The Supreme Court granted a Petition for Review on Certiorari filed by the Abay petitioners, set aside the Court of Appeals rulings, and rendered a new judgment declaring them the absolute owners of a parcel of land in Guadalupe, Cebu City, and ordering the Spouses Jacinto and Chiok Ngo Lim Young to reconvey the property to them.
The Case
The case stemmed from a Complaint for Cancellation of Title, Damages with Preliminary Injunction, and Issuance of a New Transfer Certificate of Title filed on June 19, 2001, by the petitioners against the current possessors and title holders of a parcel of land in Guadalupe, Cebu City (the subject property), namely respondent Spouses Jacinto and Chiok Ngoc Lim Young; and the sellers who transferred the property to the petitioners, specifically Crispin Caballes and the heirs of Crispin's sister, Trinidad Caballes-Gallardo, namely Fe G. Verano, Tomas Gallardo, Elena Gallardo, Editha Gallardo, Nicasio Gallardo, and Eugenio Gallardo (collectively, the Gallardos).
The subject property was identified as Lot No. 7, part of Lot 6012, of the Cebu Cadastre. It used to form part of the estate of Margarita Lopez, who married Isaac Caballes and had nine children. The petitioners asserted they were the rightful owners, having purchased the property from Crispin, Margarita's son, and the Gallardos, the heirs of Margarita's daughter Trinidad.
As proof of ownership, the petitioners offered a Contract to Sell dated August 11, 1979; an Absolute Deed of Sale dated January 23, 1981; a Deed of Absolute Sale dated September 15, 1979; an Extrajudicial Settlement and Sale dated September 22, 1982; and original tax receipts covering 1970 to 1992, some noting "Paid by: Felipe C. Abay." The petitioners built a temporary bamboo fence in 1979 and, in 1982, a concrete fence with a gate around the property, with vendor and respondent Tomas assisting.
The petitioners had been in possession for around 20 years until sometime in May 2000, when workers hired by Spouses Young forcibly entered the property, broke through the gate, and erected posts despite objections. The petitioners then discovered the property had been registered in the name of Spouses Young under Transfer Certificate of Title (TCT) No. 155087, issued on February 18, 2000. They filed an Adverse Claim dated May 25, 2000, with the Register of Deeds in Cebu City.
The Gallardos denied the petitioners' ownership, arguing that most documents pertained to Lot No. 6036-B, distinct from the subject property (Lot No. 7, part of Lot No. 6012-E). They claimed the March 1982 Extrajudicial Settlement and Sale was fabricated. Spouses Young adopted the positions of the Gallardos. The property had been sold to Jacinto S. Young through the 1999 Extrajudicial Settlement and Sale for PHP 350,000.00.
The Issue
The Court addressed whether the petitioners were entitled to the cancellation of title and reconveyance of the subject property, whether the deeds should be reformed to correct the property designation, and whether the action had prescribed.
The Ruling
The Court held that the petitioners instituted their complaint within the prescriptive period and could not be deemed guilty of inordinate delay. TCT No. 155087 was issued on February 18, 2000, and the Complaint was filed on June 19, 2001, barely one year and four months later — within both the four-year prescriptive period on the ground of fraud and the 10-year period on the ground of constructive trust.
The Court recognized the reformation of the Deed of Absolute Sale dated September 15, 1979, the Absolute Deed of Sale dated January 23, 1981, and the Extrajudicial Settlement and Sale dated September 22, 1982, changing the designation of the property from "Lot No. 6036-B" to Lot 7.
In its disposition, the Court ruled: "ACCORDINGLY, the present Petition for Review on Certiorari is GRANTED. The Decision dated May 25, 2022, and the Resolution dated January 23, 2023, of the Court of Appeals in CA-G.R. CV No. 06259 are SET ASIDE." The Court declared the deeds deemed reformed, declared the petitioners the absolute owners of the property covered by TCT No. 155087, ordered the Spouses Young to reconvey it, and directed the Registry of Deeds of Cebu City to cancel TCT No. 155087 and issue a new certificate of title in the name of the petitioners, with the costs of registration to be borne by the petitioners.
By the Numbers
- Complaint filed: June 19, 2001
- TCT No. 155087 issued: February 18, 2000
- Adverse Claim filed: May 25, 2000
- Contract to Sell: August 11, 1979
- Absolute Deed of Sale: January 23, 1981
- Deed of Absolute Sale: September 15, 1979
- Extrajudicial Settlement and Sale: September 22, 1982
- 1999 Extrajudicial Settlement and Sale price: PHP 350,000.00
- Possession disturbed: May 2000, after around 20 years of possession
- CA Decision assailed: May 25, 2022; Resolution: January 23, 2023
The Court's Reasoning
The Court explained that the prescriptive period for an action for reconveyance of real property registered through fraud is four years if directly anchored on fraud, and 10 years if based on implied or constructive trust, reckoned from the date of issuance of the certificate of title, provided the plaintiff is not in possession. It added that an action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in possession, and that an action for reformation of a written contract prescribes in 10 years, counted from the discovery of the mistake or error.
The Court found that the petitioners had been in continuous and actual possession of the subject property since 1982, when they fenced and occupied it following their purchase from Crispin and the Gallardos. Their possession was disturbed only in May 2000, when agents of Spouses Young forcibly entered the premises, and it was around this time that they discovered the misidentification of the lot in the Deeds of Absolute Sale executed in 1979, 1981, and 1982.
Reckoned from their dispossession and discovery of the error, the filing of the Complaint on June 19, 2001 — barely one year thereafter — was well within the applicable prescriptive periods for reconveyance and reformation. The Court noted that the declaration of reformation was self-executory, while the declaration of ownership, the order to reconvey, and the directive to the Registry of Deeds required affirmative acts by third parties or public officers before the judgment could be fully implemented.
Source: Supreme Court Decision, G.R. No. 266298.
This report summarizes a public Supreme Court decision and is not legal advice.