JULIANA CALADIAO, ET AL., PETITIONERS, VS. MAXIMA SANTOS VDA. DE BLAS, RESPONDENTS.

This petition for certiorari is interposed to review and reverse the
judgment of the Court of Appeals (Sixth Division) in its CA-GR No.
2374-K, affirming that of the Court of First Instance of Pampanga
requiring defendants-appellants (now petitioners), Juliana Caladiao and
children, to reconvey to plaintiff (now respondent), Mrs. Rosalina
Santos, as Administratrix of the estate of the late Maxima Santos Vda.
de Blas, the property covered by Transfer Certificate of Title No.
11118-R of Pampanga (Exh. V); to pay her P3,000.00 by way of counsel
fees, and costs.

The findings of the Court of Appeals in its
decision are that on September 30, 1932, Prudencio Limpin sold, ceded,
and transferred to Simeon Blas, married to Maxima Santos, an
unregistered fishpond of 126,546 sq. meters, situated in barrio San
Pedro, Sexmoan, Pampanga, for the price of P4,440, the vendor reserving
for himself the right to repurchase the property within one year from
date, with the explicit stipulation that if no repurchase was made
within the agreed period the sale “would automatically become a sale
absolute and irrevocable”. The notarial deed of sale a retro
(Exh. A, and Exh. 5) was recorded in the office of the Register of
Deeds of Pampanga on January 28, 193S. With the deed of sale, Limpin
delivered to the buyer a retro the Spanish title to the land
(Exh. B), and the purchaser, Simeon Blas, took possession of the
property until January 9, 1937, when he died. His widow, Maxima Santos,
took over, and paid the taxes on the property until 1955. In 1940, the
fishpond, with other property, was adjudicated to the widow by the
court taking cognizance of the Estate Proceedings of the late Simeon
Blas.

Despite the conveyance in favor of Bias, Prudencio
Limpin applied for, and obtained, the judicial registration of the same
property in favor of the conjugal partnership of Prudencio Limpin and
Juliana Caladiao (in Case No. 1495, GLRO Rec. No. 47574), and managed
to secure the issuance in their name of Original Certificate of Title
No. 21019 by the Register of Deeds of Pampanga under date February 24,
1934 (Exh. T). Prudencio Limpin died on April 17, 1941, and was
succeeded by his widow and children (now petitioners-appellants), in
whose favor Transfer Certificate No. 11118-R was later issued (Exh. V)
in 1954.

Undoubtedly unaware of the registration in favor of Limpin and his
wife, Maxima Santos Vda. de Blas applied, on March 29, 1952, for the
registration of the same property (fishpond) in Case No. 118, G.L.R.O.
Rec. No. 5415. Her application was opposed by the petitioners, but the
court, by decision rendered on June 15, 1954 (Exh. 1) overruled the
opposition and adjudicated the property to the applicant widow,
expressly finding that appellants’ predecessor, Prudencio Limpin, had
sold the property to the spouses Bias in 1932, and for failure of the
vendor to repurchase the property, Bias and his wife had become
absolute owners thereof.

While the second registration case was pending, the appellants, widow
and children of Prudencio Limpin, filed on October 24, 1952, a
complaint (Exh. L) in the Court of First Instance of Pampanga (Civ.
Case No. 509) against Maxima Santos Vda. de Blas for the return of the
fishpond and the annulment of the sale a retro
executed by Prudencio Limpin in 1932. The defendant widow answered on
October 29, 1952. The complaint in Case No. 509 was unqualifiedly
dismissed on December 9, 1952, for non-appearance of plaintiffs at the
trial, and the dismissal became final.

On August 20, 1954,
the court ordered, in Land Case No. 118, G.L.R.O. Rec. No. 5415, Maxima
Santos Vda. de Bias, applicant, the issuance of the corresponding
decree. But upon report of the Commissioner of Land Registration that
the same land had been previously decreed in favor of Prudencio Limpin
and his wife, the registration proceedings initiated by the widow Blas
were dismissed. Whereupon, said widow initiated, on August 20, 1954,
the present action against the appellant widow and heirs of Prudencio
Limpin, for reconveyance of the fishpond. Upon the death of plaintiff,
Maxima Santos, on October 5, 1956, she was substituted by her
Administratrix, Rosalina Santos. After trial, the Court of First
Instance of Pampanga found for the plaintiff, ordered reconveyance, and
awarded plaintiff P3,000 counsel fees. Upon appeal, the Court of
Appeals affirmed. The Limpins in due course resorted to this Court.

The decision of the Court of Appeals having explicitly found that the
late Prudencio Limpin had sold the property to Simeon Blas under pacto de retro,
and that Bias became the absolute owner because of Limpin’s failure to
repurchase, the contention of petitioners-appellants that the
transaction between Limpin and Blas should have been declared an
equitable mortgage merely, or, at most, a contract of antichresis, can
not be entertained, the findings of fact of the Court of Appeals being
conclusive in this Court. The review must, therefore, be limited to the
question of law, res judicata, and prescription of action.

With regard to the first question, it is now a well-settled doctrine in
this jurisdiction that the existence of a decree of registration in
favor of one party is no bar to an action to compel reconveyance of the
property to the true owner, which is an action in personam,
even if such action be instituted after the year fixed by Section 38 of
the Land Registration Act as a limit to the review of the registration
decree, provided it is shown that the registration is wrongful and the
property sought to be reconveyed has mot passed to an innocent third
party holder for value (Cabanos vs. Register of Deeds, 40 Phil. 620; Dizon vs. Lacap, 50 Phil. 193; Bagayas vs. Guilao, 64 Phil. 347, and cases cited therein; Escobar vs. Locsin, 74 Phil. 86; Sumira vs. Vistan, 74 Phil. 138; Palma vs. Cristobal, 77 Phil. 712; Aban vs. Cendana, L-11989, May 23, 1958).

Since he knew that he had previously sold the property to Simon Bias in
1932, it is incontrovertible that Prudencio Limpin subsequently applied
for, and obtained the decree of registration in his name fraudulently
and in utter bad faith; wherefore, he and his widow and heirs, who are
bound to respect the original sale, may be compelled to reconvey it to
the true owner (the spouses Blas or their successors), as is required
by the decision under appeal. The registration of the property did not
annul the conveyance in favor of Bias (cf. Cabanos vs.
Register of Deeds, 40 Phil. 620), and after the registration the
Limpins held the property in trust for the true owners. Hence, the
appellants may not seek refuge behind the incontrovertibility of the
decree of registration. The failure of the spouses Bias to appear and
oppose the application of Limpin is explained by the finding of the
Court of Appeals that they were “undoubtedly unaware” of the
proceedings in question. That the said spouses were constructively
notified by publication is irrelevant, because the action for
reconveyance does not seek to undermine the validity of the decree of
registration.

The superiority of the rights of, the appellee
over those of appellants has also been settled by the final dismissal
in 1952 of civil case No. 509, interposed by appellants against Maxima
Santos Vda. de Blas in the Court of First Instance of Pampanga, seeking
the annulment of the pacto de retro
sale executed by Prudencio Limpin in favor of her predecessor in
interest, Simeon Blas, and the repossession of the property conveyed.
While the dismissal was for failure to prosecute, the same has the
effect of an adjudication on the merits, and operates as res adjudicata, the court not having provided otherwise (Rule 30, Sees. 3 and 4).

Appellants also urge that the action for reconveyance has prescribed
because more than twenty years have elapsed since the spouses Limpin
obtained a certificate of title in their name over the fishpond object
of the present litigation. This contention is without merit. As already
pointed out, the application for registration was in bad faith, with
the result that the certificate of title issued to the vendor Limpin in
1934 was in law issued to and held by him in behalf and in trust for
the benefit of the buyers, Simeon Blas and his wife, Maxima. Under Act
190 (the old Code of Civil Procedure), section 38, which is the
governing statute, prescription does not apply to “continuing and
subsisting trusts”; so that actions against a trustee to recover trust
property held by him are imprescriptible. Actions for the reconveyance
of property wrongfully registered are of this category (Manabang vs. Canlas, 50 Off. Gaz., 1980).

Finally, it is well to note that the Court of Appeals has explicitly
found that the possession of the property has been with Blas and his
successors since the sale; wherefore, their action can not be deemed
extinguished by prescription, since Section 38, Act 190, provides that
its provisions on prescription shall not apply “to an action by the vendee of real property in possession thereof to obtain the conveyance of it”.

In view of the foregoing, we fail to find any reversible error in the
decision appealed from, and the same is affirmed, with costs against
petitioners-appellants.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, and Makalintal, JJ., concur.