G.R. No. 171531 - Guaranteed Homes, Inc. vs. Heirs of Valdez

Respondents are the heirs of Pablo Pascua, who filed a complaint for reconveyance of a 23.7229-hectare parcel of land in Cabitaugan, Subic, Zambales, covered by Original Certificate of Title (OCT) No. 404 in Pablo Pascua's name.
Alternatively, respondents prayed for damages if reconveyance was not granted.
Guaranteed Homes, Inc. (petitioner) purchased the disputed property from spouses Albino Rodolfo and Fabia Rodolfo.

OCT No. 404 showed annotations indicating prior sales by Pablo Pascua to Alejandria Marquinez and Restituto Morales.
Pablo Pascua died intestate in June 1945, survived by four children, including Cipriano Pascua, Sr.
On February 13, 1967, Cipriano executed an "Extrajudicial Settlement of a Sole Heir and Confirmation of Sales," declaring himself sole heir and confirming prior sales by Pablo, including to spouses Rodolfo.
On February 14, 1967, Transfer Certificate of Title (TCT) No. T-8241 was issued in Cipriano's name but was not signed by the Register of Deeds. On the same day, TCT No. T-8242 was issued in the names of spouses Rodolfo and TCT No. T-8241 was cancelled.
On October 31, 1969, spouses Rodolfo sold the property to petitioner by Deed of Sale with Mortgage. Subsequently, on November 5, 1969, TCT No. T-8242 was cancelled and TCT No. T-10863 was issued in petitioner’s name.

On January 24, 1997, Jorge Pascua, Sr., son of Cipriano, filed a petition for issuance of new duplicate owner’s title for OCT No. 404 before RTC Olongapo City, Branch 75, which was denied.
Respondents filed complaint for reconveyance against petitioner and impleaded heirs of Cipriano, the Register of Deeds, and the National Treasurer (through Office of the Solicitor General).
Petitioner filed a motion to dismiss on grounds of prescription (28 years since issuance of TCT No. T-10863) and that it was an innocent purchaser for value relying on spouses Rodolfo’s clean title.
Heirs of Cipriano denied execution of any document transferring ownership and knowledge of the extrajudicial settlement by Cipriano.
The Register of Deeds and National Treasurer averred that the 6-year prescriptive period to file action against the Assurance Fund had long expired and respondents had no cause of action due to inaction for 28 years.

Doctrine that an action to quiet title prescribes where plaintiff is not in possession.
Ten (10) year prescriptive period for reconveyance of fraudulently registered property counted from issuance of title.
Laches against respondents, finding petitioner an innocent purchaser for value relying on spouses Rodolfo’s title.
Six (6) year prescription for claims against Assurance Fund under P.D. No. 1529 counted from issuance of TCT No. T-10863 in 1969.

Respondents appealed; Court of Appeals reversed RTC and reinstated complaint holding:

Quieting of title action not prescribed; possession sufficiently alleged.
Laches did not apply.
Finding petitioner an innocent purchaser for value contradicted by complaint allegations.

Petitioner filed petition for review before Supreme Court challenging Court of Appeals decision.

Whether the RTC erred in granting petitioner’s motion to dismiss on the basis of prescription and absence of cause of action.
Whether the Court of Appeals erred in reversing the RTC’s dismissal and reinstating respondents’ complaint given the facts and applicable law, including the issue of possession and laches.
Whether petitioner is an innocent purchaser for value entitled to protection under the Torrens system despite alleged flaws in title documents.
Whether respondents’ claim against the Assurance Fund is barred by prescription and statutory exemption from liability.