Tiongco Yared v. Tiongco

An action for reconveyance based on implied or constructive trust is imprescriptible when the plaintiff remains in possession of the land, as the action is in effect one to quiet title. Applied here, petitioner's undisturbed possession preserved her continuing right to seek reconveyance despite the lapse of more than ten years from registration of respondent Jose's titles.

Matilde, Jose, Vicente and Felipe, all surnamed Tiongco, children of Atanacio and Maria Luis Tiongco, were collectively known as the Heirs of Maria Luis de Tiongco. Lots 3244 and 1404 in Iloilo City were registered under OCT Nos. 484 and 1482 in the names of the four siblings each in 1/4 undivided share, while Lot 3246 was registered under OCT No. 368 in the name of Heirs of Maria Luis de Tiongco. Petitioner Estrella Tiongco Yared and Carmelo Tiongco were legitimate children of Jose Tiongco, and respondent Jose B. Tiongco is Carmelo's son.

Petitioner Estrella Tiongco Yared was the daughter of Jose Tiongco and aunt of respondent Jose B. Tiongco, son of Carmelo Tiongco, with respondent Antonio G. Doronila, Jr. later acquiring the disputed lots in a series of transfers. The dispute centers on Lots 3244, 3246 and 1404 in Iloilo City formerly covered by OCT Nos. 484, 1482 and 368. Sometime in 1965 petitioner built her house on Lot 1404 and sustained herself by collecting rentals from tenants of Lots 3244 and 3246.

Thereafter, in 1968 petitioner as one of the heirs of Jose filed an adverse claim affecting all rights, interest and participation of her deceased father on the disputed lots, but it was annotated only on OCT No. 484 and OCT No. 1482 covering Lots 3244 and 1404. In 1983 respondent Jose prohibited petitioner from collecting rentals from tenants of Lots 3244 and 3246. In December 1983 respondent Jose filed suit for recovery of possession with preliminary injunction against several tenants of Lots 3244 and 3246 wherein he obtained judgment in his favor. Respondent Jose also filed unlawful detainer with damages against petitioner as she was staying on Lot 1404; while the RTC, Branch 33, Iloilo City ruled in respondent Jose's favor, the CA reversed and ruled in favor of petitioner. As such, respondent Jose never took possession of the properties.

Because petitioner inquired at the Office of the Register of Deeds of Iloilo City in 1988, she discovered that respondent Jose had executed an Affidavit of Adjudication dated April 17, 1974 declaring himself the only surviving heir of the registered owners and adjudicating unto himself Lots 3244, 3246 and 1404. Consequently the OCTs were cancelled and TCT No. T-37195 for Lot 3244, TCT No. T-4665 for Lot 3246 and TCT No. T-37193 for Lot 1404 were issued in respondent Jose's name. On May 10, 1974, the same day the TCTs for Lots 3244 and 1404 were issued, respondent Jose sold said lots to Catalino Torre, leading to issuance of TCT Nos. T-37196 and T-37194 in Torre's name. On March 30, 1979, barely two days after obtaining TCT No. T-4665, respondent Jose sold Lot 3246 to respondent Doronila who was issued TCT No. T-4666, while Torre on the same date sold Lots 3244 and 1404 to Doronila who was issued corresponding new TCTs. Just days later, on April 2, 1979 Doronila sold Lot 1404 back to respondent Jose, and on January 17, 1980 Lots 3244 and 3246 were also sold back to respondent Jose.

Because of those discoveries, petitioner filed her complaint on October 2, 1990, claiming respondent Jose knowingly made untruthful statements since other living heirs existed, rendering the affidavit and all subsequent transfers null and void and warranting reconveyance for partition. According to respondent Jose, petitioner's father was not an heir of Maria Luis de Tiongco, he was the only legitimate son and refused to acknowledge his two siblings as illegitimate, the sales were not fraudulent, Lot 3244 had been bought by the City of Iloilo at auction for tax delinquency and resold to him, and he had paid realty taxes for more than ten years while petitioner collected rentals only by his tolerance. The RTC found that the allegations in the Affidavit of Adjudication were false because respondent Jose is not the only surviving heir of Jose, Matilde, Vicente and Felipe Tiongco as the latter have other children and grandchildren who are also surviving heirs.

• Nullity of Affidavit of Adjudication: Petitioner argued that the CA erred in treating respondent Jose's Affidavit of Adjudication as merely voidable when it is a complete nullity because respondent Jose, a lawyer aware of its nullity, maliciously and in bad faith adjudicated to himself properties over which he knew he had no rights and which petitioner and her predecessors-in-interest possessed.
• Imprescriptibility of Void Act: Petitioner argued that the CA erred in affirming dismissal on prescription because the affidavit being a total nullity, the action to declare such nullity and of subsequent transactions arising therefrom does not prescribe, especially since petitioner and her predecessors-in-interest always possessed the lots and respondent Jose never possessed them.
• Constructive Trust and Possession: Petitioner argued that even assuming the affidavit was voidable, dismissal on prescription was still error because respondent Jose as lawyer aware of petitioner's ownership became an implied trustee, and an action for reconveyance based on trust does not prescribe so long as the beneficiary like petitioner has been in actual physical possession, as held in Vda. de Cabrera vs. Court of Appeals.

• Heirship: Respondent Jose argued that petitioner's father Jose was not an heir of Maria Luis de Tiongco but an heir of Maria Cresencia de Loiz y Gonzalez vda. de Tiongco, and that he was the only legitimate son while refusing to acknowledge his two other siblings because they are illegitimate.
• Absence of Fraud and Ownership: Respondent Jose argued that the series of sales was not fraudulent, Lot 3244 was bought by the City of Iloilo from its own auction sale for tax delinquency and merely resold to him, he paid real property taxes for more than ten years, and petitioner collected rentals from Lots 3244 and 3246 only because he allowed her.

• Prescription of Reconveyance: Whether petitioner's action for annulment of affidavit of adjudication, deeds of sale and TCTs and reconveyance is barred by prescription despite being filed sixteen years after registration.
• Innocent Purchaser for Value: Whether the successive transfers from respondent Jose to Catalino Torre to respondent Doronila and back to respondent Jose cleansed the defect and conferred valid title.

• Prescription of Reconveyance: No. The action is not barred because petitioner remained in possession, so the reconveyance action is in effect an imprescriptible action to quiet title and prescription commences only when possession is disturbed or title attacked.
• Innocent Purchaser for Value: No. The successive transfers did not cure the falsity of the Affidavit of Adjudication, and respondent Jose who reacquired the lots with knowledge of the defect cannot claim protection as buyer in good faith.

• Prescription of Reconveyance: The SC agreed an action for reconveyance based on implied or constructive trust ordinarily prescribes in ten years from issuance of Torrens title, and fraud-based reconveyance in four years from discovery deemed from registration constituting constructive notice. However, under Heirs of Pomposa Saludares vs. Court of Appeals, Millena vs. Court of Appeals, Alfredo vs. Borras, Vda. de Cabrera vs. Court of Appeals, David vs. Malay and Faja vs. Court of Appeals, prescription cannot be invoked when plaintiff is in possession, because undisturbed possession gives a continuing right to seek equity to determine an adverse claim and the suit is effectively to quiet title. Here petitioner's possession was disturbed only in 1983 when respondent Jose filed recovery of possession, petitioner never lost possession as the CA in the unlawful detainer case ruled for her on November 28, 1991 during pendency of the case, and she was thus positioned to clear doubts cast by TCTs in respondent Jose's name.
• Innocent Purchaser for Value: The SC observed the circuitous sales from respondent Jose to Torre to Doronila and back to respondent Jose were unusual and could not cleanse respondent Jose's adjudication of all properties to himself. The RTC itself found the sole-heir allegations false since other children and grandchildren survived. Under Sandoval vs. Court of Appeals and David vs. Malay, an innocent purchaser pays full price without notice of another's right, but one with actual knowledge of facts impelling inquiry must look beyond the certificate; non-possession by respondent Jose when sold to Torre and Doronila should have put vendees on guard. Regardless, the properties reverted to respondent Jose who admitted other heirs existed and cannot benefit from his fraudulent affidavit, so nullity of titles obtained therefrom was not cured.

• Action for reconveyance based on implied or constructive trust — Ordinarily prescribes in ten years from issuance of the Torrens title over the property; when based on fraud, must be filed within four years from discovery deemed from registration constituting constructive notice to the whole world. The SC applied the ten-year rule as the general rule but held it inapplicable here due to possession.
• Exception to prescription when plaintiff in possession — Prescription cannot be invoked when plaintiff is in possession of the land to be reconveyed; undisturbed possession gives a continuing right to seek aid of equity, and the action becomes one to quiet title which is imprescriptible. The SC applied this to sustain petitioner's 1990 complaint since she never lost possession and was disturbed only in 1983.
• Innocent purchaser for value — One who buys property of another without notice of another's right or interest and pays full and fair price at purchase or before notice, believing the vendor was owner and could convey title; one who closes eyes to facts putting a reasonable man on guard is not in good faith. The SC held Torre and Doronila were put on guard by respondent Jose's non-possession, and respondent Jose as reacquirer with knowledge could not claim this protection.
• Exception to Torrens reliance rule — Every person dealing with registered property need only rely on the title, except when the party has actual knowledge of facts impelling a reasonably cautious man to inquire or knowledge of defect or lack of title or sufficient facts to induce inquiry; what excites suspicion prompts looking beyond the certificate. The SC applied this to deny good-faith status to vendees who ignored respondent Jose's lack of possession.

• "there is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the plaintiff is in possession of the land to be reconveyed." — States the sole exception to the ten-year prescription for reconveyance, which the SC used to preserve petitioner's action.
• "prescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right." — Explains the equity basis for imprescriptibility, applied to petitioner's undisturbed possession until 1983.
• "one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession." — Quotes Faja vs. Court of Appeals as reiterated in David vs. Malay to fix accrual of quiet-title right only upon awareness of adverse claim.
• "one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property." — Defines innocent purchaser for value from Sandoval vs. Court of Appeals to reject respondent Jose's claim to good-faith protection.

• Heirs of Pomposa Saludares vs. Court of Appeals, G.R. No. 128254, January 16, 2004, 420 SCRA 51 — Followed as authority that prescription cannot be invoked when plaintiff is in possession and that fraud-based reconveyance is imprescriptible absent transfer to innocent buyer for value.
• Millena vs. Court of Appeals, G.R. No. 127797, January 31, 2000, 324 SCRA 126 — Reiterated through Saludares for the possession exception to prescription.
• Alfredo vs. Borras, G.R. No. 144225, June 17, 2003, 404 SCRA 145 — Followed for rule that actual possession gives continuing right to quiet title, making reconveyance effectively imprescriptible.
• Vda. de Cabrera vs. Court of Appeals, G.R. No. 108547, February 3, 1997, 267 SCRA 339 — Followed for rule that imprescriptibility based on implied trust applies when enforcer is in possession.
• David vs. Malay, G.R. No. 132644, November 19, 1999, 318 SCRA 711 — Followed both on possession exception and on limits of Torrens reliance where inquiry is impelled.
• Faja vs. Court of Appeals, No. L-45045, February 28, 1977, 75 SCRA 441 — Quoted for rule that possessor's right to quiet title and reconveyance accrues only when made aware of adverse claim.
• Sandoval vs. Court of Appeals, G.R. No. 106657, August 1, 1996, 260 SCRA 283 — Followed to define innocent purchaser for value and good faith.

• Rule 45, Rules of Court — Governs appeal by petition for review on certiorari; the SC took cognizance of petitioner's challenge to the CA August 28, 2003 Decision and November 27, 2003 Resolution through this mode.