CRESENCIA ALMARZA, PETITIONER, VS. ASUNCION ARGUELLES, GILDA ARGUELLES, GIL PANCRUDO, BALBINA PANCRUDO AND HON. JUDGE MIDPANTAO L. ADIL, RESPONDENTS.

From the decision dated June 2,
1978 rendered by the
then Court of First Instance of Iloilo, Branch II in Civil Case No. 11051
entitled, “Asuncion Arguelles, et al., Plaintiffs, versus Cresencia Almarza,
Defendant”, petitioner came directly to this Court on a lone question of
law:

“May the possessor en concepto
de dueno of a parcel of land, after the
lapse of more than ten years from the issuance of a Torrens Certificate of
Title to another person ask the latter to reconvey
the land?”

It was established that Lot No. 5815 of the Cabatuan
Cadastre, situated in the Barrio of Sulanga, Municipality
of Cabatuan,
Iloilo, originally belonged to
private respondents’ predecessor-in-interest, Romualdo
Grana.  In
1929, he sold a portion thereof consisting of 7,300 square meters, more or
less, to petitioner and her husband, the late Leon Almarza.  After the sale, said portion was physically
segregated from the whole lot and was taken possession of by petitioner and her
husband, who since then had been in continuous, peaceful, open and adverse possession
thereof, cultivating and gathering the produce thereof and declaring the same
in their names for taxation purposes.

The document evidencing the sale in favor of petitioner and her
husband was lost during the war, but sometime thereafter, the late Laura Pancrudo, mother of private respondents Asuncion
and Gilda Arguelles, executed an affidavit acknowledging the sale of said
portion to petitioner and her husband. 
On the basis of said affidavit and after actual inspection of the lot,
the Provincial Assessor issued a new tax declaration, Tax Declaration No. 456
beginning in the year 1945 to Leon Almarza,
annotating at the back thereof the aforementioned affidavit of the late Laura Pancrudo.  The tax
declaration, covering the 7,300 sq. m. portion of Lot No. 5815 sold to
petitioner and her husband was designated as Lot No. 5815-B.  On the other hand, a new tax declaration, Tax
Declaration No. 3909 was issued by the Provincial Assessor in the name of Romualdo Grana for the remaining
portion of Lot No. 5815, described therein as Lot No. 5815-A.

Sometime prior to July, 1950, Josefa Malote, mother of private respondents Gil and Balbina Pancrudo, filed for and
in behalf of her children and the late
Laura Pancrudo an answer in Cadastral Case No.
78, G.L.R.O. Record No. 1321.  In support
of her claim over Lot No. 5815, she presented in evidence Tax Declaration No.
3909 covering only a portion thereof designated therein as Lot No. 5815-A and a
land tax receipt dated March 30, 1950 showing payment of the real estate tax
for a portion only of Lot No. 5815 known and described in the Tax Declaration
as Lot No. 5815-A.

On July 25, 1950,
the cadastral court declared Gil and Balbina Pancrudo owner of one-half undivided share of Lot No. 5815 and the late Laura Pancrudo as owner of the other undivided half share.  Pursuant to a decree of title, Original
Certificate of Title No. 0-134, covering the entire Lot 5815 was issued in the name of said adjudicatees on May 29, 1951.

On November 1, 1951, Laura Pancrudo,
died, leaving private respondents Asuncion Arguelles and Gilda Arguelles as her
only children and legal successors-in-interest.

On April 20, 1977, private respondents Asuncion and Gilda
Arguelles and Gil and Balbina Pancrudo
instituted before the then Court of First Instance of Iloilo Civil Case No.
11051 against petitioner for recovery of the 7,300 sq. m. portion of Lot No.
5815 in her possession and for damages. 
Basis of the action was OCT No. 0-134 issued on May 29, 1951. 
Petitioner, in turn, interposed a counterclaim for reconveyance
of the disputed portion of Lot No. 5815 in her favor.

After trial, the lower
court rendered judgment on June 2, 1978 in favor of private respondents, ordering
petitioner to vacate the portion of Lot No. 5815 subject of the controversy and
to deliver the same to private respondents, as well as to pay the costs
of suit.  Petitioner’s counterclaim was
dismissed for the reason that although a constructive or implied trust was
constituted in favor of petitioner when the disputed portion was included in
the certificate of title issued to private respondents, petitioner’s action for
reconveyance had prescribed, more than ten years
having elapsed from the issuance of said certificate of title.

We reverse.  As between the
conclusion reached by the trial court that petitioner’s action for
re-conveyance has prescribed and petitioner’s own contention that it has not,
We find that the factual backdrop of the case at bar provides tenable reasons
for sustaining the latter’s position.

First.  It is not disputed
that petitioner has been in possession as owner of the disputed portion of Lot
No. 5815 since 1929 by reason of a sale in her and her husband’s favor by the
original owner thereof, Romualdo Grana,
predecessor-in-interest of private respondents. 
Said sale was even acknowledged by Laura Pancrudo,
mother of private respondents Asuncion
and Gilda Arguelles, in an affidavit annotated at the back of Tax Declaration
No. 456.  From that time on, petitioner
and/or her husband cultivated the land, gathered the produce thereof, declared
the same in her and/or her husband’s name for taxation purposes and accordingly
paid the realty taxes due thereon.  In CaragayLayno v. Court of Appeals,
133 SCRA 718, citing Sapto, et al
v. Fabiana, 103 Phil. 683 and Faja v. Court of Appeals,
75 SCRA 441, cases with similar factual backgrounds as the instant case, We
held that prescription cannot be invoked in an action for reconveyance,
which is, in effect, an action to quiet title against the plaintiff therein who
is in possession of the land in question. 
The reason, We explained, is “that as lawful possessor and owner of
the Disputed Portion, her cause of action for reconveyance
which, in effect, seeks to quiet title to property in one’s possession is imprescriptible.  Her
undisturbed possession over a period of fifty-two [52] years (48 years in this
case) 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 title.”

We further stated that if ever prescription may be invoked, it
may be said to have commenced to run only from the time the possessor was made
aware of a claim adverse to his own.  In
the case at bar, petitioner was made aware of such adverse claim only upon
service on her of the summons in Civil Case No. 11051.  As her action for reconveyance,
or to quiet title was contained in her counterclaim, the same cannot be said to
have already prescribed.

Second.  The evidence
submitted by Josefa Malote
during the Cadastral hearing consisted of tax declaration No. 3909 covering
only a portion of Lot No. 5815 designated as Lot No. 5815-A and land tax
receipt dated March 30, 1950 showing payment of real estate tax for a portion
only of Lot No. 5815, designated as Lot No. 5815-A in said tax declaration No.
3909.  In so doing, she laid claim only
to said portion of lot No. 5815 and did not assert ownership over the disputed
portion, known as Lot No. 5815-B.  This being
the case, the inclusion of the disputed portion in OCT No. 0-134 is “void
and of no effect for a land registration court has no jurisdiction to decree a
lot to persons who have put no claim in it and who never asserted any right of
ownership over it.”^[1] “The remedy of the landowner
whose property has been wrongfully or erroneously registered in another’s name
is, after one year from date of the decreee, not to set aside the decree, but respecting the
decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of
justice for reconveyance or if the property has
passed into the hands of an innocent purchaser for value, for damages.”^[2] Petitioner availed herself of this remedy
seasonably.

Third.  Private respondents obtained OCT No. 0-134 on
May 29, 1951.  Their action was instituted only on April
20, 1977, or after a
lapse of twenty-six [26] years.  The
neglect or failure of private respondents to assert their alleged right under
the certificate of title for such unreasonable length of time makes them guilty
of laches.^[3] They should now be held either to have
abandoned or waived whatever right they may have under said certificate of
title.

Fourth.  As correctly analyzed by the trial court:

“Apparently, the plaintiff [private respondents] are seeking
to recover the 7,300 square meters land in question because it is included in
their title.  They have not rebutted the
defendant’s [petitioner] evidence to the effect that they bought the area in
dispute from its primitive owner, Romualdo Grana, in 1929 and the said sale was confirmed by the late
Laura Pancrudo after World War II.  Plaintiffs likewise have not disputed that
the defendant and her late husband have been in continuous, public, and peaceful possession of the premises since
1929 until the filing of this case.

“It seems that the plaintiffs solely anchor their right over
the disputed premises on the strength of their title over Lot
5815 which includes the area in
dispute and the fact that they acquired said title in a cadastral proceedings
in 1950 which was a proceeding in rem.”^[4]

On this premise, to
adjudge private respondents owner of the disputed portion of Lot No. 5815 on
the basis merely of its having been erroneously included in their certificate
of title would indeed be “a sad day for the law” for then, We shall
be “attaching full faith and credence to a Torrens certificate of
title” “oblivious to the demands of justice” and anchoring our
decision “solely on a narrow and literal reading of a statutory
prescription, devoid of any shadow of moral right.”^[5] Furthermore,
We shall be putting a premium on land-grabbing and transgressing the broader
principle in human relations that no person shall unjustly enrich himself at
the expense of another.

WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE and another one entered ordering private respondents
to cause the segregation of the disputed portion of 7,300 square meters forming
part of Lot No. 5815 of the Cabatuan Cadastre,
Cadastral Case No. 78, G.L.R.O. Record No. 1321, presently occupied by petitioner
and to reconvey the same to said petitioner.  After the segregation shall have been
accomplished, the Register of Deeds of Iloilo is hereby ordered to cancel OCT
No. 0-134 in the names of Balbina, Gil and Laura, all
surnamed Pancrudo, and thereafter to issue a new
certificate of title covering said 7,300 square meter portion in favor of
petitioner and another certificate of title in favor of private respondents
covering the remaining portion of Lot No. 5815. 
No costs.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.

^[1]
Vda. de Recinto vs. Inciong, 77 SCRA 196

^[2]
Ibid

^[3]
Corro vs. Lising,
137 SCRA 541

^[4]
Decision, Annex “E” of
Petition, p. 60, Rollo

^[5]
Phil. Commercial and Industrial Bank vs. Villalva,
48 SCRA 31