Aguirre vs. Heirs of Villanueva

An action for reconveyance based on an implied trust created by fraudulent acquisition of property under Article 1456 of the Civil Code prescribes in ten years from the date of registration of the deed or issuance of the certificate of title if the plaintiff is not in possession of the property; however, if the plaintiff remains in possession, the action is imprescriptible as it partakes of the nature of an action to quiet title. Furthermore, equity may favor a long-time possessor with a defective title over an owner who failed to exercise acts of ownership, even if the possessor's good faith is questionable.

The case involves a dispute over a 140 square meter lot claimed by both the Spouses Aguirre and the Heirs of Lucas Villanueva. The respondents alleged that the land was fraudulently included in a Deed of Exchange executed on December 31, 1971 and registered on June 13, 1973. The petitioners claimed ownership through inheritance from Anita Aguirre's parents, who allegedly acquired the property from Ciriaco Tirol. The respondents filed an action for reconveyance in 1999 (and previously in 1997, which was dismissed for lack of jurisdiction) after discovering that petitioner Anita Aguirre had caused fences to be put up on the lot in 1981.

• The subject property is a 140 square meter lot.
• A Deed of Exchange dated December 31, 1971 was executed, allegedly fraudulently including the subject land, and was recorded with the Registry of Deeds on June 13, 1973.
• Petitioners Spouses Anita and Honorio Aguirre claimed ownership through inheritance from Anita's parents, who allegedly acquired the property from Ciriaco Tirol.
• Petitioner Anita Aguirre possessed the land for at least ten years, and continuously for 26 years from 1971 until respondents filed their complaint in 1997.
• Respondents, heirs of Lucas Villanueva, filed an action for reconveyance, annulment of the Deed of Exchange, recovery of ownership and possession, and damages in 1999, with a prior case filed in 1997 that was dismissed for lack of jurisdiction.
• Respondents became aware in 1981 that petitioner Anita Aguirre caused fences to be put up on the litigated lot.
• Respondents were not in actual possession of the property; their only acts of ownership consisted of gathering the produce of two fruit-bearing trees on the land.
• Respondents' predecessors-in-interest allegedly gave permission to Magdalena Tupas to occupy the land, but there was contrary testimony that such permission was granted by the Tirols (petitioners' predecessors-in-interest) instead.
• Petitioners may not be considered possessors in good faith because they failed to exercise reasonable diligence to ascertain who gave permission to Magdalena Tupas to occupy the land and why the tax declaration was in the name of Trinidad Tirol rather than Ciriaco Tirol.

• That they acquired the subject property by ordinary acquisitive prescription, having possessed the same for at least ten years in good faith and with just title.
• That respondents' action for reconveyance is barred by laches due to a 16-year delay in asserting their rights.
• That the Motion for Reconsideration should be denied as the respondents failed to prove possession in the concept of an owner.

• That the Court erroneously applied the law on prescription because petitioners may not be considered possessors in good faith and with just title, hence only extraordinary acquisitive prescription (30 years) could apply.
• That the Court erred in holding that their action for annulment or declaration of nullity of the Deed of Exchange, tax declarations, and recovery of ownership and possession with damages is barred by laches.
• That the fraudulent inclusion of the subject land in the Deed of Exchange entitled them to file an action for reconveyance.

• Procedural Issues:
  • Whether the Motion for Reconsideration filed by respondents should be granted.
• Substantive Issues:
  • Whether petitioners acquired the subject property by ordinary acquisitive prescription.
  • Whether respondents' action for reconveyance based on an implied trust is barred by extinctive prescription or laches.
  • Whether respondents proved possession of the property in the concept of an owner sufficient to support their claim.

• Procedural:
  • The Motion for Reconsideration is denied with finality.
• Substantive:
  • An action for reconveyance based on an implied trust under Article 1456 of the Civil Code prescribes in ten years from the date of registration of the deed or issuance of the title when the plaintiff is not in possession of the property.
  • Since respondents were not in possession and the Deed of Exchange was registered in 1973, their action filed in 1999 (or even reckoned from 1981 when they discovered the fences) is barred by the ten-year prescriptive period.
  • Respondents failed to prove that they or their predecessors-in-interest possessed the subject lot in the concept of an owner, as they did not actually occupy the land and only gathered produce from two fruit-bearing trees.
  • While petitioners may not be in good faith due to lack of reasonable diligence in verifying the chain of title and occupancy permissions, equity dictates that the lot be awarded to them considering their 26-year possession compared to respondents' weak claim.

• Implied Trust under Article 1456 of the Civil Code — A person acquiring property through fraud becomes by operation of law a trustee for the benefit of the real owner, who may file an action for reconveyance which prescribes in ten years from registration if the owner is not in possession, but is imprescriptible if the owner remains in possession (partaking of an action to quiet title).
• Acquisitive Prescription (Ordinary vs. Extraordinary) — Ordinary prescription requires possession of ten years in good faith and with just title, while extraordinary prescription requires thirty years of possession without need for good faith or just title.
• Laches — The failure to assert a right for an unreasonable length of time, causing prejudice to the adverse party, bars the claim.
• Equity as Basis for Award of Property — A court may award property to a possessor with a defective title based on long-standing possession and the failure of the legal owner to exercise acts of ownership, even if strict requirements of good faith are not met.

• "A person acquiring property through fraud becomes by operation of law a trustee of an implied trust for the benefit of the real owner of the property who may thus file an action for reconveyance."
• "To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff's possession of the disputed property is material."
• "An action for reconveyance based on an implied trust prescribes in ten years. The reference point of the ten-year prescriptive period is the date of the registration of the deed or the issuance of the title."
• "However, if the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible."
• "Thus, while petitioners may not really be in good faith... equity dictates that the lot be awarded to them... considering their 26 year possession of the same lot..."

• Alfredo v. Borras, G.R. No. 144225, June 17, 2003 — Cited as controlling precedent for the rule that an action for reconveyance based on an implied trust prescribes in ten years from registration if the plaintiff is not in possession, and is imprescriptible if the plaintiff remains in possession.

• Article 1456 of the Civil Code — Provides for the creation of an implied trust when property is acquired through fraud, allowing the real owner to file an action for reconveyance.
• (Implied) Rules on Acquisitive Prescription — Referenced in the discussion of ordinary (10 years) versus extraordinary (30 years) prescription.

• Austria-Martinez, Chico-Nazario, and Nachura, JJ. — Concurred in the resolution without issuing separate opinions.