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In 1991, Mercedes Gatmaytan purchased a parcel of land located in Misibis, Albay from Oscar Garcia. Gatmaytan tried to register the Deed of Absolute Sale but was not able to cause the transfer of the Torrens title in their name since she lacked the Department of Agrarian Reform (DAR) clearance necessary to do so. Gatmaytan then annotated his claim to Garcia’s title.
In 1996, unknown to Gatmaytan, Garcia sold the same property to DAA Realty. DAA was able to register the property under its name.
In 2005, DAA sold the property to Misibis Land, Inc. (MLI). MLI was able to register the property under its name.
In 2010, Gatmaytan discovered what Garcia did. In 2014, Gatmaytan then sued Garcia, DAA, and MLI. MLI argued that Gatmaytan’s cause of action cause of action is already barred by prescription since an action for reconveyance of real property based on an implied constructive trust arising from fraud prescribes ten (10) years after the issuance of title in favor of the defrauder. MLI stressed that the Complaint was filed in 2014, or more than ten (10) years after the issuance of DAA Realty’s Torrens title in 1996. Gatmaytan’s suit was dismissed. He filed a petition for review before the Supreme Court which was first denied. Undaunted, Gatmaytan moved that this case be decided by the Supreme Court En Banc. The Supreme Court eventually granted Gatmaytan’s motion and went on to discuss the merits of his case.
ISSUE: What is/are the causes of action of Gatmaytan?
HELD: Gatmaytan may file the following:
1. An action for reconveyance based on Section 53, paragraph 3 of Presidential Decree (PD) No. 1529 and Article 1456 of the Civil Code.
Section 53, paragraph 3 of Presidential Decree (PD) No. 1529 reads:
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder for value of a certificate of title.
Article 1456 of the Civil Code reads:
If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.
Prescriptive period: In this case: IMPRESCRIPTIBLE because there was fraud when Garcia sold the property a second time to DAA. Gatmaytan’s cause of action is characterized primarily as one for reconveyance based on a void contract, and thus, imprescriptible.
But the broader rule on prescription for cases for reconveyance under the foregoing laws are as follows:
The prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the certificate of title. This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land. An exception to this rule is when the party seeking reconveyance based on implied or constructive trust is in actual, continuous and peaceful possession of the property involved. Prescription does not commence to run against him because the action would be in the nature of a suit for quieting of title, an action that is imprescriptible.
An action for reconveyance may also be based on a void contract. When the action for reconveyance is based on a void contract, as when there was no consent on the part of the alleged vendor, the action is imprescriptible.
NOTE: Even assuming that the ten year prescriptive period is applicable in Gatmaytan’s case, his action has not yet prescribed because the counting of the ten-year period begins from the discovery of the fraud or in 2010 (he filed the case in 2014) and not from the year of registration (constructive notice) which was 1996.
2. Reconveyance based on the law on sales. The sale between Garcia and DAA and the subsequent sale between DAA and MLI are void in view of the first valid sale between Garcia and Gatmaytan. This is also imprescriptible.
3. Quieting of Title
Under Article 476 of the Civil Code, an action for quieting of title may be filed “[w]henever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title.” As a general rule, an action for quieting of title, being a real action, prescribes thirty (30) years after accrual. However, by way of exception, an action to quiet title involving property in the possession of the plaintiff is imprescriptible. If this is the cause of action to be sought by Gatmaytan, the thirty-year prescriptive period applies since he is not the possessor of the land. The prescriptive period shall be reckoned from 1996. Gatmaytan has until 2026 to file an action for quieting of title.