G.R. No. 127608 - Reyes vs. Court of Appeals

On June 21, 1967, petitioner Guadalupe S. Reyes sold one-half (1/2) of a 300-square meter lot at No. 4-F Calderon St., Project 4, Quezon City (Lot 8-B), to respondent Juanita L. Raymundo for ₱10,000.00.
A new title, TCT No. 119205, was issued in the names of Guadalupe S. Reyes and Juanita L. Raymundo for equal shares.
Respondent obtained a ₱17,000.00 loan from the Government Service Insurance System (GSIS) using her one-half share as collateral.
On September 24, 1969, petitioner sold her remaining share to respondent for ₱15,000.00 as evidenced by a deed of absolute sale; TCT No. 149036 was issued to respondent in lieu of TCT No. 119205.

Since 1967, the spouses Mario and Zenaida Palacios leased the house on the subject property from petitioner.
In December 1984, petitioner allegedly refused to receive rentals, prompting the Palacios spouses to file a petition for consignation on March 13, 1985, before the Metropolitan Trial Court (MTC) of Quezon City.
A compromise agreement was reached obliging the Palacios spouses to pay accrued rentals to petitioner and extend the lease until November 24, 1986. The MTC approved the agreement on May 28, 1985.
The Palacios spouses were ejected but later returned; a contempt case filed by petitioner was dismissed on August 12, 1987, after respondent intervened asserting ownership and produced a lease contract dated March 17, 1987, retroactive to January 1, 1987.
Since then, the Palacios spouses paid rentals to respondent.

Petitioner filed a complaint on August 23, 1987, in the Regional Trial Court (RTC), Quezon City, to cancel TCT No. 149036 and for reconveyance with damages.
Petitioner alleged the 1969 sale was simulated, executed under constraint and without material consideration, pursuant to an agreement for respondent to secure a GSIS loan to construct an apartment on the property using the entire 300 sqm as collateral; if the loan failed, respondent would reconvey the property.
A private agreement dated January 10, 1970, embodied this true intention.
The trial court found the second deed of sale simulated as petitioner continued exercising ownership by collecting rentals until December 1986.
The court ruled that the sale was constrained and void, ordered cancellation of TCT No. 149036 and reconveyance to petitioner, and awarded damages and attorney’s fees.

The Court of Appeals reversed the trial court, ruling the notarized deed of sale prevailed over the private agreement.
It held the complaint was barred by prescription, either as an action to recover title from 1969 or based on a contract from 1970.
The court also found petitioner's claim barred by laches due to respondent’s 18 years of possession.
The Court of Appeals dismissed petitioner’s complaint and denied reconsideration.

Petitioner argued the cause of action accrued only in 1987, when respondent asserted ownership, making the complaint timely.
She maintained the January 10, 1970 agreement reflected the real intention and was superior to the deed of sale.

Whether the second deed of sale dated September 24, 1969, was simulated and void.
Whether petitioner’s action for cancellation of the deed and reconveyance has prescribed.
Whether petitioner’s claim is barred by laches due to respondent’s long possession.
Whether the private agreement dated January 10, 1970, prevails over the notarized deed of sale.