Caragay-Layno vs. Court of Appeals

An action for reconveyance of land by a plaintiff in actual, open, and continuous possession—which effectively seeks to quiet title—is imprescriptible; the prescriptive period for such an action begins to run only from the time the possessor is made aware of an adverse claim to his title. Mere issuance of a Torrens certificate of title over a parcel does not vest ownership over portions illegally or erroneously included therein, and a land registration court has no jurisdiction to decree land to persons who never asserted any right of ownership over it.

Petitioner Juliana Caragay-Layno and Mariano de Vera were first cousins, both orphans, raised together by a common aunt. A 3,732-square-meter northwestern portion of a larger 8,752-square-meter parcel in Calasiao, Pangasinan, was originally owned and possessed by Juliana’s father, Juan Caragay, who held it under tax declarations from 1921. Upon Juan’s death in 1914, Juliana adjudicated the land to herself as sole heir, declared it for taxation in her name, and paid realty taxes from 1938 to 1972. In 1947, the entire 8,752-square-meter lot, including the portion Juliana occupied, was registered under Original Certificate of Title No. 63 in the name of Mariano de Vera. De Vera died in 1951; his intestate estate was later administered by his nephew, respondent Salvador Estrada. Neither De Vera nor his successors ever took possession of or asserted rights over the disputed portion. Estrada discovered the discrepancy between the titled area and the 5,147 square meters listed in the estate inventory only after assuming administration, prompting his demand that Juliana vacate.

• Parties and Property: Petitioner Juliana Caragay-Layno, assisted by her husband Benito Layno, occupied a 3,732-square-meter northwestern portion of Lot No. 1, Psu-24206, a sugar and coconut land in Calasiao, Pangasinan. The entire lot, with an area of 8,752 square meters, was covered by Original Certificate of Title No. 63 issued on 11 September 1947 in the name of Mariano M. de Vera, who died in 1951 without issue. Respondent Salvador Estrada was the administrator of De Vera’s intestate estate.

• Petitioner’s Possession and Claim of Ownership: The disputed portion had been in the open, continuous, and uninterrupted possession of Juan Caragay, Juliana’s father, since at least 1921, as shown by Tax Declaration No. 28694. After Juan’s death in 1914, Juliana adjudicated the property to herself as sole heir in 1958 and declared it in her name under Tax Declaration No. 22522 from 1959 onward. Realty taxes were paid from 1938 to 1972. Tacking her father’s possession to her own, Juliana established approximately forty-five years of possession in the concept of owner when she was disturbed in 1966.

• Erroneous Inclusion in De Vera’s Title: Juliana, an unlettered woman, alleged that De Vera, whom she regarded as a father figure, had borrowed her tax declaration for use as collateral and sugar quota application, and had her sign documents. She discovered that the disputed portion was included in De Vera’s title only in 1966 when Estrada informed her and demanded she vacate. The trial court and Court of Appeals found her allegation of fraud unsubstantiated, but the Supreme Court observed that the inclusion was clearly erroneous. The estate inventory submitted by De Vera’s widow listed only 5,147 square meters; deducting the disputed 3,732 square meters from the 8,752-square-meter title left 5,020 square meters, which closely approximated the inventory area. Neither De Vera nor his successors ever possessed or claimed the disputed portion.

• Demand and Suit: Upon noticing the discrepancy, Estrada demanded that the Laynos vacate. They refused, asserting ownership. Estrada filed suit for recovery of possession, and Juliana counterclaimed for reconveyance, raising the defense of implied or constructive trust.

• Prescription and Imprescriptibility: Petitioner maintained that her counterclaim for reconveyance, effectively an action to quiet title by one in actual possession, was imprescriptible. She argued that her possession had been undisturbed for over fifty years and that prescription could not run against her until she became aware of the adverse claim in 1966.

• Erroneous Inclusion in Title: Petitioner asserted that the disputed portion was mistakenly or fraudulently included in OCT No. 63. She contended that the land registration court had no jurisdiction to decree the portion to De Vera, who never claimed it, and that the Torrens title was never conclusive as to the ownership of the illegally included land.

• Laches and Estoppel against Respondent: Petitioner contended that De Vera’s estate and successors were guilty of laches for failing to assert any claim or take possession of the property for twenty years after the title’s issuance in 1947.

• Prescription of Action: Respondent contended that petitioner’s claim for reconveyance based on an implied or constructive trust had prescribed. Since OCT No. 63 was issued in 1947 and petitioner’s answer seeking reconveyance was filed only in 1967, the ten-year prescriptive period under Section 102 of Act 496 had lapsed, rendering the title indefeasible.

• Absolute Ownership under Torrens Title: Respondent argued that the certificate of title in the name of Mariano de Vera was conclusive evidence of ownership of all the land described therein, including the disputed portion, and that petitioner could no longer challenge it after the lapse of the statutory period.

• Prescription: Whether petitioner’s action for reconveyance—filed more than ten years after the issuance of the certificate of title—was barred by prescription.
• Validity of Inclusion in Title: Whether the inclusion of the disputed portion in De Vera’s OCT No. 63, without his having claimed or possessed it, was void or of no legal effect.

• Prescription: The action for reconveyance was held imprescriptible because petitioner and her predecessor had been in actual, open, continuous, and uninterrupted possession in the concept of owner for approximately forty-five years. An action for reconveyance by a person in possession, which effectively seeks to quiet title, falls under the settled rule that an action to quiet title is imprescriptible. Prescription began to run only in 1966 when petitioner was made aware of the adverse claim, not from the date of registration in 1947. Consequently, the filing of the counterclaim in 1967 was well within the prescriptive period.

• Validity of Inclusion in Title: The inclusion of the 3,732-square-meter portion in OCT No. 63 was declared void and of no effect. Mere possession of a Torrens certificate does not make the holder the true owner of land illegally included; a land registration court has no jurisdiction to decree land to persons who never asserted any right of ownership over it. The Land Registration Act and the Cadastral Act protect only holders in good faith and do not sanction fraud or unjust enrichment. Since the disputed portion had never been claimed or possessed by De Vera or his successors, and its erroneous inclusion was confirmed by the discrepancy in the estate inventory, reconveyance was the proper remedy.

• Rule on Imprescriptibility of Action for Reconveyance by Person in Possession — An action for reconveyance of land by a plaintiff in actual possession, which effectively seeks to quiet title, is imprescriptible. The prescriptive period commences only from the time the possessor is made aware of an adverse claim to his title. (Citing Faja v. Court of Appeals, 75 SCRA 441; Sapto v. Fabiana, 103 Phil. 683.)

• Void Inclusion of Land in Torrens Title — A certificate of title under the Torrens System is not conclusive as to the holder’s true ownership of property illegally included therein. A land registration court has no jurisdiction to decree land to persons who have put no claim to it and who have never asserted any right of ownership over it. Such inclusion is void and of no effect. (Citing Ledesma v. Municipality of Iloilo, 49 Phil. 769; Vda. de Recinto v. Inciong, 77 SCRA 201.)

• Remedy for Erroneous Registration — The remedy of a landowner whose property has been wrongfully or erroneously registered in another’s name is, after one year from the date of the decree, to bring an ordinary action for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. (Citing Vda. de Recinto v. Inciong, supra.)

• Laches Against Registered Owner — The failure of a registered owner and his successors to assert rights over or take possession of a disputed portion for a prolonged period, while another possesses it openly and continuously, may constitute laches that bars recovery.

• “[M]ere possession of a certificate of title under the Torrens System is not conclusive as to the holder's true ownership of all the property described therein for he does not by virtue of said certificate alone become the owner of the land illegally included.” — This passage encapsulates the limit of a Torrens title’s evidentiary weight when land is erroneously included.

• “A Land Registration Court has no jurisdiction to decree a lot to persons who have never asserted any right of ownership over it. … Obviously then, the inclusion of said area in the title … is void and of no effect … The Land Registration Act as well as the Cadastral Act protects only the holders of a title in good faith and does not permit its provisions to be used as a shield for the commission of fraud, or that one should enrich himself at the expense of another.” — This passage, quoting Vda. de Recinto v. Inciong, establishes the jurisdictional infirmity and the good-faith protective scope of the Torrens system.

• “[A]n action to quiet title to property in one's possession is imprescriptible. Her undisturbed possession over a period of fifty two (52) years gave her a continuing right to seek the aid of a Court of equity to determine the nature of the adverse claim of a third party and the effect on her own title.” — This passage affirms the imprescriptibility principle for possessors seeking to quiet title.

• Faja v. Court of Appeals, 75 SCRA 441 (1977) — Applied as controlling authority for the rule that a cause of action for reconveyance by a person in actual possession is imprescriptible, and that prescription runs only from the time the possessor is notified of an adverse claim.
• Vda. de Recinto v. Inciong, 77 SCRA 201 (1977) — Followed for the doctrines that a land registration court lacks jurisdiction to decree land to persons not claiming it, and that erroneous inclusion in a Torrens title is void.
• Ledesma v. Municipality of Iloilo, 49 Phil. 769 (1926) — Cited as authority that a certificate of title does not vest ownership over illegally included land.
• Sapto v. Fabiana, 103 Phil. 683 (1958) — Cited to support the imprescriptibility of an action to quiet title by one in possession.

• Section 102, Act No. 496 (Land Registration Act) — Referenced as the basis for a petition to compel a trustee to reconvey registered land to the cestui que trust. The lower court applied the ten-year prescriptive period under this provision, but the Supreme Court held it inapplicable because the action was for reconveyance based on erroneous inclusion, treated as an imprescriptible suit to quiet title by a possessor.

Justices Claudio Teehankee (Chairman), Plana, De la Fuente, and Cuevas concurred. Justices Relova and Gutierrez, Jr. took no part.