Republic of the Philippines was appointed administrator.

The estate was administered for more than

SUPREME COURT six years (Exh. F, G, H, I and J).
Manila
A project of partition dated April 25, 1913 was submitted. It was signed by
SECOND DIVISION the three legitimate children, Jose, Agustin and Granada; by the two
natural children, Atanacia and Timoteo, and by Timoteo Zayco in
representation of the other five natural children who were minors. It was
sworn to before the justice of the peace (Exh. 3).
G.R. No. L-19872 December 3, 1974
In the project of partition the conjugal hereditary estate was appraised at
EMILIANO B. RAMOS, ET AL., plaintiffs-appellants, P74,984.93. It consisted of eighteen parcels of land, some head of cattle
vs. and the advances to the legitimate children(Exh. 3).
GREGORIA T. RAMOS, ET AL., defendants-appellants.
Under that project of partition, the following adjudications were made to
Humberto V. Quisumbing and Maximino M. San Diego for plaintiffs- the heirs:
appellants.
Legitimate children: Value
Hilado and Hilado for defendants-appellants.
1. To Jose Ramos: (a) Hacienda Calaza
with an area of 328 hectares,
(b) a one-hectare town lot, (c) a
23-hectare lot in Sitio Bingig, and
AQUINO, J.:p
(d) some head of cattle P25,291.66
The parties appealed from the decision of the Court of First Instance of
2. To Granada Ramos: (a) a
Negros Occidental, dismissing plaintiffs' complaint and holding that the
parcel of riceland with a capacity
intestate estate of Martin Ramos was settled in Civil Case No. 217, which
of 16 cavans of seedlings, located
was terminated on March 4,1914, and that the judgment therein is res
in Barrio Binicuel, Kabankalan,
judicata and bars any litigation regarding the same estate (Civil Case no.
Negros Occidental and (b) some
4522).
head of cattle 1,891.66
The documentary evidence reveals the following facts:
3. To Agustin Ramos: (a) the
remaining fourteen (14) lots out of
The spouses Martin Ramos and Candida Tanate died on October 4, the eighteen lots described in the
1906 and October 26, 1888, respectively. They were survived by their inventory, which included the Hacienda
three legitimate children named Jose, Agustin and Granada. Martin Ylaya with an area of 185 hectares and
Ramos was also survived by his seven natural children named Atanacia, (b) some head of cattle 36,291.68
Timoteo, Modesto, Manuel, Emiliano, Maria and Federico.
Natural children:
On December 10, 1906 a special proceeding was instituted in the Court
of First Instance of Negros Occidental for the settlement of the intestate
4. To each of the seven (7) natural
estate of the said spouses. The case was docketed as Civil Case No.
children named Atanacia, Modesto,
217 (its expediente is still existing). Rafael O. Ramos, a brother of Martin,
Timoteo, Federico, Manuel, Emiliano
 and Maria, were adjudicated personal
properties valued at P1,785.35 consisting
of (a) cash amounting to P1,760.35 and
(b) P25, representing a one-seventh (1/7)
of a one-sixth (1/6) portion in certain head
of cattle allegedly representing one-third
of the free portion of the estate of Martin
Ramos, with an aggregate value of 12,497.51
Total adjudications P75,972.51
It was agreed in the project of partition that Jose Ramos would pay the
cash adjudications to Atanacia, Timoteo and Manuel, while Agustin
Ramos would pay the cash adjudications to Modesto, Federico, Emiliano
and Maria. It was further agreed that Jose Ramos and Agustin Ramos
would pay their sister, Granada, the sums of P3,302.36 and P14,273.78,
respectively (Exh. 3).
The record does not show whether assessed or market values were used
in appraising the eighteen parcels of land. By way of explanation, it may
be stated that, inasmuch as the ganancial estate had an appraised value
of P74,984.93, one-half thereof or the sum of P37,492.46 represented
the estate of Martin Ramos. One-third thereof was the free portion or
P12,497.48. The shares of the seven natural children were to be taken
from that one-third free portion. Dividing P12,497.48 by seven gives a
result of P1,783.35 which represented the one-seventh share of each
natural child in the free portion of the estate of their putative father, Martin
Ramos. The partition was made in accordance with the old Civil Code
which provides:
ART. 840. When the testator leaves legitimate children or
descendants, and also natural children, legally
acknowledged, each of the latter shall be entitled to one-
half of the portion pertaining to each of the legitimate
children not bettered, provided that it can be included
within the third for free disposal, from which it must
betaken, after deducting the burial and funeral expenses.
The legitimate children may satisfy the portion pertaining
to the natural children in cash, or in other property of the
estate, at a fair valuation.
The sum of P1,785.35, as the legal share of each natural child, was the
amount which was indicated in the project of partition(Exh. 3) and which
was to be satisfied in cash. The second paragraph of article 840 gives
the legitimate children the right to satisfy in cash the hereditary portions
of the natural children. (Article 840 was applied in the project of partition
when it stated that each natural child had "una septima partede un sexto
de semovientes" but the statement in the project of partition that each
legitimate child was entitled to "un tercio delos cinco quintos de los
semovientes" is erroneous. It should be "un tercii de los cinco sextos de
los semovientes").
Judge Richard Campbell, in his "decision" dated April 28,1913, approved
the project of partition as well as the intervention of Timoteo Zayco as
guardian of the five heirs, who were minors. The court declared that the
proceeding would be considered closed and the record should be
archived as soon as proof was submitted that each heir had received the
portion adjudicated to him (Exh. 4).
In an order dated February 3, 1914 Judge V. Nepomuceno asked the
administrator to submit a report, complete with the supporting evidence,
showing that the shared of the heirs had been delivered to them as
required in the decision of April 28,1913 (Exh. 5). In a manifestation
dated February 24, 1914, which was signed by Jose, Agustin, Granada,
Atanacia and Timoteo all surnamed Ramos, and by Timoteo Zayco, the
guardian, and which was sworn to before the justice of the peace on
March 2 (not 4), 1914 and filed in court on March 5,1914, they
acknowledged:
... hemos recibido del Administrador Judicial Rafael O.
Ramostodas y cada una de las participaciones a que
respectivamente tenemos derecho en los bienes relictor
de los finados esposos Martin Ramos y Candida Tanate,
completo acuerto y conformidad con elproyecto de
reparticion que nosotros mismo sometemos al Juzgado
en 25 de Abril de 1913 ... . (Exh. 6).
Note that Granada Ramos and the natural children were assumed to
have received their shares from the administrator although according to
the object of partition, Jose Ramos and Agustin Ramos (not the
administrator) were supposed to pay the cash adjudications to each of
them. No receipts were attached to the manifestation, Exhibit 6.
Apparently, the manifestation was not in strict conformity with the terms
of judge Nepomuceno's order and with the project of partition itself.
Lots Nos. 1370, 1371, 1372, 1375, 2158, 2159, 2161 and 2163(eight lots)
of the Himamaylan cadastre (page 8 of the Record on Appeal does not
mention Lot 1370), which are involved in this case were registered (as of
1958) in equal shares in the names of Gregoria Ramos and her daughter,
Granada Ramos, as shown below (Exh. 8):
Original
Lot No Registration Present title Date
1370 Aug. 29, 1923 TCT No. RT-2238
Dec. 1, 1933
1371 — do — TCT No. RT-2235 — do —
1372 — do — TCT No. RT-2237 — do —
1375 — do — TCT No. RT-2236 — do —
2158 Sept. 10, 1923 TCT No. RT-2230 —
do —
2159 — do — TCT No. RT-2233 — do —
2161 — do — TCT No. RT-2232 — do —
2163 — do — TCT No. RT-2231 — do —
Plaintiffs' version of the case. — A summary of plaintiffs' oral evidence is
found in pages 4 to 13 of their well-written brief. It is reproduced below
(omitting the citations of the transcript):
Martin Ramos, who died in 1906 in the municipality of Himamaylan,
Negros Occidental, left considerable real estate, the most valuable of
which were the Hacienda Calaza and Hacienda Ylaya, both located in
Himamaylay, Negros Occidental. Hacienda Calaza consists of sugar
land, palay land and nipa groves with an area of 400 hectares and with a
sugar quota allotment of 10,000 piculs, more or less, and having as its
present actual value P500,000 more or less.
"All the children of martin Ramos, whether legitimate or acknowledged
natural, lived together in Hacienda Ylaya during his lifetime and were
under his care. Even defendant Gregoria Ramos, widow of Jose Ramos,
admitted that she dealt with plaintiffs as family relations, especially
seeing them during Sundays in church as they lived with their father, and
maintained close and harmonious relations with them even after the
death of their father. All said children continued to live in said house of
their father for years even after his death.
"Upon their father's death, his properties were left under the
administration of Rafael Ramos, the younger brother of their father and
their uncle, Rafael Ramos continued to administer those properties of
their father, giving plaintiffs money as their shares of the produce of said
properties but plaintiffs not receiving any property or piece of land
however, until 1913 when Rafael Ramos gathered all the heirs, including
plaintiffs, in the house of their father, saying he would return the
administration of the properties. He turned over Hacienda Ylaya to
Agustin Ramos and Hacienda Calaza to Jose Ramos.
"All said children, defendants and plaintiffs alike, continued to live in the
same house of their father in Hacienda Ylaya, now under the support of
Agustin Ramos. Plaintiff Modesto Ramos who 'could understand Spanish
a little', only left said house in 1911; plaintiff Manuel stayed there for one
year and lived later with Jose Ramos for four years. Plaintiff Maria
Ramos, who herself testified that she has 'a very low educational
attainment', lived there until 1916 when she got married. Plaintiff Emiliano
lived there with Agustin, helping him supervise the work in Hacienda
Ylaya, until he transferred to Hacienda Calaza where he helped Jose
Ramos supervise the work in said hacienda.
"Agustin Ramos supported plaintiffs, getting the money from the produce
of Hacienda Ylaya, the only source of income of Agustin coming from
said hacienda. Plaintiffs asked money from Agustin pertaining to their
share in the produce of Hacienda Ylaya and received varied amounts,
sometimes around P50 at a time, getting more when needed, and
receiving P90 or P100 more or less a year.
"Jose Ramos gave plaintiffs also money as their shares from the
products of Hacienda Calaza. Even Maria Ramos who upon her marriage
in 1916 lived in La Cartota with her husband was given money whenever
she went to Himamaylan. Plaintiffs received varied amounts or sums of
money from Jose as their shares in the produce of Hacienda Ylaya more
or less about P100 a year, mostly during the milling season every year
while he was alive up to his death in 1930. Emiliano Ramos, now
deceased and substituted by his widow, Rosario Tragico, moreover,
received P300 from Jose Ramos in 1918 taken from the products of
Hacienda Calaza when he went to the United States to study.
"Upon Jose Ramos death his widow Gregoria Ramos, herself, his first
cousin, their father and mother, respectively being brother and sister,
continued to give plaintiffs money pertaining to their shares in the
products of Hacienda Calaza. She however stopped doing so in 1951,
telling them that the lessee Estanislao Lacson was not able to pay the
lease rental.
"There was never any accounting made to plaintiffs by Jose Ramos,
plaintiffs reposing confidence in their elder brother, Nor was any
accounting made by his widow, defendant Gregoria Ramos, upon his
death, plaintiff Manuel Ramos moreover having confidence in her.
"Before the survey of these properties by the Cadastral Court, plaintiff
Modesto Ramos was informed by the Surveying Department that they
were going to survey these properties. Plaintiffs then went to see their
elder brother Jose to inform him that there was a card issued to them
regarding the survey and gave him 'a free hand to do something as an
administrator'. They therefore did not intervene in the said cadastral
proceedings because they were promised that they(defendants Jose and
Agustin) would 'be the ones responsible to have it registered in the
names of the heirs'. Plaintiffs did not file and cadastral answer because
defendants Jose and Agustin told them 'not to worry about it as they have
to answer for all the heirs'. Plaintiffs were 'assured' by defendants
brothers.
"Plaintiffs did not know that intestate proceedings were instituted for the
distribution of the estate of their father. Neither did plaintiffs Modesto,
Manuel, Emiliano and Maria know (that) Timoteo Zayco, their uncle and
brother-in-law of defendant widow Gregoria was appointed their
guardian. There was an express admission by defendant Gregoria
Ramos that Timoteo Zayco was her brother-in-law.
"Plaintiffs did not know of any proceedings of Civil Case No. 217. They
never received any sum of money in cash — the alleged insignificant
sum of P1,785.35 each — from said alleged guardian as their supposed
share in the estate of their father under any alleged project of partition.
"Neither did Atanacia Ramos nor her husband, Nestor Olmedo, sign any
project of partition or any receipt of share in(the) inheritance of Martin
Ramos in cash. Nestor Olmedo did not sign any receipt allegedly
containing the signatures of Atanacia assisted by himself as husband,
Timoteo Ramos, and Timoteo Zayco as guardian ad-litem of the minors
Modesto, Manual, Federico, Emiliano and Maria. As a matter of fact,
plaintiffs Modesto and Manuel were in 1913 no longer minors at the time
of the alleged project of partition of the estate being approved, both being
of age at that time. No guardian could in law act on their behalf.
"Plaintiffs only discovered later on that the property administered by their
elder brother Jose had a Torrens Title in the name of his widow,
Gregoria, and daughter, Candida, when plaintiff Modesto's children
insisted and inquired from the Register of Deeds sometime in 1956 or
1957. Plaintiffs did not intervene in the intestate proceedings for (the)
settlement of the estate of their brother Jose as they did not know of it.
"Plaintiffs were thus constrained to bring the present suit before the Court
of First Instance of Negros Occidental on September 5, 1957 seeking for
the reconveyance in their favor by defendants Gregoria and daughter
Candida and husband Jose Bayot of their corresponding participations in
said parcels of land in accordance with article 840 of the old Civil Code
and attorney's fees in the sum of P10,000 plus costs and expenses of
this litigation". (4-13 Brief).
Proceedings in the lower court. — The instant action was filed on
September 5, 1957 against defendants Agustin Ramos, Granada Ramos
and the heirs of Jose Ramos for the purpose of securing a reconveyance
of the supposed participations of plaintiffs Atanacia, Emiliano, Manuel,
Maria and Modesto, all surnamed Ramos, in the aforementioned eight (8)
lots which apparently form part of Hacienda Calaza. (The plaintiffs did not
specify that the said shares would amount to one-sixth of the said eight
cadastral lots. One-sixth represented the one-third free portion of Martin
Ramos' one-half shares in the said lots. And the said one-sixth portion
was the share of his seven legally acknowledged natural children under
article 840 of the old Civil Code).
The action is really directed against the heirs of Jose Ramos, namely, his
wife Gregoria and his daughter Candida in whose names the said eight
lots are now registered as shown in Exhibit 8 and in page 4 hereof. It is
predicated on the theory that plaintiffs' shares were held in trust by the
defendants. No deed of trust was alleged and proven.
The defendants denied the existence of a trust. They pleaded the
defenses of (a) release of claim as shown in the project of partition, the
decision and the receipt of shares forming part of the expediente of Civil
Case No. 217 (Exh. 3, 4 and 6), (b) lack of cause of action, (c) res
judicata and (d) prescription.
Timoteo Ramos, who was joined as a co-plaintiff, manifested that he had
already received his own share of the inheritance, that he did not
authorized anyone to include him as a plaintiff and that he did not want to
be a party in this case. He moved that his name be stricken out of the
complaint (44-45 Rec. or Appeal; Exh. 7).
Emiliano Ramos, who died in 1958, was substituted by his widow and
their ten children (Exh. E, 61-64 Rec. on Appeal).The complaint is silent
as to the fate of Federico Ramos, the seventh natural child of Martin
Ramos.
As already noted, after trial, the lower court dismissed the complaint on
the ground of res judicata. The plaintiffs as well as the defendants
appealed.
Plaintiffs' appeal. — The plaintiffs contend that the trial court erred (1) in
dismissing their complaint, (2) in denying their right to share in their
father's estate and (3) in holding that the action was barred by res
judicata or the prior judgment in the special proceeding for the settlement
of Martin Ramos' intestate estate, Civil Case No. 217 of the Court of First
Instance of Negros Occidental, Abintesdado de los finados esposos
Martin Ramos y Candida Tanate(Exh. F to J and 1 to 6).
The plaintiffs vigorously press on this Court their theory that the plaintiffs,
as acknowledged natural children, were grievously prejudiced by the
partition and that the doctrine of res judicata should not bar their action.
A preliminary issue, which should first be resolved, is the correctness of
the trial court's "inexorable conclusion" that the plaintiffs were the legally
acknowledged natural children of Martin Ramos. Plaintiffs' action is
anchored on that premise.
The defendants failed to impugn that conclusion in their appellants' brief.
Not having done so, it may be regarded as conclusive against them. That
is the proposition advanced by the plaintiffs in their reply-brief.
The defendants in their appellees' brief assail that conclusion. It is true
that an appellee may make an assignment of error in his brief but that
rule refers to an appellee who is not an appellant (Saenz vs. Mitchell, 60
Phil. 69, 80). However, since an appellee is allowed to point out the
errors committed by the trial court against him (Relativo vs. Castro, 76
Phil. 563; Lucero vs. De Guzman, 45 Phil. 852), defendants' contention
that the plaintiffs were not legally acknowledged natural children may just
as well be passed upon.
The defendants, in contesting the lower court's finding that the plaintiffs
were legally acknowledged children, assume that the legitimate children
committed a mistake in conferring successional rights on the plaintiffs.
We hold that the trial court's conclusion is correct. It is true that the
acknowledgment of the plaintiffs is not evidenced by a record of birth, will
or other public document (Art. 131, Old Civil Code). But the record of Civil
Case No. 217, which is relied upon by the defendants to support their
defense of res judicata, indubitably shows that the plaintiffs were treated
as acknowledged natural children of Martin Ramos. The reasonable
inference is that they were in the continuous possession of the status of
natural children of Martin Ramos, as evidenced by his direct acts and the
acts of his family (Art. 135, Old Civil Code).
Unacknowledged natural children have no rights
whatsoever(Buenaventura vs. Urbano, 5 Phil. 1; Siguiong vs. Siguiong, 8
Phil. 5, 11; Infante vs. Figueras, 4 Phil. 738; Crisolo vs. Macadaeg, 94
Phil. 862). The fact that the plaintiffs, as natural children of Martin Ramos,
received shares in his estate implies that they were acknowledged.
Obviously, defendants Agustin Ramos and Granada Ramos and the late
Jose Ramos accorded successional rights to the plaintiffs because martin
Ramos and members of his family had treated them as his children.
Presumably, that fact was well-known in the community. Under the
circumstances, Agustin Ramos and Granada Ramos and the heirs of
Jose Ramos are estopped from attacking plaintiffs' status as
acknowledged natural children (See Arts. 283[4] and 2266[3], New Civil
Code).
Even the lower court, after treating the plaintiffs in 1913 in the intestate
proceeding as acknowledged natural children, had no choice but to
reaffirm that same holding in its 1961 decision in this case.
The crucial issue is prescription. With it the question of res judicata and
the existence of a trust are inextricably interwoven. Inasmuch as trust is
the main thrust of plaintiffs' action, it will be useful to make a brief
disgression of the nature of trusts (fideicomisos) and on the availability of
prescription and laches to bar the action for reconveyance of property
allegedly held in trust.
"In its technical legal sense, a trust is defined as the right, enforceable
solely in equity, to the beneficial enjoyment of property, the legal title to
which is vested in another, but the words 'trust' is frequently employed to
indicate duties, relations, and responsibilities which are not strictly
technical trusts." (89 C.J.S. 712).
"A person who establishes a trust is called the trust or; one in whom
confidence is reposed is known as the trustee; and the person for whose
benefit the trust has been created is referred to as the beneficiary" (Art.
1440, Civil Code). There is a fiduciary relation between the trustee and
the cestui que trust as regards certain property, real, personal, money or
choses inaction (Pacheco vs. Arro, 85 Phil. 505).
"Trusts are either express or implied. Express trusts are created by the
intention of the trust or of the parties. Implied trusts come into being by
operation of law." (Art. 1144, Civil Code). "No express trusts concerning
an immovable or any interest therein may be proven by oral evidence. An
implied trust may be proven by oral evidence" (Ibid, Arts. 1443 and
1457).
"No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended" (Ibid, Art. 1444; Tuason de
Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30,
1967, 21 SCRA 543, 546). "Express trusts are those which are created
by the direct and positive acts of the parties, by some writing or deed, or
will, or by words either expressly or impliedly evincing an intention to
create a trust" (89 C.J.S. 722).
"Implied trust are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent, or which are super
induced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties" (89 C.J.S. 724).
They are ordinarily subdivided into resulting and constructive trusts (89
C.J.S. 722).
"A resulting trust is broadly defined as a trust which is raised or created
by the act or construction of law, but in its more restricted sense it is a
trust raised by implication of law and presumed always to have been
contemplated by the parties, the intention as to which is to be found in
the nature of their transaction, but not expressed in the deed or
instrument of conveyance" (89 C.J.S. 725). Examples of resulting trusts
are found in article 1448 to 1455 of the Civil Code. See Padilla vs. Court
of Appeals, L-31569, September 28, 1973, 53 SCRA 168,179).
On the other hand, a constructive trust is a trust "raised by construction of
law, or arising by operation of law". In a more restricted sense and as
contra distinguished from a resulting trust, a constructive trust is "a trust
not created by any words, either expressly or impliedly evincing a direct
intention to create a trust, but by the construction of equity in order to
satisfy the demands of justice. It does not arise by agreement or intention
but by operation of law." (89 C.J.S. 7260727). "If a person obtains legal
title to property by fraud or concealment, courts of equity will impress
upon the title a so-called constructive trust in favor of the defrauded
party." A constructive trust is not a trust in the technical sense(Gayondato
vs. Treasurer of the P.I., 49 Phil. 244; See Art. 1456, Civil Code).
There is a rule that a trustee cannot acquire by prescription the
ownership of property entrusted to him (Palma vs. Cristobal, 77 Phil.
712), or that an action to compel a trustee to convey property registered
in his name in trust for the benefit of the cestui qui trust does not
prescribed (Manalang vs. Canlas, 94 Phil. 776; Cristobal vs. Gomez, 50
Phil. 810), or that the defense of prescription cannot be set up in an
action to recover property held by a person in trust for the benefit of
another(Sevilla vs. De los Angeles, 97 Phil. 875), or that property held in
trust can be recovered by the beneficiary regardless of the lapse of time
(Marabilles vs. Quito, 100 Phil. 64; Bancairen vs. Diones, 98 Phil. 122,
126 Juan vs. Zuniga, 62 O.g. 1351; 4 SCRA 1221; Jacinto, L-17957, May
31, 1962. See Tamayo vs. Callejo, 147 Phil. 31, 37).
That rule applies squarely to express trusts. The basis of the rule is that
the possession of a trustee is not adverse. Not being adverse, he does
not acquire by prescription the property held in trust. Thus, section 38 of
Act 190 provides that the law of prescription does not apply "in the case
of a continuing and subsisting trust" (Diaz vs. Gorricho and Aguado, 103
Phil. 261,266; Laguna vs. Levantino, 71 Phil. 566; Sumira vs. Vistan, 74
Phil. 138; Golfeo vs. Court of Appeals, 63 O.G. 4895, 12 SCRA 199;
Caladiao vs. Santos, 63 O.G. 1956, 10 SCRA 691).
The rule of imprescriptibility of the action to recover property held in trust
may possibly apply to resulting trusts as long as the trustee has not
repudiated the trust (Heirs of Candelaria vs. Romero, 109 Phil. 500, 502-
3; Martinez vs. Grano, 42 Phil. 35; Buencamino vs. Matias, 63 O. G.
11033, 16 SCRA 849).
The rule of imprescriptibility was misapplied to constructive trusts
(Geronimo and Isidoro vs. Nava and Aquino, 105 Phil. 145, 153.
Compare with Cuison vs. Fernandez and Bengzon, 105 Phil. 135, 139;
De Pasion vs. De Pasion, 112 Phil. 403, 407).
Acquisitive prescription may bar the action of the beneficiary against the
trustee in an express trust for the recovery of the property held in trust
where (a) the trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui qui trust; (b) such positive acts of
repudiation have been made known to the cestui qui trustand(c) the
evidence thereon is clear and conclusive (Laguna vs. Levantino, supra;
Salinas vs. Tuason, 55 Phil. 729. Compare with the rule regarding co-
owners found in the last paragraph of article 494, Civil Code; Casanas
vs. Rosello, 50 Phil. 97; Gerona vs. De Guzman, L-19060, May 29, 1964,
11 SCRA 153,157).
With respect to constructive trusts, the rule is different. The prescriptibility
of an action for reconveyance based on constructive trust is now settled
(Alzona vs. Capunitan, L-10228, February 28, 1962, 4 SCRA 450;
Gerona vs. De Guzman, supra; Claridad vs. Henares, 97 Phil. 973;
Gonzales vs. Jimenez, L-19073, January 30, 1965, 13 SCRA 80; Bonaga
vs. Soler, 112 Phil. 651; J. M. Tuason & Co., vs. Magdangal, L-15539,
January 30, 1962, 4 SCRA 84). Prescription may supervene in an implied
trust (Bueno vs. Reyes, L-22587, April 28, 1969, 27 SCRA 1179; Fabian
vs. Fabian, L-20449, January 29, 1968; Jacinto vs. Jacinto, L-17957, May
31, 1962, 5 SCRA 371).
And whether the trust is resulting or constructive, its enforcement may be
barred by laches (90 C.J.S. 887-889; 54 Am Jur. 449-450; Diaz vs.
Gorricho and Aguado, supra. Compare with Mejia vs. Gampona, 100
Phil. 277).
The plaintiffs did not prove any express trust in this case.
The expediente of the intestate proceeding, Civil Case No. 217,
particularly the project of partition, the decision and the manifestation as
to the receipt of shares (Exh. 3, 4 and 6)negatives the existence of an
express trust. Those public documents prove that the estate of Martin
Ramos was settled in that proceeding and that adjudications were made
to his seven natural children. A trust must be proven by clear,
satisfactory, and convincing evidence. It cannot rest on vague and
uncertain evidence or on loose, equivocal or indefinite declarations (De
Leon vs. Peckson, 62 O. G. 994). As already noted, an express trust
cannot be proven by parol evidence(Pascual vs. Meneses, L-18838, May
25, 1967, 20 SCRA 219, 228; Cuaycong vs. Cuaycong, L-21616,
December 11, 1967, 21 SCRA 1192).
Neither have the plaintiffs specified the kind of implied trust contemplated
in their action. We have stated that whether it is a resulting or
constructive trust, its enforcement may be barred by laches.
In the cadastral proceedings, which supervened after the closure of the
intestate proceeding, the eight lots involved herein were claimed by the
spouses Jose Ramos and Gregoria T. Ramos to the exclusion of the
plaintiffs (Exh. 8 to 19). After the death of Jose Ramos, the said lots were
adjudicated to his widow and daughter (Exh. 8). In 1932 Gregoria T.
Ramos and Candida Ramos leased the said lots to Felix Yulo (Exh.
20).Yulo in 1934 transferred his lease rights over Hacienda Calazato
Juan S. Bonin and Nestor Olmedo, the husband of plaintiff Atanacia
Ramos (Exh. 22). Bonin and Olmedo in 1935 sold their lease rights over
Hacienda Calaza to Jesus S. Consing (Exh. 23).
Those transactions prove that the heirs of Jose Ramos had repudiated
any trust which was supposedly constituted over Hacienda Calaza in
favor of the plaintiffs.
Under Act 190, whose statute of limitations applies to this case (Art. 116,
Civil Code), the longest period of extinctive prescription was only ten
years Diaz vs. Gorricho and Aguado, supra.).
Atanacia, Modesto and Manuel, all surnamed Ramos, were already of
age in 1914 (Exh. A to D). From that year, they could have brought the
action to annul the partition. Maria Ramos and Emiliano Ramos were
both born in 1896. They reached the age of twenty-one years in 1917.
They could have brought the action from that year.
The instant action was filed only in 1957. As to Atanacia, Modesto and
Manuel, the action was filed forty-three years after it accrued and, as to
Maria and Emiliano, the action was filed forty years after it accrued. The
delay was inexcusable. The instant action is unquestionably barred by
prescription and res judicata.
This case is similar to Go Chi Gun vs. Co, 96 Phil. 622, where a partition
judicially approved in 1916 was sought to be annulled in 1948 on the
ground of fraud. it was contended that there was fraud because the real
properties of the decedent were all adjudicated to the eldest son, while
the two daughters, who were minors, were given only cash and shares of
stocks. This Court, in upholding the petition, said:
"In any case, the partition was given the stamp of judicial approval, and
as a matter of principle and policy we should sustain its regularity, in the
absence of such cause or reason that the law itself fixes as a ground for
invalidity" (on page 634). "As the administration proceedings ended in the
year 1916, the guardianship proceedings in 1931, and the action was
brought only in the year 1948, more than 32 years from the time of the
distribution and 27 years from the termination of guardianship
proceedings", the action was barred by laches (on page 637). See Lopez
vs. Gonzaga, L-18788, January 31, 1964, 10 SCRA 167; Cuaycong vs.
Cuaycong, supra).
The leading case of Severino vs. Severino, 44 Phil. 343, repeatedly cited
by the plaintiffs, does not involve any issue of prescription or laches. In
that case, the action for reconveyance was seasonably brought. The
alleged trustee was an overseer who secured title in his name for the
land of his brother which was under his administration. He could not have
acquired it by prescription because his possession was not adverse. On
certain occasions, he had admitted that he was merely the administrator
of the land and not its true owner.
More in point is the Cuaycong case, supra, where the action for the
reconveyance of property held in trust accrued in 1936 and it was filed
only in 1961 or after the lapse of twenty-five years. That action was
barred.
On its face, the partition agreement was theoretically correct since the
seven natural children were given their full legitime, which under article
942 of the old Civil Code was their share as legal heirs. But is was
possible that the lands were undervalued or were not properly appraised
at their fair market value and, therefore, the natural children were short-
changed in the computation of the value of their shares which the
legitimate children could pay in case as allowed in article 840 of the old
Civil Code. It is of common knowledge that anyone who received lands in
the partition of a decedent's estate would ultimately have an advantage
over the one who received cash because lands increase in value as time
goes by while money is easily spent.
As pointed out in the statement if facts, it was anomalous that the
manifestation, evidencing the alleged receipt by the natural children of
their shares, should recite that they received their shares from the
administrator, when in the project of partition itself, as approved by the
probate court (Exh. 3 to 6),it was stipulated that Jose Ramos and Agustin
Ramos would be the ones to pay the cash settlement for their shares. No
receipts were submitted to the court to prove that Jose Ramos and
Agustin Ramos paid to the plaintiffs the cash adjudicated to them in the
project of partition.
The plaintiffs pinpoint certain alleged irregularities in the intestate
proceeding. The aver that Modesto Ramos and Manuel Ramos were
already of age in 1913 and could not therefore have been represented by
Timoteo Zayco as guardian ad litem and that, consequently, the two were
denied due process. The plaintiffs accused Zayco of not having
competently protected the interests of the minors, Maria Ramos and
Emiliano Ramos. The allege that Atanacia Ramos signed the project of
partition and the "receipt" of share (Exh. 3 and 6)without understanding
those documents which were in Spanish. They assert that the lopsided
and defective partition was not implemented.
In short, the plaintiffs contend that the partition was not binding on them
(Note that their brother, Timoteo, considered himself bound by that
partition). They ask that the case be remanded to the lower court for the
determination and adjudication of their rightful shares.
All those contentions would have a semblance of cogency and would
deserve serious consideration if the plaintiffs had not slept on their rights.
They allowed more than forty years to elapse before they woke up and
complained that they were much aggrieved by the partition. Under the
circumstances, their claims can hardly evoke judicial
compassion. Vigilantibus et non dormientibus jura subveniunt. "If eternal
vigilance is the price of safety, one cannot sleep on one's right for more
than a tenth of a century and except it to be preserved in its pristine
purity" (Ozaeta, J. in Association Cooperativa de Credito Agricola de
Miagao vs. Monteclaro, 74 Phil. 281, 283).
The plaintiffs have only themselves to blame if the courts at this late hour
can no longer afford them relief against the inequities allegedly vitiating
the partition of their father's estate.
In connection with the res judicata aspect of the case, it maybe clarified
that in the settlement of a decedent's estate it is not de rigueur for the
heirs to sign a partition agreement. "It is the judicial decree of distribution,
once final, that vests title in the distributees" (Reyes vs. Barretto-Datu, L-
17818, January 25,1967, 19 SCRA 85, 91) which in this case was Judge
Campbell's decision (Exh. 4).
A judgment in an intestate proceeding may be considered asa
judgment in rem (Varela vs. Villanueva, 95 Phil. 248, 267. See Sec.
49[a], Rule 39, Rules of Court). There is a ruling that "if that decree of
distribution was erroneous or not in conformity with law or the testament,
the same should have been corrected by opportune appeal; but once it
had become final; its binding effect is like that of any other judgment in
rem, unless properly set aside for lack of jurisdiction or fraud". A partition
approved by the court in 1939 could no longer be contested in 1956 on
the ground of fraud. The action had already prescribed. "The fact that one
of the distributees was a minor at the time the court issued the decree of
distribution does not imply that the court had no jurisdiction to enter the
decree of distribution." (Reyes vs. Barretto-Datu, supra, citing Ramos vs.
Ortuzar, 89 Phil. 742). "A final order of distribution of the estate of a
deceased person vests the title to the land of the estate in the distributes"
(Syllabus, Santos vs. Roman Catholic Bishop of Nueva Caceres, 45 Phil.
895, 900).
Parenthetically, it may be noted that the filing of the instant case long
after the death of Jose Ramos and other persons involved in the intestate
proceeding renders it difficult to determine with certitude whether the
plaintiffs had really been defrauded. What Justice Street said in Sinco vs.
Longa, 51 Phil. 507, 518-9 is relevant to this case.
In passing upon controversies of this character
experience teaches the danger of accepting lightly
charged of fraud made many years after the transaction in
question was accomplished, when death may have
sealed the lips of the principal actors and changes
effected by time may have given a totally different color to
the cause of controversy. In the case before us the
guardia, Emilio Tevez, is dead. The same is true of
Trinidad Diago, mother of the defendant Agueda Longa;
while Agapito Longa is now living in Spain. It will be borne
in mind also that, insofar as oral proof is concerned, the
charge of fraud rests principally on the testimony of a
single witness who, if fraud was committed, was a
participant therein and who naturally would now be
anxious, so far as practicable, to put the blame on others.
In this connection it is well to bear in mind the following
impressive language of Mr. Justice Story:
... But length of time necessarily obscures all human
evidence; and as it thus removed from the parties all the
immediate means to verify the nature of the original
transactions, it operates by way of presumption, in favor
of innocence, and against imputation of fraud. It would be
unreasonable, after a great length of time, to require
exact proof of all the minute circumstances of any
transaction, or to expect a satisfactory explanation of
every difficulty, real or apparent with which it may be
incumbered. The most that can fairly be expected, in such
cases, if the parties are living, from the frailty of memory,
and human infirmity, is, that the material facts can be
given with certainty to a common intent; and, if the parties
are dead, and the cases rest in confidence, and in parol
agreements, the most that we can hope is to arrive at
probable conjectures, and to substitute general
presumption of law, for exact knowledge. Fraud, or
breach of trust, ought not lightly to be imputed to the
living, for, the legal presumption is the other way; as to
the dead, are not here to answer for themselves, it would
be the height of injustice and cruelty, to disturb their
ashes, and violate the sanctity of the grave, unless the
evidence of fraud be clear, beyond a reasonable doubt
(Prevost vs. Gratz, 6 Wheat. [U.S.],481, 498).
Defendants' appeal. — Defendants Granada Ramos, Gregoria T. Ramos,
Candida Ramos, Jose Bayor and Agustin Ramos appealed from the
lower court's decision insofar as it ignored their counterclaim for P50,000
as moral damages and P10,000 as attorney's fees. In their brief the claim
for attorney's fees was increased to P20,000. They prayed for exemplary
damages.
The defendants argue that plaintiffs' action was baseless and was filed in
gross and evident bad faith. It is alleged that the action caused
defendants mental anguish, wounded feelings, moral shock and serious
anxiety and compelled them to hire the service of counsel and incur
litigation expenses.
Articles 2219 and 2220 (also 1764 and 2206) of the Civil Code indicate
the cases where morel damages may be recovered. The instant litigation
does not fall within any of the enumerated cases. Nor can it be regarded
as analogous to any of the cases mentioned in those articles. Hence,
defendants' claim for moral damages cannot be sustained (Ventanilla vs.
Centeno, 110 Phil. 811, 814). The worries and anxiety of a defendant in a
litigation that was not maliciously instituted are not the moral damages
contemplated in the law (Solis & Yarisantos vs. Salvador, L-17022,
August 14, 1965, 14 SCRA 887).
"The adverse result of an action does not per se make the act wrongful
and subject the actor to the payment of moral damages. The law could
not have meant to impose a penalty on the right to litigate, such right is
so precious that moral damages may not be charged on those who may
exercise it erroneously." (Barretto vs. Arevalo, 99 Phil. 771, 779).
On the other hand, the award of reasonable attorney's fees is governed
by article 2208 of the Civil Code which lays down the general rule that, in
the absence of stipulation, attorney's fees and litigation expenses cannot
be recovered. Article 2208 specifies eleven instances where attorney's
fees may be recovered. The defendants did not point out the specific
provision of article 2208 on which their counterclaim may be predicated.
WHEREFORE, the trial court's judgment is affirmed with the clarification
that defendants' counterclaim is dismissed. No costs.
SO ORDERED.
Makalintal, C.J., Barredo, Antonio and Fernandez, JJ., concur.

What may possibly apply to defendants' counterclaim are paragraphs Fernando, J., took no part.
four and eleven which respectively provide that attorney's fees may be
recovered "in case of a clearly unfounded civil action or proceeding
against the plaintiff"(defendant is a plaintiff in his counterclaim) or "in any
other cases where the court deems it just and equitable" that attorney's
fees should be awarded.

We hold that, notwithstanding the dismissal of the action, no attorney's

fees should be granted to the defendants. Under the facts of the case, it
cannot be asseverated with dogmatic finality that plaintiffs' action was
manifestly unfounded or was maliciously filed to harass and embarrass
the defendants. All indications point to the fact that the plaintiffs honestly
thought that they had a good cause of action. They acted in evident good
faith. (See Herrera vs. Luy Kim Guan, 110 Phil. 1020, 1028; Rizal Surety
& Insurance Co., Inc. vs. Court of Appeals, L-23729, May 16, 1967, 20
SCRA 61).

Inasmuch as some of the plaintiffs were minors when the partition of their
father's landed estate was made, and considering that they were not
allotted even a few square meters out of the hundreds of hectares of
lands, which belonged to him, they had reason to feel aggrieved and to
seek redress for their grievances. Those circumstances as well as the
marked contrast between their indigence and the affluence of the heirs of
their half-brother, Jose Ramos, might have impelled them to ask the
courts to reexamine the partition of their father's estate.

It is not sound public policy to set a premium on the right to litigate. An

adverse decision does not ipso facto justify the award of attorney's fees
to the winning party (Herrera vs. Luy Kim, supra; Heirs of Justiva vs.
Gustilo, 61 O. G. 6959. Cf. Lazatin vs. Twano and Castro, 112 Phil. 733,
741).

Since no compensatory and moral damages have been awarded in this

case, defendants' claim for exemplary damages, which was ventilated for
the first time in their appellants' brief, may be as an afterthought, cannot
be granted(Art. 2229, Civil Code).

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.lawphil 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.
the same among themselves share and share alike; or, at all
events, should his brothers and sister fail to do just that, they
should divide only the one-half (1/2) portions proindiviso thereof
appertaining to him (Eduardo) in the conjugal properties;
5 Gonzales v. Jimenez, L-19073, Jan. 30, 1965.

WHEREFORE, the order of dismissal of the lower court appealed from is

hereby affirmed, without costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,

Castro, Angeles and Fernando, JJ., concur.

Footnotes

1
Benjamin Cuaycong was made a defendant because her
refused to sue as a plaintiff.

2
Article 1441.

3
89 C.J.S. 722, 724.

4
"(5) — That on several occasions during the later years of
Eduardo and Lino Cuaycong, the former made known to the latter
and to their brothers and sister, that he and his wife, Clotilde de
Leon, who died in 1941, had an understanding and made
arrangements with defendant Luis D. Cuaycong and his father,
Justo Cuaycong, that it was their (Eduardo's and Clotilde's) wish
and desire, that Hdas. "Sta. Cruz," and "Pusod" above-referred
to, should be divided between the brothers and sister of Eduardo
Cuaycong, namely, Justo, Meliton, Lino and Basilisa, all
surnamed Cuaycong, and his wife, Clotilde de Leon;

"(6) — That pursuant to such wish and desire and arrangements,

the said Eduardo Cuaycong, with the knowledge and consent of
his wife, Clotilde de Leon, and as an agreement with the latter to
effectuate their wish and desire had directed his brothers and
sister to pay his wife the sum of P75,000.00, the value of the two
haciendas above-mentioned being P150,000.00, and then divide
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20449 January 29, 1968
ESPERANZA FABIAN, BENITA FABIAN and DAMASO PAPA Y
FABIAN, plaintiffs-appellants,
vs.
SILBINA FABIAN, FELICIANO LANDRITO, TEODORA FABIAN and
FRANCISCO DEL MONTE, defendants-appellees.
Felix Law Office for plaintiffs-appellants.
J.G. Mendoza for defendants-appellees.
CASTRO, J.:
Before us is the appeal taken by Esperanza Fabian, Benita I Fabian and
Damaso Papa y Fabian from the decision of the Court of First Instance of
Rizal which dismissed their complaint for reconveyance, in civil case 295-
R, filed against the defendants spouses Silbina Fabian and Feliciano
Landrito and Teodora Fabian and Francisco del Monte, upon the ground
that the latter had acquired a valid and complete title to the land in
question by acquisitive prescription.
This case traces its origin way back to January 1, 1909 when Pablo
Fabian bought from the Philippine Government lot 164 of the Friar Lands
Estate in Muntinlupa, Rizal, of an area 1 hectare, 42 ares and 80
centares, for the sum of P112 payable in installments. By virtue of this
purchase, he was issued sale certificate 547. He died on August 2, 1928,
survived by four children, namely, Esperanza, Benita I, Benita II, 1 and
Silbina.
On October 5, 1928 Silbina Fabian and Teodora Fabian, niece of the
deceased, executed an affidavit, reciting, among other things,
Que el finado Pablo Fabian, no dejo ningun otro heredero sino
los declarantes, con derecho a heredar el lote No. 164 de la
hacienda Muntinlupa, relicto por dicho finado Pablo Fabian y para
la aprobacion de traspaso a nosotros el referido lote No. 164,
prestamos esta declaracion para todos los efectos que pueden
covenir a la Oficina de Terenos a defender por nuestro mayor
derecho de heredar dicho lote contra las reclamaciones juntas de
quien las presentare.
On the strength of this affidavit, sale certificate 547 was assigned to
them. On November 14, 1928 the acting Director of Lands, on behalf of
the Government, sold lot 164, under deed 17272, to Silbina Fabian,
married to Feliciano Landrito, and to Teodora Fabian, married to
Francisco del Monte, for the sum of P120. The vendees spouses
forthwith in 1929 took physical possession thereof, cultivated it, and
appropriated the produce therefrom (and concededly have up to the
present been appropriating the fruits from the land exclusively for
themselves). In that same year, they declared the lot in their names for
taxation purposes under tax declaration 3374. This tax declaration was
later cancelled, and in lieu thereof two tax declarations (2418 and 2419)
were issued in favor of Teodora Fabian and Silbina Fabian, respectively.
Since 1929 up to the present, they have been paying the real estate
taxes thereon. In 1937 the Register of Deeds of Rizal issued TCT 33203
over lot 164 in their names. And on May 4, 1945, they subdivided the lot
into two equal parts; TCT 33203 was then cancelled and TCT 38095 was
issued over lot 164-A in the name of Silbina Fabian, married to Feliciano
Landrito, and 38096 was issued over lot 164-B in the name of Teodora
Fabian, married to Francisco del Monte.
On July 18, 1960 the plaintiffs filed the present action for reconveyance
against the defendants spouses, averring that Silbina and Teodora,
through fraud perpetrated in their affidavit aforesaid, made it appear that
"el finado Pablo Fabian no dejo ningun otro heredero sino los declarantes
con derecho a heredar el lote No. 164 de la hacienda de Muntinlupa",
which is a false narration of facts because Silbina knew that she is not
the only daughter and heir of the deceased Pablo Fabian, and Teodora
likewise knew all along that, as a mere niece of the deceased, she was
precluded from inheriting from him in the presence of his four surviving
daughters; that by virtue of this affidavit, the said defendants succeeded
in having sale certificate 547 assigned to them and thereafter in having
lot 164 covered by said certificate transferred in their names; and that by
virtue also of these assignment and transfer, the defendants succeeded
fraudulently in having lot 164 registered in their names under TCT 33203.
They further allege that the land has not been transferred to an innocent
purchaser for value. A reconveyance thereof is prayed for, aside from
P3,000 attorney's fees and costs.
In their answer of August 31, 1960, 2 the defendants spouses claim that
Pablo Fabian was not the owner of lot 164 at the time of his death on
August 2, 1928 because he had not paid in full the amortizations on the
lot; that they are the absolute owners thereof, having purchased it from
the Government for the sum of P120, and from that year having
exercised all the attributes of ownership thereof up to the present; and
that the present action for reconveyance has already prescribed. The
dismissal of the complaint is prayed for.
On the basis of a partial stipulation of facts together with annexes, the
lower court rendered judgment on June 28, 1962, declaring that the
defendants spouses had acquired a valid and complete title to the
property by acquisitive prescription, and accordingly dismissed the
complaint, with costs against the plaintiffs. The latter's motion for
reconsideration was thereafter denied.
Hence, the present recourse.
The three resulting issues of law tendered for resolution in this appeal, by
the formulation of the parties are: (1) Was Pablo Fabian the owner of lot
164 at the time of his death, in the face of the fact, admitted by the
defendants-appellees, that he had not then paid the entire purchase price
thereof? (2) May laches constitute a bar to an action to enforce a
constructive trust? (3) Has title to the land vested in the appellees
through the mode of acquisitive prescription?
1. Lot 164 was a part of the Friar Lands Estate of Muntinlupa, Rizal; its
sale to Pablo Fabian was therefore governed by Act 1120, otherwise
known as the Friar Lands Act. While under section 15 of the said Act, title
to the land sold is reserved to the Government until the purchaser makes
full payment of all the required installments and the interest thereon, this
legal reservation refers.
to the bare, naked title. The equitable and beneficial title really
went to the purchaser the moment he paid the first installment
and was given a certificate of sale. The reservation of the title in
favor of the Government is made merely to protect the interest of
the Government so as to preclude or prevent the purchaser from
encumbering or disposing of the lot purchased before the
payment in full of the purchase price. Outside of this protection
the Government retains no right as an owner. For instance, after
issuance of the sales certificate and pending payment in full of
the purchase price, the Government may not sell the lot to
another. It may not even encumber it. It may not occupy the land
to use or cultivate; neither may it lease it or even participate or
share in its fruits. In other words, the Government does not and
cannot exercise the rights and prerogatives of owner. And when
said purchaser finally pays the final installment on the purchase
price and is given a deed of conveyance and a certificate of title,
the title at least in equity, retroacts to the time he first occupied
the land, paid the first installment and was issued the
corresponding certificate of sale. In other words, pending the
completion of the payment of the purchase price, the purchaser is
entitled to all the benefits and advantages which may accrue to
the land as well as suffer the losses that may befall it. 3
That Pablo Fabian had paid five annual installments to the Government,
and in fact been issued sale certificate 547 in his name, are conceded.
He was therefore the owner of lot 164 at the time of his death. He left four
daughters, namely, Esperanza, Benita I, Benita II and Silbina to whom all
his rights and interest over lot 164 passed upon his demise.
In case a holder of a certificate dies before the giving of the deed
and does not leave a widow, then the interest of the holder of the
certificate shall descend and deed shall issue to the person who
under the laws of the Philippine Islands would have taken had the
title been perfected before the death of the holder of the
certificate, upon proof of the holders thus entitled of compliance
with all the requirements of the certificate. 4
The assignment and sale of the lot to the defendants. Silbina and
Teodora were therefore null and void as to that portion sold to Teodora,
and as well as to that portion which lawfully devolved in favor of the
appellants. To the extent of the participation of the appellants, application
must be made of the principle that if property is acquired through fraud,
the person obtaining it is considered a trustee of an implied trust for the
benefit of the person from whom the property comes (Gayondato vs.
Insular Treasurer, 49 Phil. 244).
2. In Diaz, et al. vs. Gorricho, et al., 103 Phil. 264-265 (1958), this Court,
speaking through Mr. Justice J.B.L. Reyes, declared in no uncertain
terms that laches may bar an action brought to enforce a constructive
trust such as the one in the case at bar. Illuminating are the following
excerpts from the decision penned by Mr. Justice Reyes:
Article 1456 of the new Civil Code, while not retroactive in
character, merely expresses a rule already recognized by our
courts prior to the Code's promulgation (see Gayondato vs.
 Insular Treasurer, 49 Phil. 244). Appellants are, however, in error
in believing that like express trust, such constructive trusts may
not be barred by lapse of time. The American law on trusts has
always maintained a distinction between express trusts created
by the intention of the parties, and the implied or constructive
trusts that are exclusively created by law, the latter not being
trusts in their technical sense (Gayondato vs. Insular
Treasurer, supra). The express trusts disable the trustee from
acquiring for his own benefit the property committed to his
management or custody, at least while he does not openly
repudiate the trust, and makes such repudiation known to the
beneficiary or cestui que trust. For this reason, the old Code of
Civil Procedure (Act 190) declared that the rules on adverse
possession does not apply to "continuing and subsisting" (i.e.,
unrepudiated) trusts.
But in constructive trusts, . . . the rule is that laches constitutes a
bar to actions to enforce the trust, and repudiation is not required,
unless there is a concealment of the facts giving rise to the trust
(54 Am. Jur., secs. 580, 581; 65 C.J., secs. 956, 957; Amer. Law
Institute, Restatement of Trusts, section 219; on Restitution,
section 179; Stianson vs. Stianson 6 ALR 287; Claridad vs.
Benares, 97 Phil. 973.
The assignment of sale certificate 547 was effected on October 5, 1928;
and the actual transfer of lot 164 was made on the following November
14. It was only on July 8, 1960, 32 big years later, that the appellants for
the first time came forward with their claim to the land. The record does
not reveal, and it is not seriously asserted, that the appellees concealed
the facts giving rise to the trust. Upon the contrary, paragraph 13 of the
stipulation of facts of the parties states with striking clarity "that
defendants herein have been in possession of the land in question since
1928 up to the present publicly and continuously under claim of
ownership; they have cultivated it, harvested and appropriated the fruits
for themselves." (emphasis supplied.)
3. Six years later, in Gerona, et al. vs. De Guzman, et al., L-19060, May
29, 1964, the factual setting attending which is substantially similar to that
obtaining in the case at bar, this Court, in an excellently-phrased decision
penned by Chief Justice, then Associate Justice, Roberto Concepcion,
unequivocally reaffirmed the rule, overruling previous decisions to the
contrary, that "an action for reconveyance of real property based upon a
constructive or implied trust, resulting from fraud, may be barred by the
statute of limitations," and further that "the action therefor may be filed
within four years from the discovery of the fraud," the discovery in that
case being deemed to have taken place when new certificates of title
were issued exclusively in the names of the respondents therein. The
following is what Justice Concepcion, speaking for the Court, said:
[A]lthough, as a general rule, an action for partition among co-
heirs does not prescribe, this is true only as long as the
defendants do not hold the property in question under an adverse
title (Cordova vs. Cordova, L-9936, January 14, 1948). The
statute of limitations operates, as in other cases, from the
moment such adverse title is asserted by the possessor of the
property (Ramos v. Ramos, 45 Phil., 362; Bargayo v. Camumot,
40 Phil., 857; Castro v. Echarri, 20 Phil., 23).
When respondents executed the aforementioned deed of extra-
judicial settlement stating therein that they are the sole heirs of
the late Marcelo de Guzman, and secured new transfer
certificates of title in their own name, they thereby excluded the
petitioners from the estate of the deceased, and consequently,
set up a title adverse to them. And this is why petitioners have
brought this action for the annulment of said deed upon the
ground that the same is tainted with fraud.
Although, there are some decisions to the contrary (Jacinto v.
Mendoza, L-12540, February 28, 1959; Cuison v. Fernandez, L-
11764, January 31, 1959; Marabiles v. Quito, L-10408, October
18, 1956 and Sevilla v. De los Angeles, L-7745, November 18,
1955), it is already settled in this jurisdiction that an action for
reconveyance of real property based upon a constructive or
implied trusts, resulting from fraud, may be barred by the statute
of limitations (Candelaria vs. Romero, L-12149, September 30,
1960; Alzona v. Capunita, L-10220, February 28, 1962).
Inasmuch as petitioners seek to annul the aforementioned deed
of "extra-judicial settlement" upon the ground of fraud in the
execution thereof, the action therefor may be filed within
four (4) years from the discovery of the fraud (Mauricio v.
Villanueva, L-11072, September 24, 1959). Such discovery is
deemed to have taken place, in the case at bar, on June 25,
1948, when said instrument was filed with the Register of Deeds
and new certificates of title in the name of the respondents
exclusively, for the registration of the deed of extra-judicial
settlement constitutes constructive notice to the whole world
(Diaz v. Gorricho, L-11229, March 29, 1958; Avecilla v. Yatco, L-
 11578, May 14, 1958; J. M. Tuason & Co., Inc. v. Magdangal, L-
15539, January 30, 1962; Lopez v. Gonzaga, L-18788, January
31, 1964). (Emphasis supplied.)
Upon the undisputed facts in the case at bar, not only had laches set in
when the appellants instituted their action for, reconveyance in 1960, but
as well their right to enforce the constructive trust had already
prescribed. 5
It logically follows from the above disquisition that acquisitive prescription
has likewise operated to vest absolute title in the appellees, pursuant to
the provisions of section 41 of Act 190 that
Upon the foregoing disquisition, we hold not only that the appellants'
action to enforce the constructive trust created in their favor has
prescribed, but as well that a valid, full and complete title has vested in
the appellees by acquisitive prescription.1äwphï1.ñët
ACCORDINGLY, the judgment a quo, dismissing the complaint, is
affirmed. No pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Bengzon, J.P., Zaldivar,
Sanchez, Angeles and Fernando, JJ., concur.
Makalintal, J., concurs in the result.

Ten years actual adverse possession by any person claiming to

be the owner for that time of any land or interest in land,
uninterruptedly continued for ten years by occupancy, descent,
grants, or otherwise, in whatever way such occupancy may have
commenced or continued, 6shall vest in every actual occupant or
possessor of such land a full and complete title. . . . (Emphasis
ours.)

The stringent mandate of said section 41 that "the possession by the

claimant or by the person under or through whom he claims must have
been actual, open, public, continuous under a claim of title exclusive of
any other right and adverse to all other claimants," was adjudged by the
lower court as having been fulfilled in the case at hand. And we agree.
Although paragraph 13 of the stipulation of facts hereinbefore adverted to
does not explicitly employ the word "adverse" to characterize the
possession of the defendants from 1928 up to the filing of the complaint
in 1960, the words, "defendants have been in possession of the land
since 1928 up to the present [1960] publicly and continuously under claim
of ownership; they have cultivated it, harvested and appropriated the
fruits for themselves," clearly delineate, and can have no other logical
meaning than, the adverse character of the possession exercised by the
appellees over the land. If the import of the abovequoted portion of the
stipulation of facts is at all doubted, such doubt is dispelled completely by
additional cumulative facts in the record which are uncontroverted. Thus,
the appellees declared the lot for taxation purposes in their names, and
the resulting tax declaration was later concelled and two tax declarations
were issued in favor of Silbina Fabian and Teodora Fabian, respectively.
They have been paying the real estate taxes thereon from 1929 to the
present. And in 1945 they subdivided the lot into two equal parts, and two
transfer certificates of title were issued separately in their names.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-38018 October 31, 1978
MARCELO SOTTO, Administrator of the Estate of Filemon
Sotto, petitioner,
vs.
PILAR TEVES, FLORENTINO TEVES, DULCE TEVES KIAMKO
assisted by husband FELIPE KIAMKO DOLORES TEVES ARCENAS,
assisted by husband MARIANO ARCENAS, MARIA CAMARA
GUMBAN, assisted by husband NICANOR GUMBAN, BELEN
CAMARA BROWN, assisted by husband ROGER BROWN and the
HONORABLE COURT OF APPEALS, respondents.
Delfin V Nacua, Jose D. Palma, Nicolas Jumapao & Pedro Albino and
San Juan, Africa Gonzales & San Agustin for petitioner.
Teodoro Almase and Filiberto Leonardo for respondents.
GUERRERO, J.:
This is a petition for review on certiorari of the Resolution of the Court of
Appeals, Special Division of Five 1 dated Sept. 14, 1973 in CA-G.R. No.
44351 R which reconsidered the decision of the Eight Division 2, same
Court dated November 25, 1972 and from the Resolution dated
December 13, 1973 of the said Special Division of Five, denying the
motion for reconsideration of the previous Resolution. The dispositive
portion of the appealed Resolution states:
WHEREFORE, the decision rendered in the above-
entitled case is hereby reconsidered. The appealed
judgment is hereby reversed and set aside. Plaintiffs are
hereby declared the absolute owners of Lots Nos. 7547,
842, 2179-A, 123 and 1370. Reconveyance and delivery
of possession of the aforesaid five lots to plaintiffs are
hereby ordered. Defendant is hereby sentenced to pay
plaintiffs the sum corresponding to P4,500.00 a month
from October 10, 1966 until the reconveyance and
delivery of possession as above ordered have been
effected, with legal interest thereon from said date until
fully paid, and the sum of P5,000.00 as and for attorney's
fees, with costs of both instances against the defendant. 3
The voluminous records and pleadings in this case establish the following
undisputed facts which are stated in the appealed Resolution of the
Special Division of Five dated Sept. 14, 1973, as follows:
Subject of the plaintiffs' action for declaration of
ownership and/or reconveyance, and for the recovery of
possession, rentals, damages and attorney's fees, are
five (5) parcels of land, all located in Cebu City, more
particularly described in the complaint, and denominated
as Lots Nos. 7547, 842, 2179-A, 123, and 1370. There is
no dispute as to the fact that the aforesaid properties
originally belonged to the conjugal partnership of the
spouses Florentino Rallos and Maria Fadullon. When
Florentino Rallos died on March 14, 1912 in the City of
Cebu, the parcels of land in question, together with the
other properties comprising the estate of the deceased,
descended in testate succession to his sole heirs, his
widow, Maria Fadullon, and two children, named
Concepcion Rallos and Carmen Rallos. The lawyer to
whom the Rallos heirs entrusted the settlement of the
estate was Atty. Filemon Sotto.
Shortly after the closure of the probate proceeding in 1913, Atty. Sotto
married Carmen Rallos. Carmen died in 1945 without leaving any issue.
Concepcion died later leaving many children. Maria Fadullon
predeceased her two daughters. Atty. Sotto died intestate on October 10,
1966.
Competing for the ownership of the five lots are the direct descendants
and blood relatives of Florentino Rallos and Maria Fadullon, opposed by
the administrator of the intestate estate of Atty. Sotto. The children of
Concepcion Rallos, or the grandchildren of Florentino Rallos and Maria
Fadullon, some of whom are assisted by their spouses, are the plaintiffs
in this case. Defendant administrator represents Atty. Sotto's children out
of wedlock. It is claimed by the defendant that Atty. Sotto was at the time
of his death the owner of the five lots in question.
In life, Atty. Filemon Sotto was a very prestigious man. He wielded partition inasmuch as his clients had the desire to conserve pro-
tremendous social and political influence. Successively, he was municipal indiviso the properties in their possession, which motion 4 is as follows:
councilor, vice-president of Cebu City, Assemblyman, Senator and
Delegate to the Constitutional Convention of 1934. He was editor and MOCION SOBRE LA DISPOSICION DE LOS BIENES
publisher of many newspapers among which was the famous "La
Revolucion" which featured quite prominently in the celebrated Wood- Maria Fadullon, conyuge viuda de Florentino Rallos, y sus
Sotto libel case. When his life, however, was almost at an end, he was hijas Carmen Rallos y Concepcion Rallos, unicas
declared incompetent. In 1962, while Atty. Sotto was under guardianship, herederas de dicho finado comparecen hoy por medio del
Cesar Sotto, his nephew and protegee and one of the guardians judicially Abogado Filemon Sotto para exponer lo que sigue:
appointed to take care of his estate, delivered to Pilar Teves, one of the
herein plaintiffs, certain documents which had lain in secrecy in the
Que habiandose hecho por el Juzgado una declaracion
private files of Atty. Sotto. All along, the direct descendants and blood
de "unicas herederas" de los bienes del finado Florentino
relatives of Florentino Rallos had rested on the belief that the properties
Rallos en favor de las comparecientes, y siendo todas
in question, which are the fruits of the sweat and toil of their grandfather,
ellas mayores de edad, pidan al Juzgado que se la releve
would one day be delivered unto them. The revelation of Cesar Sotto,
a la Albacea de presenter cualquier proyecto de
however, led the plaintiffs to the discovery that all the properties in
reparticion, pues las exponentes tienen el preposito de
question were now titled in the name of Atty. Sotto. and were in danger of
conservar por ahora "por indivisos" los susodichos
falling into the hands of his children out of wedlock, who are total
bienes, en poder de ellas mismas.
strangers to the spouses Rallos and Fadullon. Upon such discovery, the
plaintiffs initiated the present lawsuit forthwith."
Cebu, 25 Enero de 1913.
On June 13, 1967, the herein private respondents filed suit in the Court of
First Instance of Cebu against petitioner Marcelo Sotto, as administrator (
of the intestate estate of Filemon Sotto, for the recovery of possession S
and ownership of the 5 parcels of land described in the complaint, with G
damages. The complaint was based mainly upon the theory that a trust D
relation was established and created with respect to the said properties, .
with Atty. Filemon Sotto as trustee and as cestuis que trust, his mother- )
in-law, Maria Fadullon Vda. de Rallos; his wife, Carmen Rallos; and his
sister-in-law, Concepcion Rallos (predecessor in interest of herein private F
respondents); and that in gross violation of the trust reposed upon him by I
Concepcion Rallos and after her death, by her heirs, the said Atty. L
Filemon Sotto, through sheer manipulation, fraudulent acts and means, E
non-existent and void decrees, fictitious sales and transfers, succeeded M
in causing the transfer of the ownership of the properties to the name of O
his wife Carmen Rallos, and finally to his name alone. N

S
The complaint alleged five causes of action. Under the first cause of
O
action, it is alleged that on January 25, 1913, Atty. Filemon Sotto as
T
counsel, not only for the widow, Maria Fadullon Vda. de Rallos, but also
T
for her daughters, Carmen and Concepcion both surnamed Rallos, filed a
O
motion in said Special Proceedings No. 365-0 praying to relieve the
executrix Maria Fadullon Vda. de Rallos from presenting a project of
 A H
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Maria Fadullon y sus hijas Carmen y Concepcion Rallos )
manifiestan. Que son la mismas mencionadas en la
preinserta mocion y que estan conformes con todo el C
contenido de la misma. A
R
Cebu, 25 de Enero de 1913. M
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 ( looked upon as the head of the Rallos family to look after the properties
S inherited from the deceased Florentino Rallos including the 5 parcels of
G land hereinbefore mentioned, thereby establishing a trust relation with
D Don Filemon Sotto as trustee of the said properties for the benefit of his
. mother-in-law Maria Fadullon Vda. de Rallos, his wife Carmen Rallos de
) Sotto and sister-in-law Concepcion Rallos and the heirs of the latter,
as cestuis que trust; that the aforesaid trust reposed upon him continued
M even after the deaths of Maria Fadullon Vda. de Rallos, Carmen Rallos
A de Sotto and Concepcion Rallos, the latter who married twice, first to
R Mariano Teves and second to Mariano Camara, and lasted up to Don
I Filemon Sotto's death on October 10, 1966; that on November 29, 1916,
A Don Filemon Sotto in violation of the trust reposed upon him by, and his
duty as attorney for, the heirs of the deceased Florentino Rallos, illegally
F caused Decree No. 64101 dated Jan. 26, 1918 to be issued in Case No.
. 9, G.R.L.O No. 9465 of the Court of First Instance of Cebu on the entire
Lot No. 7547 in question, in the name alone of Carmen Rallos de Sotto,
V the wife of Filemon Sotto, to the great prejudice and damage of the other
D co-owners thereof namely Maria Fadullon Vda. de Rallos and
A Concepcion Rallos de Camara; that said Decree is inexistent, null and
. void ab initio and without force and effect for it should have been issued
not in the name of Carmen Rallos de Sotto but in the names of Maria
D Fadullon Vda. de Rallos — ½ share and the remaining ½ share thereof in
E the names of Carmen Rallos de Sotto and Concepcion Rallos de Camara
in equal proportion of ¼ share each; that on February 9, 1918, as a result
R of the said inexistent, null and void Decree No. 64101, Original Certificate
A of Title No. 1034 was issued in the name of Carmen Rallos de Sotto, wife
L of Filemon Sotto; that sometime in 1922, Atty. Filemon Sotto had caused
L Lot No. 7547 to be transferred by his wife to the name of another person
O as a result of which O.C.T. No. 1034 was cancelled and Transfer
S Certificate of Title No. 6278 was issued, for fear that said lot might be
attached in connection with the libel suit filed against the newspaper, La
Upon approval by the Court of the above quoted Mocion Sobre La Revolucion edited by Don Filemon Sotto at the instance of the then Gov.
Disposicion de los Bienes, the said probate proceedings was terminated. Gen. Leonard Wood; that on June 5, 1933, Don Filemon Sotto caused
Transfer Certificate of Title No. 6278 of Lot 7547 to be reconveyed not in
The complaint further alleged that at that time Atty. Filemon Sotto (then the name of his wife but in his own name under Transfer Certificate of
known as Don Filemon Sotto) was still single, but he already enjoyed Title No. 12740 and was thereafter reconstituted administratively by the
considerable prestige and influence and was well-known for his sagacity guardian of his properties as Transfer Certificate of Title No. RT-6890 in
he having become a municipal councilor, municipal vice-mayor, fiscal and the name of Filemon Sotto, widower,and finally the present Certificate of
assemblyman; that he married Carmen J. Rallos on Sept. 27, 1913 and Title No. 27710 was issued by the Register of Deeds in the name of
he later became senator, delegate to the Constitutional Convention and Filemon Sotto, widower.
editor, besides being a practicing lawyer.
Under the second, third, fourth and fifth causes of action, respondents
It is furthermore alleged that Atty. Filemon Sotto, having married Carmen alleged specific similar violations of the trust relation reposed upon him
Rallos, thereby virtually making him a member of the Rallos family, was with respect to the other 4 parcels of land in that Atty. Filemon Sotto
illegally caused said lots to be registered either in the name of his wife
Carmen Rallos de Sotto alone or jointly with Maria Fadullon Vda. de
Rallos, to the prejudice of the other co-owner, Concepcion Rallos, and
thereafter thru manipulations and fraudulent means, unregistered deeds
of sale, fictitious and simulated transfers, incumbrances and
reconstitution, these properties were in gross violation of the trust
reposed upon him by the heirs, finally titled in the name alone of Carmen
Rallos de Sotto and ultimately to that of his name as Don Filemon Sotto,
widower.
Under the sixth cause of action, demand was made for the payment of
rental income of the lots in question at P4,500.00 a month from Oct. 10,
1966 until delivery of possession and ownership of said lots as actual or
compensatory damages, P20,000.00 as moral damages, P10,000.00 as
exemplary damages and P20,000.00 for professional services.
Answering the complaint, petitioner Marcelo Sotto as administrator of the
estate of Atty. Filemon Sotto, denied that there was any trust relation
between Don Filemon Sotto on one hand and Maria Fadullon Vda. de
Rallos, Carmen Rallos and Concepcion Rallos on the other; that granting
that such relationship existed between Don Filemon Sotto and
Concepcion Rallos, such a relationship could not have endured until the
death of Don Filemon Sotto; that the decree of Lot No. 7547 was issued
in the name of Carmen Rallos pursuant to an agreement among the heirs
of Florentino Rallos that this parcel of land, together with the other
parcels of land involved in this case, be adjudicated to Carmen Rallos as
her share in the estate of Florentino Rallos, in the same manner that
several parcels of land were likewise adjudicated to, and decrees issued
in the name of Concepcion Rallos, as her share in the estate of
Florentino Rallos; that the partition agreement adjudicating Lots No. 7547
and ½ each of Lots Nos. 842, 2179-A and Lots Nos. 123 and 1370 were
adjudicated to Carmen Rallos and the other halves of Lot Nos. 842 and
2179 were adjudicated to Maria Fadullon Vda. de Rallos and decrees
were accordingly issued later on by the Cadastral Court relative to the
said properties of land in pursuance to said partition agreement; that
more than 1 year having elapsed from their issuance, the decrees had
become indefeasible; that the parcels of land, having been transferred to
the purchasers for value and in good faith, the present action for
reconveyance will not prosper; that the plaintiffs have no cause of action
as the same is barred by prescription, laches and estoppel; and
assuming that there was any trust relation between Atty. Sotto and
Concepcion Rallos, the trust was repudiated by Atty. Filemon Sotto a
long time ago as shown by the series of transfers of these lots made by
him personally. A counterclaim for exemplary damages, moral damages
and attorney's fees were also set up.
The issues having been joined and trial concluded, the Court of First
Instance of Cebu rendered its decision 5dismissing the complaint, holding
that no express trust relation existed between Atty. Filemon Sotto on one
hand and Maria Fadullon Vda. de Rallos, Carmen Rallos and Concepcion
Rallos on the other with respect to the lots in question; that there was no
implied trust subsisting between Atty. Sotto and the said heirs and that
there was actual partition between them whereby the 5 lots were given to
Carmen Rallos as her share; that Carmen Rallos exercised acts of
ownership over the 5 city lots in question to the exclusion of Concepcion
Rallos and Maria Fadullon Vda. de Rallos, registering them in her name
under the Torrens system; that Concepcion Rallos and her children after
her death were thus notified constructively and actually by Carmen Rallos
de Sotto's raising the flag of exclusive ownership and repudiation of the
trust relation, if there was any, and since then the period of prescription of
10 years for bringing the action tolled against an implied trust. Laches or
inaction on the part of Concepcion Rallos and her heirs have thus
rendered their demand sale or no longer enforceable.
The heirs of Concepcion Rallos appealed to the Court of Appeals. In the
Decision 6 promulgated Nov. 25, 1972, the Court of Appeals, Eighth
Division, affirmed the judgment of the lower court. The appellate court
agreed with the conclusion of the lower court that no express trust was
created between Atty. Filemon Sotto and the heirs of Florentino Rallos by
the mere signing of the Mocion in behalf of the heirs of Florentino Rallos;
that when the surviving heirs of the deceased manifested in the petition
filed by Atty. Filemon Sotto during the probate of the will that it is their
desire not to partition the estate so as to preserve and maintain co-
ownership over the properties, there can be no doubt that by direct and
positive acts in holding the estate pro-indiviso, they intended to create an
express trust among themselves; that Filemon Sotto who merely
represented the heirs in that probate proceedings and filed the petition in
court was not made a co-trustee by reason of his marriage to Carmen
Rallos even if he was the lawyer of the Rallos family enjoying the prestige
of being a prominent lawyer with political influence; that the estate of
Florentino Rallos was already partitioned whether in 1925, prior or
subsequent thereto, does not matter but the fact is that the Original
Transfer Certificates of Title covering the 5 parcels of land were originally
issued in the name of Carmen Rallos alone with respect to lot No. 7547
and jointly in the name of Carmen Rallos and Maria Fadullon Vda. de
Rallos as regards Lots Nos. 842, 2179-A, 123 and 1370, to the exclusion
of Concepcion Rallos: that there was repudiation of the trust relation
among the co-owners, the date of which the Court can only be guided by
the registration and issuance of the certificates of title when Carmen
Rallos put the stakes of exclusive ownership over the lands and
repudiated whatever trust was reposed in her by her co-heirs; that from
the moment Carmen Rallos asserted her title over the questioned
properties, the statute of limitation operated against her co-heirs,
irrespective of plain Sotto vs. Teves, plaintiffs' pretension that they
discovered much too late that the 5 lots were already titled in the name of
Carmen Rallos, for such discovery is deemed to have taken place when
the certificates of title to the properties were issued in favor of Carmen
Rallos.
The above decision of the Appellate Court having been assailed on a
Motion for Reconsideration 7 filed by plaintiffs-appellants, now the herein
private respondents, the Court of Appeals, Special Division of Five,
reversed the said decision in its Resolution of Sept. 14, 1973. The Court,
however, agreed with the ruling of the original decision declaring that the
heirs of Florentino Rallos had "by manifesting to the probate court that it
was their desire to preserve and maintain the ownership of the inherited
properties thereby intended and created by direct and positive acts an
express trust among themselves," as it was in conformity with the
evidence and the law. 8 The court also noted that "(t)he parties ceased to
debate the question as to whether or not an express trust was created by
and among the Rallos heirs after our decision was promulgated. They
came to agree that such a relationship was indeed created and that it
existed. In the present motion for reconsideration, the dispute centers on
the issue as to whether the express trust subsisted or it was repudiated.
The parties are also in disaccord on the question as to whether Atty.
Sotto should be considered a party in the express trust or should be
regarded merely as a constructive trust." 9
The respondent Court of Appeals said that upon the facts and under the
law, Atty. Sotto can be regarded as the constructive trustee of his wife
and of the widow and descendants of Florentino Rallos; that Atty. Sotto's
special relations with the Rallos heirs inhibited him from any act or
conduct that could put his interests above or in direct collision with the
interests of those who had reposed their trust and confidence in him.
The Court also found that the trust continued to subsist and did not
terminate in 1925 by an adjudication of the lots to Carmen Rallos, for no
such adjudication took place; that the registration of the lots was not the
result of such adjudication or partition and said registration did not
amount to a repudiation of the express trust. The titling of the lots in the
names of Carmen Rallos and Maria Fadullon Vda. de Rallos was done in
their capacities as trustees and not as absolute and exclusive owners
thereof. In 1925 an oral agreement founded upon and in reaffirmation of
the 1913 written agreement was reached among the Rallos heirs under
which the 5 lots would remain under co-ownership of the 3 heirs, with
Carmen Rallos as administratrix who would be entitled to a lifetime of
usufruct of the properties but upon her death, ownership of the lots would
devolve to Concepcion Rallos and her heirs. The Court ruled that
Carmen Rallos could not legally deprive Concepcion Rallos and her heirs
of their rights to the properties through the execution of a will in favor of
her husband Filemon Sotto, considering that the same were trust
properties held by her in trust for the benefit of Concepcion Rallos and
her heirs, hence, Atty. Filemon Sotto must be deemed to have received
the properties impressed with the subsisting trust, not for himself but for
the benefit of the cestuis que trust.
Concluding, the Court said: "Upon the facts, under the applicable laws,
and even on the basis of equity, plaintiffs are entitled to be declared the
owners of the properties which admittedly originated from their ancestor
and blood relative, their grandfather Florentino Rallos. As owners of the
lots in question plaintiffs are also entitled to the fruits
thereof. ... 10
Petitioner's motion for reconsideration having been denied, he now
comes to Us to review the reversal of the original decision of the
appellate court and makes the following assignment of errors:
I. The Court of Appeals erred in finding that an express trust was created
among the heirs of Florentino Rallos by virtue of the Mocion Sobre la
Disposicion de los Bienes filed by Filemon Sotto.
II. The Court of Appeals erred in not finding that the legal relationships
created by the said Mocion Sobre La Disposicion De los Bienes was a
simple co-ownership.
III. The Court of Appeals erred in finding that Don Filemon Sotto became
a co-trustee by virtue of his subsequent marriage to Carmen Rallos.
IV. The Court of Appeals erred in not finding that the heirs of Florentino
Rallos entered into an actual, effective and mutually accepted partition of
the estate.
V. The Court of Appeals erred in finding that an express trust existed by
the use of parol evidence, disregarding the weight of a torrens title and a
public document mutually admitted by the parties.
VI. The Court of Appeals erred in not finding that even if an express trust
was created, the same was expressly repudiated by both parties.
VII. The Court of Appeals erred not finding the respondents guilty of
laches and estoppel.
The first and second assignments of error relate to the Mocion Sobre la
Disposicion de los Bienes hence We are constrained to consider and
resolve them together. Petitioner faults the Court of Appeals in finding
that an express trust was created among the heirs of Florentino Rallos by
virtue of the Mocion filed by Atty. Sotto, and in not finding that the legal
relationship created by the Mocion was a simple co-ownership. Petitioner
contends that the "motion is very clear and categorical and the only
purpose of that Motion is to keep the properties in a co-ownership by the
heirs of Florentino Rallos, not to create a relationship of express trust
among the heirs." 11 He argues that "(s)ince the alleged source of
express trust is a written document, applying therefore the document
aforecited it is necessary that the document expressly state and provide
for the express trust," 12 and that it is a contradiction in terms for the
Court of Appeals to imply from the document an express trust.
Petitioner's contention is without merit. It may be true that the heirs of
Florentino Rallos intended and desired to keep the properties in co-
ownership pro-indiviso when they signed the Mocion filed in their behalf
by Atty. Filemon Sotto in the probate proceedings to terminate the same
but the legal effect of said agreement to preserve the properties in co-
ownership as expressed in writing and embodied in the Mocion was to
create a form of an express trust among themselves as co-owners of the
properties. In the case of Castrillo, et al. vs. Court of Appeals, et al., 10
SCRA 549, the Supreme Court, speaking thru Chief Justice Makalintal,
said that "co-ownership is a form of trust and every co-owner is a trustee
for the other." In co-ownership, the relationship of each co-owner to the
other co-owners is fiduciary in character and attribute. Whether
established by law or by agreement of the co owners, the property or
thing held pro-indiviso is impressed with a fiducial nature that each co-
owner becomes a trustee for the benefit of his co-owners and he may not
do any act prejudicial to the interest of his co-owners.
Under the law on Trusts, it is not necessary, as petitioner insists, that the
document expressly state and provide for the express trust, for no
particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended. (Art. 1444, N.C.C.) An express
trust is 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. Cuaycong et al. vs. Cuaycong, et al., G.R. No. L-21616, Dec. 11,
1967).
We agree with the findings of the respondent Court of Appeals that an
express trust was created by the heirs of Florentino Rallos in respect to
the properties in litigation when they agreed to preserve said properties in
co-ownership among themselves as manifested and expressed into
writing and filed as a pleading captioned Mocion Sobre la Disposicion de
los Bienes. Incidentally, this is the same finding of the original decision of
the Eight Division, same Court which was, however, reconsidered on
other grounds. We find no reason to disturb this finding of the respondent
Court, the same being in accordance with law and the facts as clearly
established.
We now consider the third assignment of error. Petitioner contends that
the Court of Appeals erred in finding that Don Filemon Sotto became a
co-trustee by virtue of his subsequent marriage to Carmen Rallos.
Petitioner, while admitting that as a lawyer some form of trust devolved
upon the shoulders of Filemon Sotto; that as the husband of Carmen
Sotto, some form of trust devolved on his shoulders; that because of
overwhelming social and political standing during his time some form of
trust was carried by Filemon Sotto, 13 argues that this is not the Trust that
is defined in our Civil Code most especially if it is the express trust under
Articles 1441 and 1444 which is relied upon by the respondent Court of
Appeals, Special Division of Five. The trust on the shoulder of Filemon
Sotto as the family lawyer in the intestate proceedings of Florentino
Rallos was only coterminous with the duration of the proceedings itself.
The trust on the shoulder of Filemon Sotto by virtue of his marriage to
Carmen Rallos was only as much as the trust on the shoulders of the two
husbands of Concepcion Rallos, Mariano Teves and Mariano Camara,
and this trust is not the trust defined in our Civil Code on express trust." 14
We find no merit in petitioner's contention. In the first place, petitioner's
argument is based on an incorrect assumption. Petitioner assumes that
the respondent Court of Appeals found the existence of an express trust
between Atty. Filemon Sotto and the heirs of Florentino Rallos, which is
not correct. What the appellate court held is that Atty. Sotto can be
regarded as the constructive trustee of his wife and of the widow and
descendants of Florentino Rallos. In fact the Court declared, thus —
Upon the record, we have no doubt but that there existed
more than mere professional relationship of attorney and
client between Atty. Sotto and the members of the family
of Florentino Rallos. Shortly after the closure of the
testate proceeding, Atty. Sotto contracted marriage with
one of the daughters of Florentino Rallos. The attorney
thereby became not only a family lawyer but also an
actual member on the Rallos family by affinity. By reason
of his marriage to Carmen Rallos, and on account of his
prestige and tremendous social and political influence,
Atty. Sotto enjoyed and exercised a personal, domestic,
social, political and moral ascendancy and superiority not
only over his wife but also over Maria Fadullon,
Concepcion Rallos, and the latter's children. The
evidence reveals that the Ralloses looked up to Atty.
Sotto as protector and benefactor, as one on whom they
could repose their trust and confidence and who would
take care of the properties inherited from Florentino
Rallos, and on his part, Atty. Sotto acknowledged his
position as protector of the rights and interests of the
Rallos family. Like a pater familias, he attended to the
financial and medical needs of the direct descendants of
Florentino Rallos and Maria Fadullon (Exhs. U and T).
When one of the five parcels in question, Lot 7547, was
being claimed by a certain Manuel Ocejo, Atty. Sotto
represented the Rallos family as defendants in Civil Case
No. 1641 of the Court of First Instance of Cebu, and the
lot was adjudicated in favor of the Rallos family. The acts
and conduct of the Ralloses and Atty. Sotto fostered a
close and fiduciary relationship between them. Upon the
facts and under the law, Atty. Sotto can be regarded as
the constructive trustee of his wife and of the widow and
descendants of Florentino Rallos. For the settled rule is
that:
The relation between parties, in order to be a fiduciary
relation" need not be legal, but may be moral, social,
domestic or merely personal; and where by reason of
kinship, business association, disparity in age or physical
or mental condition or other reason, the grantee is in an
especially intimate position with regard to another and the
latter reposes a degree of trust and confidence in the
former, confidential relationship exists which prohibits the
one entrusted from seeking a selfish benefit for himself
during the course of relationship, and affords a basis for
imposing a constructive trust. (89 CJS Art. 151, pp. 1054-
1057)
Atty. Sotto's special relationship with the Rallos heirs inhibited him from
any act or conduct that would put his interests above, or in direct collision
with, the interests of those who had reposed their trust and confidence in
him." 15
Secondly, it is also not quite correct for petitioner to claim that the
respondent Court ruled that Don Filemon Sotto became a co-trustee by
virtue of his subsequent marriage to Carmen Rallos. The truth of the
matter is that, according to the Court, Atty. Sotto became a constructive
trustee not only by reason of his marriage to Carmen Rallos but also on
account of his prestige and tremendous social and political influence,
also because Atty. Sotto enjoyed and exercised a personal, domestic,
social, political and moral ascendancy and superiority over his wife, over
Maria Fadullon, Concepcion Rallos and the latter's children, besides
being the protector of the rights and interests of the Rallos family acting
like a pater familias attending to their financial and medical needs, as well
as the family lawyer.
We are in full accord with these findings and conclusion of the
respondent Court as the same are final, conclusive and binding upon Us,
there being no exceptional circumstances or reasons to review or revise
the same.
With respect to the fourth assignment of error, petitioner impugns the
Court of Appeals in not finding that the heirs of Florentino Rallos entered
into an actual, effective and mutually accepted partition of the estate.
Petitioner claims that partition of the inherited properties took place
between the heirs in 1925 in accordance with which the 5 parcels of land
under litigation were adjudicated to Carmen Rallos and that by reason of
the partition and adjudication, the lots were granted to Carmen Rallos
and titles were secured and issued in her favor and name.
On the other hand, the private respondents claim that there was such a
partition agreed upon in 1925 when, on the occasion of the visit of Maria
Fadullon Vda. de Rallos and Carmen Rallos to Concepcion Rallos after
the latter's delivery of a child, it was agreed that the properties in
Carmen, Cebu and one lot in Basak, Cebu City, all assessed at
P9,000.00 were to remain with Concepcion Rallos, while the 5 lots now in
litigation, then owned in common among the three heirs, and assessed at
P55,000.00 would be administered by Carmen Rallos, the fruits thereof to
be received by Carmen Rallos during her lifetime and that upon the death
of Carmen the properties will devolve to Concepcion and to her children.
The respondent Court rejected petitioner's claim of partition and
adjudication, declaring that —
We cannot embrace the theory advanced by defendant,
which is bereft of evidentiary support, that in 1925, on the
occasion of the visit paid by Maria Fadullon and Carmen
Rallos to Concepcion Rallos, the five lots in question were
adjudicated to Carmen Rallos. To begin with, there is no
concrete evidence of record on which to lay such claim. It
is our belief that the realities of the situation of the parties
and the practicable and equitable utility of the inheritance
of Florentino Rallos are better determinants of the
question as to whether defendant's theory would be
accepted or rejected. Carmen Rallos was admittedly
without any child to support. On the other hand,
Concepcion Rallos was burdened with many children.
The lots in Carmen and Basak, which were allowed to be
retained by Concepcion, were assessed at a mere
P9,000.00, whereas the five lots in question had an
assessed value of P55,000.00 in 1925. It is very difficult
to believe that Carmen Rallos and Maria Fadullon had
gone to Concepcion, on the occasion when another child
had just been added to the latter's burden, to tell her that
they were depriving her of a valuable share in the
inheritance, such share to be given to Carmen who was
childless. Such theory of defendant is utterly un Filipino
and is thoroughly irreconcilable with our customs and
ways of treating close relatives. The more probable and
believable is the testimony of Pilar Teves that Maria
Fadullon and Carmen Rallos came to Concepcion, as
Magis bearing gifts, to tell her that the five lots would go
to her and to her children upon Carmen's death. The
testimony of Pilar jibes with the evidence that Florentino
Rallos had expressed the wish that a portion of the
inherited properties should be devoted to defray the
expenses for the education of his grandchildren. " 16
We uphold the stand of the respondent Court of Appeals, Special
Division of Five in giving credence and belief to respondents' claim of
partition as testified to by Pilar Teves, one of the private respondents,
because the Court's findings and its ruling is based on the grounds of
human experience, the ordinary course of things and our own native
customs, culture and tradition to revere the memory of our ancestor by
keeping intact the estate in inheritance as long as possible, and to help
one's brothers and sisters to benefit from the sweat and toil of our
parents, rather than dispossess them or given the inheritance away to
perfect strangers, strangers to family ties and filial affection. It is
unconscionable and contrary to morals that a parent should deprive his
children of what lawfully belongs to them. (De Guzman vs. Aquino, 34
SCRA 236).
Petitioner's version of the partition and adjudication is, from a factual
viewpoint, clearly untenable; it is even inconsistent with his evidence. The
facts show that all the lots were registered originally before the alleged
partition and adjudication in 1925. Lots 123 and 1370 were registered on
Sept. 23, 1913; Lot 842 on Feb. 5, 1918; Lot 2179-A on June 17, 1921
and Lot 7547 on February 9, 1918. Base on their respective dates, the
acts of registration preceded the supposed partition and adjudication
which inexplicably reversed the usual order of occurrence which is, that
partition and adjudication normally precede registration. More than that,
the first 4 lots mentioned above were registered jointly in the names of
Maria Fadullon Vda. de Rallos and Carmen Rallos, which strongly belied
petitioner's contention that all the 5 lots were adjudicated to Carmen
Rallos alone. The conclusion is inescapable that petitioner's version did
not take place and that the registration of the lots could not have resulted
from the supposed partition and adjudication.
As We have heretofore stressed, the findings of fact of the Court of
Appeals are conclusive. Likewise, question of credibility is left to the
Court of Appeals. (De Garcia vs. Court of Appeals, 37 SCRA 129).
Appreciation of evidence is within the domain of the Court of Appeals
because its findings of facts are not reviewable by the Supreme Court.
(Talosig vs. Vda. de Nieba, 43 SCRA 472; Tingco vs. de la Merced, 58
SCRA 89). The Supreme Court will not review findings of facts of the
Court of Appeals, (Evangelista & Co. vs. Santos, 51 SCRA 416).
On appeal from a decision of the Court of Appeals, the findings of fact
made in said decision are final, except: (1) When the conclusion is a
finding grounded entirely on speculations, surmises or conjectures; (2)
When the inference is manifestly mistaken, absurd or impossible; (3)
When there is a grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of fact are
conflicting, (6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the admissions
of both appellant and appellee. (Napolis vs. Court of Appeals, 43 SCRA
301). In the case at bar, We are convinced and satisfied that the above
exceptions do not obtain.
Petitioner exacerbates that the Court of Appeals erred in finding that an
express trust existed by the use of parol evidence, disregarding the
weight of a torrens title and a public document mutually admitted by the
parties, in his fifth assignment of error.
We reject petitioner's contention as baseless. In the first place, the
respondent Court did not find that an express trust existed by the use of
parol evidence. Actually, the Court, on this point said: "On the basis of
undisputed facts, we held in our decision that the heirs of Florentino
Rallos, by manifesting to the probate court that it was their desire to
preserve and maintain the co-ownership over the inherited properties,
thereby intended and created, by direct positive acts, an express trust
among themselves. (pp. 19, 24, Decision). It is our view that this holding
should be maintained because it is in conformity with the evidence and
the law." 17 In a later portion of the Resolution appealed from, the Court
said: "As early as in 1913, the Rallos heirs had already agreed expressly
and in writing that the five parcels shall remain in co-ownership, and that
in regard to them each one of the heirs shall be a trustee for the
others." 18
In the second place, the oral testimony of Pilar Teves simply affirmed the
existence of such trust relation; it gave proof that the heirs desired to
continue the express trust and co-ownership over the five lots. It was not
necessary that the heirs create a new agreement of co-ownership over
the said properties. They merely reiterated their written agreement made
in 1913 that the five parcels would be preserved in co-ownership but
made provisions for their administration, collection of rentals and final
disposition upon the death of Carmen Rallos.
There is, therefore, no violation of Art. 1443, N.C.C which provides that
"no express trust concerning an immovable or any interest therein may
be proved by parol evidence," as the same is not applicable herein.
As to the pretension that the respondent appellate court disregarded the
weight of a torrens title and a public document mutually admitted by the
parties, the latter refering to the will executed by Carmen Rallos in 1942
bequeathing all her properties to her husband, Atty. Filemon Sotto,
petitioner's reasoning holds no water because from the very nature of a
trust relation which existed between Carmen Rallos and her co-owners,
she cannot obtain and secure a torrens title to the properties in her name
much less dispose of them by testament to her husband, a constructive
trustee, to the prejudice and deprivation of the rights and interests of said
co-heirs.
A fiduciary relationship may exist even if the title to the property subject
to the trust appears in the name of the trustee alone, because in cases of
trusteeship, the legal title usually appears in the name of the trustee,
while the equitable title remains with the cestui que trust. (Palma vs.
Cristobal, 77 Phil. 712). True it is that Torrens titles were issued in the
name of Carmen Rallos, but the principle holds that a trustee who takes a
Torrens title in his name cannot repudiate the trust by relying on the
registration, which is one of the well- known stations upon the finality of a
decree of title. (Alvarez, et al. vs. E spiritu,
L-18833, August 14, 1965, 14 SCRA 892; Paterno Vda. de Padilla vs.
Bibby de Padilla, 74 Phil. 377; Nery vs. Lorenzo, L-23096, April 27, 1972,
44 SCRA 431, 439 and the cases cited therein).
Neither an the will executed by Carmen Rallos deprive the private
respondents of their ownership over the five parcels of land. These lots
were trust properties; Carmen Rallos was holding them in trust for her
sister Concepcion Rallos and the latter's children. Not being the absolute
owner thereof, Carmen Rallos could not legally convey their ownership
by including them in their will. To all intents and purposes, the will and
last testament of Carmen Rallos was merely a vehicle of an existing trust
and therefore, Atty. Filemon Sotto must be deemed to have received the
properties not for himself but for the benefit of the cestui que trust. And
as a trustee of these trust properties, Atty. Sotto never alienated or
disposed any of these properties during his lifetime, thereby recognizing
his position as trustee and that he held them for the benefit and interest
of the cestuis que trust.
On the penultimate and ultimate assignments of error, petitioner
fulminates against the appellate court in not finding that, assuming that
an express trust was created, the same was expressly repudiated by the
parties and in not finding respondents guilty of laches and estoppel.
The resolution of these supposed errors, the 6th and the 7th, must follow
as a consequence to Our ruling a propospetitioner's 4th and 5th
assignments of error. We sustained the respondent Court in rejecting
petitioner's version of the partition and adjudication and that the
registration of the lots could not have resulted from the supposed
partition and adjudication. We affirmed that the express trust and co-
ownership over the 5 parcels of land created and agreed in 1913 by and
among the Rallos heirs did not terminate in 1925 but subsisted and was
maintained by them thereafter. We also declared that the registration of
the 4 lots in the names of Carmen Rallos and Maria Fadullon Vda. de
Rallos and 1 lot in favor of Carmen Rallos alone was done in their
capacities as trustees and not as absolute or exclusive owners, and not
only in their own behalf and benefit but also for the other co-owner,
Concepcion Rallos.
With these previous pronouncements in mind, We must overrule
petitioner's stand that the trust was expressly repudiated by the parties
although he makes capital of the fact of registration of the properties in
the names of Carmen Rallos and Maria Fadullon Vda. de Rallos,
contending strongly that such registration is evidence of repudiation of
the express trust. The rationale of Our conclusion in meeting petitioner's
4th assignment of error, including the authorities cited thereunder, holds
with equal force and persuasion over petitioner's contention of alleged
repudiation by the parties. The registration of the property in the name of
the trustee in possession thereof must be deemed to have been effected
for the benefit of the cestui que trust. (Severino vs. Severino, 44 Phil 343;
Baretto vs. Tuason, 50 Phil. 888).
Petitioner points to the fact that Concepcion Rallos had expressly
repudiated the trust by selling the Basak properties which were converted
into a subdivision, as well as to acts of exclusive ownership over the
properties of the estate by each of the co-owners to show that the trust
relationship and co-ownership was repudiated, renounced and
terminated when the parties agreed to an actual partition of the estate.
Petitioner's advocation is futile. Besides the falsity of its basis for the
reason that We found no partition as theorized by petitioner and that the
trust relation subsisted and was maintained in 1925 and thereafter, the
acts of exclusive ownership pointed by petitioner do not appear to be
clear, open and unequivocal repudiation of the trust. Thus —
1. The sale by Concepcion Rallos of some of the properties originally
forming part of the estate of Florentino Rallos cannot be considered as a
repudiation of the express trust by Concepcion herself. Said properties
were given to her in the aforementioned agreement testified to by Pilar
Teves and did not form part of the five parcels of land over which an
express trust was established in 1913 and reiterated in 1925.
2. With respect to Lots 123 and 1370, Atty. Filemon Sotto, soon after the
creation of the express trust in 1913, caused the registration of these two
lots and the issuance of Original Certificate of Title No. 251-253 dated
Sept. 23, 1913 in the names of Maria Fadullon and Carmen Rallos, to the
exclusion of Concepcion Rallos. Thereafter, Atty. Sotto caused the deed
of sale to be executed by Maria Fadullon whereby she purportedly sold
her share in the two lots to Carmen Rallos, and by virtue of such deed,
Atty. Sotto was able to obtain Transfer Certificate of Title in the name of
his wife Carmen Rallos. That the registration of these two lots took place
in 1913, barely 8 months after the creation of the express trust, and being
inconsistent with the terms of said Motion that they preserve the
inheritance in co-ownership and in equal shares, do not clearly show that
Carmen Rallos intended to repudiate their original agreement as
contained in the Mocion. Since the titles were issued in the name of
Carmen Rallos thru the professional services of her lawyer-husband Atty.
Filemon Sotto, it is more believable and consistent with the express trust
relation created under the Mocion dated and filed on Jan 25, 1913 that
the title was taken in the name of Carmen Rallos but for the benefit of the
other heirs, namely Maria Fadullon Rallos and Concepcion Rallos.
3. With respect to Lot 2179-A, the Original Certificate of Title was
obtained by Atty. Filemon Sotto on June 17, 1921 in the name of Maria
Fadullon de Rallos and Carmen Rallos, again excluding Concepcion
Rallos. When Gov. Gen. Wood sued Atty. Sotto for damages in the
famous Wood-Sotto libel case, Atty. Sotto, fearful of the issuance of
attachments proceedings, caused Maria Fadullon and Carmen Rallos to
sell Lot 2179-A in favor of the spouses Agustin Jereza and Beatriz de
Jereza, in whose names the Original Certificate of Title were then
transferred. However, Atty. Sotto obliged the Jerezas to execute a
counter deed of sale in his favor and consequently a Transfer Certificate
of Title was issued in the name of Atty. Filemon Sotto. The fictitious
transfer of the lot to the Jereza spouses which was proved by the
testimony of the Private Secretary of Atty. Filemon Sotto does not
indicate a clear repudiation of the trust or of the co-ownership; the
alleged repudiation was not open, public and deliberate. The acts, on the
contrary, were secretive and fraudulent assertions of exclusive
ownership.
4. With regards to Lot 842, the same was registered on Feb. 5, 1918 in
the name of Carmen Rallos and her mother Maria Fadullon Rallos, also
to the exclusion of Concepcion Rallos. A deed of sale executed by Maria
Fadullon purported to sell her ½ share of the lot in favor of Concepcion
Rallos. This deed was among the documents kept in the private files of
Atty. Sotto which were delivered by Cesar Sotto to the respondents. This
deed was not registered in the Office of the Register of Deeds but was
kept secret in the files of Atty. Sotto. Thereafter, another deed was
registered whereby Maria Fadullon sold her share to Carmen Rallos and
upon the registration of the latter deed, title was consolidated in the name
of Carmen Rallos, who was issued a new Transfer Certificate of Title.
That the deed of sale supposedly asserting a claim of ownership and
transfer thereof was kept under seal of secrecy cannot be considered as
unequivocal acts of repudiation of the trust and of the co-ownership.
Although the title to the lot was finally consolidated in the name of
Carmen Rallos thru this secret manner, We must regard the registration
to be for the benefit of the other co-heirs who cannot be prejudiced by
such furtive and stealthy act.
The finding of the respondent Court of Appeals that "(t)he issuance of
titles and the execution of the purported sales and transfers, which all
culminated in Atty. Sotto's acquisition of titles in his name, occurred
during the existence of the express trust, and were shrouded by a cloud
of secrecy, at least as far as Concepcion Rallos was concerned. AU the
papers and documents pertaining to the issuance of titles and to the
transfers and sales were kept in Atty. Sotto's possession, and concealed
from the knowledge of Concepcion Rallos. At the time Concepcion Rallos
was being deprived of a valuable share in the inheritance, she was kept
completely in the dark. Under the facts, appellee cannot rely on the
certificates of title in the names of Atty. Sotto to defeat the plaintiffs' right
and cause of action," 19clearly appears to be correct and well-founded
that the same will not be disturbed by Us in the present petition for review
on certiorari.
In Diaz, et al. vs. Gorricho and Aguado Phil. 261, the Supreme Court,
speaking thru Justice J.B.L. Reyes, said. The express trusts disable the
trustee from acquiring for his own benefit the property committed to his
management or custody, at least while he does not openly repudiate the
trust, and makes such repudiation known to the beneficiary or cestui que
trust. For this reason, the old Code of Civil Procedure (Act 190) declared
that the rules on adverse possession do not apply to "continuing and
subsisting" (i.e., unrepudiated) trusts."
In Valdez, et al vs. Olarga et al., 51 SCRA 71, the Supreme Court, with
Acting Chief Justice Makalintal as ponente, held: "And from the
standpoint of acquisitive prescription, or prescription of ownership, this
Court has held in numerous decisions involving fiduciary relations such
as those occupied by a trustee with respect to the cestui que trust that as
a general rule the former's possession is not adverse and therefore
cannot ripen into a title by prescription. Adverse possession in such a
case requires the concurrence of the following circumstances: (a) that the
trustee has performed unequivocal acts of repudiation amounting to an
ouster of the cestui que trust; (b) that such positive acts of repudiation
have been made known to the cestui que trust and (c) that the evidence
thereon should be clear and conclusive."
In the light of the above doctrinal , We rule that the registration of the lots
in the names of Carmen Rallos and her mother Maria Fadullon Vda de
Rallos and their subsequent transfers and consolidation to Carmen
Rallos' name alone in a manner shown to be fictitious, fraudulent and
secretive, thereby keeping the cestuis que trust in the dark did not
constitute acts of repudiation of the express trust. Such registrations were
ineffective and not binding upon the cestui que trust. We are persuaded
and convinced that the circumstances required by said decisions are not
present in the case at bar.
Petitioner finally raises a number of points which according to him
constitute acts of repudiation by Concepcion Rallos such as her failure
and that of her heirs to oppose the probate of the will of Carmen and that
this failure also constitute laches; that the failure of the three inventories
of properties submitted in the intestate proceedings of Concepcion Rallos
to include the five parcels of land in question is a repudiation; that this
omission has also placed the respondents in estoppel to claim now the
properties; and that the failure of respondents to take any action to
recover the properties during the lifetime of Filemon Sotto constitute
laches.
Laches has been defined as the failure or neglect, for an unreasonable
and unexplained length of time, to do that which by exercising due
diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or
declined to assert it. (Tijam, et al. v. Sibonghanoy, et al., No. L-21450,
April 15, 1968, 23 SCRA 29, 35). The defense of laches is an equitable
one and does not concern itself with the character of the defendant's title,
but only with whether or not by reason of the plaintiff's long inaction or
inexcusable neglect he should be barred from asserting his claim at all.
(Pabalate v. Echarri, Jr., 35 SCRA 518).
Estoppel, on the other hand, rests on this rule: whenever a party has, by
his declaration, act or omission, intentionally and deliberately led the
other to believe a particular thing true, and to act, upon such belief, he
cannot, in any litigation arising out of such declaration, act, or omission,
be permitted to falsify it." (De Castro vs. Ginete,
L-30058, March 28, 1969, 27 SCRA 623). Estoppel has its origin in equity
and being based on moral and natural justice, finds applicability whatever
and whenever the special circumstances of a case so demand (Castrillo
vs. Court of Appeals, L-18046, March 31, 1964, 10 SCRA 549; Beronilla
vs. Government Service Insurance System, L-21723, November 26,
1970, 36 SCRA 44).
In determining whether a delay in seeking to enforce a right constitutes
laches, the existence of a confidential relationship between the parties is
an important circumstance for consideration, a delay under such
circumstances not being so strictly regarded as where the parties are
strangers to each other. The doctrine of laches is not strictly applied
between near relatives, and the fact that the parties are connected by ties
of blood or marriage tends to excuse an otherwise unreasonable delay.
The claim that the heirs of Concepcion Rallos are guilty of laches and are
estopped from claiming the properties deserves scant consideration, for
in fiduciary relationship, the beneficiaries have the right to rely on the
trust and confidence reposed in the trustee. In the case at bar, there
being no effective repudiation of the express trust created by and among
the Rallos heirs, the defense of laches invoked by petitioner is unvailing.
(Buencamino, et al., G.R. No. L-19012, October 30, 1967). Moreover,
under the facts established and showing the complete dominance of Atty.
Sotto over the heirs and descendants of the Rallos family, the
confidential relationship between the parties connected by ties of
marriage and the reliance of the heirs with complete and absolute
confidence in their uncle-in-law, Atty. Sotto, who, however, kept the heirs
in total ignorance and suppressed from them the real truth regarding said
properties that they were already registered in Atty. Sotto's name as
finally revealed to them by Cesar Sotto, the nephew and protegee of Atty.
Sotto and were in danger of being lost to total strangers, the doctrine of
laches is not strictly applicable. Furthermore, Atty. Sotto received from his
wife, Carmen Rallos, the properties under her will fully impressed with
their fiduciary character and in the full knowledge that said properties
were trust properties as far back in 1913 when he drafted and prepared
the Mocion Sobre la Disposicion de los Bienes and filed the same in the
probate proceedings. This knowledge he carried into his marriage with
Carmen Rallos and throughout his lifetime so that the will executed by
Carmen Rallos bequeathing the properties to her husband, Atty. Sotto,
was merely a vehicle of an existing trust. He thereby became a trustee of
the trust properties, not as an innocent third party and neither for a
valuable consideration. Notwithstanding the fact that the titles to the
properties were ultimately transferred to the name of Atty. Filemon Sotto,
widower, through administrative proceedings, the titling thereof must be
regarded as for the benefit and interest of the cestui que trust, the private
respondents herein.
In passing, it must be mentioned here that Don Filemon Sotto was a
distinguished figure in the political history of the nation, having been
elected a delegate from Cebu to the Constitutional Convention that
formulated the 1935 Philippine Constitution. In recognition of his wisdom
and sagacity, Don Filemon was chosen Chairman of the Committee of
Seven that drafted and sponsored the 1935 Philippine Constitution. It is
to the great credit and commendation to the moral integrity of Don
Filemon that having preserved and maintained the properties in question
under his name without alienating or transferring them to third persons,
and realizing the responsibilities of the trust reposed in him, he must
have intended said properties to be restored to their rightful owners who
are the Rallos heirs, the private respondents herein.
We are satisfied that respondents, upon discovery of the fraudulent
transfers, fictitious sales and concealed deeds relating to the trust
properties which were revealed to them by Cesar Sotto, the very nephew
and protegee of Atty. Filemon Sotto and guardian appointed over the
latter's estate, promptly and seasonably filed the present action for
reconveyance. There is no absolute rule as to what constitutes laches or
staleness of demand; each case is to he determined according to its
particular circumstances. The question of laches is addressed to the
sound discretion of the court and since laches is an equitable doctrine, its
application is controlled by equitable considerations. It cannot be invoked
to defeat justice or to perpetrate fraud and injustice. It would be rank
injustice and patently iniquitous to deprive the lawful heirs of their rightful
inheritance.
Private respondents are entitled to the relief prayed for, which is for the
reconveyance of the properties to them. Since their grandmother, Maria
Fadullon Vda. de Rallos die in 1938, her pro-indiviso share in the
properties then owned in co-ownership descended by intestacy to her
daughters, Concepcion and Carmen. Upon Carmen's death in 1945
without issue, the properties devolved to Concepcion pursuant to their
agreement in 1925 as testified to by Pilar Teves. When Concepcion
Rallos died, her heirs, who are now the private respondents, are entitled
to these properties and should be declared owners thereof. They are also
entitled to the fruits thereof, the rentals of the properties, including
damages and attorney's fees as assessed by the appellate court which
We find just and reasonable.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed
from is hereby affirmed, with costs against the petitioner.

SO ORDERED.

Teehankee (Chairman), Makasiar, Muñoz Palma and Fernandez, JJ.,

concur.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19060 May 29, 1964
IGNACIO GERONA, MARIA CONCEPCION GERONA, FRANCISCO
GERONA and DELFIN GERONA,petitioners,
vs.
CARMEN DE GUZMAN, JOSE DE GUZMAN, CLEMENTE DE
GUZMAN,
FRANCISCO DE GUZMAN, RUSTICA DE GUZMAN, PACITA DE
GUZMAN and VICTORIA DE GUZMANrespondents.
Manuel J. Serapio for petitioners.
D. F. Castro and Associates for respondents.
CONCEPCION, J.:
Appeal by certiorari from a decision of the Court of Appeals, affirming that
of the Court of First Instance of Bulacan.
In the complaint, filed with the latter court on September 4, 1958,
petitioners herein, namely, Ignacio, Maria Concepcion, Francisco and
Delfin, all surnamed Gerona, alleged that they are the legitimate children
of Domingo Gerona and Placida de Guzman; that the latter, who died on
August 9, 1941 was a legitimate daughter of Marcelo de Guzman and his
first wife, Teodora de la Cruz; that after the death of his first wife, Marcelo
de Guzman married Camila Ramos, who begot him several children,
namely, respondents Carmen, Jose, Clemente, Francisco, Rustica,
Pacita and Victoria, all surnamed De Guzman; that Marcelo de Guzman
died on September 11, 1945; that subsequently, or on May 6, 1948,
respondents executed a deed of "extra-judicial settlement of the estate of
the deceased Marcelo de Guzman", fraudulently misrepresenting therein
that they were the only surviving heirs of the deceased Marcelo de
Guzman, although they well knew that petitioners were, also, his forced
heirs; that respondents had thereby succeeded fraudulently in causing
the transfer certificates of title to seven (7) parcels of land, issued in the
name of said deceased, to be cancelled and new transfer certificates of
title to be issued in their own name, in the proportion of 1/7th individual
interest for each; that such fraud was discovered by the petitioners only
the year before the institution of the case; that petitioners forthwith
demanded from respondents their (petitioners) share in said properties,
to the extent of 1/8th interest thereon; and that the respondents refused
to heed said demand, thereby causing damages to the petitioners.
Accordingly, the latter prayed that judgment be rendered nullifying said
deed of extra-judicial settlement, insofar as it deprives them of their
participation of 1/18th of the properties in litigation; ordering the
respondents to reconvey to petitioners their aforementioned share in said
properties; ordering the register of deeds to cancel the transfer
certificates of title secured by respondents as above stated and to issue
new certificates of title in the name of both the petitioners and the
respondents in the proportion of 1/8th for the former and 7/8th for the
latter; ordering the respondents to render accounts of the income of said
properties and to deliver to petitioners their lawful share therein; and
sentencing respondents to pay damages and attorney's fees.
In their answer, respondents maintained that petitioners' mother, the
deceased Placida de Guzman, was not entitled to share in the estate of
Marcelo de Guzman, she being merely a spurious child of the latter, and
that petitioners' action is barred by the statute of limitations.
After appropriate proceedings, the trial court rendered a decision finding
that petitioners' mother was a legitimate child, by first marriage, of
Marcelo de Guzman; that the properties described in the complaint
belonged to the conjugal partnership of Marcelo de Guzman and his
second wife, Camila Ramos; and that petitioners' action has already
prescribed, and, accordingly, dismissing the complaint without costs. On
appeal taken by the petitioners, this decision as affirmed by the Court of
Appeals, with costs against them.
Petitioners maintain that since they and respondents are co-heirs of the
deceased Marcelo de Guzman, the present action for partition of the
latter's estate is not subject to the statute of limitations of action; that, if
affected by said statute, the period of four (4) years therein prescribed did
not begin to run until actual discovery of the fraud perpetrated by
respondents, which, it is claimed, took place in 1956 or 1957; and that
accordingly, said period had not expired when the present action was
commenced on November 4, 1958.
Petitioners' contention is untenable. Although, as a general rule, an
action for partition among co-heirs does not prescribe, this is true only as
long as the defendants do not hold the property in question under an
adverse title (Cordova vs. Cordova, L-9936, January 14, 1948). The
statute of limitations operates as in other cases, from the moment such
adverse title is asserted by the possessor of the property (Ramos vs.
Ramos, 45 Phil. 362; Bargayo v. Camumot, 40 Phil. 857; Castro v.
Echarri, 20 Phil. 23).
When respondents executed the aforementioned deed of extra-judicial
settlement stating therein that they are the sole heirs of the late Marcelo
de Guzman, and secured new transfer certificates of title in their own
name, they thereby excluded the petitioners from the estate of the
deceased, and, consequently, set up a title adverse to them. And this is
why petitioners have brought this action for the annulment of said deed
upon the ground that the same is tainted with fraud. 1äwphï1.ñët
Although, there are some decisions to the contrary (Jacinto v. Mendoza,
L-12540, February 28, 1959; Cuison v. Fernandez, L-11764, January 31,
1959; Maribiles v. Quinto, L-10408, October 18, 1956; and Sevilla v. De
los Angeles, L-7745, November 18, 1955), it is already settled in this
jurisdiction that an action for reconveyance of real property based upon a
constructive or implied trust, resulting from fraud, may be barred by the
statute of limitations (Candelaria v. Romero, L-12149, September 30,
1960; Alzona v. Capunita, L-10220, February 28, 1962).
Inasmuch as petitioners seek to annul the aforementioned deed of "extra-
judicial settlement" upon the ground of fraud in the execution thereof, the
action therefor may be filed within four (4) years from the discovery of the
fraud (Mauricio v. Villanueva, L-11072, September 24, 1959). Such
discovery is deemed to have taken place, in the case at bar, on June 25,
1948, when said instrument was filed with the Register of Deeds and new
certificates of title were issued in the name of respondents exclusively, for
the registration of the deed of extra-judicial settlement constitute
constructive notice to the whole world (Diaz v. Gorricho, L-11229, March
29, 1958; Avecilla v. Yatco, L-11578, May 14, 1958; J.M. Tuason & Co.,
Inc. v. Magdangal, L-15539, January 30, 1962; Lopez v. Gonzaga, L-
18788, January 31, 1964).
Ignacio Gerona became of age on 3 March 1948. He is deemed
to have discovered defendants' fraud on 25 June 1948 and had,
therefore, only 4 years from the said date within which to file this
action. Plaintiff Maria Concepcion Gerona became of age on 8
December 1949 or after the registration of the deed of extra-
judicial settlement. She also had only the remainder of the period
of 4 years from December 1949 within which to commence her
action. Plaintiff Francisco Gerona became of age only on 9
January 1952 so that he was still a minor when he gained
knowledge (even if only constructive) of the deed of extra-judicial
settlement on 25 June 1948. Likewise, plaintiff Delfin Gerona
became of legal age on 5 August 1954, so that he was also still a
minor at the time he gained knowledge (although constructive) of
the deed of extra-judicial settlement on 25 June 1948. Francisco
Gerona and Delfin Gerona had, therefore, two years after the
removal of their disability within which to commence their action
(Section 45, paragraph 3, in relation to Section 43, Act 190), that
is, January 29, 1952, with respect to Francisco, and 5 August
1954, with respect to Delfin.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed,
with costs against petitioners herein. It is so ordered.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barredo, Paredes, Regala
and Makalintal, JJ., concur.
Padilla, Labrador and Dizon, JJ., took no part.

As correctly stated in the decision of the trial court:

In the light of the foregoing it must, therefore, be held that

plaintiffs learned at least constructively, of the alleged fraud
committed against them by defendants on 25 June 1948 when
the deed of extra-judicial settlement of the estate of the deceased
Marcelo de Guzman was registered in the registry of deeds of
Bulacan, Plaintiffs' complaint in this case was not filed until 4
November 1958, or more than 10 years thereafter. Plaintiff
 Republic of the Philippines
SUPREME COURT
Manila
G.R. No. L-33360 April 25, 1977
MAXIMINO CARANTES (Substituted by Engracia Mabanta
Carantes), petitioner,
vs.
COURT OF APPEALS, BILAD CARANTES, LAURO CARANTES,
EDUARDO CARANTES and MICHAEL TUMPAO, respondents,
Sinforoso Fingonil and Sinai C. Hamada for petitioner.
Ruben C. Ayson for private respondents.
CASTRO, C.J:
This is an appeal by certiorari from the decision of the Court of Appeals in
CA-G.R. 36078-R promulgated on December 23, 1970 reversing the
judgment of the Court of First Instance of Baguio City, Branch II, in Civil
Case 804, and from the appellate court's resolution dated March 7, 1971
denying herein petitioner's motion for reconsideration.
Mateo Carantes was the original owner of Lot No. 44 situated at Loakan,
Baguio City, as evidenced by Original Certificate of Title No. 3 issued in
his name on September 22, 1910 by virtue of Free Patent No. 5 granted
to him on the same date. In 1913 Mateo died. He was survived by his
widow Ogasia and six children, namely, Bilad, Lauro, Crispino, Maximino,
Apung and Sianang, all surnamed Carantes.
In 1930 construction of the Loakan Airport was commenced by the
Government. Because a portion of Lot No. 44 was needed for the landing
field, the Government instituted proceedings (Civil Case 338) for its
expropriation. For the purpose, Lot No. 44 was subdivided into Lots Nos.
44-A, 44-B, 44-C, 44-D and 44-E. The portion expropriated by the
Government was Lot No. 44-A.
In 1933 Special Proceedings Nos. 409 to 413 were filed with the court for
the settlement of the estate of the late Mateo Carantes. One of his sons,
herein petitioner Maximino Carantes, was appointed and qualified as
judicial administrator of the estate. In his capacity as administrator,
Maximino filed on June 20, 1939 a project of partition wherein he listed
as the heirs of Mateo Carantes who were entitled to inherit the estate,
himself and his brothers and sisters, or the latter's surviving children
Apparently because negotiations were, by that time, under way for the
purchase by the Government of Lots Nos. 44-B and 44-C for the purpose
of widening the Loakan Airport, the only property listed by Maximino in
the project of partition was the remaining portion of Lot No. 44.
On October 23, 1939 a deed denominated "Assignment of Right to
Inheritance" was executed by four of Mateo Carantes children, namely,
Bilad, Sianang, Lauro and Crispino, and the heirs of Apung Carantes
(also a son of Mateo who died in 1923), namely, Pitag, Bill, Alson,
Eduardo and Juan, assigning to Maximino Carantes their rights to
inheritance in Lot No. 44. The stated monetary consideration for the
assignment was P1.00. However, the document contains a recital to the
effect that the said lots, "by agreement of all the direct heirs and heirs by
representation of the deceased Mateo Carantes as expressed and
conveyed verbally. by him during his lifetime, rightly and exclusively
belong to the particular heir, Maximino Carantes, now and in the past in
the exclusive, continuous, peaceful and notorious possession of the
same for more than ten years."
On the same date Maximino Carantes sold to the Government Lots Nos.
44-B and 44-C and divided the proceeds of the sale among himself and
the other heirs of Mateo.
On February 6, 1940, upon joint petition of the heirs of Mateo Carantes,
the Court of First Instance of Baguio City issued an Order in another
proceeding — Administrative Case No. 368 — cancelling O.C.T. No. 3.
Pursuant thereto the said title was cancelled, and in its place Transfer
Certificate of Title No. 2533 was issued in the joint names of the five
children of Mateo Carantes and the children of Apung Carantes
(representing their deceased father) as co-owners pro indiviso, or one-
sixth share for each child.
On March 16, 1940 Maximino Carantes registered the deed of
"Assignment of Right to Inheritance." Accordingly, T.C.T. No. 2533 in the
names of the heirs was cancelled, and in lieu thereof Transfer Certificate
of Title No. 2540 was issued on the same date in the name of Maximino
Carantes. Also on the same date, Maximino, acting as exclusive owner of
the land covered by T.C.T. No. 2540, executed a formal deed of sale in
favor of the Government over Lots Nos. 44-B and 44-C.
On February 21, 1947, as a result of the approval of the Subdivision
Survey Plan psd-16786, and pursuant to the deed of sale executed in
1940 by Maximino Carantes in favor of the Government, T.C.T. No. 2540
in Maximino's name was cancelled, and in lieu thereof Transfer
Certificate of Title No. T98, covering Lots Nos. 44-A, 44-B arid 44-C, was
issued in the name of the Government, while Transfer Certificate of Title
No. T-99, covering the remaining Lots Nos. 44-D (100, 345 square
meters) and 44-E (10,070 square meters) was issued in the name of
Maximino Carantes, who has up to the present remained the registered
owner of said lots.
On September 4, 1958 the present complaint was filed by three children
of the late Mateo Carantes, namely, Bilad, Lauro and Crispino, and by
some of the surviving heirs of Apung and of Sianang ('also children of
Mateo Carantes). Maximino Carantes was named principal defendant,
and some of the heirs of Apung and Sianang were impleaded as parties-
defendants in view of their alleged reluctance to join as parties-plaintiffs.
In their complaint the plaintiffs alleged inter alia that they and/or their
predecessors-in-interest executed the deed of "Assignment of Right to
Inheritance" on October 23, 1939, only because they were made to
believe by the defendant Maximino Carantes that the said instrument
embodied the understanding among the parties that it merely authorized
the defendant Maximino to convey portions of Lot No. 44 to the
Government in their behalf to minimize expenses and facilitate the
transaction; and that it was only on February 18, 1958, when the plaintiffs
secured a copy of the deed, that they came to know that the same
purported to assign in favor of Maximino their rights to inheritance from
Mateo Carantes. The plaintiffs prayed that the deed of "Assignment of
Right to Inheritance" be declared null and void; that Lots Nos. 44-D and
44-E covered by T.C.T. No. T99 be ordered partitioned into six (6) equal
shares and the defendant Maximino Carantes be accordingly ordered to
execute the necessary deeds of conveyance in favor of the other
distributees and that the said defendant be ordered to pay the plaintiffs
the sum of P1,000 as attorney's fees and the sum of P200 as costs of
suit.
On September 10, 1958 the defendants filed a motion to dismiss on the
grounds (1) that the plaintiffs' cause of action is barred by the statute of
limitations because the deed of assignment was recorded in the Registry
of Property at the latest on February 21, 1947, hence, plaintiffs' cause of
action accrued from the said date, and since pursuant to article 1144 of
the new Civil Code an action based on a written contract must be brought
within ten years from the time the right of action accrues, plaintiffs' right to
file the complaint had already prescribed on September 4, 1958; and (2)
that the complaint states no cause of action because ownership over the
property became vested in Maximino Carantes by acquisitive prescription
ten years from its registration in his name on February, 21, 1947.
In an Order dated September 30, 1958, the trial court denied the motion
to dismiss on the grounds that there are allegations of co-ownership and
trust in the complaint, and, therefore, prescription did not lie, and that the
complaint alleges that the plaintiffs discovered the alleged fraud only in
February, 1958.
In their answer filed on October 7, 1958, the defendants traversed the
material averments of the complaint and alleged inter alia that the
property of the deceased Mateo Carantes and his wife had been divided
and distributed among their six children; that the deed of "Assignment of
Right to Inheritance" was an acknowledgment of the fact of designation of
the property therein described as specifically pertaining or belonging by
right of inheritance to the defendant Maximino Carantes: that there was
never any agreement between the assignors and the assignee
authorizing the latter to merely represent his co-heirs in negotiations with
the Government; and that the assignors knew fully well that the deed of
assignment contained what, on its face, it represented, By way of special
defenses, the defendants alleged that any supposed agreement between
the plaintiffs and/or their predecessors-in-interest and the defendant
Maximino Carantes, other than the deed of assignment, is barred by the
statute of frauds and is null and void because not in writing, much less, in
a public instrument; that the only agreement between the parties is what
appears in the deed of assignment; that the plaintiffs' right of action has
already prescribed; that the defendant Maximino Carantes acquired
absolute ownership over the property in question by acquisitive
prescription and registration; and that any obligation on the part of the
defendants in relation to the property had been discharged by novation,
condonation and compensation. The defendants set up the counterclaim
that in the event the rights of the heirs are disturbed, the produce from
the lands inherited by the plaintiffs from Mateo Carantes as well as the
real estate taxes on the land paid by the defendant Maximino Carantes
should be collated; and that the filing of the complaint being malicious,
the defendants should be awarded the sum of P4,500 by way of nominal,
compensatory, moral and corrective damages, including attorney's fees
and expenses of litigation. The defendants prayed for the dismissal of the
complaint and payment of damages to them.
An answer to the counterclaim was filed by the plaintiffs on November 7,
1958 denying the material allegations of the counterclaim.
After trial, the court rendered its decision on January 28, 1965. It was the
trial court's opinion that since an action based on fraud prescribes in four
years from the discovery of the fraud, and in this case the fraud allegedly
perpetrated by the defendant Maximino Carantes must be deemed to
have been discovered on March 16, 1940 when the deed of assignment
was registered, the plaintiffs' right of action had already prescribed when
they filed the action in 1958; and even assuming that the land remained
the common property of the plaintiffs and the defendant Maximino
Carantes notwithstanding the execution of the deed of assignment, the
co-ownership was completely repudiated by the said defendant by
performance of several acts, the first of which was his execution of a
deed of sale in favor of the Government on October 23, 1939, hence,
ownership had vested in the defendant Maximino Carantes by acquisitive
prescription. The court accordingly dismissed the complaint. It likewise
dismissed the counterclaim.
The plaintiffs moved for reconsideration. Their motion having been
denied in an Order dated March 8, 1965, they appealed to the Court of
Appeals.
As adverted to above, the Court of Appeals reversed the judgment of the
trial court, hence the present recourse.
-I-
In her brief filed with this Court, the petitioner argues that the private
respondents' action is not actually one for annulment of the deed of
"Assignment of Right to Inheritance" but for the reformation thereof,
hence, the said action has prescribed long before the filing of the
complaint.
The petitioner's theory that the private respondents' action is for
reformation of an instrument is a new one, adopted by the petitioner for
the first time on appeal to this Court. Her husband did not raise it as a
defense in his answer filed with the trial court, where, consequently, trial
proceeded on the theory that the action sought the declaration of nullity
of the deed of assignment. When the case reached the respondent court
the petitioner likewise did not raise this issue, although in truth, even had
she done so, it would have been a belated and futile exercise. She
cannot be allowed to change her theory of the case at this stage of the
proceedings.
The settled rule is that defenses not pleaded in the answer may not be
raised for the first time on appeal. 1 A party cannot, on appeal, change
fundamentally the nature of the issue in the case. 2 When a party
deliberately adopts a certain theory and the case is decided upon that
theory in the court below, he will not be permitted to change the same on
appeal, because to permit him to do so would be unfair to the adverse
party. 3
Consequently, we have to disregard the petitioner's theory that the action
is for reformation of an instrument, and must proceed on the basis of the
issues properly raised and ventilated before the trial court.
- II -
We do not agree with the respondent court's legal conclusion that the
deed of "Assignment of Right to Inheritance" is void ab initio and
inexistent on the grounds that real consent was wanting and the
consideration of P1.00 is so shocking to the conscience that there was in
fact no consideration, hence, the action for the declaration of the
contract's inexistence does not prescribe pursuant to article 1410 of the
new Civil Code.
Article 1409 (2) of the new Civil Code relied upon by the respondent court
provides that contracts "which are absolutely simulated or fictitious" are
inexistent and void from the beginning. The basic characteristic of
simulation is the fact that the apparent contract is not really desired or
intended to produce legal effects or in any way alter the juridical situation
of the parties. 4
The respondents' action may not be considered as one to declare the
inexistence of a contract for lack of consideration. It is total absence of
cause or consideration that renders a contract absolutely void and
inexistent. 5 In the case at bar consideration was not absent. The sum of
P1.00 appears in the document as one of the considerations for the
assignment of inheritance. In addition — and this of great legal import —
the document recites that the decedent Mateo Carantes had, during his
lifetime, expressed to the signatories to the contract that the property
subject-matter thereof rightly and exclusively belonged to the petitioner
Maximino Carantes. This acknowledgment by the signatories definitely
constitutes valuable consideration for the contract.
- III -
The present action is one to annul the contract entitled "Assignment of
Right to Inheritance" on the ground of fraud.
Article 1390 of the new Civil code provides that a contract "where the
consent is vitiated by mistake, violence, intimidation, undue influence or
fraud," is voidable or annullable. Even article 1359, which deals on
reformation of instruments, provides in its paragraph 2 that "If mistake,
fraud, inequitable conduct, or accident has prevented a meeting of the
minds of the parties, the proper remedy is not reformation of the
instrument but annulment of the contract," When the consent to a
contract was fraudulently obtained, the contract is avoidable. 6 Fraud or
deceit does not render a contract void ab initio and can only be a ground
for rendering the contract voidable or annullable pursuant to article 1390
of the new Civil Code by a proper action in court. 7
The present action being one to annul a contract on the ground of fraud,
its prescriptive period is four years from the time of the discovery of the
fraud. 8
The next question that must be resolved is: from what time must fraud,
assuming that there was fraud, be deemed to have been discovered in
the case at bar? From February, 1958, when, according to the private
respondents, and as found by the respondent court, the private
respondents actually discovered that they were defrauded by the
petitioner Maximino Carantes when rumors spread that he was selling
the property for half a million pesos? Or from March 16, 1940, when, as
admitted by the parties and found by both the trial court and the
respondent court, the deed of "Assignment of Right to Inheritance" was
registered by the petitioner in the Office of the Register of Deeds?
The weight of authorities is to the effect that the registration of an
instrument in the Office of the Register of Deeds constitutes constructive
notice to the whole world, and, therefore, discovery of the fraud is
deemed to have taken place at the time of the registration. 9 In this case
the deed of assignment was registered on March 16, 1940, and in fact on
the same date T.C.T. No. 2533 in the names of the heirs of Mateo
Carantes was cancelled, and T.C.T. No. 2540 in the name of the
petitioner was issued in lieu thereof. The four-year period within which
the private respondents could have filed the present action consequently
commenced on March 16, 1940; and since they filed it only on
September 4, 1958, it follows that the same is barred by the statute of
limitations.
The respondent court refused to accord recognition to the rule of
constructive notice, because, according to it, there was a fiduciary
relationship between the parties. Upon this premise it concluded that the
four-year prescriptive period should be deemed to have commenced in
February, 1958 when private respondents had actual notice of the fraud.
Without resolving the question of whether or not constructive notice
applies when a fiduciary relationship exists between the parties — a point
which is not in issue in this case — we hold that the respondent court's
conclusion, lacking the necessary premise upon which it should be
predicated, is erroneous.
Definitely, no express trust was created in favor of the private
respondents. If trust there was, it could only be — as held by respondent
court — a constructive trust, which is imposed by law. In constructive
trusts there is neither promise nor fiduciary relations; the so-called trustee
does not recognize any trust and has no intent to hold the property for the
beneficiary. 10 In at least two cases, the rule of constructive notice was
applied by this Court although a constructive trust had been created.
Thus, in Lopez, et al. vs. Gonzaga, et al., 11 where the plaintiffs and the
defendants were co-heirs and the decedent owner of the lands had
merely allowed the principal defendant to use the products and rentals of
the lands for purposes of coconut oil experimentation, but said defendant
later caused the transfer of the certificates of title in his own name
through the registration of certain judicial orders, this Court held that the
recording of the judicial orders sufficed as notice to the other heirs, for
the rule is that knowledge of what might have been revealed by proper
inquiry is imputable to the inquirer. In Gerona, et al. vs. De Guzman, et
a., supra, the petitioners and the private respondents were co-heirs, and
the petitioners' action for partition and reconveyance was based upon a
constructive trust resulting from fraud. This Court held that the discovery
of the fraud "is deemed to have taken place, in the case at bar, on June
25, 1948, when said instrument was filed with the Register of Deeds and
new certificates of title were issued in the name of respondents
exclusively, for the registration of the deed of extra-judicial settlement
constituted constructive notice to the whole world."
- IV -
The decision under review found that a constructive trust was created in
favor of the private respondents, and, holding that an action for
reconveyance based on constructive trust is imprescriptible, recognized
the right of the private respondents to file an action for reconveyance
regardless of the lapse of time, citing Gayandato vs. Treasurer of the
Philippine Islands, et al. 12
We have examined Gayandato, and have failed to find support therein for Makasiar, Muñoz-Palma and Martin, JJ., concur.
the holding of the respondent court. In any event, it is now settled that an
action for reconveyance based on implied or constructive trust is
prescriptible it prescribes in ten years. 13 In this case the ten-year
prescriptive period began on March 16, 1940, when the petitioner
registered the deed of "Assignment of Right to Inheritance" and secured
the cancellation of the certificate of title in the joint names of the heirs of Separate Opinions
Mateo Carantes, and, in lieu thereof, the issuance of a new title
exclusively in his name. 14 Since the present action was commenced only
on September 4, 1958, it is clear that the same is barred by extinctive
prescription. TEEHANKEE, J, concurring:

-V- I concur on the ground that respondents' action based on constructive

trust prescribed after ten years.
It was also held by the respondent court that the petitioner was merely
holding the property in trust for the benefit of his co-heirs as
administrator, hence, there was a continuing and subsisting trust, and
pursuant to section 38 of the Code of Civil Procedure, the provisions of Separate Opinions
the said Code on prescription (Secs. 40-41) do not apply. It is our view,
however, that there was no continuing and subsisting trust. TEEHANKEE, J, concurring:

From March 16, 1940, when the petitioner registered the deed of I concur on the ground that respondents' action based on constructive
assignment and had the Certificate of title in the names of the heirs trust prescribed after ten years.
cancelled and a new certificate of title issued in his own name, he began
to hold the property in open and clear repudiation of any trust. 15 It will be
noted that on the same date, the petitioner also executed a formal deed
of sale over portions of Lot No. 44 in favor of the Government. In 1948 he
mortgaged Lot No. 44-D with the Philippine National Bank as his
exclusive property. The petitioner's exercise of such rights of dominion is
anathema to the concept of a continuing and subsisting trust. The
circumstances, found by the respondent court, that the name of Mateo
Carantes still appeared in the tax declaration as owner of the land and
the name of the petitioner as administrator, that the real estate taxes,
were shared by the other heirs with the petitioner, and that some of the
heirs are living in houses erected by them on the land, wane in legal
significance in the face of the petitioner's aforesaid uncontroverted acts of
strict dominion. In connection with the payment of real estate taxes, it is
to be noted that the respondent court also found that all the receipts were
issued in the name of the petitioner. The circumstances mentioned above
do not make out a case of a continuing and subsisting trust.

ACCORDINGLY, the judgment of the Court of Appeals appealed from is

set aside, and another entered dismissing the complaint in Civil Case No.
804 of the Court of First Instance of Baguio. No costs.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-61791 January 28, 1983
PURIFICACION ALARCON and ROSAURO ALARCON, petitioners,
vs.
HONORABLE ABDULWAHID BIDIN, District Judge, Court of First
Instance, Branch I, Zamboanga City, and FLORENTINO SERGAS,
MOISES SERGAS, ANASTACIO SERGAS, CRESENCIA SERGAS,
TOLENTINO SERGAS, ENGELERTO SERGAS, CARMELITA
SERGAS, and DOMINGO ROJAS FRANCISCO, respondents.
Alejandro C. Saavedra for petitioners.
Jose C. Azcarraga, Jr., for private respondents.
MELENCIO-HERRERA, J.:
Petitioners seek a review of the Orders of respondent Judge dismissing
their Complaint in Civil Case No. 2116 on the ground of laches, and
denying reconsideration.
The records disclose that Civil Case No. 2116 is an action for "Recovery
of Possession of Real Property with Damages." The property involved is
Lot 3178 of the Zamboangas cadastre, with an area of 74,638 square
meters, more or less, situated in Malugatay, Zamboanga, covered by
Original Certificate of Title No. T-13, 125 (0-9493) of the Register of
Deeds of Zamboanga, in the names of (1) Roberto Alarcon, married to
Basilia Timpanco, and (2) Guillerma Trinidad, wife of Mariano Daquel, in
undivided shares. Roberto Alarcon is the father of petitioners-plaintiffs.
In 1923, Roberto Alarcon leased the disputed property to Esteban
Sergas, predecessor-in-interest of private respondents surnamed
Sergas, which lease was duly recorded on OCT No. T-13, 125 (0-9493).
On January 5, 1926, Roberto Alarcon sold a portion of his undivided
share in the property to Esteban Sergas. 1 The date of the instrument of
sale was entered on the title as January 5, 1926, and the date of
inscription as May 3, 1963. The name of the vendor in the text of the
"Escritura de Venta" was "Roberto Alarcon", but the typewritten name at
the bottom of the document, above which appears a thumbmark, reads
"Alberto Alarcon".
Also entered on the title was a "Cancellation of Lease" with the Identical
dates of "Jan. 5, 1926" as the date of the document, and May 3, 1963 "
as the date of inscription. 2
On July 9, 1928, Roberto Alarcon sold another portion of his share of the
land to Adela Alvarez, who, in turn, sold it, on November 29, 1954, to
Domingo Rojas Francisco, one of the private respondents.
Denying the genuineness of the "Escrituras de Venta" under oath, and
alleging that the thumbmark in the Deed of Sale in favor of Esteban
Sergas is not Roberto Alarcon's nor is he "Alberto" Alarcon, and that the
document in favor of Adela Alvarez was neither signed by Roberto,
petitioners, as plaintiffs, filed suit for recovery of what they allege is their
portion of cadastral lot 3178 on October 23, 1978.
Private respondents, defendants below, moved to dismiss the complaint
on the ground that the action is barred by the statute of limitations and
that petitioners are guilty of laches. Petitioners opposed on the ground
that no prescription can lie against their father's recorded title.
On May 23, 1979, respondent Judge dismissed the complaint "for the
reason that (it) is barred by laches", and, on August 27, 1979, he denied
reconsideration of the dismissal Order.
It is these two Orders that petitioners now assail.
Upon the facts, and the evidence on record, we sustain the Orders of
respondent Judge.
Petitioners' allegation that their deceased father, Roberto Alarcon, never
sold the land in litigation is refuted by the "Escrituras de Venta" which he
had executed, one in favor of Esteban Sergas, and the other in favor of
Adela Alvarez. The denial by petitioners of the genuineness of the deeds
is overcome by the fact that from the date of sale in favor of Esteban
Sergas in 1926, the latter had taken possession of the property and has
been in adverse possession under claim of ownership ever since,
followed by his successors-in-interest, the private respondents surnamed
Sergas. Similarly, the other vendee, Adela Alvarez, also took possession
from the date of sale in her favor in 1928 until she sold her portion in
1954 to private respondent Domingo Rojas Francisco, who has also been
in uninterrupted possession since said date. Noteworthy also is the fact
that from the dates of the sales in 1926 and 1928, respectively, up to the
time of his death in 1960, or approximately at least 32, and at the most
34 years, the vendor Roberto Alarcon took no steps to rescind the sales
nor reivindicate the property. And as far as petitioners are concerned,
more than 50 years had elapsed since the execution of the deeds of sale
in 1926 and 1928 and the date they instituted suit for recovery of
possession in 1978. Clearly, their passivity and inaction and, before
them, that of their father, constituted laches. As held by respondent
Judge, their cause of action must be considered barred for it has been
converted into a stale demand. 3 And, although, as petitioners claim, the
defense of laches is not a ground for a motion to dismiss there would be
no point to continue litigating this case in view of the finding that
petitioners are guilty thereof.

True, land registered under the Torrens System may not be acquired by
prescription or adverse possession, as petitioners correctly contend. The
protection given by law is in favor of registered owners. As it is, although
title to the disputed property is still in the name of Roberto Alarcon, it has
been subjected to the registration in 1963 of the sale made by him to
Esteban Sergas. Technically, therefore, the latter became the owner in
1963 of the portion of the land sold to him. It may also be stated that if
petitioners' cause of action in seeking the nullification of the sales is
predicated on fraud, the same has prescribed for not having been
brought within four years from the inscription of the deed of sale in favor
of Esteban Sergas in 1963.

At any rate, laches is invocable by both the Sergas and private

respondent Domingo Rojas Francisco.

ACCORDINGLY, the due course Resolution is hereby recalled and the

instant Petition is hereby denied for lack of merit.

SO ORDERED.

Teehankee (Chairman), Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Plana, J., is on official leave.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22587 April 28, 1969
RUFINO BUENO, FILOMENA B. GUERRO, LUIS B. GUERRERO,
BENJAMIN B. GUERRERO, VIOLETA B. REYES-SAMONTE,
FELICIDAD B. REYES-FONACIER, MERCEDES B. REYES, HONESTA
B. REYES-SARMIENTO, TEODORA B. REYES-DALUMPINES,
MAMERTA B. REYES-MERCADO, ROSARIO B. REYES-
CONCEPCION, FEDERICO B. REYES and CONCEPCION B.
REYES, plaintiffs-appellants,
vs.
MATEO H. REYES, and JUAN H. REYES defendants-appellees.
Rafael B. Ruiz and Benjamin B. Guerrero for plaintiffs-appellants.
Harold M. Hernando for defendants-appellees.
MAKALINTAL, J.:
In Civil Case No. 3636 of the Court of First Instance of Ilocos Norte, the
plaintiffs' complaint was dismissed, upon motion of the defendants, in an
order dated July 29, 1963. The case is before us on appeal from the said
order of dismissal.
The antecedent facts are as follows: On January 7, 1936 Francisco H.
Reyes filed an answer in Cadastral Case No. 47 of Ilocos Norte, claiming
lot No. 2857 of the Laoag Cadastre as property belonging to himself and
to his two brothers, Juan and Mateo. The case was heard without
opposition, and the lot was adjudicated in favor of the claimants on March
27, 1939, in whose names Original Certificate of Title No. 19074 was
issued on the following July 7.
Twenty-three years thereafter, or on December 12, 1962 to be exact, the
plaintiffs filed the action below for reconveyance of lot No. 2357. They
allege in their complaint that the said lot originally belonged to Jorge
Bueno, who died leaving three children, namely, Brigida Bueno, Eugenia
Bueno and Rufino Bueno, to whom the property descended by intestate
succession; that subsequently Brigida and Eugenia died, leaving their
respective children, who are now the plaintiffs-appellants together with
Rufino Bueno; that Francisco H. Reyes was Eugenia's husband and the
father of the plaintiffs surnamed Reyes, "who agreement among the heirs
of Jorge Bueno was entrusted in filing the answer in the cadastral
proceedings and in obtaining the title thereto for and in behalf of all the
heirs of Jorge Bueno, including his wife Eugenia Bueno." (Par. V of the
complaint.)
The other pertinent allegations in the complaint read:
VI
That as agreed upon with said Francisco Reyes, said
Francisco Reyes declared the said parcel of land above-
described in his name, and either in bad faith or by
mistake filed an answer in the cadastral proceedings and
obtained title thereto in his name and those of brothers,
Mateo and Juan, who connived and consented to the
malicious or erroneous acts of the late Francisco Reyes,
knowing fully well that said parcel of land was never
owned by them and has never been in their possession,
and knowing further that said parcel of land belonged to,
and possessed by the wife of Francisco Reyes in
conjunction with her sister and brother, Brigida and
Rufino, respectively;
VII
That the fact that Francisco Reyes, Mateo Reyes and
Juan Reyes are declared owners of the lot in suit by virtue
of Original Certificate of Title No. 19074 has only been
discovered during this year when Mateo Reyes and Juan
Reyes, the defendants herein, including Francisco Reyes
who was dead long ago, filed with this Court a petition for
the issuance of a writ of possession against a wrong
person by the name of Mateo R. Reyes, who now
admittedly (sic) not the possessor of the lot but plaintiffs
herein, and the plaintiffs have demanded from the
defendants the reconveyance and/or the quitclaiming of
their undivided shares as appearing in said Certificate of
Title No. 19074 but then, they refused, and continue to
refuge to do so;
The defendants Juan and Mateo Reyes 1 filed their answer, in which, they
raised a number of defenses, including laches, imprescriptibility of title,
and prescription of action. This last defense was reiterated in a
subsequent motion to dismiss, which was upheld by the court a quo in
the order already referred to and now subject of this appeal.
Two errors are assigned by the appellants: (1) in the dismissal of the
complaint on the ground of prescription; and (2) in the dismissal of the
complaint "even in relation to appellants surnamed Reyes, the children of
Francisco Reyes."
Both the appellees and the court below proceeded on the theory that the
action for reconveyance was predicated on the existence of an implied
trust, and that such an action prescribes in 10 years. The appellants
counter, in this appeal, that the trust was not implied but express, and
that in any case even an implied trust, according to some decisions of
this Court, is imprescriptible.
The first prong of the appellants' argument is untenable. What was
apparently designed to be an express trust, as alleged in paragraph V of
the complaint, was for the late Francisco H. Reyes to file an answer in the
cadastral proceeding and to obtain title to the land for and in behalf of all
the heirs of Jorge Bueno. 2 But such express trust failed to materialize. In
the next paragraph of the complaint Francisco H. Reyes is charged with
"either bad faith or mistake" in filing the cadastral answer and obtaining
title to the property in his own name and in the names of his two brothers,
Juan and Mateo, "who connived and consented to the (said) malicious or
erroneous acts."
If any trust can be deduced at all from the foregoing facts it was an
implied one, arising by operation of law not from any presumed intention
of the parties but to satisfy the demands of justice and equity and as a
protection against unfair dealing or downright fraud. Indeed, in this kind of
implied trust, commonly denominated constructive, as distinguished from
resulting, trust, there exists a certain antagonism between the cestui
que trust and the trustee. Thus, for instance, under Article 1456 of the
Civil Code, "if property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for
the benefit of the person from whom the property comes." In a number of
cases this Court has held that registration of property by one person in
his name, whether by mistake or fraud, the real owner being another
person, impresses upon the title so acquired the character of a
constructive trust for the real owner, which would justify an action for
reconveyance. 3
While there are some decisions which hold that an action upon a trust is
imprescriptible, without distinguishing between express and implied
trusts, the better rule, as laid down by this Court in other decisions, is that
prescription does supervene where the trust is merely an implied
one. 4 The reason has been expressed by Justice J.B.L. Reyes in J.M.
Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions
for recovery of real property prescribed in 10 years, excepting
only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case
of Diaz v. Gorricho, L-11229, March 29, 1958, however, the
continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are imposed by
law) where no fiduciary relation exists and the trustee does not
recognize the trust at all.
Upon the general proposition that an action for reconveyance such as the
present is subject to prescription in ten years the appellees and the
court a quo are correct. The question here, however, is: from what time
should the prescriptive period be counted, in the light of the allegations in
the complaint? It should be remembered that the constructive trust arose
by reason of the "bad faith or mistake" of the deceased Francisco H.
Reyes, compounded by the connivance of the appellees Juan and Mateo
Reyes. Consequently, the cause of action upon such trust must be
deemed to have accrued only upon the discovery of such bad faith or
mistake, or to put it more specific upon the discovery by the appellants
that Francisco H. Reyes, in violation of their agreement with him, had
obtained registration of the disputed property in his own name and in the
names of his brothers. It would not do to say that the cadastral
proceeding itself, by virtue of its nature as a proceeding in rem, was
constructive notice to the appellants, for as far as they were concerned
the cadastral answer they had authorized Francisco H. Reyes to file was
not adverse to them; and neither he nor the appellees may invoke the
constructive-notice rule on the basis of their own breach of the authority
thus given. On top of all this, it was the appellants and not the appellees
who were in possession of the property as owners, continuously up to
1962, when for the first time the latter appeared upon the scene and tried
to get such possession, thereby revealing to them the fact of the
mistaken or fraudulent registration.
The foregoing, of course, are not facts already established by evidence.
But they are alleged in the complaint and therefore deemed
hypothetically admitted for purposes of the motion to dismiss filed by the
defendants. To be sure, there are contradictory allegations of fact in the
answer, but these are matters of defense that must be sunbstantiated at
the trial. At the very least the grounds upon which the order of dismissal
is based do not appear to us to be indubitable; and it would be more in
keeping with justice to afford the plaintiffs as well as the defendants the
opportunity to lay their respective claims and defenses before the Court
in a full-blown litigation.

With this view we take of the case, it is unnecessary to take up the

second error assigned.lawphi1.nêt

WHEREFORE, the order appealed from is set aside and the case is
remanded for further proceedings. No costs.

Dizon, Zaldivar, Sanchez, Fernando, Capistrano, Teehankee and

Barredo, JJ., concur.
Concepcion, C.J. and Castro, J., are on leave.
Reyes, J.B.L., Actg. C.J., concurs and certifies that the Chief Justice
voted in favor of this opinion before going on official leave.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-30889 February 29, 1972
VARSITY HILLS, INC., J. M. TUASON & CO., INC., JOSE M. TUASON,
NICASIO A. TUASON, TERESA TUASON, CELSO S. TUASON,
SEVERO A. TUASON and HEIRS OF D. TUASON, INC., petitioners,
vs.
HON. PEDRO C. NAVARRO, Judge of the Court of First Instance of
Rizal, RAYMUNDA MEJIA, ELPIDIO TIBURCIO, CONSUELO MEJIA,
CRISANTA MEJIA, OSCAR MEJIA and ANGELITA MEJIA and
PEOPLE'S HOMESITE & HOUSING CORPORATION, respondents.
Sison Law Offices for petitioners.
Francisco S. Salvador for respondent Elpidio Tiburcio.
Amado T. Garrovillas and Hill and Associates Law Offices for
respondents Raymunda Mejia, et al.
Government Corporate Counsel Leopoldo M. Abellera and Trial Attorney
Felipe S. Aldana for respondent People's Homesite & Housing
Corporation.
REYES J.B.L., J.:p
Original petition for certiorari and prohibition to set aside an order of 22
January 1969 issued by the Court of First Instance of Rizal, Branch 11
(presided over by respondent Judge Pedro Navarro), in its Civil Case No.
9046, for lack of jurisdiction and abuse of discretion.
Said Civil Case No. 9046 began by a petition filed on 29 December 1965
by respondents Raymunda, Consuelo, Crisanta, Oscar and Angelita, all
surnamed Mejia, as heirs of Quintin Mejia, and by Elpidio Tiburcio as
assignee of a portion of the estate left by Quintin Mejia, as plaintiff,
against the individual petitioners herein surnamed Tuason, J. M. Tuason
& Co., Inc., Varsity Hills, Inc., and Heirs of D. Tuason, Inc., as well as
People's Homesite & Housing Corporation, Ateneo University, Maryknoll
College, Loyola Memorial Park, Xavierville Estates & the Register of
Deeds as defendants, seeking (a) reivindication of a property situated in
Marikina, Rizal (now Loyola Heights, Quezon City), allegedly included in
Original Certificates of Title Nos. 730 and 735 of the Office of the
Register of Deeds of Rizal, issued in the name of defendants Tuason,
and in the transfer certificates of title derived from said original
certificates; (b) the revocation of the decision of the Court of Land
Registration dated 22 October 1913 in its Case No. 7672 as null and void
from the beginning together with the decrees of registration issued
pursuant to the decision aforesaid: (c) that the defendants Tuason be
ordered to respect the decision and injunction of the Court of First
Instance of Rizal (Judge Eulogio Mencias presiding) decreeing the
annulment of original Certificate No. 735 previously referred to:1 (d)
payment of P10,000 attorneys fees; (e) that a writ of preliminary
injunction be issued against defendants disturbing the possession of the
plaintiffs during the pendency of the suit; and (f) for costs and any other
just and proper remedy.
The complaint (Annex "A", Petition) alleged that Quintin Mejia, plaintiffs'
predecessor-in-interest, had obtained a Spanish title to the land in
controversy of "105 quiñones" in area, by "Composicion con el Estado"
issued in 20 September 1888; that Quintin Mejia and his successors in
interest had occupied the land without interruption until they were forcibly
ejected therefrom and their houses demolished in 1934 through a writ of
execution obtained from the court by the "Banco de las Islas Filipinas" as
receiver of the Tuason Estate; that in 1914 the defendants Tuason had
obtained a decree of registration No. 15584 issued by the Court of Land
Registration, covering 35,403 hectares; that said Tuasons had,
fraudulently and insidiously included plaintiffs' land in the area covered by
their Certificates of Title Nos. 730 and 735, by inserting fake and false
technical descriptions expanding the original areas decreed; that the
University of the Philippines, Varsity Hills, Inc., Ateneo de Manila,
Maryknoll College, Loyola Memorial Park, the People's Homesite and
Housing Corporation and Xavierville Estate, Inc., were subsequent
acquirers with titles derived from the original fraudulent certificates, and
that their titles should likewise be annulled.
Defendants below (now petitioners for certiorari) Tuasons, J. M. Tuason,
Inc., and Varsity Hills, Inc., filed in the court below a motion to dismiss, on
the ground that (1) plaintiffs' causes of action were barred by final
judgment rendered in Civil Case No. 4420 of the Court of First Instance
of Rizal on 5 August 1931, which was affirmed by the Supreme Court on
21 December 1933, entitled "Bank of the Philippine Islands vs. Pascual
Acuna, et al. (59 Philippine Reports, page 183, et seq.) wherein Quintin
Mejia, plaintiffs' predecessor-in-interest, had been one of the defendants,
was therein declared as without title to the land, and, as admitted by the
complaint and Annex "C" thereof, after the decision had become final
said Quintin Mejia had been, by writ of execution issued by the Court of
First Instance, ejected from the land in question and his house
demolished; (2) that the causes of action averred in the complaint were
barred by Section 38 of the Land Registration Act and by the statute of
Limitations (extinctive prescription), over 51 years having elapsed since
the decree of registration was issued; (3) that said causes of action were
likewise barred by laches, 32 years having elapsed since Quintin Mejia
had been ejected and driven away from the land, and his house
demolished as admitted in the complaint; (4) that the court below had no
jurisdiction to review and revise the decree of registration of 1914 nor the
final 1933 decision of the Supreme Court in Bank of the Philippine
Islands vs. Acuna, et al.; and finally (5) that the complaint averred no
sufficient cause of action.
Before the motion to dismiss could be heard, plaintiffs filed an amended
complaint on 26 January 1966, virtually reiterating their allegations in the
original complaint, except that this time they omitted all reference to the
Bank of the Philippine Islands case and the execution issued thereunder,
and further charged that the transferees University of the Philippines, et
al., had obtained their certificates of title, derived from the OCT 730 and
735, by anomalous transfers, tampering of official records, and inserting
of false technical descriptions not published.
On 9 February 1966, defendants then filed an Answer to the amended
complaint, denying its material allegations and pleading as affirmative
defenses the same points raised in the motion to dismiss, adding (a) that
defendants and their predecessors-in-interest had been in actual and
adverse possession for over 30 years of the land in dispute, thereby
acquiring title by acquisitive prescription; (b) that plaintiffs have no
interest in the property in litigation, as found by the Supreme Court in its
1933 decision; (e) that plaintiffs' claims of ownership were extinguished
by the decrees of registration and (d) that defendants were purchasers
for value and in good faith of the lands standing in their names.
Defendants asked for a preliminary hearing on their affirmative defenses,
pursuant to Section 5, Revised Rule 16.
After an Answer with Third Party Complaint of defendant PHHC against
the Tuasons as its vendors seeking eventual enforcement of their
warranty against eviction, should plaintiffs prevail, which the Tuasons
answered reiterating their special affirmative defenses pleaded in their
answer to the plaintiff's amended complaint, the Court set the case for
pre-trial. None was held in view of defendants' insistence on a preliminary
hearing on their affirmative defenses. The Court first issued an order
denying the Motion to Dismiss although it had been practically
abandoned by the filing of an answer to the amended complaint and
announced it was unnecessary to hear the affirmative defenses since the
motion to dismiss had been denied; and upon the motion to dismiss
based on the affirmative defense having been submitted without any
hearing being held, on 22 January 1969, said motion was denied
(Petition, Annex "Q").
Considering that the order was not appealable, but that the same was
contrary to law and issued without, or in excess of, jurisdiction by reason
of grave abuse of discretion, defendants Tuasons, Tuason, Inc. and
Varsity Hills resorted to this Court in special proceeding for writs of
certiorari and prohibition. The petitions were admitted, and the lower
court was enjoined from proceeding with the trial until further orders.
Plaintiffs below, Tiburcio and the Mejias, answered denying the abuse of
discretion and pleading that appeal in due time was the proper remedy.
After a careful review of the record, We are constrained to agree with
petitioners that the court below gravely abused its discretion in denying
petitioners' motion to dismiss based on their affirmative defenses, as set
up in their answer (Petition, Annex "O") to the amended complaint
(Petition, Annex "C-1"), for the record and the exhibits annexed to said
motion to dismiss as well as those incorporated by reference thereto
amply demonstrate that the action of private respondents herein, Tiburcio
and the various Mejias, was already barred by at least res judicataand
extinctive prescription (statute of limitations).
We can not close our eyes to the fact that plaintiffs below (respondents
here) expressly pleaded in their original complaint in the Court of First
Instance (Petition, Annex "A") that they were the heirs of the late Quintin
Mejia (Annex "A", paragraph 6) while plaintiff Elpidio Tiburcio was "an
assignee to (sic) a portion of the estate left by Quintin Mejia" (Annex "A",
paragraph 1); and that the "Banco de las Islas Filipinas as Tuasons
administrator and judicial depository (i.e., receiver) of the Tuason estate,
ejected the plaintiffs' predecessor-in-interest, Quintin Mejia, from the
premises subject of this action ... Quintin Mejia's house was demolished
in 1934, and he and his family were driven away from their own land."
(Complaint, Annex "A" of petition, paragraph 6).
How and why this ejectment was carried out is revealed by the writ of
execution (copied in Annex "C" to the original complaint) issued by the
Court of First Instance of Rizal on 21 May 1934, in its Civil Case No.
4420, entitled "Banco de las Islas Filipinas vs. Pascual Acuna, et al." The
writ of execution recited inter alia that the court decreed on 5 August
1931 that "(a) the defendants were not owners of any portion of land of
the Hacienda in question and (b) that they should vacate the same as
soon as the decision became final"; that the Supreme Court confirmed
said decree by decision promulgated on 21 December 1933,2 and the
court issued an order on 5 February 1934, ordering the execution of the
decision confirmed by the Supreme Court; and the Provincial Sheriff of
Rizal or his lawful delegates were ordered to proceed with the execution
of the decision against defendants Margarita Acuna and others,
including Quintin Mejia, whose name appears in page 3, paragraph 3, of
the writ of execution.
It is true that the plaintiffs' original complaint was superseded as a
pleading by the amended complaint which omitted these recitals of fact;
but these recitals are an extra-judicial admission against interest by the
plaintiffs themselves,3 and were offered as exhibits in support of the
petitioners' Motion to Dismiss Based on Affirmative Defenses submitted
to the court below (Petition, Annex "O", pages 4-5). As such admissions
against interest, they are entitled to weight against herein private
respondents, specially since they are backed by uncontrovertible judicial
reports.
That the "Hacienda" referred to in the writ of execution (Annex "C" to the
original complaint, Annex "A" of Petition herein) is the Tuason Estate
referred to in the complaint is made clear beyond doubt by this Court's
1933 decision in "Banco de las Islas Filipinas vs. Acuna, et al.," 59 Phil.
183, at page 184, where this Court stated: .
The character in which the plaintiff sues is not open to
question, and the material facts are as follows: The heirs
of the Tuason estate, herein referred to as the Tuason
Entail hold, a Torrens title to a tract of land containing
three parcels with an area of about 1,600 hectares
located in the Province of Rizal. This property is now
covered by Torrens certificate of title No. 3792 issued in
lieu of an older certificate dating from 8 July 1914. The
land, for the most part, is not productive, having a light
covering of soil. It is not very useful for agricultural
purposes, but it is valuable because of its great extent
and its proximity to a populous city. In October, 1929, and
prior thereto, the defendants entered upon portions of the
property mentioned and fixed themselves thereon. To
dislodge them this action was brought.
It is well to note here that T. C. T. No. 3792 mentioned above is derived
from and superseded T. C. T. No. 2680, which in turn cancelled and
replaced O. C. T. 735, which the Mejias attack as void in their amended
complaint (See page 6 of Annex "B" to Petition herein).
In overruling the claim of defendants (including Quintin Mejia,
respondents' causante), this Court declared in its aforementioned 1933
decision (59 Phil., pages 185-186): .
... It is obvious that the decree of the court in the land
registration proceeding put a quietus upon any rights
which the appellants may be supposed to have had,
originating anterior to the decree, and since that decree
was entered and title issued, the appellants could have no
rights other than such as are derived from and under the
Torrens title. But no scrap of paper was introduced in
evidence showing any such right, and since the rights
acquired by the decree are imprescriptible (section 46,
Act No. 496), it results that the occupation of this land by
the appellants is a mere usurpation against which no valid
legal defense can be alleged.
Some of the defendants have attempted to prove that
they have occupied the parcels held by them from a
period long anterior to the decree in the land registration
case, and some that the parcels held by them are not
within the confines covered by the title relied upon by the
plaintiff. All such contentions are evidently baseless.
Some of the appellants, it is true, had been on portions of
this land anterior to the present usurpation, but having
been ousted, they returned upon the occasion of the
invasion now referred to, planting themselves upon
different parcels from what they had occupied before. All
of them are without color of right or title, and their number
and concerted action supply the main reasons why the
course of this action should have been prolonged until
now.
In the face of these declarations in a final decision of the highest Court of
the land, it becomes indubitable that the action in the court below was
definitely barred: for while present private respondents were not parties
to the 1933 cause, their predecessor in interest, Quintin Mejia was such a
party, and the final judgment against him concludes and bars his
successors and privies as well (Rule 39, Section 49, paragraph b).
(b) In other cases the judgment or order is, with respect to
the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive
between the parties and their successors in interest by
title subsequent to the commencement of the action or
special proceeding, litigating for the same thing and under
the same title and in the same capacity.
Private respondents, to be sure, seek to avoid the conclusive effect of our
1933 judgment by contending that the predecessors of petitioners
Tuason had - .
fraudulently and insidiously included the property of
plaintiffs (Mejia) by allegedly expanding the areas
covered by the registration decrees that led to the
issuance of titles Nos. 730 and 735 by inserting fake false
technical descriptions and pasting these sheets in the
anterior page of the technical description [Amended
Complaint, page 5, paragraph XII(2)].
Unfortunately for them, private respondents, in advancing these
contentions (assuming, in gratia argumenti, that such maneuvers really
took place), are faced by a dilemma: if these fraudulent insertions were
made before the decree of registration was issued, then inquiry into the
same was barred within one year from the issuance of the decree (Land
Registration Act, Act 496, Section 38) since respondents and their
predecessors failed to file a petition for review one year after the entry of
the decree; upon the other hand, if the alleged insertions were made after
the decree, the same should have been pleaded and asserted when
Quintin Mejia was made defendant in Case No. 4420 of the Court of First
Instance of Rizal. If it was so pleaded, obviously it was overruled in the
decision adverse to them that was later affirmed by this Court in 1933 (59
Phil. 183). If it was not pleaded, it is likewise barred, since a judgment on
the merits —
is final as to the claim and demand in controversy,
including the parties and those in privity with them, not
only as to every matter which was offered and received to
sustain or defeat the claim or demand, but as to any other
admissible matter which might have been offered for that
purpose and of all matters that could have been adjudged
in that case. 4 (Emphasis supplied) .
Clearly, then, private respondents' cause of action barred by res
judicata. But even without the final judgment against their predecessor,
Quintin Mejia, their action was extinguished by the lapse of thirty (30)
years from the time Quintin Mejia was ejected from the land in question
by the Provincial Sheriff of Rizal (1934) under the writ of execution
hereinbefore adverted to without any suit being attempted to recover the
land during the interval. Since under Section 40 of the old Code of Civil
Procedure (Act 190) in force in 1934 an action to recover land or interest
therein prescribed in 10 years, it is evident that, independent of the
previous judgment, this reivindicatory action is foreclosed by the Statute
of Limitations (extinctive prescription), as contended by petitioners.
Private respondents can neither rely on their allegation of fraud
committed by the predecessors of petitioners Tuason, since that
supposed fraud, if any (for there is no proof thereof) must have been
brought home to Quintin Mejia in 1934 when the Tuason Estate receiver
filed action against him and his co-defendants to expel them from the
Hacienda. Neither can the Mejias rely on the Tuasons holding the land
under implied trust: our decisions make it abundantly clear that actions
on implied and constructive trusts (as distinguished from express ones)
are extinguished by laches or prescription of ten years.5
We are thus led to no other possible construction that on the pleadings
and facts on record, respondents Mejia presented no cause of action
whatever. Wherefore, the lower court's denial of petitioner's motion to
dismiss, on the basis of their special defenses, constituted grave abuse
of discretion amounting to excess of jurisdiction, since it unwarrantedly
operated to prolong a litigation that was unmeritorious on the face of the
documents before it. Such abuse is certainly correctible by the writs
of certiorari and prohibition herein asked for.
As a last resort, respondents Mejia and Tiburcio invoke the decision of
the Court of First Instance of Rizal (Judge Mencias presiding) that held
the decrees of registration that led to the issuance of O. C. T. Nos. 730
and 735 in favor of the Tuasons null and void for lack of proper
publication. But that decision is plainly no authority here, since it is not
final, being still pending appeal to this Supreme Court. Not only that, but (c) People's Homesite & Housing Corporation and
as between the Tuasons and the Mejias, heirs of Quintin Mejia, the University of the Philippines vs. Judge Mencias and E.
question has been finally set at rest by this Court's decision in Banco de Tiburcio, L-24114, decided 16 August 1967 (20 SCRA
las Islas Filipinas vs. Acuña, et al., 59 Phil. 183, when it held (Cas. cit., 1031).
page 186) that: .
It is against public policy that matters already decided on the merits be
Among the arguments made by the appellants of the relitigated again and again, consuming the Court's time and energies at
Bagobantay group, it is alleged that the Torrens title relied the expense of other litigants: Interest rei publicae ut finish sit litium.
upon by the plaintiff is void, and in support of this
contention it is stated that, during the course of the WHEREFORE, the writs applied for are granted, the appealed order
registration proceedings, an order was made by the court denying the motion to dismiss is set aside, and the respondent Court is
for the amendment of the original plan of the applicants ordered to dismiss the complaint in Civil Case No. 9046 of the Court of
and that this order was not followed by new publication, First Instance of Rizal, the dismissal to be with prejudice. Costs against
wherefore, it is supposed, the court was without private respondents.
jurisdiction to decree the title to the applicants. In this
connection reliance is placed upon the doctrine stated in Concepcion. C.J., Makalintal, Zaldivar, Castro, Teehankee, Barredo,
Philippine Manufacturing Co. vs. Imperial (49 Phil. 122). Villamor and Makasiar, JJ., concur.
But the brief for the appellants fails to call attention to the
fact that the rule stated in the case cited has reference to
Fernando, J., took no part.
an amendment of the plan by which additional land,
different from that included in the original survey, is
intended to be brought within the process of registration.
In the case before us, the order referred to was for the
exclusion of certain portions of the land covered by the
original survey, and the doctrine of the case cited cannot
apply. Apart from this it does not appear that the portion
intended to be excluded comprehended any part of the
land which has been usurped.

Since Elpidio Tiburcio is only suing here as assignee of the Mejias, his
fate must be the same as theirs, He may not, in these proceedings
attempt to relitigate the validity of his own claims as against the Tuasons,
particularly because the lack of merit of the Tiburcio claims of title to, and
right to possession of, portions of the Tuason estates have been
repeatedly adjudged by at least three final decisions of this Supreme
Court that were likewise called to the attention of the court below.

(a) Tiburcio, et al. vs. People's Homesite & Housing

Corporation,
L-13479, decided 31 October 1959 (106 Phil. 477) ; .

(b) Galvez & Tiburcio vs. Tuason, et al., L-15644, decided

29 February 1964 (10 SCRA 344); .
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-31858 August 31, 1977
FAUSTINO JARAMIL AND FILOMENA CABINAR, petitioner,
vs.
COURT OF APPEALS, and SOTERA MEDRANA, REGINA DE LA
CRUZ, VALERIANA C. PRUDENCIO ET AL., respondents.
Isabelo V. Velasquez for petitioners.
Prudencio V. Mejia & Rufino A. Ortiz for private respondents.
FERNANDEZ, J.:
This is an appeal from the majority decision of the Court of Appeals in
CA-G.R. No. 32973-R entitled "Sotera Medrana et al., Plaintiffs-
Appellees, vs. Faustino Jaramil et al., Defendants-Appellants", affirming
the judgement of the court of First Instance of Pangasinan, the
dispositive part of whiuch reads:
WHEREFORE, the judgement is hereby rendered for the
plaintiff's declaring them to be true owners of Lot 1422
covered by Original Certificate Of Title No. 49228;
ordering the defendants to vacate the premises and
surrender the possession thereof to the plaintiffs, and to
pay the sum P260.00 representing the mon thly
thereafter, and to pay the cost. 1
The record shows that Sotera Medrana, widow of the late Isadora dela
Cruz, and their children and their gra children instituted in the court of
First Instance ofPangasinan an action to recover possession of a parcel
land, Lot 1422, embraced in Original Certificate of Title No. 49228 and for
damages against the spouses Faustino Jaramil and Filomena Cabinar.
The complaint alleged the Isidro dela Cruz was in life the owner of Lot
1422 located in Umingan, Pangasinan, containing an area of 3,226
square meters, more less, embraced in Original Certificate of Title No.
49228; that sometime in 1935 the spouses Faustino Jaramil and
Filomena Cabinar were permitted by the registered owners to established
residence on the land with the understanding that said spouses would
vacate the premises upon demand; and that despite a demand to vacate
made on or about August 23, 1958, the defendants refused to leave the
land in question. 2
The defendants averred in their answer that they are the true owners of
the disputed lot and that if Isidro dela Cruz and Sotera Medrana were
able to register the property in their names, the registration must have
been done through fraud and bad faith. The defendants interposed a
counterclaim wherein they asked for damages and for the reconveyance
to them of the land question. 3
From the decision of the Court of First Instance of Pangasinan rendered
in favor of the plaintiffs, the defendants appealed to the Court of Appeals
where the case was docketed as CA-G.R. No. 32973-R.
The case was decided by a special division of five composed of Justices
Hermogenes Concepcion Jr., Jesus Y. Perez, Ramon O. Nolasco,
Edilberto Soriano and Andres Reyes. Justice Andres Reyes, concurred in
by Justices Jesus Y. Perez and Ramon O. Nolasco, found the appealed
judgment to be in accordance with the evidence, and the law and
affirmed the same, with costs against the appellants. 4 Justice Edilberto
Soriano concurred in by Justice Hermogenes Concepcion Jr. dissented
and voted that "the appealed decision should be reversed; plaintiffs-
appellees should be ordered to reconvey Lot No. 1422 of the Cadastral
Survey of Umingan to defendants-appellants, and the Register of deeds
of Pangasinan should likewise be ordered to cancel Original Certificate of
Title No. 49228 in the names of the spouses Isidro de la Cruz and Sotera
Medrana, and in lieu thereof should issue another one in the names of
defendants-appellants Faustino Jaramil and Filomena Cabinar, with costs
against appellees. 5
The petitioners-appellants Faustino Jaramil and Filomena Cabinar assign
the following errors:
I
 THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THAT RESPONDENTS-APPELLEES ARE
THE TRUE OWNERS OF LOT 1422 COVERED BY
ORIGINAL CERTIFICATE OF TITLE NO. 49228, NOT
THE HEREIN PETITIONERS-APPELLANTS.
THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONERS-APPELLANTS' ACTION
FOR THE RECONVEYANCE OF TITLE IS BARRED BY
THE STATUTE OF LIMITATIONS. 6
The facts narrated in the majority opinion are:
The evidence for the plaintiffs discloses that as early as
1911 Isidro dela Cruz and Sotera Medrana were already
living on the land in question, having built a house
thereon. No other person except the said spouses
appeared and claimed the property during the cadastral
proceedings involving lands located in Umingan,
Pangasinan. Consequently, the cadastral court
adjudicated the land in their favor on April 17, 1926 (Exh.
I Subsequently, or on March 15, 1932, Original Certificate
of Title No. 49228 of the Office of the Register of Deeds
of Pangasinan was issued in their names (Exh. A).
Sometime in 1935, Faustino Jaramil and Filomena
Cabinar asked permission from Isidro dela Cruz to stay
on the land. Permission was granted, but when plaintiffs
asked them to vacate in 1958 they refused to leave,
compelling plaintiffs to go to court. 7
According to the petitioners-appellants, the true facts are that although
they have a certificate of title, Exhibit "A", covering the land in question,
the respondents-appellees and their predecessor-in- interest Isidro dela
Cruz, had never been in possession of said land; that the petitioners-
appellants and their predecessor-in-interest Agustin Cabinar have always
been in possession of the land; that Agustin Cabinar was the original
owner and possessor of the land and subsequently had given it to the
petitioners-appellants as a donation by reason of marriage in 1924; that
after acquiring the property in question, the petitioners-appellants
constructed thereon their own house of strong materials which was
burned during the Japanese occupation; that after liberation, they again
constructed thereon their house of mixed materials which was later
demolished and replaced by the house now presently standing on the
land; 8 and that the facts as correctly found in the dissenting opinion show
that the registration of the land in question in the names of Isidro dela
Cruz and Sotera Medrana was fraudulently, made. 9
The evidence in support of the claim of the petitioners-appellants that
Isidro dela Cruz registered the land in question fraudulently and in breach
of trust consists of the testimonies of Faustino Jaramil and Cornelio
Barba.
Faustino Jaramil declared that when the cadastral survey of Umingan
was being undertaken, Isidro dela Cruz went to him and said that
inasmuch as their lots adjoin each other, Isidro dela Cruz would take care
of the survey and represent Faustino Jaramil in the cadastral
proceedings, promising to deliver Faustino's title as soon as Isidro's title
was obtained; that upon the request of Isidro dela Cruz, Faustino Jaramil
gave the former P50.00 to defray the expenses; that in 1958 when the
heirs of Isidro dela Cruz caused a relocation survey of the land to be
made and claimed it as their own, Faustino Jaramil discovered for the
first time that the property had been registered in the names of Isidro dela
Cruz and Sotera Medrana.10
Cornelio Barba testified that he was one of the surveyors who took part;
in the cadastral survey of Umingan and that during the cadastral survey,
Isidro dela Cruz was his cardman whose duty A as to issue notification
cards about the survey.11
The majority opinion found the testimony of Faustino Jaramil on the
alleged fraud to be incredible because:
Appellants rely on the barefaced claimed of Faustino
Jaramil that Isidro dela Cruz 'must have deceived us'
because, having been presumably entrusted with the sum
of P50.00 at the inception of the cadastral survey of
Umingan, upon the promise of Isidro dela Cruz that he,
would take care of the survey, represent Faustino in
court, and secure the title, the deceased registered the
land instead in his own name . It appears, however, that
neither during the lifetime of Isidro Dela Cruz nor after his
death did Faustino Jaramil as much as inquire from the
deceased or his heirs about the P50.00 and whether the
land had been registered. lift peso before the war was
substantial amount. Had Fortunate Jaramil really
entrusted such a sum to Isidro dela Cruz. it is certain that
he would make inquiries at least as to nether it was
 applied to the intended purpose. The fact that he
remained silent for more than three decades bespeaks
the weakness and falsity of his claim. Moreover, the tenor
of Faustino's testimony is that the sum was entrusted
when the cadastral survey of Umingan had just began
(pp. 47-48, TSN, Axibal). On cross-examination he
declared it was during the cadastral survey in 1922 when
Isidro dela Cruz told him that he would be responsible for
the survey (p. 58, Ibid.).lwphl@itç The declaration renders
the whole story about the alleged breach of trust unworthy
of rational belief. For from the very evidence of the
defense, the appellants' alleged acquisition of the
property- took place only in 1924, when it was donated to
them on the occasion of their marriage. It results that
Isidro dela Cruz had no reason to broach to them in 1922
the Idea of registering the land in their behalf On the basis
of Faustino's incredible testimony, we will not impute
fraud or breach of trust on Isidro dela Cruz, whose lips
have long hen sealed by death. 12
It is indeed odd that Faustino Jaramil had not taken Steps to verify
whether or not the title to the land in question had been registered in his
name. The evidence shows that the cadastral court had adjudicated the
land in question to Isidro dela Cruz and Sotera Medrana on April 17,
1926 and on March 15, 1932. Original Certificate of Title No. 49228 of the
Registry of Deeds of Pangasinan was issued in their names.
Despite the issuance of Original Certificate of Title No. 49228 to Isidro
dela Cruz and Sotera Medrana on March 15, 1912, the petitioners-
appellants did not take any steps to cause the transfer of the title to the
land to them. It was only when the private respondents instituted in 1958
Civil Case No. T-535 in the Court of First Instance of Pangasinan to
recover the possession of the land in question that the petitioners-
appellants interposed a counter-claim in heir answer for the
reconveyance of said land to them .
Fraud is a question of fact which must be alleged and proved. Fraud is a
serious charge and to be sustained, it must be supported by clear and
conniving proof.13
There 'is no clear shows that Isidro dela Cruz had perpetrated fraud on
Faustino Jaramil The contention that Faustino Jaramil was deceived was
Isidro dela Cruz because after having beer, entrusted the sum of P50.00
at the inception of the cadastral survey of Umingan upon the latter's
promise that he would take care of the survey and secure the title for
Faustino Jaramil the said Isidro dela Cruz caused the land in question to
be registered in his name and that of his wife, has no merit It is a fact that
neither during the lifetime of Isidro dela Cruz nor after his death no
inquiry had been made by Faustino Jaramil about the P50.00 and
whether the land had been registered in his name.
The preponderance of the evidence is that Isidro dela Cruz and Sotera
Medrana did not perpetrate fraud in having the title to the land in question
registered in their names. Granting, arguendo that fraud was committed
and an implied trust was created, the counterclaim of the petitioners-
appellants for the reconveyance of the title to the land in question to them
has prescribed. It is now settled that an action for the reconveyance of
land based on implied or constructive trust prescribes within ten (10)
years.
The Supreme Court has held that:
It is Idle to bother as to whether the action here is one
founded exclusively on fraud which prescribes in four (4)
years or one based on constructive trust which is barred
after ten years, there being no question that the appellees
secured their title more than twenty years before the filing
of the complaint, and it is from the date of the issuance of
such title that the effective assertion of adverse title for
purposes of the statute of limitations is counted. (Gerona
vs. De - Guzman, 11 SCRA 153). 14
The cause of action of the petitioners-appellants for the reconveyance to
them of the title to the land in question arose on March 15, 1932 when
Original Certificate of Title No. 49228 was issued by the Office of the
Register of Deeds of Pangasinan. 15 The issuance of said original
certificate of title constituted constructive notice to the public including the
petitioners-appellants.
In view of the foregoing, the decision of the Court of Appeals correctly
affirmed the judgment of the Court of First Instance of Pangasinan in Civil
Case No. T-535.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed,
without pronouncement as to costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Muñ;oz-Palma, Martin and Guerrero,
JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-39478 November 29, 1977
FAUSTINA CABABARROS VDA. DE NACALABAN, ANDRONICA,
TEODITA, GODOFREDO, PROPULO, CALVIN, TARCIANO, OROTON,
and NEVIL, all surnamed' NACALABAN. petitioners,
vs.
THE HONORABLE COURT OF APPEALS, and CATALINA
CABABARROS, ROSITA, PRUTO, AMADEO, LILA, NATIVIDAD,
ADORACION, ALEJANDRIA, ARQUIPO, ARLITA, JOSEFA, VERONA,
JOSEFINA, LOURDES, PUSINA MAGNA and JOSEFINO, all
surnamed CABABARROS; VIVINA, ROGELIO, FRANCISCO,
GLORIA, CALINICO all surnamed ABEJO; LEO, CLEMENTE,
VICTOR, EDITHA, ANNE, ALEJANDER, FELIX, and AMPARO, all
surnamed ABEJO; minors and are represented by their natural
mother and guardian, NATIVIDAD NANGCAS VDA. DE
ABEJO, respondents.
A. R. Montemayor for petitioners.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision 1 of the Court of
Appeals in CA-G.R. No. 41486-R entitled "Rosita Cababarros et al., vs.
Faustina Vda. de Nacalaban, et al." affirming in toto the judgment of the
Court of First Instance of Misamis Oriental in Civil Case No. 2317, the
dispositive part of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered declaring the parcel of land particularly
described in the plaintiffs' amended complaint as a
common hereditary property of the plaintiffs and the
defendants in the above-entitled case and ordering the
latter to effect the partition thereof and to reconvey in
favor of the persons legally entitled thereto their
respective lawful shares interests and/or participation
over the same under the following proportions, to wit:
One-sixth (1/6) share to the Heirs of Gerardo Cababarros;
One-sixth (1/6) share to the Heirs of Jose Cababarros;
One-sixth (1/6) share to the Heirs of Felicisimo
Cababarros;
One-sixth (1/6) share to Catalina Cababarros;
One-sixth (1/6) share to the Heirs of Ignacio Cababarros;
The remaining one-sixth (1/6) share shall be retained by
the defendants as their own share. The defendants are
likewise ordered to pay jointly and severally, unto the
plaintiffs the sum of P500.00 as attorney's fees and to pay
the costs.
SO ORDERED.
Done in the city of Cagayan de Oro this 27th day of
November, 1967.
(Sgd.) BENJAMIN K. GOROSPE J u d g e 2
On February 11, 1964 Rosita, Pruto Amadeo, Natividad, Adoracion,
Alejandria, Lila, and Josefina, all surnamed Cababarros and Vivina,
Rogelio, Francisco, Gloria, Calinico and Ciriaco, all surnamed Abejo,
claiming to be heirs of the spouses Narciso Cababarros and Narcisa
Edmilao, instituted against Faustina Vda. de Nacalaban and Godofredo,
Propulo Calvin, Tarciano, Oroton and Nivel all surnamed Nacalaban, and
Gerardo Cababarros and Catalina Cababarros Civil Case No. 2317 for
partition of a parcel of land and reconveyance of shares therein.
The complaint 3 stated that the spouses Narciso Cababaros and Narcisa
Edmilao, during their lifetime, acquired a certain parcel of land known as
Lot No. 1162, surveyed in the name of Heirs of Narciso Cababarros
situated at Corrales Extension, Telegrapo Cagayan de Oro City
containing an area of 4,082 square meters and declared in the name of
Diociciano Naralaban under Tax Declaration No. 16358; that upon the
death of Narciso Cababarros and Narcisa Edmilao the said land was
transmitted by operation of law to the defendants and the parents of the
plaintiffs; that the property in question being owned in common, was
placed in trust and in the physical possession of defendant Faustina Vda.
de Nacalaban and her late husband, Dioniciano Nacalaban, on the
understanding that they should deliver the shares of the herein plaintiffs
in case the latter demanded the same; that which the property in question
was in the ion of the defendant Faustina Vda. de Nacalaban and her
husband Dioniciano Nacalaban, the said spouses were able to secure
fraudulently a certificate of title in their names, without the consent and
knowledge of the plaintiffs; and that upon knowing of the fraudulent
acquisition, the plaintiffs had exerted on several occasions efforts to
demand for their respective shares but the defendants arrogantly refused
and ignored the plaintiffs' demands.
In their answer 4 the defendants alleged that the late spouses Narciso
Cababarros and Narcisa Edmilao were not owners anymore of the land
subject of this action long before their deaths and hence could not have
transmitted non-existent rights over the said land which was no longer
theirs; that no trust, express or implied, had ever existed between
plaintiffs and defendants; and that the plaintiffs were fully aware that the
spouses Dioniciano Nacalaban and Faustina Cababarros were issued a
torrens title as proof of their exclusive ownership over the land in
question long before World War II. They averred as affirmative defenses
that the complaint states no cause of action; that even assuming that a
cause of action exists, the same has already been barred by prior
judgment; and that the same has already been barred by the statute of
limitations or prescription, The defendants asked for damages and
attorney's fees.
The defendants-appellants, now petitioners, assign the following errors:
I Cababarros and Narcisa Edmilao died, they were no longer owners of the
THE RESPONDENT COURT OF APPEALS ERRED IN
INSTALLING PLAINTIFFS-RESPONDENTS, AS CO-
OWNERS OF THE LAND IN SUIT SINCE THERE IS NO
EVIDENCE OF FRAUD TO JUSTIFY THE CREATION
OF AN IMPLIED TRUST IN THE CADASTRAL
PROCEEDING WHEREIN O.C.T. NO. 6929 WAS
ADJUDICATED AS CONJUGAL PROPERTY OF YOUR
DEFENDANTS- PETITIONERS.
II
THE RESPONDENT COURT OF APPEALS ERRED IN
NOT HOLDING PLAINTIFF-RESPONDENTS' ACTION
BARRED BY PRIOR JUDGEMENT AND/OR BY
PRESCRIPTION. 5
The respondents did not file their brief. Hence they were not able to
refute the arguments of the petitioners.
The record discloses that the spouses Narciso Cababarros and Narcisa
Edmilao acquired the land in question; that said spouses executed a
mortgage over the aforementioned land in favor of Casimiro Tamparong
to secure the payment of the indebtedness of Gerardo Cababarros a son
of the former; that Narciso Cababarros and Narcisa Edmilao were unable
to pay the indebtedness hence the mortgage was foreclosed; that
Casimiro Tamparong acquired the land in question as a result of the
foreclosure proceedings; that the spouses Dioniciano Nacalaban and
Faustina Cababarros purchased said land from Casimiro Tamparong;
that by virtue of the sale in their favor, the said spouses claimed the land
in question in the cadastral proceedings that as a result, Original
Certificate of Title No. 6929 covering the land was issued by the Register
of Deeds of Misamis Oriental on January 8, 1938 to the spouses
Dioniciano Nacalaban and Faustina Cababarros that the aforementioned
spouses have been in possession as owners of the land in question
continuously, openly and quietly since they bought the same from
Casimiro Tamparong until the present; that they have been paying the
taxes on the land regularly; and that the spouses Dioniciano Nacalaban
and Faustina Cababarros had mortgaged the property twice to the
Philippine National Bank and had sold a portion thereof to Cagayan de
Oro City for the extension of Corrales Avenue. 6
From the facts of record it is clear that when the spouses Narciso
land in question which had been previously acquired by Casimiro
Tamparong. Hence the plaintiffs, private respondents herein. did not
inherit any right on the land in question.
The record also shows that a deed of sale conveying the land in question
was executed by Casimiro Tamparong in favor of the spouses Dioniciano
Nacalaban and Faustina Cababaros On the basis of the deed of sale in
their favor, said spouses claimed the land in the cadastral proceedings
and as a consequence Original Certificate of Title No. 6929 of the
Registry of Misamis Oriental was issued to them on January 8, 1938.

There is no showing that the petitioners ever recognized the private

respondents as their co-owners of the land in question. Since 1952 the
land in question had been declared for taxation purposes only in the
name of Dioniciano Nacalaban. 7

The contention of the private respondents that an implied trust over the
land in question existed between them and the petitioners has no factual
and legal basis. Granting, arguendo, that such an implied trust existed,
the cause of action of the private respondents has prescribed. Their
cause of action arose on January 8, 1938 when Original Certificate of
Title No. 6929 was issued by the Register of Deeds of Misamis Oriental
to the spouses Dioniciano Nacalaban and Faustina Cababarros The
issuance of the title was constructive notice to the private
respondents. 8 Moreover, there is evidence that in 1945 the private
respondents had demanded partition of the land in question and the
petitioners refused to comply with the demand. 9

The present action for partition and reconveyance was commenced only
on February 11, 1964, more than ten (10) years from the date the cause
of action arose in 1938.

It is now settled that actions on implied and constructive trusts are

extinguished by laches or prescription of ten years. 10

There is no factual and legal basis for award of damages and attorney's
fees to the petitioners.

WHEREFORE, the 'decision appealed from is hereby set aside and the
complaint in Civil Case No. 2317 of the Court of First Instance of Misamis
Oriental is dismissed., without pronouncement as to costs.

SO ORDERED.

Teehankee (Chairman), Makasiar, Muñoz Palma and Guerrero, JJ.,

concur.

Martin, J., took no part.

 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-33762 December 29, 1977
POTENCIANA DUQUE, AMADEO DUQUE and ARSENIO
DUQUE, petitioners,
vs.
PAZ DOMINGO, represented by her guardian ad litem, MARCOSA
DUQUE- VALENZUELA, Intestate Estate of JULIA DUQUE, in
substitution of Julia Duque, and the COURT OF
APPEALS, respondents.
Antonio K. Aranda & Virgilio B. Jara for petitioners.
Arturo Agustines for respondents.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of
Appeals in CA-G.R. No. 43557-R entitled "JULIA DUQUE, for herself and
as natural guardian of her daughter of unsound mind, PAZ DOMINGO,
versus POTENCIANA DUQUE, AMADEO DUQUE and ARSENIO
DUQUE", the dispositive part of which reads:
WHEREFORE, the decision appealed from is hereby
reversed and another one entered instead, declaring Julia
Duque the absolute owner of lot 1083 currently covered
by TCT No. T-25195 in the name of defendants; declaring
said TCT No. T-25195 null and void; and ordering that a
new certificate of title be issued in the name of Julia
Duque. Without pronouncement as to costs.
SO ORDERED. 1
On September 5. 1966, Julia Duque, for herself and as, natural guardian
of her daughter of unsound mind, Paz Domingo, instituted against
Potenciana Duque, Amadeo Duque and Arsenio Duque Civil Case No.
266-V in the Court of First Instance of Bulacan for reconveyance of Lot
1083 of Malinta Estate located in Polo, Bulacan and in the alternative, to
declare Transfer Certificate of Title No. 25195 in the name of the
defendants void and to declare the plaintiffs as the absolute owners of
said Lot 1083.
The complaint alleged that plaintiff, Julia Duque, is a niece of Juana
Duque who died in 1928; that the defendants are the children of Mariano
Duque, a deceased nephew of Juana Duque and natural brother of the
plaintiff, Julia Duque; that sometime in 1908, Juana Duque, through her
other nephew, Faustino Duque, whom she had employed as her agent,
purchased from the government Lot 1083 of the Malinta Estate at Polo,
Bulacan under Tax Declaration No. 8724 at P 1,600.00, more particularly
described in Original Certificate of Title No. 374; that Lot 1083 was then a
part of the Friar Estate of the government disposable by the Director of
Lands on installment pursuant to the Friar Land Act; that Faustino Duque,
the agent, caused the document of purchase, Sale Certificate No. 1138,
to be issued by the government in his name with the consent of his
principal, Juana Duque; that under the terms of Sale Certificate No. 1138,
the price of Lot 1083 was P 503.00 payable in 20 annual installments of
P 25.00 each; that the original of the sale certificate was lost in the files of
the Bureau all of Lands during the war and plaintiffs could not secure a
copy for attachment to the complaint; that on June 22, 1915, Faustino
Duque transferred his Sale Certificate No. 1138 with the permission of
Juana Duque to his brother, Mariano Duque, who later received in 1931
Transfer Certificate No. 7501 for Lot 1083 from the government; that
since [he issuance of the sale certificate in 1909, Juana Duque had been
in the exclusive possession of Lot 1083 as owner paying the installments
stipulated in the contract to the government through Faustino Duque and
Mariano Duque or reimbursing their advances therefor; that in 1927,
Juana Duque verbally donated and delivered Lot 1083 to plaintiff Julia
Duque, her niece; that from then on up to the present, the plaintiff Julia
Duque has been in the exclusive ion of Lot 1083 as beneficial owner
thereof; that Mariano Duque, the title holder, died and in 1957, his
children, Emilio Duque, Potenciana Duque, Amadeo Duque and Arsenic
Duque registered Lot 1083 in their names under Transfer Certificate of
Title No. T-19924 of the Registry of Deeds of Bulacan; that subsequently
Emilio Duque died without issue and the defendants had Lot 1083
recorded in their names under Transfer Certificate of Title No. T- 25195 in
1959; that plaintiff, Julia Duque, requested the defendants to reconvey to
her the title of Lot 1083 but they refused and still refuse to comply with
her request; that Juana Duque, the owner of Lot 1083 died single, without
issue and intestate in 1928 survived by her nephews, as legal heirs,
Mariano Duque, Domingo Duque, Faustino Duque and Apolonio Duque;
that the foregoing legal heirs the donation of Lot 1083 made by Juana
Duque to plaintiff, Julia Duque, in or about 1927 and repudiated and
abandoned all rights to contest it, as in fact they caused Lot 1083 to be
declared for tax purposes in the name of Paz Domingo, the only child of
Julia Duque, in or about 1933; and that the defendants had plaintiffs,
beneficial ownership of Lot 1083 after the death of their father, Mariano
Duque. 2
In their answer filed on October 5, 1966, the defendants averred as
affirmative and special defenses that Lot 1083 of the Malinta Estate is
owned in fee simple by defendants, Potenciana, Amadeo and Arsenio, all
surnamed Duque, as evidenced by T.C.T. No. T25195 of the Registry of
Deeds of Bulacan; that said property was y purchased in 1915 by
defendants' father and predecessor-in-interest, Mariano Duque, from the
government of the Philippine Islands; that the purchase price of the land
being payable in installment, it was only in 1931, after full payment of
said price, when Mariano Duque acquired ownership in fee simple over
Lot 1083 by the issuance in his favor of T.C.T. No. 7501 of the Registry
of Deeds of Bulacan by the government of the Philippine Islands; that
from 1915 up to the present, over a period of 51 years, Mariano Duque,
his heirs and successor in interest which include defendants herein have
continuously treated, held and possessed Lot 1083 as their sole and
exclusive property and that no one among them has recognize that the
beneficial ownership thereof was in Julia Duque, Juana Duque, Paz or
any third that the vanity of the grant in 1931 by the Government of the
Philippine Islands of T.C.T. No. T-7501 in favor of Duque was never
questioned by the plaintiffs in inspite of their knowledge about it, that in
fact the plaintiffs were aware that from the issuance of said title in 1931
will in exercise of the rights of over the land, at least three conveyances
involving Lot 1083 had been in the Office of the Registry of Deeds of
Bulacan which in the grant of new certificates of title in the of the name of
the parties; that notwithstanding their knowledge about these
conveyances the plaintiffs kept silent and never raised any objections
thereto; that although the plaintiffs and defendants belong to the same
family, no allegation that earnest efforts towards a compromise have
been made by the former is contained in the complaint; that under the
circumstances, plaintiffs have no cause of action against the defendants;
that even assuming that they have a cause of action, the same has been
barred by the statute of stations and/or by laches or it is enforceable
under the Statute of Frauds; and that in any event, the plaintiffs are in
estoppel from claiming any rights of interest over Lot 1083. 3
The parties filed on June 22, 1968 the following:
PARTIAL STIPULATION OF FACTS
The parties hereto hereby submit the following partial
stipulation of facts, in compliance with the verbal
permission of the Court at the hearing on June 25, 1968:
1. Plaintiff Julia Duque is the natural sister of the late
Mariano Duque, who died on June 20, 1947;
2. Defendants Potenciana, Arsenio and Amadeo, all
surnamed, Duque, are the legitimate children of said
Mariano Duque;
3. The property in question, which was formerly a part of
the Friar Land Estate of the Government (Lot 1083 of the
Malinta Estate), was disposed of by the Government of
the Philippine Islands on January 1, 1909 by virtue of
Sales Certificate No. 1138 for a consideration of P 503.00
payable in 20 annual installments of P 25.00 per year,
effective January 1, 1909;
4. As per Sales Certificate No. 1138, the grantee thereof
was one Faustino Duque;
5. On September 15, 1931. Transfer Certificate of Title
No. 7501, covering said parcel of land, was issued in
favor of the late Mariano Duque;
6. As of this date, the property in question is covered by
Transfer Certificate of Title No. 25195 of the Registry of
Deeds for the Province of Bulacan issued in the names of
defendants Potenciana Arsenio and Amadeo, all
surnamed, Duque;
7. The present value of said property is more than P
300,000.00. WHEREFORE, it is respectfully prayed that
the foregoing partial Stipulation of Facts be approved and
made a part of the records of this case.
AVIADO & ARANDA
By:
 (Sgd.) ILLEGIBLE
Counsel for the defendants
214 Bank of P.I. Bldg.
Plaza Moraga, Manila
(Sgd.) ARTURO AGUSTINES
Counsel for the Plaintiffs
4
Polo, Bulacan
The trial court rendered the decision dated February 1969 dismissing the
complaint without cost.
Meanwhile, the plaintiff Julia Duque died on January 31, 1969. She was
ordered substituted by her daughter and co-plaintiff, Paz Domingo for
whom Marcosa Duque-Valenzuela was appointed as guardian ad litem in
an order of the trial court dated March 31, 1969. 5
The plaintiffs appealed to the Court of Appeals where the appeal was
docketed as CA-G.R. No. 43557-R.
The Court of Appeals declared Julia Duque the absolute owner of Lot
1083 because "Although the plaintiff's theory is that the property in
question was acquired by Julia Duque through an oral donation made by
her aunt Juana Duque in her favor, the case should be considered from
the point of view of a verbal partition among heirs made by the decedent
and consented to by them." The Court of Appeals said that "In 1927 one
year before her death Juana Duque gathered her nephews and nieces in
her house and made a verbal partition of her properties: to each of them
she gave something and to Julia she gave the property in question, all of
the heirs including Mariano Duque, consented to each other's largesse." 6
The petitioners assign the following errors:
I
THE COURT A QUO ERRED IN NOT HOLDING THAT
THE CLAIM OF PRIVATE RESPONDENTS TO
ENFORCE AN IMPLIED TRUST OVER REAL
PROPERTY HAD PRESCRIBED OR HAD BEEN
BARRED BY LACHES.
II
THE COURT A QUO ERRED IN NOT HOLDING THAT
THE ORAL DONATION MADE IN 19927 OF LOT 1083,
ASSUMING THE TRUTH THEREOF, WAS NULL AND
VOID.
III
THE COURT A QUO ERRED IN PRESUMING, EVEN
WITHOUT ANY SHRED OF EVIDENCE PRESENTED IN
SUPPORT THEREOF, AND IN UTTER DISREGARD OF
THE SALES CERTIFICATE ISSUED BY THE
GOVERNMENT AND ITS CORRESPONDING
ASSIGNMENT, THAT FAUSTINO DUQUE AND
MARIANO DUQUE ACTED AS AGENTS OF JUANA
DUQUE.
IV
THE COURT A QUO ERRED IN NOT HOLDING THAT
AN IMPLIED TRUST OVER A REAL PROPERTY
COVERED BY TORRENS TITLE CANNOT BE
ESTABLISHED BY A MERE TAX DECLARATION.
V
THE COURT A QUO ERRED IN PROMULGATING THE
DECISION, WHICH IS PREMISED ON FACTS AND
INVOLVING ISSUES NOT COVERED BY THE
EVIDENCE AND RAISED IN THE PLEADINGS. 7
The partial stipulation of facts and the evidence established that the land
in question, Lot 1083 of the Malinta Estate was formerly a part of the
Friar Land Estate of the Government that on January 1, 1909 the
Government of the Philippine Islands sold to Faustino Duque Lot 1083 by
virtue of Sale Certificate No. 1138 for a consideration of P 503.00
payable in 20 annual installments of P 25.00 per year, effective on
January 1, 1909; that in 1915 Faustino Duque assigned his right on Lot
1083 in favor of Mariano Duque, the legitimate father of the petitioners
Potenciana Duque, Amadeo Duque and Arsenio Duque; that on
September 15, 1931, Transfer Certificate of Title No. 7501 was issued in
the name of Mariano Duque; that upon the death of Mariano Duque, his
widow, Dorotea Vda. de Duque and children, Potenciana, Amadeo,
Arsenio and Emilio, all surnamed Duque, as heirs, instituted in the Court
of First Instance of Manila a proceeding for the settlement of the estate of
said Mariano Duque; that in the estate proceeding Lot 1083 was
adjudicated pro-indiviso to the widow and children of Mariano Duque; that
Transfer Certificate of Title No. 19924 was issued to the said heirs; that
when Dorotea Vda. de Duque and Emilio Duque died in 1954 and 1956,
respectively, their shares in Lot 1083 were inherited by the petitioners to
whom Transfer Certificate of Title No. 25195 was issued; that in 1933 the
land in question was declared for taxation in the name of the respondent,
Paz Domingo; that beginning with the year 1949 the tax declaration
embracing the land in question was in the name of Mariano Duque and
that Tax Declaration No. 15214 is in the names of the petitioners. 8
The private respondents adduced oral evidence that sometime in 1908
Juana Duque, through her nephew whom she had employed as her
agent, purchased from the Government Lot 1083 of the Malinta Estate in
Polo, now Valenzuela, Bulacan; that Faustino Duque, the agent, caused
the document of purchase, Sale Certificate No. 1138, to be issued by the
government in his name with the consent of his principal, Juana Duque;
and that in or about 1927 Juana Duque verbally donated and delivered
Lot 1083 to her niece, Julia Duque. 9
The theory of the private respondents that the land in question was
purchased by Juana Duque through her agent Faustino Duque and that
in 1927 she verbally donated said land to Julia Duque is supported only
by testimonial evidence which cannot prevail over the petitioners'
documentary evidence consisting of Sale Certificate No. 1138 issued in
1909 whereby the Director of Lands sold Lot 1083 to Faustino Duque on
a 20-year installment of P 25.00 per year for a total price of P 503.00 and
the transfer certificates of title in the name of Mariano Duque and his
heirs. If Juana Duque was the real purchaser, it is odd that Faustino
Duque appeared as the purchaser of Lot 1083 in Sale Certificate No.
1138. From 1909 until her death in 1928 Juana Duque had never taken
any step to have the land in question transferred in her name despite the
fact that in 1915 Faustino Duque transferred his right to the land under
Sale Certificate No. 1138 to Mariano Duque. There is no sufficient
evidence to show that Juana Duque consented to the transfer by
Faustino Duque of his right to the land in question in favor of Mariano
Duque. Moreover, if Juana Duque was the real owner of Lot 1083 she
would not have consented to the aforementioned transfer by Faustino
Duque to Mariano Duque.
The complaint 10 admitted that in 1931 Mariano Duque received Transfer
Certificate of Title No. 7501 for Lot 1083 from the government; that
Mariano Duque, the holder, died and in 1957 his children registered Lot
1083 in their names under Transfer Certificate of Title No. T-19924-, and
that upon the death of Emilio Duque without issue, the defendants,
petitioners herein, had said Lot 1083 recorded in their names under
Transfer Certificate of Title No. T-25195 in 1959.
From 1931 the title to the land in question, Lot 1083, had always been in
the name of Mariano Duque and after his death, in those of his children,
the herein petitioners. The complaint was filed by Julia Duque only in
September 1966 after the lapse of thirty-five (35) years from the issuance
of Transfer Certificate of Title No. 7501 to Mariano Duque.
The alleged possession by the private respondents of the land in
question did not divest the petitioners, as registered owners, of their
rights to Lot 1083. Adverse possession under claim of ownership for the
period fixed by law is ineffective against a Torrens title.11
The alleged oral donation by Juana Duque in favor of Julia Duque did not
transfer any right over Lot 1083 to the donee. Both under the Spanish
Civil Code and the Civil Code of the Philippines, a donation of an
immovable, to be valid must be made in a public document, specifying
therein the property donated and the value of the charges which the
donee must satisfy. 12
The Court of Appeals must have realized the fatal infirmity of the alleged
verbal donation because it considered the case "from the point of view of
a verbal partition among heirs made by the decedent and consented to
by them. 13
There is no adequate showing that Mariano Duque consented in 1927 to
a verbal partition made by Juana Duque wherein she gave the property in
question, Lot 1083, to Julia Duque. On the contrary, in 1931, after full
payment of the purchase price, Mariano Duque obtained in his name
Transfer Certificate of Title No. 7501 for Lot 1083 from the government. 14
The improbability of the alleged oral partition becomes more evident
when it is considered that Lot 1083 is registered land and any transaction
affecting registered land should be evidenced by a registerable deed. 15
No implied trust between Juana Duque and either Faustino Duque or
Mariano Duque has been established by sufficient evidence.

At any rate, granting, arguendo, that such an implied or constructive trust

existed, the right of action upon the same has prescribed. From 1931
when Transfer Certificate of Title No. 7501 covering the land in question
was issued to Mariano Duque until 1966 when the present case was
commenced a period of 35 years had passed. The registration of an
instrument in the Office of the Register of Deeds constitutes constructive
notice to the whole world, and, therefore, discovery of the fraud is
deemed to have taken place at the time of registration. 16 Such
registration is deemed to be a constructive notice that the alleged
fiduciary or trust relationship has been repudiated. It is now settled that
an action on an implied or constructive trust prescribes in ten (10) years
from the date the right of action accrued. 17 The issuance of Transfer
Certificate of Title No. 7501 in 1931 to Mariano Duque commenced the
effective assertion of adverse title for the purpose of the statute of
limitations.

WHEREFORE, the decision of the Court of Appeals appealed from is

hereby set aside and Civil Case No. 266-V of the Court of First Instance
of Bulacan is dismissed, without pronouncement as to costs.

SO ORDERED.

Makasiar, Munoz Palma and Guerrero, JJ., concur.

Teehankee (Chairman), J., concur in the result.

Martin, J., took no part.

 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-45645 June 28, 1983
FRANCISCO A. TONGOY, for himself and as Judicial Administrator
of the Estate of the Late Luis D. Tongoy and Ma. Rosario Araneta
Vda. de Tongoy, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, MERCEDES T. SONORA,
JUAN T. SONORA, JESUS T. SONORA, TRINIDAD T. SONORA,
RICARDO P. TONGOY, CRESENCIANO P. TONGOY, AMADO P.
TONGOY, and NORBERTO P. TONGOY, respondents.
Tañada, Sanchez, Tanada & Tanada Law Office for petitioners.
Reyes & Pablo Law Office for respondents.
MAKASIAR, J.:
This is a petition for certiorari, to review the decision of respondent Court
of Appeals in CA-G.R. No. 45336-R, entitled "Mercedes T. Sonora, et al.
versus Francisco A. Tongoy, et al.", promulgated on December 3, 1975.
The antecedent facts which are not controverted are quoted in the
questioned decision, as follows:
The case is basically an action for reconveyance
respecting two (2) parcels of land in Bacolod City. The
first is Lot No. 1397 of the Cadastral Survey of Bacolod,
otherwise known as Hacienda Pulo, containing an area of
727,650 square meters and originally registered under
Original Certificate of Title No. 2947 in the names of
Francisco Tongoy, Jose Tongoy, Ana Tongoy, Teresa
Tongoy and Jovita Tongoy in pro-indiviso equal shares.
Said co-owners were all children of the late Juan Aniceto
Tongoy. The second is Lot No. 1395 of the Cadastral
Survey of Bacolod, briefly referred to as Cuaycong
property, containing an area of 163,754 square meters,
and formerly covered by Original Certificate of Title No.
2674 in the name of Basilisa Cuaycong.
Of the original registered co-owners of Hacienda Pulo,
three died without issue, namely: Jose Tongoy, who died
a widower on March 11, 1961; Ama Tongoy, who also
died single on February 6, 1957, and Teresa Tongoy who
also died single on November 3, 1949. The other two
registered co-owners, namely, Francisco Tongoy and
Jovita Tongoy, were survived by children. Francisco
Tongoy, who died on September 15, 1926, had six
children; Patricio D. Tongoy and Luis D. Tongoy by the
first marriage; Amado P. Tongoy, Ricardo P. Tongoy;
Cresenciano P. Tongoy and Norberto P. Tongoy by his
second wife Antonina Pabello whom he subsequently
married sometime after the birth of their children. For her
part, Jovita Tongoy (Jovita Tongoy de Sonora), who died
on May 14, 1915, had four children: Mercedes T. Sonora,
Juan T. Sonora, Jesus T. Sonora and Trinidad T. Sonora.
By the time this case was commenced, the late Francisco
Tongoy's aforesaid two children by his first marriage,
Patricio D. Tongoy and Luis D. Tongoy, have themselves
died. It is claimed that Patricio D. Tongoy left three
acknowledged natural children named Fernando, Estrella
and Salvacion, all surnamed Tongoy. On the other hand,
there is no question that Luis D. Tongoy left behind a son,
Francisco A. Tongoy, and a surviving spouse, Ma.
Rosario Araneta Vda. de Tongoy.
The following antecedents are also undisputed, though by
no means equally submitted as the complete facts, nor
seen in Identical lights: On April 17, 1918, Hacienda Pulo
was mortgaged by its registered co-owners to the
Philippine National Bank (PNB), Bacolod Branch, as
security for a loan of P11,000.00 payable in ten (10) years
at 8% interest per annum. The mortgagors however were
unable to keep up with the yearly amortizations, as a
result of which the PNB instituted judicial foreclosure
proceedings over Hacienda Pulo on June 18, 1931. To
avoid foreclosure, one of the co-owners and mortgagors,
Jose Tongoy, proposed to the PNB an amortization plan
that would enable them to liquidate their account. But, on
December 23, 1932, the PNB Branch Manager in Bacolod
advised Jose Tongoy by letter that the latter's proposal
was rejected and that the foreclosure suit had to continue.
As a matter of fact, the suit was pursued to finality up to
the Supreme Court which affirmed on July 31, 1935 the
decision of the CFI giving the PNB the right to foreclose
the mortgage on Hacienda Pulo. In the meantime, Patricio
D. Tongoy and Luis Tongoy executed on April 29, 1933 a
Declaration of Inheritance wherein they declared
themselves as the only heirs of the late Francisco Tongoy
and thereby entitled to the latter's share in Hacienda Pulo.
On March 13, 1934, Ana Tongoy, Teresa Tongoy,
Mercedes Sonora, Trinidad Sonora, Juan Sonora and
Patricio Tongoy executed an "Escritura de Venta" (Exh. 2
or Exh. W), which by its terms transferred for
consideration their rights and interests over Hacienda
Pulo in favor of Luis D. Tongoy. Thereafter, on October
23, 1935 and November 5, 1935, respectively, Jesus
Sonora and Jose Tongoy followed suit by each executing
a similar "Escritura de Venta" (Exhs. 3 or DD and 5 or AA)
pertaining to their corresponding rights and interests over
Hacienda Pulo in favor also of Luis D. Tongoy. In the
case of Jose Tongoy, the execution of the "Escritura de
Venta" (Exh. 5 or AA) was preceded by the execution on
October 14, 1935 of an Assignment of Rights (Exh. 4 or
Z) in favor of Luis D. Tongoy by the Pacific Commercial
Company as judgment lien-holder (subordinate to the
PNB mortgage) of Jose Tongoy's share in Hacienda Pulo.
On the basis of the foregoing documents, Hacienda Pulo
was placed on November 8, 1935 in the name of Luis D.
Tongoy, married to Maria Rosario Araneta, under
Transfer Certificate of "Title No. 20154 (Exh. 20). In the
following year, the title of the adjacent Cuaycong property
also came under the name of Luis D. Tongoy, married to
Maria Rosario Araneta, per Transfer Certificate of Title
No. 21522, by virtue of an "Escritura de Venta" (Exh. 6)
executed in his favor by the owner Basilisa Cuaycong on
June 22, 1936 purportedly for P4,000.00. On June 26,
1936, Luis D. Tongoy executed a real estate mortgage
over the Cuaycong property in favor of the PNB, Bacolod
Branch, as security for loan of P4,500.00. Three days
thereafter, on June 29, 1936, he also executed a real
estate mortgage over Hacienda Pulo in favor of the same
bank to secure an indebtedness of P21,000.00, payable
for a period of fifteen (15) years at 8% per annum. After
two decades, on April 17, 1956, Luis D. Tongoy paid off
all his obligations with the PNB, amounting to a balance
of P34,410.00, including the mortgage obligations on the
Cuaycong property and Hacienda Pulo. However, it was
only on April 22, 1958 that a release of real estate
mortgage was executed by the bank in favor of Luis D.
Tongoy. On February 5, 1966, Luis D. Tongoy died at the
Lourdes Hospital in Manila, leaving as heirs his wife Maria
Rosario Araneta and his son Francisco A. Tongoy. Just
before his death, however, Luis D. Tongoy received a
letter from Jesus T. Sonora, dated January 26, 1966,
demanding the return of the shares in the properties to
the co-owners.
Not long after the death of Luis D. Tongoy, the case now
before Us was instituted in the court below on complaint
filed on June 2, 1966 by Mercedes T. Sonora, Juan T.
Sonora ** , Jesus T. Sonora, Trinidad T. Sonora, Ricardo
P. Tongoy and Cresenciano P. Tongoy. Named
principally as defendants were Francisco A. Tongoy, for
himself and as judicial administrator of the estate of the
late Luis D. Tongoy, and Maria Rosario Araneta Vda. de
Tongoy. Also impleaded as defendants, because of their
unwillingness to join as plaintiffs were Amado P. Tongoy,
Norberto P. Tongoy ** and Fernando P. Tongoy. Alleging
in sum that plaintiffs and/or their predecessors transferred
their interests on the two lots in question to Luis D.
Tongoy by means of simulated sales, pursuant to a trust
arrangement whereby the latter would return such
interests after the mortgage obligations thereon had been
settled, the complaint prayed that 'judgment be rendered
in favor of the plaintiffs and against the defendants-
(a) Declaring that the HACIENDA PULO,
Lot 1397-B-3 now covered by T.C.T. No.
29152, Bacolod City, and the former
Cuaycong property, Lot 1395 now covered
by T.C.T. No. T-824 (RT-4049) (21522),
Bacolod City, as trust estate belonging to
the plaintiffs and the defendants in the
proportion set forth in Par. 26 of this
complaint;
 (b) Ordering the Register of Deeds of
Bacolod City to cancel T.C.T. No. 29152
and T.C.T. No. T-824 (RT-4049) (21522),
Bacolod City, and to issue new ones in the
names of the plaintiffs and defendants in
the proportions set forth in Par. 26 thereof,
based on the original area of HACIENDA
PULO;
(c) Ordering the defendants Francisco A.
Tongoy and Ma. Rosario Araneta Vda. de
Tongoy to render an accounting to the
plaintiffs of the income of the above two
properties from the year 1958 to the
present and to deliver to each plaintiff his
corresponding share with legal interest
thereon from 1958 and until the same
shall have been fully paid;
(d) Ordering the defendants Francisco
Tongoy and Ma. Rosario Araneta Vda. de
Tongoy to pay to the plaintiffs as and for
attorney's fees an amount equivalent to
twenty-four per cent (24%) of the rightful
shares of the plaintiffs over the original
HACIENDA PULO and the Cuaycong
property, including the income thereof
from 1958 to the present; and
(e) Ordering the defendants Francisco A.
Tongoy and Ma. Rosario Vda. de Tongoy
to pay the costs of this suit.
Plaintiffs also pray for such other and further remedies
just and equitable in the premises.
Defendants Francisco A. Tongoy and Ma. Rosario Vda.
de Tongoy filed separate answers, denying in effect
plaintiffs' causes of action, and maintaining, among
others, that the sale to Luis D. Tongoy of the two lots in
question was genuine and for a valuable consideration,
and that no trust agreement of whatever nature existed
between him and the plaintiffs. As affirmative defenses,
defendants also raised laches, prescription, estoppel, and
the statute of frauds against plaintiffs. Answering
defendants counter claimed for damages against plaintiffs
for allegedly bringing an unfounded and malicious
complaint.
For their part, defendants Norberto Tongoy and Amado
Tongoy filed an answer under oath, admitting every
allegation of the complaint. On the other hand, defendant
Fernando Tongoy originally joined Francisco A. Tongoy in
the latter's answer, but after the case was submitted and
was pending decision, the former filed a verified answer
also admitting every allegation of the complaint.
Meanwhile, before the case went to trial, a motion to
intervene as defendants was filed by and was granted to
Salvacion Tongoy and Estrella Tongoy, alleging they
were sisters of the full blood of Fernando Tongoy. Said
intervenors filed an answer similarly admitting every
allegation of the complaint.
After trial on the merits, the lower court rendered its
decision on October 15, 1968 finding the existence of an
implied trust in favor of plaintiffs, but at the same time
holding their action for reconveyance barred by
prescription, except in the case of Amado P. Tongoy,
Ricardo P. Tongoy, Cresenciano P. Tongoy, and Norberto
P. Tongoy, who were adjudged entitled to reconveyance
of their corresponding shares in the property left by their
father Francisco Tongoy having been excluded therefrom
in the partition had during their minority, and not having
otherwise signed any deed of transfer over such shares.
The dispositive portion of the decision reads:
IN VIEW OF ALL THE FOREGOING considerations,
judgment is hereby rendered dismissing the complaint,
with respect to Mercedes, Juan, Jesus and Trinidad, all
surnamed Sonora. The defendants Francisco Tongoy and
Rosario Araneta Vda. de Tongoy are hereby ordered to
reconvey the proportionate shares of Ricardo P.,
Cresenciano P., Amado P., and Norberto P., all surnamed
Tongoy in Hda. Pulo and the Cuaycong property. Without
damages and costs.
 SO ORDERED.
Upon motion of plaintiffs, the foregoing dispositive portion
of the decision was subsequently clarified by the trial
court through its order of January 9, 1969 in the following
tenor:
Considering the motion for clarification of
decision dated November 7, 1968 and the
opposition thereto, and with the view to
avoid further controversy with respect to
the share of each heir, the dispositive
portion of the decision is hereby clarified
in the sense that, the proportionate legal
share of Amado P. Tongoy, Ricardo P.
Tongoy, Cresenciano P. Tongoy and the
heirs of Norberto P. Tongoy, in Hda. Pulo
and Cuaycong property consist of 4/5 of
the whole trust estate, leaving 1/5 of the
same to the heirs of Luis D. Tongoy.
SO ORDERED. (pp. 157-166, Vol. I, rec.).
Both parties appealed the decision of the lower court to respondent
appellate court. Plaintiffs-appellants Mercedes T. Sonora, Jesus T.
Sonora, Trinidad T. Sonora and the heirs of Juan T. Sonora questioned
the lower court's decision dismissing their complaint on ground of
prescription, and assailed it insofar as it held that the agreement created
among the Tongoy-Sonora family in 1931 was an implied, and not an
express, trust; that their action had prescribed; that the defendants-
appellants were not ordered to render an accounting of the fruits and
income of the properties in trust; and that defendants were not ordered to
pay the attorney's fees of plaintiffs- appellants. For their part, defendants-
appellants Francisco A. Tongoy and Ma. Rosario Araneta Vda. de
Tongoy not only refuted the errors assigned by plaintiffs-appellants, but
also assailed the findings that there was preponderance of evidence in
support of the existence of an implied trust; that Ricardo P. Tongoy,
Amado P. Tongoy and Norberto P. Tongoy are the legitimate half-
brothers of the late Luis D. Tongoy; that their shares in Hacienda Pulo
and Cuaycong property should be reconveyed to them by defendants-
appellants; and that an execution was ordered pending appeal.
On December 3, 1975, respondent court rendered the questioned
decision, the dispositive portion of which is as follows:
WHEREFORE, judgment is hereby rendered modifying
the judgment and Orders appealed from by ordering
Maria Rosario Araneta Vda. de Tongoy and Francisco A.
Tongoy. —
1) To reconvey to Mercedes T. Sonora, Juan T. Sonora
(as substituted and represented by his heirs), Jesus T.
Sonora and Trinidad T. Sonora each a 7/60th portion of
both Hacienda Pulo and the Cuaycong property, based
on their original shares;
2) To reconvey to Ricardo P. Tongoy, Cresenciano P.
Tongoy, Amado P. Tongoy and Norberto P. Tongoy as
substituted and represented by his heirs each a 14/135th
portion of both Hacienda Pulo and the Cuaycong
property, also based on their original shares; provided
that the 12 hectares already reconveyed to them by virtue
of the Order for execution pending appeal of the judgment
shall be duly deducted;
3) To render an accounting to the parties named in pars.
1 and 2 above with respect to the income of Hacienda
Pulo and the Cuaycong property from May 5, 1958 up to
the time the reconveyances as herein directed are made;
and to deliver or pay to each of said parties their
proportionate shares of the income, if any, with legal
interest thereon from the date of filing of the complaint in
this case, January 26, 1966, until the same is paid;
4) To pay unto the parties mentioned in par. 1 above
attorney's fees in the sum of P 20,000.00; and
5) To pay the costs.
SO ORDERED (pp. 207-208, Vol. 1, rec.).
Petitioners Francisco A. Tongoy and Ma. Rosario Araneta Vda. de
Tongoy (defendants-appellants) have come before Us on petition for
review on certiorari with the following assignments of errors (pp. 23-24,
Brief for Petitioners):
I. The Court of Appeals erred in finding that there was a trust constituted
on Hacienda Pulo.
II. The Court of Appeals erred in finding that the purchase price for the
Cuaycong property was paid by Jose Tongoy and that said property was
also covered by a trust in favor of respondents.
III. Conceding, for the sake of argument, that respondents have
adequately proven an implied trust in their favor, the Court of Appeals
erred in not finding that the rights of respondents have prescribed, or are
barred by laches.
IV. The Court of Appeals erred in finding that the respondents Tongoy
are the legitimated children of Francisco Tongoy.
V. Granting arguendo that respondents Tongoy are the legitimated
children of Francisco Tongoy, the Court of Appeals erred in not finding
that their action against petitioners has prescribed.
VI. The Court of Appeals erred in ordering petitioners to pay attorney's
fees of P 20,000.00.
VII. The Court of Appeals erred in declaring that execution pending
appeal in favor of respondents Tongoys was justified.
I Luis D. Tongoy would benefit with the
It appears to US that the first and second errors assigned by petitioners
are questions of fact which are beyond OUR power to review.
Thus, as found by the respondent Court of Appeals:
xxx xxx xxx
We shall consider first the appeal interposed by plaintiffs-
appellants. The basic issues underlying the disputed
errors raised suggest themselves as follows: 1) whether
or not the conveyance respecting the questioned lots
made in favor of Luis D. Tongoy in 1934 and 1935 were
conceived pursuant to a trust agreement among the
parties; 2) if so, whether the trust created was an express
or implied trust; and 3) if the trust was not an express
trust, whether the action to enforce it has prescribed.
The first two issues indicated above will be considered
together as a matter of logical necessity, being so closely
interlocked. To begin with, the trial court found and ruled
that the transfers made in favor of Luis D. Tongoy were
clothed with an implied trust, arriving at this conclusion as
follows:
The Court finds that there is
preponderance of evidence in support of
the existence of constructive, implied or
tacit trust. The hacienda could have been
leased to third persons and the rentals
would have been sufficient to liquidate the
outstanding obligation in favor of the
Philippine National Bank. But the co-
owners agreed to give the administration
of the property to Atty. Luis D. Tongoy, so
that the latter can continue giving support
to the Tongoy-Sonora family and at the
same time, pay the amortization in favor of
the Philippine National Bank, in the same
manner that Jose Tongoy did. And of
course, if the administration is successful,
profits of the hacienda. Simulated deeds
of conveyance in favor of Luis D. Tongoy
were executed to facilitate and expedite
the transaction with the Philippine National
Bank. Luis D. Tongoy supported the
Tongoy-Sonora family, defrayed the
expenses of Dr. Jesus Sonora and Atty.
Ricardo P. Tongoy, in their studies. Luis
Tongoy even gave Sonoras their shares in
the "beneficacion" although the
"beneficacion" were included in the deeds
of sale. The amount of consideration of
the one-fifth (15) share of Jose Tongoy is
one hundred (P 100,00) pesos only.
Likewise the consideration of the sale of
the interests of the Pacific Commercial
Company is only P100.00 despite the fact
 that Jose Tongoy paid in full his
indebtedness in favor of said company.
The letter of Luis D. Tongoy dated
November 5, 1935 (Exhibit 'BB-1') is very
significant, the tenor of which is quoted
hereunder:
Dear Brother Jose:
Herewith is the deed which the bank sent
for us to sign. The bank made me pay the
Pacific the sum of P100.00 so as not to
sell anymore the land in public auction.
This deed is for the purpose of dispensing
with the transfer of title to the land in the
name of the bank, this way we will avoid
many expenses.
Yours,
Luis D. Tongoy
Jose Tongoy signed the deed because he incurred the
obligation with the Pacific and paid it. In releasing the
second mortgage, Luis Tongoy paid only P100.00 and the
deed was in favor of Luis Tongoy. This was done in order
"to avoid many expenses " of both Jose and Luis as
obviously referred to in the word "WE".
Those two transactions with nominal considerations are
irrefutable and palpable evidence of the existence of
constructive or implied trust.
Another significant factor in support of the existence of
constructive trust is the fact that in 1933-34, when
proposals for amicable settlement with the Philippine
National Bank were being formulated and considered,
Luis D. Tongoy was yet a neophite (sic) in the practice of
law, and he was still a bachelor. It was proven that it was
Jose Tongoy, the administrator of Hda. Pulo, who
provided for his expenses when he studied law, when he
married Maria Araneta, the latter's property were leased
and the rentals were not sufficient to cover all the
considerations stated in the deeds of sale executed by
the co-owners of Hda. Pulo, no matter how inadequate
were the amounts so stated. These circumstances
fortified the assertion of Judge Arboleda that Luis D.
Tongoy at that time was in no condition to pay the
purchase price of the property sold,
But the Court considers the evidence of execution of
express trust agreement insufficient. Express trust
agreement was never mentioned in the plaintiffs'
pleadings nor its existence asserted during the pre-trial
hearings. It was only during the trial on the merits when
Atty. Eduardo P. Arboleda went on to testify that he
prepared the deed of trust agreement.
Indeed the most formidable weapon the plaintiff could
have used in destroying the "impregnable walls of the
defense castle consisting of public documents" is
testimony of Atty. Eduardo P. Arboleda. He is most
qualified and in a knowable position to testify as to the
truth of the existence of the trust agreement, because he
was not only the partner of the late Luis D. Tongoy in their
practice of law especially during the time he prepared
and/or notarized the deeds of sale but he was also his
colleague in the City Council. But however forceful would
be the impact of his testimony, it did not go beyond the
establishment of constructive or implied trust agreement.
In the first place, if it is true that written trust agreement
was prepared by him and signed by Luis D. Tongoy for
the security of the vendor, why is it that only two copies of
the agreement were prepared, one copy furnished Jose
Tongoy and the other kept by Luis Tongoy, instead of
making five copies and furnished copy to each co-owner,
or at least one copy would have been kept by him? Why
is it that when Atty. Arboleda invited Mrs. Maria Rosario
Araneta Vda. de Tongoy and her son to see him in his
house, Atty. Arboleda did not reveal or mention the fact of
the existence of a written trust agreement signed by the
late Luis D. Tongoy? The revelation of the existence of a
written trust agreement would have been a vital and
controlling factor in the amicable settlement of the case,
which Atty. Arboleda would have played an effective role
as an unbiased mediator. Why did not Atty. Arboleda
state the precise context of the written agreement; its
form and the language it was written, knowing as he
should, the rigid requirements of proving the contents of a
lost document. It is strange that when Mrs. Maria Rosario
Araneta Vda. de Tongoy and her son were in the house of
Atty. Arboleda, in compliance with his invitation for the
supposed friendly settlement of the case, Atty. Arboleda
did not even submit proposals for equitable arbitration of
the case. On the other hand, according to Mrs. Tongoy,
Mrs. Arboleda intimated her desire to have Atty. Arboleda
be taken in. The Court refuses to believe that Judge
Arboleda was aware of the alleged intimations of Mrs.
Arboleda, otherwise he would not have tolerated or
permitted her to indulge in such an embarrassing and
uncalled for intrusion. The plaintiffs evidently took such
ungainly insinuations with levity so much so that they did
not think it necessary to bring Mrs. Arboleda to Court to
refute this fact.
The parties, on either side of this appeal take issue with
the conclusion that there was an implied trust, one side
maintaining that no trust existed at all, the other that the
trust was an express trust.
To begin with, We do not think the trial court erred in its
ultimate conclusion that the transfers of the two lots in
question made in favor of the late Luis D. Tongoy by his
co-owners in 1933 and 1934 created an implied trust in
favor of the latter. While, on one hand, the evidence
presented by plaintiffs-appellants to prove an express
trust agreement accompanying the aforesaid transfers of
the lots are incompetent, if not inadequate, the record
bears sufficiently clear and convincing evidence that the
transfers were only simulated to enable Luis D. Tongoy to
save Hacienda Pulo from foreclosure for the benefit of the
co-owners, including himself. Referring in more detail to
the evidence on the supposed express trust, it is true that
plaintiffs- appellants Jesus T. Sonora, Ricardo P. Tongoy,
Mercedes T. Sonora and Trinidad T. Sonora have
testified with some vividness on the holding of a family
conference in December 1931 among the co-owners of
Hacienda Pulo to decide on steps to be taken vis-a-vis
the impending foreclosure of the hacienda by the PNB
upon the unpaid mortgage obligation thereon.
Accordingly, the co-owners had agreed to entrust the
administration and management of Hacienda Pulo to Luis
D. Tongoy who had newly emerged as the lawyer in the
family. Thereafter, on the representation of Luis D.
Tongoy that the bank wanted to deal with only one person
it being inconvenient at time to transact with many
persons, specially when some had to be out of town the
co-owners agreed to make simulated transfers of their
participation in Hacienda Pulo to him. As the evidence
stands, even if the same were competent, it does not
appear that there was an express agreement among the
co-owners for Luis D. Tongoy to hold Hacienda Pulo in
trust, although from all the circumstances just indicated
such a trust may be implied under the law (Art. 1453, Civil
Code; also see Cuaycong vs. Cuaycong, L-21616,
December 11, 1967, 21 SCRA 1192, 1197-1198). But,
whatever may be the nature of the trust suggested in the
testimonies adverted to, the same are incompetent as
proof thereof anent the timely objections of defendants-
appellees to the introduction of such testimonial evidence
on the basis of the survivorship rule. The witnesses being
themselves parties to the instant case, suing the
representatives of the deceased Luis D. Tongoy upon a
demand against the latter's estate, said witnesses are
barred by the objections of defendants-appellees from
testifying on matters of fact occurring before the death of
the deceased (Sec. 20[a], Rule 130), more particularly
where such occurrences consist of verbal agreements or
statements made by or in the presence of the deceased.
Neither has the existence of the alleged contra-
documento-- by which Luis D. Tongoy supposedly
acknowledged the transfers to be simulated and bound
himself to return the shares of his co-owners after the
mortgage on the Hacienda had been discharged-been
satisfactorily established to merit consideration as proof of
the supposed express trust. We can hardly add to the
sound observations of the trial court in rejecting the
evidence to the effect as insufficient, except to note
further that at least plaintiffs-appellants Mercedes T.
Sonora and Trinidad T. Sonora have testified having been
apprised of the document and its contents when Luis D.
Tongoy supposedly delivered one copy to Jose Tongoy.
And yet as the trial court noted, no express trust
agreement was ever mentioned in plaintiffs-appellants'
pleadings or at the pre-trial.
Nevertheless, there is on record enough convincing
evidence not barred by the survivorship rule, that the
transfers made by the co-owners in favor of Luis D.
Tongoy were simulated and that an implied or resulting
trust thereby came into existence, binding the latter to
make reconveyance of the co-owners' shares after the
mortgage indebtedness on Hacienda Pulo has been
discharged. Thus it appears beyond doubt that Hacienda
Pulo has been the source of livelihood to the co-owners
and their dependents, when the subject transfers were
made. It is most unlikely that all of the several other co-
owners should have come at the same time to one mind
about disposing of their participation in the hacienda,
when the same counted so much in their subsistence and
self-esteem. Only extreme necessity would have forced
the co-owners to act in unison towards earnestly parting
with their shares, taking into account the meager
considerations mentioned in the deeds of transfer which
at their most generous gave to each co-owner only
P2,000.00 for a 1/5 part of the hacienda. As it appears to
Us, the impending foreclosure on the mortgage for
P11,000.00 could not have created such necessity.
Independent of testimony to the effect, it is not hard to
surmise that the hacienda could have been leased to
others on terms that would have satisfied the mortgage
obligation. Moreover, as it turned out, the PNB was
amenable, and did actually accede, to a restructuring of
the mortgage loan in favor of Luis D. Tongoy, thereby
saving the hacienda from foreclosure. As a matter of fact,
the co-owners must have been posted on the attitude of
the bank regarding the overdue mortgage loan, and its
willingness to renew or restructure the same upon certain
conditions. Under such circumstances, it is more
reasonable to conclude that there was no compelling
reason for the other co-owners to sell out their birthrights
to Luis D. Tongoy, and that the purported transfers were,
as claimed by them in reality simulated pursuant to the
suggestion that the bank wanted to deal with only one
person. In fact, as recited in the Escritura de Venta (Exh.
AA) executed between Luis. D. Tongoy and Jose Tongoy,
it appears that the series of transfers made in favor of the
former by the co-owners of Hacienda Pulo followed and
was made pursuant to a prior arrangement made with the
PNB by Luis D. Tongoy to redeem the shares or
participation of his co-owners. That this was readily
assented to in the anxiety to save and preserve Hacienda
Pulo for all its co-owners appears very likely anent
undisputed evidence that the said co-owners had been
used to entrusting the management thereof to one among
them, dating back to the time of Francisco Tongoy who
once acted as administrator, followed by Jose Tongoy,
before Luis D. Tongoy himself took over the hacienda.
Strongly supported the theory that the transfers were only
simulated to enable Luis D. Tongoy (to) have effective
control and management of the hacienda for the benefit of
all the co-owners is preponderant evidence to the effect
that he was in no financial condition at the time to
purchase the hacienda. Witness Eduardo Arboleda who
was a law partner of Luis D. Tongoy when the transfers
were made, and who is not a party in this case,
emphatically testified that Luis D. Tongoy could not have
produced the money required for the purchase from his
law practice then. On the other hand, the suggestion that
his wife Ma. Rosario Araneta had enough income from
her landed properties to sufficiently augment Luis D.
Tongoy's income from his practice is belied by evidence
that such properties were leased, and the rentals
collected in advance, for eleven (11) crop years beginning
1931 (Exh. EEE), when they were not yet married.
The financial incapacity of Luis D. Tongoy intertwines,
and together gains strength, with proof that the co-owners
as transferors in the several deeds of sale did not receive
the considerations stated therein. In addition to the
testimony of the notary public, Eduardo P. Arboleda, that
no consideration as recited in the deeds of transfer were
ever paid in his presence, all the transferors who testified
including Jesus T. Sonora, Mercedes T. Sonora and
Trinidad T. Sonora-all denied having received the
respective considerations allegedly given them. While
said transferors are parties in this case, it has been held
that the survivorship rule has no application where the
testimony offered is to the effect that a thing did not occur
(Natz vs. Agbulos, CA-G.R. No. 4098-R, January 13,
1951; Mendoza v. C. Vda. de Goitia, 54 Phil. 557, cited by
Mora, Comments on the Rules of Court, 1970 ed., Vol. 5,
p. 174).
Also of some significance is the fact that the deeds of
transfer executed by Ana Tongoy, Teresa Tongoy,
Mercedes Sonora, Trinidad Sonora, Juan Sonora, and
Patricio Tongoy (Exh. W) as well as that by Jesus Sonora
(Exh. DD) did not even bother to clarify whether Luis D.
Tongoy as transferee of his co-owners' share was
assuming the indebtedness owing to the PNB upon the
mortgage on Hacienda Pulo. In an honest-to-goodness
sale, it would have been most unlikely that the transferors
would have paid no attention to this detail, least of all
where, as in this case, the transfers were apparently
prompted by the inability of the co-owners to discharge
the mortgage obligation and were being pressed for
payment.
Furthermore, the tenor of the letter from Luis D. Tongoy to
Jose Tongoy, dated November 5, 1935 (Exhibit Bb-1), as
heretofore quoted with portions of the decision on appeal,
is very revealing of the fact that the steps taken to place
Hacienda Pulo in the name of Luis D. Tongoy were made
for the benefit not only of himself but for the other co-
owners as well. Thus, the letter ends with the clause-"this
way we will avoid many expenses.
Finally, it is not without significance that the co-owners
and their dependents continued to survive apparently
from the sustenance from Hacienda Pulo for a long time
following the alleged transfers in favor of Luis D. Tongoy.
In fact, it does not appear possible that Jesus T. Sonora
and Ricardo P. Tongoy could have finished medicine and
law, respectively, without support from Luis D. Tongoy as
administrator of the common property.
All the foregoing, considered together, constitute clear
and convincing evidence that the transfers made in favor
of Luis D. Tongoy by his co- owners were only simulated,
under circumstances giving rise to an implied or resulting
trust whereby Luis D. Tongoy is bound to hold title in trust
for the benefit of his co-owners (cf. de Buencamino, et al.
vs. De Matias, et al., L-19397, April 30, 1966, 16 SCRA
849)" [pp. 170-181, Vol. I, rec.].
The Court of Appeals found enough convincing evidence not barred by
the aforecited survivorship rule to the effect that the transfers made by
the co- owners in favor of Luis D. Tongoy were simulated.
All these findings of fact, as a general rule, are conclusive upon US and
beyond OUR power to review. It has been well-settled that the jurisdiction
of the Supreme Court in cases brought to IT from the Court of Appeals is
limited to reviewing and revising errors of law imputed to it, its findings of
fact being conclusive as a matter of general principle (Chan vs. C.A., 33
SCRA 737, 744; Alquiza vs. Alquiza, 22 SCRA 494, 497).
The proofs submitted by petitioners do not place the factual findings of
the Court of Appeals under any of the recognized exceptions to the
aforesaid general rule.
I
The initial crucial issue therefore is-whether or not the rights of herein
respondents over subject properties, which were the subjects of
simulated or fictitious transactions, have already prescribed.
The negative answer to the aforesaid query is found in Articles 1409 and
1410 of the New Civil Code. Said provisions state thus:
Art. 1409. The following contracts are inexistent and void
from the beginning:
xxx xxx xxx
2) Those which are absolutely simulated
or fictitious;
xxx xxx xxx
These contracts cannot be ratified. Neither can the right
to set up the defense of illegality be waived (emphasis
supplied).
 Art. 1410. The action or defense for the declaration of the
inexistence of a contract does not prescribe.
The characteristic of simulation is the fact that the apparent contract is
not really desired nor intended to produce legal effects nor in any way
alter the juridical situation of the parties. Thus, where a person, in order
to place his property beyond the reach of his creditors, simulates a
transfer of it to another, he does not really intend to divest himself of his
title and control of the property; hence, the deed of transfer is but a sham.
This characteristic of simulation was defined by this Court in the case of
Rodriguez vs. Rodriguez, No. L-23002, July 31, 1967, 20 SCRA 908.
A void or inexistent contract is one which has no force and effect from the
very beginning, as if it had never been entered into, and which cannot be
validated either by time or by ratification (p. 592, Civil Code of the
Philippines, Vol. IV, Tolentino, 1973 Ed.).
Avoid contract produces no effect whatsoever either against or in favor of
anyone; hence, it does not create, modify or extinguish the juridical
relation to which it refers (p. 594, Tolentino, supra).
The following are the most fundamental characteristics of void or
inexistent contracts:
1) As a general rule, they produce no legal effects whatsoever in
accordance with the principle "quod nullum est nullum producit effectum."
2) They are not susceptible of ratification.
3) The right to set up the defense of inexistence or absolute nullity cannot
be waived or renounced.
4) The action or defense for the declaration of their inexistence or
absolute nullity is imprescriptible.
5) The inexistence or absolute nullity of a contract cannot be invoked by
a person whose interests are not directly affected (p. 444, Comments and
Jurisprudence on Obligations and Contracts, Jurado, 1969 Ed.; emphasis
supplied).
The nullity of these contracts is definite and cannot be cured by
ratification. The nullity is permanent, even if the cause thereof has
ceased to exist, or even when the parties have complied with the contract
spontaneously (p. 595, Tolentino, supra).
In Eugenio vs. Perdido, et al., No. L-7083, May 19, 1955, 97 Phil. 41, this
Court thus reiterated:
Under the existing classification, such contract would be
"inexisting" and the "action or defense for declaration' of
such inexistence "does not prescribe' (Art. 14 10 New
Civil Code). While it is true that this is a new provision of
the New Civil Code, it is nevertheless a principle
recognized since Tipton vs. Velasco, 6 Phil. 67 that "mere
lapse of time cannot give efficacy to contracts that are null
and void.
Consistently, this Court held that 11 where the sale of a homestead is
nun and void, the action to recover the same does not prescribe because
mere lapse of time cannot give efficacy to the contracts that are null and
void and inexistent" (Angeles, et al. vs. Court of Appeals, et al., No. L-
11024, January 31, 1958, 102 Phil. 1006).
In the much later case of Guiang vs. Kintanar (Nos. L-49634-36, July 25,
1981, 106 SCRA 49), this Court enunciated thus:
It is of no consequence, pursuant to the same article, that
petitioners, the Guiang spouses, executed on August 21,
1975, apparently in ratification of the impugned
agreement, the deeds of sale covering the two lots
already referred to and that petitioners actually received
in part or in whole the money consideration stipulated
therein, for according to the same Article 1409, contracts
contemplated therein, as the one We are dealing with,
"cannot be ratified nor the defense of its illegality be
waived." Neither it it material, much less decisive, that
petitioners had not earlier judicially moved to have the
same annulled or set aside. Under Article 1410 of the
Civil Code, (t)he action or defense for declaration of the
inexistence of a contract does not prescribe.
Evidently, therefore, the deeds of transfer executed in favor of Luis
Tongoy were from the very beginning absolutely simulated or fictitious,
since the same were made merely for the purpose of restructuring the
mortgage over the subject properties and thus preventing the foreclosure
by the PNB.
Considering the law and jurisprudence on simulated or fictitious contracts
as aforestated, the within action for reconveyance instituted by herein
respondents which is anchored on the said simulated deeds of transfer
cannot and should not be barred by prescription. No amount of time
could accord validity or efficacy to such fictitious transactions, the defect
of which is permanent.
There is no implied trust that was generated by the simulated transfers;
because being fictitious or simulated, the transfers were null and void ab
initio-from the very beginning and thus vested no rights whatsoever in
favor of Luis Tongoy or his heirs. That which is inexistent cannot give life
to anything at all.
II
But even assuming arguendo that such an implied trust exists between
Luis Tongoy as trustee and the private respondents as cestui que trust,
still the rights of private respondents to claim reconveyance is not barred
by prescription or laches.
Petitioners maintain that, even conceding that respondents have
adequately proven an implied trust in their favor, their rights have already
prescribed, since actions to enforce an implied trust created under the old
Civil Code prescribes in ten years.
Under Act No. 190, whose statute of limitation would
apply if there were an implied trust as in this case, the
longest period of extinctive prescription was only ten
years (Salao vs. Salao, 70 SCRA 84; Diaz vs. Gorricho
and Aguado, 103 Phil. 261, 226).
On the other hand, private respondents contend that prescription cannot
operate against the cestui que trust in favor of the trustee, and that
actions against a trustee to recover trust property held by him are
imprescriptible (Manalang vs. Canlas, 50 OG 1980). They also cite other
pre-war cases to bolster this contention, among which are: Camacho vs.
Municipality of Baliwag, 28 Phil. 46; Uy vs. Cho Jan Ling, 19 Phil. 202
[pls. see pp. 258-259, Brief for Respondents, p. 398, rec.]. They further
allege that possession of a trustee is, in law, possession of the cestui
quetrust and, therefore, it cannot be a good ground for title by
prescription (Laguna vs. Levantino, 71 Phil. 566; Cortez vs. Oliva, 33
Phil. 480, cited on p. 261, Brief for Respondents, supra).
The rule now obtaining in this jurisdiction is aptly discussed in the case
of Bueno vs. Reyes (27 SCRA 1179, 1183), where the Court through
then Mr. Justice Makalintal, held:
While there are some decisions which hold that an action
upon a trust is imprescriptible, without distinguishing
between express and implied trusts, the better rule, as
laid down by this Court in other decisions, is that
prescription does supervene where the trust is merely an
implied one. The reason has been expressed by Mr.
Justice J.B.L. Reyes in J.M. Tuazon and Co., Inc. vs.
Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the Old Code of Civil Procedure, all
actions for recovery of real property prescribe in ten
years, excepting only actions based on continuing or
subsisting trusts that were considered by section 38 as
imprescriptible. As held in the case of Diaz vs. Gorricho,
L-11229, March 29, 1958, however, the continuing or
subsisting trusts contemplated in Sec. 38 of the Code of
Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are
imposed by law) where no fiduciary relation exists and the
trustee does not recognize the trust at all.
This doctrine has been reiterated in the latter case of Escay vs. C.A. (61
SCRA 370, 387), where WE held that implied or constructive trusts
prescribe in ten years. "The prescriptibility of an action for reconveyance
based on implied or constructive trust, is now a settled question in this
jurisdiction. It prescribes in ten years" (Boñaga vs. Soler, et al., 2 SCRA
755; J.M. Tuazon and Co., Inc. vs. Magdangal, 4 SCRA 88, special
attention to footnotes).
Following such proposition that an action for reconveyance such as the
instant case is subject to prescription in ten years, both the trial court and
respondent appellate court are correct in applying the ten-year
prescriptive period.
The question, however, is, from what time should such period be
counted?
The facts of the case at bar reveal that the title to Hacienda Pulo was
registered in the name of Luis D. Tongoy with the issuance of TCT No.
20154 on November 8, 1935; that the title to the adjacent Cuaycong
property was transferred to Luis D. Tongoy with the issuance of TCT No.
21522 on June 22, 1936. The properties were mortgaged in the year
1936 by said Luis D. Tongoy for P4,500.00 and P 21,000.00,
respectively, for a period of fifteen years; that the mortgage obligations to
the PNB were fully paid on April 17, 1956; that the release of mortgage
was recorded in the Registry of Deeds on May 5, 1958; and that the case
for reconveyance was filed in the trial court on June 2, 1966.
Considering that the implied trust resulted from the simulated sales which
were made for the purpose of enabling the transferee, Luis D. Tongoy, to
save the properties from foreclosure for the benefit of the co-owners, it
would not do to apply the theory of constructive notice resulting from the
registration in the trustee's name. Hence, the ten-year prescriptive period
should not be counted from the date of registration in the name of the
trustee, as contemplated in the earlier case of Juan vs. Zuñiga (4 SCRA
1221). Rather, it should be counted from the date of recording of the
release of mortgage in the Registry of Deeds, on which date May 5, 1958
— the cestui que trust were charged with the knowledge of the settlement
of the mortgage obligation, the attainment of the purpose for which the
trust was constituted.
Indeed, as respondent Court of Appeals had correctly held:
... as already indicated, the ten-year prescriptive period
for bringing the action to enforce the trust or for
reconveyance of plaintiffs-appellants" shares should be
toned from the registration of the release of the mortgage
obligation, since only by that time could plaintiffs-
appellants be charged with constructive knowledge of the
liquidation of the mortgage obligations, when it became
incumbent upon them to expect and demand the return of
their shares, there being no proof that plaintiffs-appellants
otherwise learned of the payment of the obligation earlier.
More precisely then the prescriptive period should be
reckoned from May 5, 1958 when the release of the
mortgage was recorded in the Registry of Deeds, which is
to say that the present complaint was still filed within the
period on June 4, 1966 (p. 35 of questioned Decision, on
p. 191, rec.).
Consequently, petitioner Francisco A. Tongoy as successor-in-interest
and/or administrator of the estate of the late Luis D. Tongoy, is under
obligation to return the shares of his co-heirs and co-owners in the
subject properties and, until it is done, to render an accounting of the
fruits thereof from the time that the obligation to make a return arose,
which in this case should be May 5, 1958, the date of registration of the
document of release of mortgage.
Hence, WE find no evidence of abuse of discretion on the part of
respondent Court of Appeals when it ordered such accounting from May
5, 1958, as well as the imposition of legal interest on the fruits and
income corresponding to the shares that should have been returned to
the private respondents, from the date of actual demand which has been
determined to have been made on January 26, 1966 by the demand
letter (Exh. TT) of respondent Jesus T. Sonora to deceased Luis D.
Tongoy.
III
With respect to the award of attorney's fees in the sum of P20,000.00, the
same appears to have been properly made, considering that private
respondents were unnecessarily compelled to litigate (Flordelis vs. Mar,
114 SCRA 41; Sarsosa Vda. de Barsobin vs. Cuenco, 113 SCRA 547;
Phil. Air Lines vs. C.A., 106 SCRA 393). As pointed out in the questioned
decision of the Court of Appeals:
As for the claim for attorney's fees, the same appears to be well taken in
the light of the findings WE have made considering that prevailing
plaintiffs- appellants were forced to litigate to enforce their rights, and that
equity under all the circumstances so dictate, said plaintiffs-appellants
should recover attorney's fees in a reasonable amount. We deem
P20,000.00 adequate for the purpose (p. 36 of Decision, p. 151, rec.).
IV
The remaining assignement of error dwells on the question of whether or
not respondents Amado, Ricardo, Cresenciano and Norberto, all
surnamed Tongoy, may be considered legitimated by virtue of the
marriage of their parents, Francisco Tongoy and Antonina Pabello,
subsequent to their births and shortly before Francisco died on
September 15, 1926. Petitioners maintain that since the said respondents
were never acknowledged by their father, they could not have been
legitimated by the subsequent marriage of their parents, much less could
they inherit from the estate of their father, the predecessor-in-interest of
Luis D. Tongoy, who is admittedly the half brother of the said
respondents.
Both the trial court and the respondent appellate court have found
overwhelming evidence to sustain the following conclusions: that Amado
P. Tongoy, Ricardo P. Tongoy, Cresenciano P. Tongoy and Norberto P.
Tongoy were born illegitimate to Antonina Pabello on August 19, 1910
(Exh. A), August 12,1914 (Exh. B), December 1, 1915 (Exhs. C and C- 1)
and August 4, 1922 (Exh. D), respectively; that Francisco Tongoy was
their father; that said Francisco Tongoy had before them two
legitimate children by his first wife, namely, Luis D. Tongoy and Patricio
D. Tongoy; that Francisco Tongoy and Antonina Pabello were
married sometime before his death on September 15, 1926 (Exh. H); that
shortly thereafter, Luis D. Tongoy and Patricio D. Tongoy executed an
Extra-Judicial Declaration of Heirs, leaving out their half-brothers Amado,
Ricardo, Cresenciano, and Norberto, who were then still minors; that
respondents Amado, Ricardo, Cresenciano and Norberto were known
and accepted by the whole clan as children of Francisco; that they had
lived in Hacienda Pulo with their parents, but when they went to school,
they stayed in the old family home at Washington Street, Bacolod,
together with their grandmother, Agatona Tongoy, as well as with the
Sonoras and with Luis and Patricio Tongoy; that everybody in Bacolod
knew them to be part of the Tongoy-Sonora clan; and that Luis D.
Tongoy as administrator of Hacienda Pulo, also spent for the education
of Ricardo Tongoy until he became a lawyer; and that even petitioners
admit the fact that they were half-brothers of the late Luis D. Tongoy.
The bone of contention, however, hinges on the absence of an
acknowledgment through any of the modes recognized by the Old Civil
Code (please see Articles 131 and 135 of the Old Civil Code), such that
legitimation could not have taken place in view of the provisions of Art.
121 of the same Code which states that "children shall be considered
legitimated by a subsequent marriage only when they have been
acknowledged by the parents before or after the celebration thereof."
Of course, the overwhelming evidence found by respondent Court of
Appeals conclusively shows that respondents Amado, Ricardo,
Cresenciano and Norberto have been in continuous possession of the
status of natural, or even legitimated, children. Still, it recognizes the fact
that such continuous possession of status is not, per se, a sufficient
acknowledgment but only a ground to compel recognition (Alabat vs.
Alabat, 21 SCRA 1479; Pua vs. Chan, 21 SCRA 753; Larena vs. Rubio,
43 Phil. 1017).
Be that as it may, WE cannot but agree with the liberal view taken by
respondent Court of Appeals when it said:
... It does seem equally manifest, however, that
defendants-appellants stand on a purely technical point in
the light of the overwhelming evidence that appellees
were natural children of Francisco Tongoy and Antonina
Pabello, and were treated as legitimate children not only
by their parents but also by the entire clan. Indeed, it does
not make much sense that appellees should be deprived
of their hereditary rights as undoubted natural children of
their father, when the only plausible reason that the latter
could have had in mind when he married his second wife
Antonina Pabello just over a month before his death was
to give legitimate status to their children. It is not in
keeping with the more liberal attitude taken by the New
Civil Code towards illegitimate children and the more
compassionate trend of the New Society to insist on a
very literal application of the law in requiring the
formalities of compulsory acknowledgment, when the only
result is to unjustly deprive children who are otherwise
entitled to hereditary rights. From the very nature of
things, it is hardly to be expected of appellees, having
been reared as legitimate children by their parents and
treated as such by everybody, to bring an action to
compel their parents to acknowledge them. In the hitherto
cited case of Ramos vs. Ramos, supra, the Supreme
Court showed the way out of patent injustice and inequity
that might result in some cases simply because of the
implacable insistence on the technical amenities for
acknowledgment. Thus, it held —
Unacknowledged natural children have no rights
whatsoever (Buenaventura vs. Urbano, 5 Phil. 1; Siguiong
vs. Siguiong, 8 Phil. 5, 11; Infante vs. Figueras, 4 Phil.
738; Crisolo vs. Macadaeg, 94 Phil. 862). The fact that
the plaintiffs, as natural children of Martin Ramos,
received shares in his estate implied that they were
acknowledged. Obviously, defendants Agustin Ramos
and Granada Ramos and the late Jose Ramos and
members of his family had treated them as his children.
Presumably, that fact was well-known in the community.
Under the circumstances, Agustin Ramos and Granada
Ramos and the heirs of Jose Ramos, are estopped from
 attacking plaintiffs' status as acknowledged natural
children (See Arts. 283 [4] and 2666 [3], New Civil Code).
[Ramos vs. Ramos, supra].
With the same logic, estoppel should also operate in this
case in favor of appellees, considering, as already
explained in detail, that they have always been treated as
acknowledged and legitimated children of the second
marriage of Francisco Tongoy, not only by their presumed
parents who raised them as their children, but also by the
entire Tongoy-Sonora clan, including Luis D. Tongoy
himself who had furnished sustenance to the clan in his
capacity as administrator of Hacienda Pulo and had in
fact supported the law studies of appellee Ricardo P.
Tongoy in Manila, the same way he did with Jesus T.
Sonora in his medical studies. As already pointed out,
even defendants-appellants have not questioned the fact
that appellees are half-brothers of Luis D. Tongoy. As a
matter of fact, that are really children of Francisco Tongoy
and Antonina Pabello, and only the technicality that their
acknowledgment as natural children has not been
formalized in any of the modes prescribed by law appears
to stand in the way of granting them their hereditary
rights. But estoppel, as already indicated, precludes
defendants-appellants from attacking appellees' status as
acknowledged natural or legitimated children of Francisco
Tongoy. In addition to estoppel, this is decidedly one
instance when technicality should give way to conscience,
equity and justice (cf. Vda. de Sta. Ana vs. Rivera, L-
22070, October 29, 1966,18 SCRA 588) [pp. 196-198,
Vol. 1, rec.].
It is time that WE, too, take a liberal view in favor of natural children who,
because they enjoy the blessings and privileges of an acknowledged
natural child and even of a legitimated child, found it rather awkward, if
not unnecessary, to institute an action for recognition against their natural
parents, who, without their asking, have been showering them with the
same love, care and material support as are accorded to legitimate
children. The right to participate in their father's inheritance should
necessarily follow.
The contention that the rights of the said respondents — Tongoys have
prescribed, is without merit. The death of Francisco Tongoy having
occurred on September 15, 1926, the provisions of the Spanish Civil
Code is applicable to this case, following the doctrine laid down in Villaluz
vs. Neme (7 SCRA 27) where this Court, through Mr. Justice Paredes,
held:
Considering that Maria Rocabo died (on February 17,
1937) during the regime of the Spanish Civil Code, the
distribution of her properties should be governed by said
Code, wherein it is provided that between co-heirs, the
act to demand the partition of the inheritance does not
prescribe (Art. 1965 [Old Civil Code]; Baysa, et al. vs.
Baysa, 53 Off. Gaz. 7272). Verily, the 3 living sisters were
possessing the property as administratices of the other
co-heirs, plaintiffs-appellants herein, who have the right to
vindicate their inheritance regardless of the lapse of time
(Sevilla vs. De los Angeles, L- 7745, 51 Off. Gaz. 5590,
and cases cited therein).
Even following the more recent doctrine enunciated in Gerona vs. de
Guzman (11 SCRA 153) that "an action for reconveyance of real property
based upon a constructive or implied trust, resulting from fraud, may be
barred by the statute of limitations" (Candelaria vs. Romero, L-12149,
Sept. 30, 1960; Alzona vs. Capunita, L-10220, Feb. 28, 1962)", and that
"the action therefor may be filed within four years from the discovery of
the fraud x x x", said period may not be applied to this case in view of its
peculiar circumstances. The registration of the properties in the name of
Luis D. Tongoy on November 8, 1935 cannot be considered as
constructive notice to the whole world of the fraud.
It will be noted that the foreclosure on the original mortgage over
Hacienda Pulo was instituted by PNB as early as June 18, 1931, from
which time the members of the Tongoy-Sonora clan had been in constant
conference to save the property. At that time all the respondents-
Tongoys were still minors (except Amado, who was already 23 years old
then), so that there could be truth to the allegation that their exclusion in
the Declaration of Inheritance executed by Patricio and Luis Tongoy on
April 29, 1933 was made to facilitate matters-as part of the general plan
arrived at after the family conferences to transfer the administration of the
property to the latter. The events that followed were obviously in
pursuance of such plan, thus:
March 13, 1934 — An Escritura de Venta (Exh. 2 or W)
was executed in favor of Luis D. Tongoy by Ana Tongoy,
Teresa Tongoy, Mercedes Sonora, Trinidad Sonora, Juan
 Sonora and Patricio Tongoy, transferring their rights and interest of Luis D. Tongoy, to return the properties that the prescriptive
interests over Hacienda Pulo to the former. period should begin to run.

October 23, 1935 — An Escritura de Venta (Exh. 3 or DD) As above demonstrated, the prescriptive period is ten year-from the date
was executed by Jesus Sonora, likewise transferring his of recording on May 5, 1958 of the release of mortgage in the Registry of
rights and interests over Hacienda Pulo to Luis D. Deeds.
Tongoy;
WHEREFORE, THE JUDGMENT APPEALED FROM IS HEREBY
November 5, 1935 — An Escritura de Venta (Exh. 5 or AFFIRMED IN TOTO.
AA) was also executed by Jose Tongoy in favor of Luis D.
Tongoy for the same purpose; (Note: This was preceded SO ORDERED.
by the execution on October 14, 1935 of an Assignment
of Rights [4 or Z) in favor of Luis D. Tongoy by the Pacific Guerrero and Escolin, JJ., concur.
Commercial Company as judgment lien-holder
[subordinate of the PNB mortgage] of Jose Tongoy on
Aquino and Abad Santos, JJ., concurs in the result.
Hacienda Pulo
Concepcion, Jr., and De Castro, JJ., took no part.
November 5, 1935 — Hacienda Pulo was placed in the
name of Luis D. Tongoy married to Ma. Rosario Araneta
with the issuance of TCT 20154 (Exh. 20);

June 22, 1936 — An Escritura de Venta was executed by Footnotes

Basilisa Cuaycong over the Cuaycong property in favor of
Luis D. Tongoy, thereby resulting in the issuance of TCT
No. 21522 in the name of Luis D. Tongoy married to Ma.
Rosario Araneta;
June 26, 1936 — Luis D. Tongoy executed a real estate
mortgage over the Cuaycong property in favor of the PNB
to secure a loan of P4,500.00; and
** During the pendency of the case below, the defendant
Norberto P. Tongoy died and was substituted by his
widow Eva Mabugat Tongoy, all his children Madonna,
Majesty and Francisco, all surnamed Tongoy.
Subsequently, plaintiff Juan T. Sonora also died and was
substituted by his widow Elisa Cuison Sonora and his
children Clarabelle and Romulo, both surnamed Sonora.

June 29, 1936 — Luis D. Tongoy executed a real estate

mortgage over Hacienda Pulo to secure a loan of
P21,000.00 payable for fifteen years.

When the mortgages were constituted, respondents Cresenciano Tongoy

and Norberto Tongoy were still minors, while respondent Amado Tongoy
became of age on August 19, 1931, and Ricardo Tongoy attained
majority age on August 12, 1935. Still, considering that such transfer of
the properties in the name of Luis D. Tongoy was made in pursuance of
the master plan to save them from foreclosure, the said respondents
were precluded from doing anything to assert their rights. It was only
upon failure of the herein petitioner, as administrator and/or successor-in-
 Republic of the Philippines As Administratrix, DE VERA's widow filed in Special Proceedings No.
SUPREME COURT 4058 of the former Court of First Instance of Pangasinan, Branch III, an
Manila Inventory of all properties of the deceased, which included "a parcel of
land in the poblacion of Calasiao, Pangasinan, containing an area of
FIRST DIVISION 5,417 square meters, more or less, and covered by Tax Declaration No.
12664."
G.R. No. L-52064 December 26, 1984
Because of the discrepancy in area mentioned in the Inventory as 5,147
JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO square meters (as filed by the widow), and that in the title as 8,752
LAYNO, petitioner, square meters, ESTRADA repaired to the Disputed Property and found
vs. that the northwestern portion, subsequently surveyed to be 3,732 square
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as meters, was occupied by petitioner-spouses Juliana Caragay Layno and
Administrator of the Estate of the Deceased, MARIANO DE Benito Layno. ESTRADA demanded that they vacate the Disputed
VERA, respondents. Portion since it was titled in the name of the deceased DE VERA, but
petitioners refused claiming that the land belonged to them and, before
them, to JULIANA's father Juan Caragay.
Pedro Peralta for petitioner.
ESTRADA then instituted suit against JULIANA for the recovery of the
Andres T. Gutierrez for private respondent.
Disputed Portion (Civil Case No. D-2007), which she resisted, mainly on
the ground that the Disputed Portion had been fraudulently or mistakenly
included in OCT No. 63, so that an implied or constructive trust existed in
her favor. She then counterclaimed for reconveyance of property in the
MELENCIO-HERRERA, J.: sense that title be issued in her favor.

Respondent Appellate Court, then the Court of Appeal, affirmed in After hearing, the Trial Court rendered judgment ordering JULIANA to
toto the judgment of the former Court of First Instance of Pangasinan, vacate the Disputed Portion.
Branch III, at Dagupan adjudging private respondent entitled to recover
possession of a parcel of land and ordering petitioners, as defendants On appeal respondent Appellate Court affirmed the Decision in toto.
below, to vacate the premises. Petitioners, as paupers, now seek a
reversal of that judgment.
Before us, JULIANA takes issue with the following finding of respondent
Court:
It was established by a relocation survey that the Disputed Portion is a
3,732 square-meter-area of a bigger parcel of sugar and coconut land
Although Section 102 of Act 496 allows a Petition to
(Lot No. 1, Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total
compel a Trustee to reconvey a registered land to
area of 8,752 square meters, situated at Calasiao, Pangasinan. The
the cestui que trust (Severino vs. Severino, 44 Phil 343;
entire parcel is covered by Original Certificate of Title No. 63, and
Escobar vs. Locsin, 74 PhiL 86) this remedy is no longer
includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the
available to Juliana Caragay. Mariano de Vera's land, Lot
name of Mariano M. DE VERA, who died in 1951 without issue. His
1, Psu-24206, was registered on September 11, 1947
intestate estate was administered first by his widow and later by her
(Exhibit"C") and it was only on March 28, 1967 when the
nephew, respondent Salvador Estrada.
defendants filed their original answer that Caragay sought
the reconveyance to her of the 3,732 square meters.
Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, Thus, her claim for reconveyance based on implied or
were first cousins, "both orphans, who lived together under one roof in constructive trust has prescribed after 10 years (Banaga
the care of a common aunt."
 vs. Soler, L-15717, June 30,1961; J.M. Tuason & Co. vs.
Magdangal, L-15539, Jan. 30, 1962; Alzona vs.
Capunitan, 4 SCRA 450). In other words, Mariano de
Vera's Original Certificate of Title No. 63 (Exhibit "C") has
become indefeasible. 1
We are constrained to reverse.
The evidence discloses that the Disputed Portion was originally
possessed openly, continuously and uninterruptedly in the concept of an
owner by Juan Caragay, the deceased father of JULIANA, and had been
declared in his name under Tax Declaration No. 28694 beginning with
the year 1921 (Exhibit "2-C"), later revised by Tax Declaration No. 2298
in 1951 (Exhibit "2-B"). Upon the demise of her father in 1914, JULIANA
adjudicated the property to herself as his sole heir in 1958 (Exhibit "4"),
and declared it in her name under Tax Declaration No. 22522 beginning
with the year 1959 (Exhibit "2-A"), later cancelled by TD No. 3539 in 1966
(Exhibit "2"). Realty taxes were also religiously paid from 1938 to 1972
(Exhibits "3-A" to "3-H"). Tacking the previous possession of her father to
her own, they had been in actual open, continuous and uninterrupted
possession in the concept of owner for about forty five (45) years, until
said possession was disturbed in 1966 when ESTRADA informed
JULIANA that the Disputed Portion was registered in Mariano DE VERA's
name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion
in OCT No. 63, JULIANA, an unlettered woman, declared that during his
lifetime, DE VERA, her first cousin, and whom she regarded as a father
as he was much older, borrowed from her the Tax Declaration of her land
purportedly to be used as collateral for his loan and sugar quota
application; that relying on her cousin's assurances, she acceded to his
request and was made to sign some documents the contents of which
she did not even know because of her ignorance; that she discovered the
fraudulent inclusion of the Disputed Portion in OCT No. 63 only in 1966
when ESTRADA so informed her and sought to eject them.
Of significance is the fact, as disclosed by the evidence, that for twenty
(20) years from the date of registration of title in 1947 up to 1967 when
this suit for recovery of possession was instituted, neither the deceased
DE VERA up to the time of his death in 1951, nor his successors-in-
interest, had taken steps to possess or lay adverse claim to the Disputed
Portion. They may, therefore be said to be guilty of laches as would
effectively derail their cause of action. Administrator ESTRADA took
interest in recovering the said portion only when he noticed the
discrepancy in areas in the Inventory of Property and in the title.
Inasmuch as DE VERA had failed to assert any rights over the Disputed
Portion during his lifetime, nor did he nor his successors-in-interest
possess it for a single moment: but that, JULIANA had been in actual,
continuous and open possession thereof to the exclusion of all and
sundry, the inescapable inference is, fraud having been unsubstantiated,
that it had been erroneously included in OCT No. 63. The mistake is
confirmed by the fact that deducting 3,732 sq. ms., the area of the
Disputed Portion from 8,752 sq. ms., the area of Lot 1 in OCT No. 63, the
difference is 5,020 sq. ms., which closely approximates the area of 5,147
sq. ms., indicated in the Inventory of Property of DE VERA. In fact, the
widow by limiting the area in said Inventory to only 5,147 sq. ms., in
effect, recognized and admitted that the Disputed Portion of 3,132 sq.
ms., did not form part of the decedent's estate.
The foregoing conclusion does not necessarily wreak havoc on the
indefeasibility of a Torrens title. For, mere possession of a certificate of
title under the Torrens System is not conclusive as to the holder's true
ownership of all the property described therein for he does not by virtue
of said certificate alone become the owner of the land illegally
included. 2 A Land Registration Court has no jurisdiction to decree a lot to
persons who have never asserted any right of ownership over it.
... Obviously then, the inclusion of said area in the title of
Lot No. 8151 is void and of no effect for a land registration
Court has no jurisdiction to decree a lot to persons who
have put no claim in it and who have never asserted any
right of ownership over it. The Land Registration Act as
well as the Cadastral Act protects only the holders of a
title in good faith and does not permit its provisions to be
used as a shield for the commission of fraud, or that one
should enrich himself at the expense of another. 3
JULIANA, whose property had been wrongfully registered in the name of
another, but which had not yet passed into the hands of third parties, can
properly seek its reconveyance.
The remedy of the landowner whose property has been
wrongfully or erroneously registered in another's name is,
after one year from the date of the decree, not to set
aside the decree, but, respecting the decree as
 incontrovertible and no longer open to review, to bring an claim that the land she had been occupying and
ordinary action in the ordinary court of justice for cultivating all these years, was titled in the name of a third
reconveyance or, if the property has passed into the person. We hold that in such a situation the right to quiet
hands of an innocent purchaser for value, for damages. 4 title to the property, to seek its reconveyance and annul
any certificate of title covering it, accrued only from the
Prescription cannot be invoked against JULIANA for the reason that as time the one in possession was made aware of a claim
lawful possessor and owner of the Disputed Portion, her cause of action adverse to his own, and it is only then that the statutory
for reconveyance which, in effect, seeks to quiet title to the property, falls period of prescription commences to run against such
within settled jurisprudence that an action to quiet title to property in one's possessor.
possession is imprescriptible. 5 Her undisturbed possession over a period
of fifty two (52) years gave her a continuing right to seek the aid of a WHEREFORE, the judgment under review is hereby REVERSED and
Court of equity to determine the nature of the adverse claim of a third SET ASIDE, and another one entered ordering private respondent
party and the effect on her own title. 6 Salvador Estrada, as Administrator of the Estate of the Deceased,
Mariano de Vera, to cause the segregation of the disputed portion of
Besides, under the circumstances, JULIANA's right to quiet title, to seek 3,732 square meters forming part of Lot No. 1, Psu-24206, Case No. 44,
reconveyance, and to annul OCT. No. 63 accrued only in 1966 when she GLRO Rec. No. 117, presently occupied by petitioner Juliana Caragay-
was made aware of a claim adverse to her own. It was only then that the Layno, and to reconvey the same to said petitioner. After the segregation
statutory period of prescription may be said to have commenced to run shall have been accomplished, the Register of Deeds of Pangasinan is
against her, following the pronouncement in Faja vs. Court of Appeals, hereby ordered to issue a new certificate of title covering said 3,732 sq.
supra, a case almost Identical to this one. m. portion in favor of petitioner, and another crtificate of title in favor of
the Estate of the deceased, Mariano de Vera covering the remaining
... Inasmuch as it is alleged in paragraph 3 of Frial's portion of 5,0520 square meters. No costs.
complaint, that Felipa Faja has been in possession of the
property since 1945 up to the present for a period of 30 SO ORDERED
years, her cause of action for reconveyance, which in
effect seeks to quiet her title to the property, falls within Teehankee (Chairman), Plana, De la Fuente and Cuevas, * JJ., concur.
that rule. If at all, the period of prescription began to run
against Felipa Faja only from the time she was served Relova and Gutierrez, Jr., JJ., took no part.
with copy of the complaint in 1975 giving her notice that
the property she was occupying was titled in the name of
Indalecio Frial. There is settled jurisprudence that one
who is in actual possession of a piece of land claiming to
be owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to
vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to
seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party
and its effect on his own title, which right can be claimed
only by one who is in possession. No better situation can
be conceived at the moment for Us to apply this rule on
equity than that of herein petitioners whose mother,
Felipa Faja, was in possession of the litigated property for
no less than 30 years and was suddenly confronted with a