Spouses Benito v. Saquitan-Ruiz
REITERATIONFacts
The Antecedents: Respondent Agapita Saquitan-Ruiz filed a civil suit against Spouses Horacio and Felisa Benito for specific performance with declaration of nullity of titles and damages. Respondent alleged that petitioners sold to her a parcel of land (Lot 1-B-2) on April 17, 1979, for P6,000.00, warranting a clean title. Petitioners failed to deliver or cause the issuance of a new certificate of title in her name despite repeated demands. Respondent further alleged that petitioners, in bad faith and with fraudulent intent, re-subdivided the original parcel into five lots and obtained new titles (PT-101743 to PT-101747) under Horacio Benito's name, which included the portion sold to her, rendering these titles null and void. Procedural History: The Regional Trial Court (RTC) dismissed respondent's Complaint on grounds of prescription and/or laches, holding that the action prescribed 20 years from the sale and more than one year from the issuance of the assailed certificates of title. The RTC denied respondent's motion for reconsideration and to amend the complaint. The Court of Appeals (CA) reversed the RTC, reinstating the complaint and granting the amendment, holding that the action was for reconveyance, which prescribes in ten years from the issuance of the title, and that the cause of action had not yet prescribed. The Petition: Petitioners seek review of the CA's decision, arguing that the CA erred in reinstating the complaint, granting the amendment, and remanding the case, particularly because the disputed property was allegedly transferred to a third party, respondent did not pay the consideration, and laches had set in.
Issue(s)
Whether the Court of Appeals erred in reinstating the respondent's Complaint, granting the amendment, and remanding the case to the trial court. Whether the action for reconveyance has prescribed or is barred by laches. Whether the sale of the disputed property to a third party renders the action for reconveyance moot and academic.
Ruling
The petition is denied, and the assailed decision of the Court of Appeals is affirmed. The case is remanded to the trial court for further proceedings.
Ratio Decidendi
On the reinstatement of the Complaint and amendment: The Court affirmed the CA's decision to reinstate the complaint and admit the amended complaint. The CA correctly identified the respondent's cause of action as one for reconveyance, not an action to invalidate titles based on fraud. An action for reconveyance is based on implied or constructive trust and prescribes ten years from the issuance of the title. The allegations in the complaint, particularly regarding the fraudulent re-subdivision and issuance of new titles, sufficiently stated a cause of action for reconveyance. The amendment was allowed to clarify the nature of the action, which did not substantially change the theory of the case or subject the petitioners to entirely new liabilities. On prescription and laches: The Court held that the action for reconveyance had not prescribed. The prescriptive period for reconveyance is ten years from the issuance of the title. The questioned titles were issued on March 25, 1996, and the complaint was filed on April 16, 1999, well within the ten-year period. Regarding laches, the Court found no basis for its application. Laches requires unreasonable and unexplained neglect in asserting rights. The petitioners failed to show that they ever demanded the alleged unpaid consideration for the sale, which would have put the respondent on notice to assert her rights more actively. Furthermore, the issue of nonpayment was raised for the first time in the motion to dismiss, depriving the respondent of due process to refute such claims. On the sale to a third party: The Court ruled that the sale of the disputed lot to Basilia dela Cruz through a judicial execution sale did not render the action for reconveyance moot. While a review of a decree of registration may be barred after one year, an action for reconveyance can still be pursued to transfer wrongfully registered property to its rightful owner. The third-party purchaser's right was subject to the 12-month redemption period. Moreover, the respondent was in possession of the disputed property, and the right to seek reconveyance does not prescribe when the claimant is in actual possession of the property. The rules also allow for the vindication of a third person's claim to a property subjected to execution in a separate action.
Main Doctrine
An action for reconveyance based on an implied or constructive trust prescribes ten years from the issuance of the title over the property, and if the claimant is in possession, the right to seek reconveyance does not prescribe.