Guadalupe S. Reyes v. Court of Appeals

Summary

This case involves a property dispute where petitioner Guadalupe Reyes claimed that her second sale of property to respondent Juanita Raymundo was simulated. Reyes sold half of her lot to Raymundo in 1967, then the remaining half in 1969. Reyes alleged the second sale was merely to enable Raymundo to secure a GSIS loan for apartment construction, with an understanding that the property would be reconveyed if the loan failed. When the loan was disapproved, Raymundo refused reconveyance. The Supreme Court found the second deed of sale was indeed simulated, noting that Reyes continued collecting rentals from lessees for 17 years after the purported sale, and Raymundo only asserted ownership in 1987. The Court applied the principle that an action for reconveyance does not prescribe when the plaintiff remains in actual possession, and that actions for declaration of inexistence of contracts are imprescriptible. The decision reinforced that the Torrens system cannot validate fraudulent or simulated transactions and that continued possession by the alleged vendor strongly indicates simulation.