EMILIANO B. RAMOS, ET AL.

, plaintiffs-appellants,
vs.
GREGORIA T. RAMOS, ET AL., defendants-appellants.
G.R. No. L-19872 December 3, 1974

The parties appealed from the decision of the Court of First Instance of Negros Occidental, dismissing plaintiffs'
complaint and holding that the intestate estate of Martin Ramos was settled in Civil Case No. 217, which was
terminated on March 4,1914, and that the judgment therein is res judicata and bars any litigation regarding the
same estate (Civil Case no. 4522).
The documentary evidence reveals the following facts:
The spouses Martin Ramos and Candida Tanate died on October 4, 1906 and October 26, 1888, respectively.
They were survived by their three legitimate children named Jose, Agustin and Granada. Martin Ramos was also
survived by his seven natural children named Atanacia, Timoteo, Modesto, Manuel, Emiliano, Maria and Federico.
On December 10, 1906 a special proceeding was instituted in the Court of First Instance of Negros Occidental for
the settlement of the intestate estate of the said spouses. The case was docketed as Civil Case No. 217
(its expediente is still existing). Rafael O. Ramos, a brother of Martin, was appointed administrator. The estate was
administered for more than six years (Exh. F, G, H, I and J).
A project of partition dated April 25, 1913 was submitted. It was signed by 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).
In the project of partition the conjugal hereditary estate was appraised at P74,984.93. It consisted of eighteen
parcels of land, some head of cattle and the advances to the legitimate children(Exh. 3).
Under that project of partition, the following adjudications were made to the heirs:
Legitimate children: Value
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
(d) some head of cattle P25,291.66
2. To Granada Ramos: (a) a
parcel of riceland with a capacity
of 16 cavans of seedlings, located
in Barrio Binicuel, Kabankalan,
Negros Occidental and (b) some
head of cattle 1,891.66
3. To Agustin Ramos: (a) the
remaining fourteen (14) lots out of
the eighteen lots described in the
inventory, which included the Hacienda
Ylaya with an area of 185 hectares and
(b) some head of cattle 36,291.68
Natural children:
4. To each of the seven (7) natural
children named Atanacia, Modesto,
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 NoRegistrationPresent titleDate
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"
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.
The rule of imprescriptibility was misapplied to constructive trusts.
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. Prescription may supervene in an implied trust. 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 .
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.
What may possibly apply to defendants' counterclaim are paragraphs 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).
WHEREFORE, the trial court's judgment is affirmed with the clarification that defendants' counterclaim is
dismissed. No costs.
SO ORDERED.

GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants,

vs.
LUIS D. CUAYCONG, ET AL., defendants-appellees.
G.R. No. L-21616 December 11, 1967

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.
WHEREFORE, the order of dismissal of the lower court appealed from is hereby affirmed, without costs. So ordered.

ESPERANZA FABIAN, BENITA FABIAN and DAMASO PAPA Y FABIAN, plaintiffs-appellants,

vs.
SILBINA FABIAN, FELICIANO LANDRITO, TEODORA
FABIAN and FRANCISCO DEL MONTE, defendants-appellees.
G.R. No. L-20449 January 29, 1968

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 .
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
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.
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.1wph1.t
ACCORDINGLY, the judgment a quo, dismissing the complaint, is affirmed. No pronouncement as to costs.

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.
G.R. No. L-38018 October 31, 1978

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 tremendous social and political influence.
Successively, he was municipal councilor, vice-president of Cebu City, Assemblyman, Senator and Delegate to the
Constitutional Convention of 1934. He was editor and publisher of many newspapers among which was the famous
"La Revolucion" which featured quite prominently in the celebrated Wood-Sotto libel case. When his life, however,
was almost at an end, he was declared incompetent. In 1962, while Atty. Sotto was under guardianship, Cesar
Sotto, his nephew and protegee and one of the guardians judicially 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 private files of Atty.
Sotto. All along, the direct descendants and blood relatives of Florentino Rallos had rested on the belief that the
properties in question, which are the fruits of the sweat and toil of their grandfather, would one day be delivered
unto them. The revelation of Cesar Sotto, however, led the plaintiffs to the discovery that all the properties in
question were now titled in the name of Atty. Sotto. and were in danger of falling into the hands of his children out
of wedlock, who are total strangers to the spouses Rallos and Fadullon. Upon such discovery, the plaintiffs initiated
the present lawsuit forthwith."
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 and
ownership of the 5 parcels of land described in the complaint, with damages. The complaint was based mainly
upon the theory that a trust 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 respondents);
and that in gross violation of the trust reposed upon him by Concepcion Rallos and after her death, by her heirs, the
said Atty. Filemon Sotto, through sheer manipulation, fraudulent acts and means, non-existent and void decrees,
fictitious sales and transfers, succeeded in causing the transfer of the ownership of the properties to the name of
his wife Carmen Rallos, and finally to his name alone.
The complaint alleged five causes of action. Under the first cause of action, it is alleged that on January 25, 1913,
Atty. Filemon Sotto as counsel, not only for the widow, Maria Fadullon Vda. de Rallos, but also for her daughters,
Carmen and Concepcion both surnamed Rallos, filed a motion in said Special Proceedings No. 365-0 praying to
relieve the executrix Maria Fadullon Vda. de Rallos from presenting a project of partition inasmuch as his clients
had the desire to conserve pro-indiviso the properties in their possession, which motion 4 is as follows:
MOCION SOBRE LA DISPOSICION DE LOS BIENES
Maria Fadullon, conyuge viuda de Florentino Rallos, y sus hijas Carmen Rallos y Concepcion Rallos, unicas
herederas de dicho finado comparecen hoy por medio del Abogado Filemon Sotto para exponer lo que sigue:
Que habiandose hecho por el Juzgado una declaracion de "unicas herederas" de los bienes del finado
Florentino Rallos en favor de las comparecientes, y siendo todas ellas mayores de edad, pidan al Juzgado que
se la releve a la Albacea de presenter cualquier proyecto de reparticion, pues las exponentes tienen el
preposito de conservar por ahora "por indivisos" los susodichos bienes, en poder de ellas mismas.
Cebu, 25 Enero de 1913.
(SGD.) FILEMON SOTTO
Abogado de la mocionantes
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 contenido de la misma.
Cebu, 25 de Enero de 1913.
(SGD.) CONCHITA RALLOS DE TEVES
(SGD.) CARMEN J. RALLOS
(SGD.) MARIA F. VDA. DE RALLOS
Upon approval by the Court of the above quoted Mocion Sobre La Disposicion de los Bienes, the said probate
proceedings was terminated.
The complaint further alleged that at that time Atty. Filemon Sotto (then known as Don Filemon Sotto) was still
single, but he already enjoyed considerable prestige and influence and was well-known for his sagacity he having
become a municipal councilor, municipal vice-mayor, fiscal and assemblyman; that he married Carmen J. Rallos on
Sept. 27, 1913 and he later became senator, delegate to the Constitutional Convention and editor, besides being a
practicing lawyer.
It is furthermore alleged that Atty. Filemon Sotto, having married Carmen Rallos, thereby virtually making him a
member of the Rallos family, was looked upon as the head of the Rallos family to look after the properties inherited
from the deceased Florentino Rallos including the 5 parcels of land hereinbefore mentioned, thereby establishing a
trust relation with 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 even after the deaths of Maria Fadullon Vda.
de Rallos, Carmen Rallos de Sotto and Concepcion Rallos, the latter who married twice, first to Mariano Teves and
second to Mariano Camara, and lasted up to Don Filemon Sotto's death on October 10, 1966; that on November 29,
1916, 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 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, the wife of Filemon Sotto, to the great prejudice and damage of the other co-owners thereof
namely Maria Fadullon Vda. de Rallos and 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 Fadullon Vda. de Rallos share and the remaining share thereof in the names of Carmen
Rallos de Sotto and Concepcion Rallos de Camara in equal proportion of share each; that on February 9, 1918, as a
result of the said inexistent, null and void Decree No. 64101, Original Certificate of Title No. 1034 was issued in the
name of Carmen Rallos de Sotto, wife of Filemon Sotto; that sometime in 1922, Atty. Filemon Sotto had caused Lot No.
7547 to be transferred by his wife to the name of another person as a result of which O.C.T. No. 1034 was cancelled
and Transfer 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 Revolucion edited by Don Filemon Sotto at the instance of the then Gov. 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 name of his wife but in his own name under Transfer Certificate of Title No. 12740 and was
thereafter reconstituted administratively by the guardian of his properties as Transfer Certificate of Title No. RT-6890 in
the name of Filemon Sotto, widower,and finally the present Certificate of Title No. 27710 was issued by the Register of
Deeds in the name of Filemon Sotto, widower.
Under the second, third, fourth and fifth causes of action, respondents alleged specific similar violations of the trust
relation reposed upon him 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 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.
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 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
MAXIMINO CARANTES (Substituted by Engracia Mabanta Carantes), petitioner,
vs.
COURT OF APPEALS, BILAD CARANTES, LAURO CARANTES, EDUARDO CARANTES and MICHAEL
TUMPAO, respondents,
G.R. No. L-33360 April 25, 1977

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 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 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.
-V-
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 the said Code on prescription (Secs. 40-41) do not apply. It is our view,
however, that there was no continuing and subsisting trust.
From March 16, 1940, when the petitioner registered the deed of assignment and had the Certificate of title in the
names of the heirs 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.

PURIFICACION ALARCON and ROSAURO ALARCON, petitioners,

vs.
HONORABLE ABDULWAHID BIDIN, District Judge, CFI Branch I, Zamboanga City, and FLORENTINO
SERGAS, MOISES SERGAS, ANASTACIO SERGAS, CRESENCIA SERGAS, TOLENTINO SERGAS,
ENGELERTO SERGAS, CARMELITA SERGAS, and DOMINGO ROJAS FRANCISCO, respondents.
G.R. No. L-61791 January 28, 1983

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.

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.
G.R. No. L-22587 April 28, 1969

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

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.
G.R. No. L-30889 February 29, 1972

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 quiones" 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 as between the Tuasons and the
Mejias, heirs of Quintin Mejia, the question has been finally set at rest by this Court's decision in Banco de las Islas
Filipinas vs. Acua, et al., 59 Phil. 183, when it held (Cas. cit., page 186) that: .
Among the arguments made by the appellants of the Bagobantay group, it is alleged that the Torrens title relied
upon by the plaintiff is void, and in support of this contention it is stated that, during the course of the
registration proceedings, an order was made by the court for the amendment of the original plan of the
applicants and that this order was not followed by new publication, wherefore, it is supposed, the court was
without jurisdiction to decree the title to the applicants. In this connection reliance is placed upon the doctrine
stated in Philippine Manufacturing Co. vs. Imperial (49 Phil. 122). But the brief for the appellants fails to call
attention to the fact that the rule stated in the case cited has reference to 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); .
(c) People's Homesite & Housing Corporation and University of the Philippines vs. Judge Mencias and E. Tiburcio,
L-24114, decided 16 August 1967 (20 SCRA 1031).
It is against public policy that matters already decided on the merits be relitigated again and again, consuming the
Court's time and energies at the expense of other litigants: Interest rei publicae ut finish sit litium.
WHEREFORE, the writs applied for are granted, the appealed order denying the motion to dismiss is set aside, and
the respondent Court is ordered to dismiss the complaint in Civil Case No. 9046 of the Court of First Instance of
Rizal, the dismissal to be with prejudice. Costs against private respondents.
FAUSTINO JARAMIL AND FILOMENA CABINAR, petitioner,
vs.
COURT OF APPEALS, and SOTERA MEDRANA, REGINA DE LA CRUZ, VALERIANA C. PRUDENCIO ET
AL., respondents.
G.R. No. L-31858 August 31, 1977

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.) 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.

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.
G.R. No. L-39478 November 29, 1977

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
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 Cababarros and Narcisa Edmilao died, they were
no longer owners of the 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.

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.
G.R. No. L-33762 December 29, 1977

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
Polo, Bulacan 4
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.

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.
G.R. No. L-45645 June 28, 1983

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
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, Luis D. Tongoy would benefit with
the 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" (Boaga 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. Zuiga (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
interests over Hacienda Pulo to the former.
October 23, 1935 An Escritura de Venta (Exh. 3 or DD) was executed by Jesus Sonora, likewise transferring his
rights and interests over Hacienda Pulo to Luis D. Tongoy;
November 5, 1935 An Escritura de Venta (Exh. 5 or AA) was also executed by Jose Tongoy in favor of Luis D.
Tongoy for the same purpose; (Note: This was preceded by the execution on October 14, 1935 of an Assignment of
Rights [4 or Z) in favor of Luis D. Tongoy by the Pacific Commercial Company as judgment lien-holder [subordinate
of the PNB mortgage] of Jose Tongoy on Hacienda Pulo
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 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
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-
interest of Luis D. Tongoy, to return the properties that the prescriptive period should begin to run.
As above demonstrated, the prescriptive period is ten year-from the date of recording on May 5, 1958 of the
release of mortgage in the Registry of Deeds.
WHEREFORE, THE JUDGMENT APPEALED FROM IS HEREBY AFFIRMED IN TOTO.SO ORDERED

JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO LAYNO, petitioner,

vs.
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Administrator of the Estate of the
Deceased, MARIANO DE VERA, respondents.
G.R. No. L-52064 December 26, 1984

Respondent Appellate Court, then the Court of Appeal, affirmed in toto the judgment of the former Court of First
Instance of Pangasinan, Branch III, at Dagupan adjudging private respondent entitled to recover possession of a
parcel of land and ordering petitioners, as defendants below, to vacate the premises. Petitioners, as paupers, now
seek a reversal of that judgment.
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 (Lot No. 1, Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of 8,752
square meters, situated at Calasiao, Pangasinan. The entire parcel is covered by Original Certificate of Title No. 63,
and includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M. DE VERA, who
died in 1951 without issue. His intestate estate was administered first by his widow and later by her nephew,
respondent Salvador Estrada.
Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were first cousins, "both orphans, who lived
together under one roof in the care of a common aunt."
As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 of the former Court of First Instance of
Pangasinan, Branch III, an Inventory of all properties of the deceased, which included "a parcel of land in the
poblacion of Calasiao, Pangasinan, containing an area of 5,417 square meters, more or less, and covered by Tax
Declaration No. 12664."
Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters (as filed by the widow), and
that in the title as 8,752 square meters, ESTRADA repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters, was occupied by petitioner-spouses
Juliana Caragay Layno and Benito Layno. ESTRADA demanded that they vacate the Disputed 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.
ESTRADA then instituted suit against JULIANA for the recovery of the 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 sense that title be issued in her favor.
After hearing, the Trial Court rendered judgment ordering JULIANA to vacate the Disputed Portion.
On appeal respondent Appellate Court affirmed the Decision in toto.
Before us, JULIANA takes issue with the following finding of respondent Court:
Although Section 102 of Act 496 allows a Petition to compel a Trustee to reconvey a registered land to
the cestui que trust (Severino vs. Severino, 44 Phil 343; Escobar vs. Locsin, 74 PhiL 86) this remedy is no
longer available to Juliana Caragay. Mariano de Vera's land, Lot 1, Psu-24206, was registered on September
11, 1947 (Exhibit"C") and it was only on March 28, 1967 when the defendants filed their original answer that
Caragay sought the reconveyance to her of the 3,732 square meters. Thus, her claim for reconveyance based
on implied or constructive trust has prescribed after 10 years (Banaga 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 ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 4
Prescription cannot be invoked against JULIANA for the reason that as lawful possessor and owner of the Disputed
Portion, her cause of action for reconveyance which, in effect, seeks to quiet title to the property, falls within settled
jurisprudence that an action to quiet title to property in one's 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 Court of equity to
determine the nature of the adverse claim of a third party and the effect on her own title. 6
Besides, under the circumstances, JULIANA's right to quiet title, to seek reconveyance, and to annul OCT. No. 63
accrued only in 1966 when she was made aware of a claim adverse to her own. It was only then that the statutory
period of prescription may be said to have commenced to run against her, following the pronouncement in Faja vs.
Court of Appeals, supra, a case almost Identical to this one.
... Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has been in possession of the
property since 1945 up to the present for a period of 30 years, her cause of action for reconveyance, which in
effect seeks to quiet her title to the property, falls within that rule. If at all, the period of prescription began to run
against Felipa Faja only from the time she was served 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 claim that the land she had been
occupying and cultivating all these years, was titled in the name of a third person. We hold that in such a
situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title
covering it, accrued only from the time the one in possession was made aware of a claim adverse to his own,
and it is only then that the statutory period of prescription commences to run against such possessor.
WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE, and another one entered
ordering private respondent Salvador Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera, to
cause the segregation of the disputed portion of 3,732 square meters forming part of Lot No. 1, Psu-24206, Case
No. 44, GLRO Rec. No. 117, presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the same to
said petitioner. After the segregation shall have been accomplished, the Register of Deeds of Pangasinan is hereby
ordered to issue a new certificate of title covering said 3,732 sq. 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 portion of 5,0520
square meters. No costs.SO ORDERED