G.R. No. L-52064 December 26, 1984
JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO LAYNO, petitioner, vs. HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Administrator of the Estate of the Deceased, MARIANO DE VERA, respondents.

FACTS

The case involves a dispute over a 3,732-square-meter portion of a larger parcel of land in Calasiao, Pangasinan, covered by Original Certificate of Title (OCT) No. 63 in the name of the deceased Mariano de Vera. Petitioner Juliana Caragay-Layno, de Vera’s first cousin, and her husband have been in possession of this disputed portion. The estate’s administrator, respondent Salvador Estrada, discovered a discrepancy between the area listed in the estate’s inventory (about 5,147 sq. m.) and the area in the title (8,752 sq. m.), leading to the finding that the petitioners occupied the excess area. Estrada filed an action for recovery of possession.
Petitioner resisted, claiming ownership through her father, Juan Caragay, who had possessed the land since 1921. She asserted that the disputed portion was either fraudulently or mistakenly included in de Vera’s OCT, creating an implied trust in her favor, and counterclaimed for reconveyance. She testified that de Vera, whom she trusted, borrowed her tax declaration and had her sign documents she did not understand, leading to the inclusion of her land in his title. The trial court and the Court of Appeals ruled for the estate, holding that her action for reconveyance based on an implied trust had prescribed after ten years from the 1947 registration.

ISSUE

Whether the petitioner’s action for reconveyance of the disputed property, based on an implied trust, has prescribed.

RULING

The Supreme Court reversed the appellate court, ruling that the action had not prescribed. The Court clarified that the ten-year prescriptive period for reconveyance based on an implied or constructive trust applies only when the plaintiff is not in possession of the property. Here, the petitioner and her predecessor-in-interest had been in actual, open, continuous, and uninterrupted possession in the concept of an owner for decades—since 1921—and paid realty taxes accordingly. This possession was disturbed only in 1966 when Estrada informed her of the claim.
The legal logic is that one in actual possession claiming ownership may wait until that possession is attacked before seeking judicial relief. The cause of action for reconveyance, which seeks to quiet title, accrues only from the time the possessor is made aware of an adverse claim. Therefore, prescription began to run only from 1966, not from the 1947 registration. The estate’s failure to assert any rights over the land for twenty years from registration constituted laches. Given the petitioner’s long-standing possession and the evidence indicating mistaken inclusion in the title, the Court ordered the segregation and reconveyance of the disputed portion to her.