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G.R. No. 191128 September 12, 2012

FACTS: This case involves two parcels of land in Brgy. Kapihan, San Bernardino, Bulacan, inherited by siblings Lucia and Nicasio

Nicasio sold his entire share to the petitioner Spouses Guizano. Lucia on the other hand sold her share to respondent Reynaldo
Veneracion. Nicasio’s share sold to petitioner was then registered under a TCT in the name of Emmanuel Guizano (petitioner’s son).
Lucia didn’t have any documentary proof of ownership over her share, so respondent’s father hired a geodetic engineer to segregate
the land sold to respondent from the land sold to petitioner.

Petitioner later discovered that Lucia’s share sold to respondent was actually part of the property sold to her by Nicasio. She placed the
word “HOLD” on the subdivision plan signed by the geodetic engineer. Respondent then filed a complaint against petitioner and Lucia,
praying that petitioner reconvey the parcel of land in his favor. In her Answer, petitioner claimed that the complaint was without merit
since the property subject of the sale between respondent and Lucia was part of the property sold to her, which is registered in the
name of her son Emmanuel. Thus, respondent had no cause of action against her.

RTC Malolos dismissed the complaint, observing that Lucia had no evidence to support her ownership of her share – she never had
the property surveyed, never paid real estate taxes, and never declared it for tax purposes. It also found respondent guilty of laches for
filing the action 14 years after Emmanuel Guizano’s title over it was issued, which already attained the status of indefeasibility.

CA reversed the RTC decision and ordered petitioner to convey the property to respondent. It found that petitioner believed the
property sold to respondent belonged to Lucia (see bullet points under Fact #2) and is thus estopped from claiming ownership over the

Petitioner died during the pendency of the case, so her heirs filed a Rule 45 petition before the SC, averring that: Emmanuel’s title had
already attained indefeasibility, thus it is no longer open for review by the CA; Reconveyance is not available to respondents because
of laches; The action should be dismissed because it was directed against petitioner, who is not the real party in interest as she was
not the registered owner of the property (it was Emmanuel, who was not even impleaded).

ISSUE: Whether or not respondent’s complaint should be dismissed for not being filed against the real party-in-interest

RULING: Yes. Both the RTC and the CA grievously erred when they overlooked a basic but fundamental issue that petitioner timely
raised in her Answer – that the complaint states no cause of action against her.

An action for reconveyance is an action available to a person whose property has been wrongfully registered under the Torrens system
in another’s name. While it is a real action, it is an action in personam, for it binds a particular individual only, although it concerns the
right to an intangible thing.

Being an action in personam, any judgment in this action is binding only upon the parties properly impleaded. This is in keeping with
the principle that every action must be prosecuted or defended in the name of the real party-in-interest, i.e., the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit, as embodied in Sec. 2, Rule 3 of the Rules
of Court:

Any decision rendered against a person who is not a real party-in-interest in the case cannot be executed. Hence, a complaint filed
against such a person should be dismissed for failure to state a cause of action.