Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21616 December 11, 1967
GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants,
vs.
LUIS D. CUAYCONG, ET AL., defendants-appellees.
Benito C. Jalandoni and M. S. Gomez for plaintiffs-appellants.
Hilado and Hilado for defendants-appellees.
BENGZON, J.P., J.:
Eduardo Cuaycong, married to Clotilde de Leon, died on June 21,
1936 without issue but with three brothers and a sister surviving him:
Lino, Justo, Meliton and Basilisa. Upon his death, his properties were
distributed to his heirs as he willed except two haciendas in Victorias,
Negros Occidental, devoted to sugar and other crops — the
Haciendas Sta. Cruz and Pusod both known as Hacienda Bacayan.
Hacienda Bacayan is comprised of eight (8) lots — No. 28, covered
by T.C.T. No. T-22130; Nos. 8, 17, 18 & 135, covered by T.C.T. No.
T-22131; Nos. 21, 22, 23, covered by T.C.T. No. 22132 — all of
which are titled in the name of Luis D. Cuaycong, son of Justo
Cuaycong.
Lino Cuaycong died on May 4, 1937 and was survived by his
children Paz, Carolina, Gertrudes, Carmen, Virgilio, Benjamin,
Praxedes and Anastacio. Praxedes Cuaycong, married to Jose
Betia, is already deceased and is survived by her children Jose Jr.,
Jesus, Mildred, Nenita and Nilo, all surnamed Betia. Anastacio
Cuaycong, also deceased, is survived by his children Ester,
Armando, Lourdes, Luis T., Eva and Aida, all surnamed Cuaycong.
Meliton and Basilisa died without any issue.
On October 3, 1961, the surviving children of Lino Cuaycong:
Gertrudes, Carmen, Paz, Carolina, Virgilio; the surviving children of
Anastacio: Ester, Armando, Lourdes, Luis T., Eva and Aida; as well
as Jose, Jr., Jesus, Mildred, Nenita, Nilo, all surnamed Betia,
children of deceased Praxedes Cuaycong Betia, filed as pauper
litigants, a suit against Justo, Luis and Benjamin Cuaycong1 for
conveyance of inheritance and accounting, before the Court of First
Instance of Negros Occidental (Civil Case No. 6314), alleging among
others that:
1. Eduardo Cuaycong had on several occasions, made known to his
brothers and sisters that he and his wife Clotilde de Leon (died in
1940) had an understanding and made arrangements with Luis
Cuaycong and his father Justo Cuaycong, that it was their desire to
divide Haciendas Sta. Cruz and Pusod among his brothers and sister
and his wife Clotilde.
2. With the consent of his wife, Eduardo had asked his brothers and
sister to pay his wife P75,000 (the haciendas were worth P150,000)
and then divide equally the remaining one-half share of Eduardo.
3. The brothers and sister failed to pay the 1/2 share of Clotilde over
the two haciendas which were later acquired by Luis Cuaycong thru
clever strategy, fraud, misrepresentation and in disregard of
Eduardo's wishes by causing the issuance in his name of certificates
of title covering said properties.
4. As the two haciendas were the subject of transactions between
the spouses and Justo and Luis Cuaycong, Eduardo told Justo and
Luis, and the two agreed, to hold in trust what might belong to his
brothers and sister as a result of the arrangements and deliver to
them their share when the proper time comes.
5. That as far back as 1936 Lino demanded from Justo and Luis his
share and especially after Eduardo's and Clotilde's death, the
plaintiffs demanded their shares.
6. That their demands had been refused and in 1960 during the
estate proceedings of Praxedes Escalon, deceased wife of Luis D.
Cuaycong, the latter fraudulently made it appear that the plaintiffs
had nothing to do with the land; that Luis Cuaycong had possessed
the lands since June 21, 1936 from which time he should be made to
account for the plaintiffs' share; and that P1,500 attorney's fees
should be paid in their favor.
Luis D. Cuaycong on October 20, 1961 moved to dismiss the
complaint on the grounds of unenforceability of the claim under the
statute of frauds, no cause of action (Rule 8, Sec. 1 [f] of the Rules of
Court), and bar of causes of action by the statute of limitations (Rule
8, Sec. 1[e]). Subsequently, opposition thereto, answer and reply
were filed; the plaintiffs also sought to have Benjamin Cuaycong
declared in default for his failure to answer.
On December 16, 1961, the Court of First Instance ruled that the
trust alleged, particularly in paragraph 8 of the complaint, refers to an
immovable which under Article 1443 of the Civil Code may not be
proved by parole evidence. Plaintiffs were given 10 days to file an
amended complaint mentioning or alleging therein the written
evidence of the alleged trust, otherwise the case would be
dismissed.
Later, on December 23, 1961, the court decreed that since there was
no amended complaint filed, thus, no enforceable claim, it was
useless to declare Benjamin Cuaycong in default.
Plaintiff thereafter manifested that the claim is based on an implied
trust as shown by paragraph 8 of the complaint. They added that
there being no written instrument of trust, they could not amend the
complaint to include such instrument.
On January 13, 1962, the court dismissed the case for failure to
amend the complaint; it further refused to reconsider its order
denying the motion to declare Benjamin Cuaycong in default, stating
that such a default declaration would be of no purpose.
Failing in their efforts to have the dismissal reconsidered, plaintiffs
appealed to Us. The resolution of the appeal hinges on whether the
trust is express or implied.
Paragraph 8 of the complaint state:
That as the said two haciendas were then the subject of
certain transactions between the spouses Eduardo
Cuaycong and Clotilde de Leon on one hand, and Justo and
Luis D. Cuaycong on the other, Eduardo Cuaycong told his
brother Justo and his nephew, defendant Luis D. Cuaycong,
to hold in trust what might belong to his brothers and sister
as a result of the arrangements and to deliver to them their
shares when the proper time comes, to which Justo and Luis
D. Cuaycong agreed.
The plaintiffs claim that an inplied trust is referred to in the complaint
which, under Article 1457 of the Civil Code, may be proved by parole
evidence.
Our Civil Code defines an express trust as one created by the
intention of the trustor or of the parties, and an implied trust as one
that comes into being by operation of law.2 Express trusts are those
created by the direct and positive acts of the parties, by some writing
or deed or will or by words evidencing an intention to create a trust.
On the other hand, implied trusts are those which, without being
expressed, are deducible from the nature of the transaction by
operation of law as matters of equity, in dependently of the particular
intention of the parties.3 Thus, if the intention to establish a trust is
clear, the trust is express; if the intent to establish a trust is to be
taken from circumstances or other matters indicative of such intent,
then the trust is implied. From these and from the provisions of
paragraph 8 of the complaint itself, We find it clear that the plaintiffs
alleged an express trust over an immovable, especially since it is
alleged that the trustor expressly told the defendants of his intention
to establish the trust. Such a situation definitely falls under Article
1443 of the Civil Code.
Appellants point out that not only paragraph 8 should be considered
but the whole complaint, in which case they argue that an implied
trust should be construed to exist. Article 1453, one of the cases of
implied trust, is also cited: "When property is conveyed to a person in
reliance upon his declared intentions to hold it for or transfer it to
another or the grantor, there is an implied trust in favor of the person
whose benefit is contemplated." Said arguments are untenable, even
considering the whole complaint. The intention of the trustor to
establish the alleged trust may be seen in paragraphs 5 and
6.4 Article 1453 would apply if the person conveying the property did
not expressly state that he was establishing the trust, unlike the case
at bar where he was alleged to have expressed such intent.
Consequently, the lower court did not err in dismissing the complaint.

Besides, even assuming the alleged trust to be an implied one, the

right alleged by plaintiffs Would have already prescribed since
starting in 1936 When the trustor died, plaintiffs had already been
allegedly refused by the aforesaid defendants in their demands over
the land, and the complaint was filed only in 1961 — more than the
10-year period of prescription for the enforcement of such rights
under the trust.lawphil It is settled that the right to enforce an implied
trust in one's favor prescribes in ten (10) years.5 And even under the
Code of Civil Procedure, action to recover real property such as
lands prescribes in ten years (Sec. 40, Act 190).

And for the above reasons, We agree that it was pointless to declare
Benjamin Cuaycong in default, considering that without a written
instrument as evidence of the alleged trust, the case for the plaintiffs
must be dismissed.

WHEREFORE, the order of dismissal of the lower court appealed

from is hereby affirmed, without costs. So ordered.
G.R. No. L-59879 May 13, 1985
PATRICIO SINAON and MARIA, FRANCISCA and JOSE, all
surnamed SINAON, petitioners,
vs.
ANDRES SOROÑGON, ANASTACIA PARREÑO, SOLEDAD
PARREÑO, ANA PARREÑO, MARCELINA, CLARITA, RUFINO
and MANUEL, all surnamed ARELLANO, SIMPLICIO
SOMBLINGO and BRIGIDA SOMBLINGO and COURT OF
APPEALS, respondents.
Neil D. Hechanova for petitioners.
Benjamin P. Sorongon for respondents.
AQUINO, J.:
The issue in this case is whether an action for reconveyance of a
registered five-hectare land, based on implied trust, would lie after
the supposed trustees had held the land for more than forty years.
According to the documentary evidence consisting of public
documents and tax records, Judge (later Justice) Carlos A. Imperial
in a decree dated March 4, 1916 adjudicated to Canuta Soblingo
(Somblingo), a widow, Lot No. 4781 of the Sta. Barbara, Iloilo
cadastre with an area of 5.5 hectares. OCT No. 6178-A was issued
in 1917 to Canuta (Exh. 6 and 7 or B).
In 1923 Canuta sold the lot to the spouses Patricio Sinaon and Julia
Sualibio for P2,000 (Exh. 8). TCT No. 2542 was issued to the Sinaon
spouses (Exh. 9 or C). It is still existing and uncancelled up to this
time, Julia was the granddaughter of Canuta.
The lot was declared for tax purposes in Sinaon's name (Exh. 3).
The Sinaon spouses and their children paid the realty taxes due
thereon (Exh. 1 to 5-C). They have possessed the land as owners
from 1923 up to this time or for more than half a century.
Canuta was one of the five children of Domingo Somblingo, the
alleged original owner of the lot when it was not yet registered. His
other four children were Felipe, Juan, Esteban and Santiago. The
theory of respondents Soroñgon, et al.,which they adopted in
their 1968 second amended complaint (they filed the action in 1964)
is that Canuta and the Sinaons were trustees of the lot and that the
heirs of Domingo's four children are entitled to a 4/5 share thereof.
That theory was sustained by the trial court and the Appellate Court.
The trial court ordered the Sinaons to convey 4/5 of Lot No. 4781 to
respondents Soroñgon, et al. It decreed partition of the lot in five
equal parts. The Sinaons appealed to this Court. The respondents
did not file any brief.
We hold that after the Sinaons had appeared to be the registered
owners of the lot for more than forty years and had possessed it
during that period, their title had become indefeasible and their
possession could not be disturbed. Any pretension as to the
existence of an implied trust should not be countenanced.
The trustors. who created the alleged trust, died a long time ago. An
attempt to prove the trust was made by unreliable oral evidence. The
title and possession of the Sinaons cannot be defeated by oral
evidence which can be easily fabricated and contradicted. The
contradictory oral evidence leaves the court sometimes bothered and
bewildered.
There was no express trust in this case. Express trusts concerning
real property cannot be proven by parol evidence (Art. 1443, Civil
Code). An implied trust "cannot be established, contrary to the
recitals of a Torrens title, upon vague and inconclusive proof"
(Suarez vs. Tirambulo, 59 Phil. 303; Salao vs. Salao, L-26699,
March 16,1976, 70 SCRA 65, 83).
Even assuming that there was an implied trust, plaintiffs' action was
clearly barred by prescription (Salao vs. Salao,supra, p. 84).
Prescription is rightly regarded as a statute of repose whose object is
to suppress fraudulent and stale claims from springing up at great
distances of time and surprising the parties or their representatives
when the facts have become obscure from the lapse of time or the
defective memory or death or removal of witnesses (53 C.J.S. 903).
See Teves Vda. de Bacong vs. Teves and CA, G.R. No. 50143,
October 24, 1983, 125 SCRA 137; Ramos vs. Ramos, L-19872,
December 3, 1974, 61 SCRA 284; Gallanosa vs. Arcangel, L-29300,
June 21, 1978, 83 SCRA 676 and Sinco vs. Longa 51 Phil. 507.

It was not necessary for the Sinaons to plead prescription as a

defense because there is no dispute as to the dates. There was no
factual issue as to prescription (Chua Lamko vs. Dioso, 97 Phil. 821,
824; Ferrer vs. Ericta, L-41767, August 23, 1978, 84 SCRA 705).

At any rate, the Sinaons invoked in the lower court the ruling laid
down in Gerona vs. De Guzman, 120 Phil. 149, 153 that an action for
reconveyance of realty, based upon a constructive or implied trust
resulting from fraud, may be barred by prescription. The prescriptive
period is reckoned from the issuance of the title which operates as a
constructive notice (Diaz vs. Gorricho and Aguado, 103 Phil. 261,
266-267; J.M. Tuason & Co., Inc. vs. Magdangal, 114 Phil. 42, 46-
47; Lopez vs. Gonzaga, 119 Phil. 424, 437).

The supposed trust in this case, which is neither an express nor a

resulting trust, is a constructive trust arising by operation of law (Art.
1456, Civil Code). It is not a trust in the technical sense (Gayondato
vs. Treasurer of the P.I., 49 Phil. 244). *

WHEREFORE, the judgment of the Court of Appeals is reversed and

the complaint is dismissed. The receivership is terminated. The
receiver is directed to wind up his accounts. No costs.

SO ORDERED.
G.R. Nos. L-20787-8 June 29, 1965
J. ANTONIO ARANETA, plaintiff-appellee,
vs.
ANTONIO PEREZ, defendant-appellant.
Araneta, Mendoza and Papa for plaintiff-appellee.
Alfonso Felix, Jr. for defendant-appellant.
BAUTISTA ANGELO, J.:
On June 16, 1961, Antonio M. Perez executed a promissory note
wherein he agreed to pay J. Antonio Araneta, or order, the sum of
P3,700.00 119 days from said date, or on October 13, 1961, and if it
is not paid on the date of maturity, to pay interest at 9% per annum
on the amount of the loan, and P370.00 as attorney's fees in addition
to costs and other disbursements taxable under the Rules of Court.
The note having become due and Antonio M. Perez having failed to
pay it despite demand made upon him to do so, Araneta filed on
October 31, 1961 a complaint in the Municipal Court of Manila to
collect its import under the terms therein stipulated (Civil Case No.
92265).
In his answer, defendant Perez admitted the execution of the
promissory note as well as his failure to pay it despite its maturity
and demand, but he averred certain allegations that were irrelevant
to the complaint. Thus, Perez alleged that the proceeds of the note
were applied by him to the payment of the medical treatment of his
minor daughter Angela Perez y Tuason, who is the beneficiary of the
trust then administered by Araneta as trustee in Special Proceeding
No. Q-73 of the Court of First Instance of Quezon City, and that the
trust estate is bound to pay the expenses of said treatment because
they were for the benefit of said minor and so the personal fund he
borrowed from Araneta and for which he executed the aforesaid
promissory note should be paid by Araneta in the manner above-
stated. In the same answer, Perez set up a counterclaim demanding
several amounts by way of moral damages, exemplary damages,
and attorney's fees.
On motion for judgment on the pleadings filed by Araneta, and
without any opposition on the part of defendant Perez, the municipal
court rendered a decision on April 1962 ordering Perez to pay the
amounts prayed for in the complaint and dismissing his counterclaim
for damages. His motion for reconsideration having been denied,
Perez appealed to the court a quo where the appeal was docketed
as Civil Case No. 50707 and where he filed practically the same
answer he filed in the municipal court.
In the meantime, or on February 8, 1962, Perez filed a complaint in
the Municipal Court of Manila against Araneta in his capacity as
trustee of the minor child Angela Perez y Tuason in Special
Proceeding No. Q-73 of the Court of First Instance of Quezon City
wherein, making reference to Civil Case No. 92265 filed against him
by Araneta, he repeated the same allegations contained in the
answer he interposed to the complaint of Araneta and prayed that
Araneta as trustee be required to pay Perez the amount of
P3,700.00 advanced by the latter in order to meet the obligation of
the trust estate. And on the basis of a motion to dismiss filed by
Araneta as trustee, and over the opposition of Perez, the municipal
court dismissed the latter's complaint. His motion for reconsideration
having been denied, Perez appealed to the court a quo were his
case was docketed as Civil Case No. 50706 and where he filed an
amended complaint against Araneta.
Considering that the two cases involved the same parties and the
same promissory note, they were ordered consolidated. And on
September 7, 1962, the court a quo issued a joint order wherein it
affirmed the judgment on the pleadings rendered by the municipal
court in Civil Case No. 50707, while it affirmed the order of dismissal
that was likewise issued by the same court in Civil Case No. 50706.
His motion for reconsideration filed in the two consolidated cases
having been denied, Perez interposed the present joint appeal.
Appellant contends that (1) the court a quo erred in finding Antonio
Perez indebted to Antonio Araneta in the sum of P3,700.00 requiring
him to pay said amount to Araneta with interest at the rate of 9% per
annum from October 13, 1961 until its full payment, plus P370.00 as
attorney's fees, and in failing to find that the true debtor was the trust
estate of the children of Angela I. Tuason; and (2) assuming that the
court a quo correctly ruled in requiring Antonio Perez to pay the
above amount to Antonio Araneta, nevertheless, the court a
quo erred in failing to require Araneta in his capacity as trustee of the
aforesaid children to reimburse Antonio Perez that amount upon
proof by the latter of the payment made by him of said amount.
1. The promissory note signed by appellant clearly states that he
agreed to pay Araneta or order the sum of P3,700.00 on October 13,
1961 and if the same is not paid on said date to pay 9% interest
thereon per annum until fully paid, plus the sum of P370.00 as
attorney's fees, in addition to the costs and other disbursements
taxable under the Rules of Court. Under these terms it is clear that
appellant bound himself to pay personally said promissory note
which he cannot shift to another without the consent of the payee.
Such is the undertaking of the maker. Indeed, Section 60 of the
Negotiable Instrument, Law provides that "the maker of a negotiable
instrument by making it engages that he will pay it according to its
tenor and admits the existence of the payee and his then capacity to
indorse so that appellant cannot now escape liability as maker by
alleging that he spent the money for the medical treatment of his
daughter since it is not the payee's concern to know how said
proceeds should be spent. That is the sole concern of the maker.
Payee's interest is merely to see that the note be paid according to
its terms.
Neither can appellant escape liability by resorting to the expedient
that appellee, by moving for judgment on the pleadings, is deemed to
have admitted the material allegations of his answer in Civil Case
No. 50707, for the reason that said allegations are irrelevant and
have no bearing whatsoever on appellant's personal liability. In this
connection, it is meet to recall that appellant, after admitting the
execution of the promissory note and his failure to pay it despite
demand thereof, made averments which in substance had the effect
of a recoupment of what he had spent against any share in the trust
fund that may come to the minor for whose benefit he claims to have
spent the money.
Thus, he made the following affirmative defenses: That Dña. Angela
Tuason died in 1948 leaving estate worth five million pesos 2/9 of
which she left in trust for the benefit of the children of said Angela
Tuason under the administration of appellee Araneta; that the will
was prepared by Araneta; that the estate is now worth one million
pesos and despite thereof Araneta professed inability to pay the
allowance of P18,000.00 a year due the beneficiaries; that Araneta
sold some income — producing properties of the trust and
speculated with trust funds in the stock market; that appellant had to
advance certain expenses for the minors and secure for them
properties worth at least a quarter of a million pesos; that the two
beneficiaries are for unknown reasons short of funds so, that the
appellant had to borrow the sum of P3,700.00 for the medical
treatment of minor Angela Perez y Tuason; that appellant asked the
trustee to advance said amount with the concurrence of the
beneficiaries but the trustee refused though he offered to lend the
money out of his own pocket, and so appellant executed the
promissory note in question.
It is clear that insofar as the personal liability of appellant Perez on
the promissory note is concerned, which he admittedly executed for
value in favor of appellee Araneta, all the above recited allegations
are irrelevant and immaterial and cannot tender any issue that will
affect his personal liability under the note. And this is so because the
allegation regarding the existence of the trust and its
mismanagement on the part of appellee Araneta as trustee, certainly,
has nothing to do with the money lent by him to appellant. Neither
has the allegation that the proceeds of the note were spent by
appellant for the medical treatment of minor Angela anything to do
with his personal obligation because the destination of the proceeds
of said note is certainly not the concern of Araneta. We are,
therefore, of the opinion that the court a quo did not err in rendering
judgment on the pleadings in the light of what is averred in appellee's
complaint.
2. But even assuming for the sake of argument that what is claimed
by appellant as to how he spent the proceeds of the notes is true,
that will not exempt him from his liability to Araneta but would merely
give him some basis to claim for recoupment against the share of the
trust fund belonging to the benefited minor if it is properly shown that
there is fund coming to said minor. Here, no such showing was
made. Moreover, the trust herein created merely provides for delivery
to the beneficiaries of the share that may correspond to them in the
net income of the trust fund, but does not impose upon the trustee interest thereon per annum from October 13, 1961 until payment and
the duty to pay any obligation or expenses that may be needed by of the sum of P370.00 as attorney's fees.
said beneficiaries.
We hold that appellant's claim is not justified considering that
Appellant has cited several authorities to support his stand that the appellee was forced to file the present suit in view of appellant's
medical expenses in question which were made for the sake of the refusal to honor the note under consideration. The request,
beneficiary should be borne by the trust fund, but from an therefore, for dismissal has no legal basis.
examination thereof one may see that they require that beneficiary
be insolvent in order that the trust estate may be obliged to shoulder WHEREFORE, with the modification that the payment of interest on
the expenses. 1Here the beneficiary is not in that situation for, as the note should start from the date of extrajudicial demand, or
appellant himself has admitted, said beneficiary has properties that October 18, 1961, we hereby affirm the order appealed from in all
are worth at least a quarter of a million pesos which are under the other respects, without pronouncement as to costs.
Guardianship Court of Manila. There is, therefore, no room for the
application of the ruling laid down in the cited authorities. Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala,
Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
The other authorities cited by appellant to bolster his claim are also Barrera, J., is on leave.
inapplicable for they sanction the applications of the trust fund to
medical or other expenses of the beneficiaries only when there is
absolute necessity therefor, or when they themselves are unable to
provide for those expenses. As already stated, the beneficiaries here
are well off or have enough to provide for their necessities if only
their guardian should take steps to attend to them as required by the
circumstances. But instead of doing so, appellant insists on having
appellee recoup with trust money what he had allegedly spent for his
daughter's benefit thus giving rise to the present dual litigation.

We take note of the written manifestation or "constancia" submitted

to this Court by appellant dated August 22, 1963 in his capacity as
judicial guardian of the beneficiaries herein, as well as of supplement
thereof made on September 20, 1963, inviting attention of this Court
to an order issued by the Juvenile and Domestic Relations Court
authorizing appellant as such guardian to assign the amount of
P3,700.00 to appellee herein for the purpose of reimbursing him for
the amount he had advanced and which is the subject of the
promissory note for which reason appellant now claims that this case
is now moot and should be dismissed. But to such manifestation
appellee has filed a rejoinder dated September 2, 1963 stating that
the request for dismissal is untenable since the order appealed from
calls not only for the payment of the sum of P3,700.00 but of 9%
G.R. No. L-12111 January 31, 1959
AGATONA GERONIMO and INOCENCIO ISIDORO, plaintiffs-
appellants,
vs.
JOSE NAVA and FELISA AQUINO, defendants-appellees.
Luis Manalang and Associates for appellants.
Jose Nava, A. C. Bagasao, Ananias C. Ona and Constancio S. Vitug
for appellees.
MONTEMAYOR, J.:
Plaintiff spouses Agatona Geronimo and Isidro Inocencio are
appealing directly to this Tribunal from the order of the Court of First
Instance of Nueva Ecija, dated October 29, 1956, dismissing their
complaint on motion of defendant Jose Nava and his co-defendants,
his children by his deceased wife, Felisa Aquino, on the ground
of res adjudicata.
The following facts are not disputed. On October 19, 1935, Jose
Nava and his wife, Felisa Aquino, were owners of our lots, Nos.
2820, 2821, 2819 and 1729 of the Cabanatuan Cadastre, forming a
single mass, with a total area of 3,549 square meters, with a house
of strong materials erected thereon, with a total assessed value of
P8,820.00. On that date, they mortgaged said four lots to La Urbana,
presumably a building and loan association, to secure the payment
of a loan of P3,047.76. For failure to live up to the terms of the
mortgage, the latter was foreclosed by La Urbana, pursuant to Act
3135, and on March 9, 1939, the said property was sold to La
Urbana for the sum of P3,786.26. On April 26, 1938, La Urbana
transferred and assigned all its rights and interest in the said property
to Agatona Geronimo, plaintiff in the present case, for the sum of
P6,000.00, subject, however, to the right of redemption of Nava and
his wife Felisa. Agatona paid P600.00 on account of the purchase
price and to secure the payment of the balance of P5,400.00,
mortgaged the same lots to la Urbana, which duly notified Nava and
his wife of the assignment or transfer. Immediately after buying the
lots from the Sheriff in March, 1938, La Urbana took possession of
the same and collected the rentals thereon at the rate of P30.00 a
month. In May, 1938 shortly after purchasing the same lots from La
Urbana, Agatona also took possession of the property and collected
P62.50 representing the May and June rentals, and since July of the
same year, she had been collecting the rentals at the rate of P35.00
a month.
Within the one year period of redemption Nava tried to redeem the
property, going to La Urbana and offering to pay the amount of
redemption, and when the latter refused to accept the offer,
disclaiming any interest in the property because it had already
transferred the same to Agatona, Nava wrote to Agatona, making the
same offer to redeem after liquidation of the account consisting of
rentals so far received by her. He even offered to meet her at the
office of the Clerk of Court and waited for her there all day on the last
day of the redemption period, and when she failed to appear, he
bought a cashier's check at the Philippine National Bank in the
amount of P3,470.00 and deposited the sum in the Philippine
National Bank branch in Cabanatuan in her name. On the same day,
he filed Civil Case No. 8071 of the Court of First Instance of Nueva
Ecija against Agatona and Inocencio to compel them to permit him to
redeem the property after rendering an account of the rentals
received by them and to pay damages. On filing the case, Nava filed
with the Register of Deeds of Nueva Ecija a notice of lis pendens in
accordance with the provisions of Section 24, Rule 7, of the Rules of
Court, and said notice was noted on the corresponding certificates of
title, covering the four lots. When Agatona and her husband bought
the same lots from La Urbana, transfer certificates of title for the four
lots were issued to her, on which certificates were also noted the
notice of lis pendens and other annotations which appeared in the
former certificates of title which were cancelled. In that case, La
Urbana was impleaded upon petition of Agatona and her husband.
After hearing, the trial court found that Nava and his wife had
substantially complied with the provisions regarding redemption; that
they had made not only a valid offer to redeem, but they actually
made a valid tender of payment of the redemption price, and
rendered judgment as follows:
Accordingly, the Court hereby renders judgment in favor of
the plaintiffs and against the defendants, ordering the latter
 to execute in favor of the former a valid and registerable
deed to resale of the property in question within 15 days
from the date this judgement becomes final. The redemption
price shall be determined as follows: To the auction price of
P3,786.29, there shall be added the interest thereon for one
year at the rate of 12%. To said sum and interest, there shall
also be added any amount paid either by the defendants for
any assessments or taxes or insurance after the auction,
plus the interest thereon at the same rate, computed from
date of such payment to March 9, 1939. From such total
sum, there shall be deducted the rents received by the
defendants at the rate of P30.00 a month from the months of
March, April and May, 1938, P32.50 for the month of June
and P35.00 monthly from July to March 9, 1939. The
resulting difference represents the redemption price as of
March 9, 1939, the last date of the one-year period of
redemption. In view, however, of the fact that the defendants
have turned down the offer of the plaintiffs to redeem the
property made within the period of redemption and in view
further of the fact that the Court has found the plaintiffs
entitled to redeem, the defendants are hereby adjudged
possessors of the property in bad faith from the date of the
filing of this complaint (Enage vs. Escaño, 38 Phil., 665,
666.) Therefore, the total rentals received by the defendants
as the rate of P35.00 monthly from March 9, 1939, until the
reconveyance is effected and the restoration of the actual
possession to the plaintiffs, should be paid by the defendants
to said plaintiffs together with legal interest thereon from
March 9, 1939, less, however, such sums as defendants
might have paid after March 9, 1939, for taxes and
insurance. The defendants shall also pay the costs of this
suit.
On appeal to the Court of Appeals by Agatona and her husband, the
appealed judgment was affirmed by the Court of Appeals in a
decision dated November 21, 1942. On December 8, 1942, the
decision of the Court of Appeals became final and executory, and ten
days thereafter, the records of the case were returned to the trial
court.
On March 15, 1943, Nava and his wife asked for the issuance of a
writ of execution of the decision and the trial court, on March 24,
1943, ordered the clerk of court to issue the corresponding writ of
execution.
In their appeal, Agatona and her husband made the following
assignment of errors:
I. The lower court erred in dismissing the complaint on the
ground of res judicata.
II. The lower court erred in not holding that the present action
is premised on a different cause of action and that new facts
like the withdrawal of the redemption money after the
decision had become final, failure to register the decision
and so cancel TCTs in the name of Agatona Geronimo and
cause issuance of new ones in Nava's name and/or to
request issuance of writ of execution, etc., may be presented
and proven and are not barred by the first case.
III. The lower court likewise erred in not holding that the
judgment rendered in civil case No. 8071 as confirmed by
the decision of the Court of Appeals promulgated on
November 21, 1942, is expired, and cannot constitute a bar
to present action for it is itself barred by prescription and by
laches after almost 15 years for defendant's failure (1) to
execute the judgment, (2) to register the decision in the
office of the Register of Deeds of Nueva Ecija, (3) to cancel
the certificates of title in the name of plaintiff Agatona
Geronimo, (4) to cause the issuance of new ones in the
name of Jose Nava; and that the registration of titles since
1938 in Agatona Geronimo's name created an indefeasible
title on her.
IV. The lower court also erred in not holding that defendant's
withdrawal of the redemption money deposited in the
Cabanatuan Branch of the Philippine National Bank for
consignment is a waiver of defendants' right to redeem the
properties involved and a loss of any right to said properties
 — defendants cannot have both the money and the
properties.
V. The lower court also erred in not holding the propriety of
cancelling the annotations of lis pendens of Civil Case No.
8071 and of the mortgage by Agatona Geronimo in favor of
La Urbana on the back of Torrens Titles Nos. 14699, 14760,
14701 and 14702 issued on the name of Agatona Geronimo;
and that the registered interests therein, whether vested,
contingent, expectant or inchoate, of all parties concerned,
have already ceased or terminated as any action that may
arise therefrom is already barred by prescription and the
aforesaid decision in former case (8071) has already ceased
or lost its force and effect, thereby creating a situation as if
there never have been any decision or annotation.
VI. The lower court likewise erred in not holding that debt
moratorium does not apply to the enforcement of the
decision in case 8071 which is, in the main ordering the
execution by the defendants of a registerable deed of
repurchase and that the same is a matter of defense by
defendants Agatona Geronimo, et al., and it must be set by
defendants and not by the plaintiffs, the Navas, and
granting arguendo, debt moratorium applies to the case at
bar, still more than ten years have already elapsed after
deducting the duration of debt moratorium as decided by the
Honorable Supreme Court in one case.
VII. The lower court finally erred in denying plaintiffs' motions
for reconsideration dated December 28, 1956 and January
19, 1957.
As already stated, the appealed order of dismissal in the present
case is based on the proposition that the decision of the trial court
affirmed by the Court of Appeals in Civil Case No. 8071 was a bar to
the present action, for the reason that a final judgment rendered by a
court of competent jurisdiction on the merits is conclusive as to the
rights of the parties, and that as to them, it constitutes a bar to
subsequent actions involving the same claim, demand and cause of
action, provided that there was between the two cases, identity of
parties, of subject matter and cause of action (30 Am. Jur. 914; I
Moran p. 612, 1957 ed.)
In the present case, the parties are the same as those in Civil Case
No. 8071, except that after the death of Nava's wife, Felisa Aquino,
her children by Nava were substituted as co-defendants. The subject
mater is the same in both cases, namely, the four lots in litigation.
However, appellants Agatona and Inocencio dispute the identity of
the cause of action because in Civil Case No. 8071, what was sought
and decided therein was the right of Nava and his wife to redeem the
property in question, whereas, in the present case, the complaint of
plaintiffs Agatona and Isidoro seeks the cancellation of the
annotations specially of the notice of lis pendens on their transfer
certificates of title, and that of the mortgage for the sum of
P4,900.00, executed by Agatona in favor of Banco Hipoticario de
Filipinas, the reason given being that the registered interest involving
said annotations had already ceased, and that any action they may
arise therefrom was already barred by prescription. Technically, the
cause of action in the present case and in Civil Case No. 8071 may
differ. But in substance, they are the same.
Plaintiff herein maintain that they are still the owners of the four lots
in question and have the right to continue as such; that the
annotation of lis pendens as regards the institution of Civil Case No.
8071 may be cancelled, for the reason that the judgment in said case
in favor of Nava et al. can no longer be enforced because of the
passage of time, namely, prescription. It will be recalled, however,
that in Civil Case No. 8071, the Court of First Instance of Nueva Ecija
found and held that Nava and his wife had the right to redeem the
property, and it ordered that Agatona and her husband execute the
necessary registerable titles to the four lots in favor of Nava and wife,
upon the payment of the price to be ascertained after liquidation. The
judgment may not have been executed totally, but the defendants
herein maintain and evidently with reason, that it was at least
partially executed, for the reason that as stated in the motion to
dismiss, after Nava and his wife had asked for the execution of the
judgment rendered in Civil Case No. 8071, that is, in July 1944,
provincial auditor Francisco Alejo, who was occupying the house
erected on the four lots in question, began paying the house rent to
Nava, stating that Agatona had refused to accept said rentals, for the
reason that she lost in Civil Case No. 8071, and that when Mr. Alejo
vacated the house in May 1945, Nava took possession of the whole
property and has continued in possession up to the date of filing the
motion for dismissal on October 24, 1956. In other words, by virtue of
the decision in Civil Case No. 8071, herein defendants Nava et al.,
not only were restored to the possession of the property in question
since 1945, but had been receiving the rentals of the house on said
property since 1944. The only thing lacking is the formal execution of
the deed of transfer or the sale by Agatona and her husband to
herein defendants.
In the present case, we are inclined to brush aside technicalities
when they stand in the way of administering justice and giving to
parties in litigation their due, specially in case of redemption.
Moreover, the equities in the case are on the side of the defendants-
appellees herein. The four lots in question at the time that they were
mortgaged to Nava and his wife to La Urbana were assessed in the
amount of P8,820 and the Court may take judicial notice of the fact
that the assessed value oftentimes is but a fraction of the real value
of the property assessed. At the present time, or rather, when the
present action was instituted in 1956, the property in question,
according to plaintiffs themselves because of the natural tendency of
real estate to increase in value, are assessed at P13,350.00 and
must be worth more than that; and yet, that same property was
originally mortgaged with La Urbana by Nava and his wife for all
P3,047.76 and was sold at auction sale to La Urbana for P3,376.29,
so that the redemption price cannot be much more than that,
considering that from the same shall be deducted the rentals
received by Agatona and her husband at the rate of P30.00 a month
from March 1938 until the defendants herein began receiving said
rentals some time in July, 1944.
Moreover, there is another aspect of this case which is not only
important, but also decisive. Considering the circumstances
surrounding this case, as well as that of Civil Case No. 8071, we find
that when Agatona evidently acquiescing in the final decision in Civil
Case No. 8071, not only allowed but even directed the tenant of the
house on the property to pay his rentals to Nava, instead of to
herself; and when in 1945, she allowed Nava to occupy the house
when the tenant disoccuppied it, and to take possession of the whole
property, her acts should be construed as a recognition of the fact
that the property, though still in her name, was to be held in trust for
Nava, to be conveyed to him on payment of the repurchase price.
Such trust is an express one, not subject to prescription. We may
also hold that when the trial court in that Civil Case No. 8071
declared in a decision that had become final and executory, that
Nava et al. had the right to redeem the property, and ordered
Agatona et al. to make the resale, there was created what may be
regarded as a constructive trust, in the sense that although Agatona
and her husband had the naked title to the property by reason of the
certificates of title issued in their names, and which they retained,
nevertheless, they were to hold such property in trust for Nava et al.
to redeem, subject to the payment of redemption price. Of course, it
might be contended that in the latter instance of a constructive trust,
prescription may apply where the trustee asserts a right adverse to
that of the cestui que trust, such as, asserting and exercising acts of
ownership over a property being held in trust. But even under this
theory, such a claim of prescription would not prosper in the present
case. As already stated, since 1944, after the decision in Civil Case
No. 8071 became final and executory, Agatona evidently acquiesced
in the decision against her, so much so that thereafter, as already
stated, she suggested that the tenant of the house pay his rentals to
Nava instead of to her, meaning that Nava had a right to said rentals.
No only this, but since May, 1945, when the tenant left the house,
Nava took possession thereof as well as the land on which it was
built, and has been occupying the same up to the present time,
exercising acts of ownership over the same, and Agatona evidently,
all along, showing confirmity. It was only on September 30, 1956 that
she and her husband filed the present case to cancel the notice of lis
pendens of Civil Case No. 8071, including naturally, the decision in
said case against them, and to recover the possession of the
property. If such acts on her part as trustee can be considered as an
assertion of the right of ownership against Nava, the cestui que trust,
over the property, then the prescription invoked by her, assuming it
to be available, falls far short of the period required by law to
established title by prescription. Agatona did not even have the
possession of the property in order to exercise acts of ownership
over the same.
In conclusion, we find that the order of dismissal appealed order,
sustained. But if we merely affirmed the appealed order, the parties
would be in the same situation they were before the present action
was initiated, consequently, for the benefit of the parties, and in the
interest of justice we hereby order both parties plaintiff and defendant
to comply with terms of the decision of the trial court in Civil Case
No. 8071. The trial court is directed to see to it that this is done within
a reasonable time. No costs.