Aznar Brothers Realty Company v.
Aying Aznar Brothers Realty Company denied that the Ayings are the lawful
G.R. No. 144773, 16 May 2005
FACTS:
Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her
favor over Lot No. 4399 located in Lapu-Lapu City. Crisanta died, so the
Cadastral court issued a decision directing the issuance of a decree of title
in the name of her 8 children, namely: Juan, Celedonio,Emiliano, Francisco,
Simeon, Bernabe, Roberta and Fausta, all surnamed Aying. However, the
certificate was lost during the war.
All the heirs of the Aying siblings executed an Extra-Judicial Partition of Real
Estate with Deed of Absolute Sale conveying the lot in issue to the Aznar
Brothers Realty Company. The deed was registered with the ROD of Lapu-
Lapu City on March 6, 1994 under Act. No. 3344 (the law governing
registration of unregistered land) and since then, the realty company
religiously paid the real property taxes on the property. Later, Aznar
Brothers Realty Company filed a Petition for Reconstitution of the Original
Title since the original title of the lot was lost during the war. This was
granted by the court and the ROD of Lapu-Lapu was directed to issue a
reconstituted title in the name of the Aying Siblings. Thus, OCT No. RO-2856
was issued.
The Aznar Brothers Realty Company then sent out notices to vacate the lot
to the persons occupying the property, reasoning that they were the rightful
owner. The occupants refused to vacate, hence an ejectment case was filed
against them before the MTC. The MTC ordered the occupants to vacate.
Eventually, this case reached the Supreme Court and a decision was
rendered in favor of the realty company declaring them as the rightful
possessor of the land.
Meanwhile, persons claiming to be the descendants of the eight Aying
siblings, numbering around 220 persons submitted an amended complaint
before the RTC and alleged that they are co-owners of the land being the
descendants of the registered owners under OCT No. RO-2856; that they
had been in actual, peaceful, physical, open, adverse, continuous and
uninterrupted possession in concept of owner of subject parcel of land since
time immemorial; and that the deed of absolute sale executed in favor of
the realty company by the alleged heirsof Crisanta Maloloy-on is a fraud and
is null and void ab initio because not all the co-owners of subject property
affixed their signature on said document and some of the co-owners who
supposedly signed said document had been dead at the time of the
execution thereof; that Aznar Brothers Realty Company held the land in bad
faith, knowing fully well that it did nothave any right to the land and used
force, threat and intimidation against them thus, suffering moral damages.
owners of the land and alleged it had been in actual possession of subject
land as owner thereof by virtue of the extra-judicial partition of real property
and deed of absolute sale executed in its favor; that in fact, it had been
paying taxes thereon religiously. The realty company further alleged that
they are barred by prescription to file an action for recovery of property
which should be instituted within 4 years from discovery of the fraud. It took
the Aying heirs 27 years to file their action against the realty company.
ISSUE:
Whether or not the realty company’s defense, that they acquired the entire
parcel of land with the mistaken belief that all the heirs have executed the
document, entitle them to ownership over the land by prescription.
RULING:
No, Aznar Brothers Realty Company cannot be entitled ownership over the
land based on mistaken belief. The law provides that if property is acquired
through mistake or fraud, the person obtaining it is considered a trustee of
an implied trust for the benefit of the person from whom the property comes.
Based on this rule, a trustee cannot acquire by prescription ownership over
property entrusted to him until and unless he repudiates the trust. However,
in constructive implied trusts, prescription may supervene even if the
trustee does not repudiate the relationship. Necessarily, repudiation of said
trust is not a condition precedent to the running of the prescriptive period.
> 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
> Implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or which are
superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties
> Implied trusts may be resulting or constructive
CONSTRUCTIVE TRUSTS
RESULTING TRUSTS
Based on the equitable doctrine that
valuable consideration and not legal Created by the construction of
title determines the equitable title equity in order to satisfy the
or interest and is presumed always demands of justice and prevent
to have been contemplated by the unjust enrichment
parties They arise contrary to intention
They arise from the nature of against one who, by fraud, duress,
circumstances of the consideration or abuse of confidence, obtains or
involved in a transaction whereby holds the legal right to property
one person thereby becomes which he ought not, in equity and
invested with legal title but is good conscience to hold
obligated in equity to hold his legal
title in favor of another.
1

G.R. No. 144773 May 16, 2005
AZNAR BROTHERS REALTY COMPANY, petitioner,
vs.
LAURENCIO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE
OTHER HEIRS OF EMILIANO AYING, PAULINO AYING, IN HIS OWN
BEHALF AND IN BEHALF OF THE OTHER HEIRS OF SIMEON AYING,
AND WENCESLAO SUMALINOG, IN HIS OWN BEHALF AND IN BEHALF
OF THE OTHER HEIRS OF ROBERTA AYING, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the modification of
the Decision1 of the Court of Appeals (CA) dated March 7, 2000 which
affirmed with modification the Decision of the Regional Trial Court (RTC) of
Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution
dated August 2, 2000 denying petitioner’s motion for reconsideration of the
aforementioned decision.
The antecedent facts are as follows:
The disputed property is Lot No. 4399 with an area of 34,325 square meters
located at Dapdap, Lapu-Lapu City. Crisanta Maloloy-on petitioned for the
issuance of a cadastral decree in her favor over said parcel of land. After her
death in 1930, the Cadastral Court issued a Decision directing the issuance
of a decree in the name of Crisanta Maloloy-on’s eight children, namely:
Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta,
all surnamed Aying. The certificate of title was, however, lost during the
war.
Subsequently, all the heirs of the Aying siblings executed an Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964,
conveying the subject parcel of land to herein petitioner Aznar Brothers
Realty Company. Said deed was registered with the Register of Deeds of
Lapu-Lapu City on March 6, 1964 under Act No. 3344 (the law governing
registration for unregistered land), and since then, petitioner had been
religiously paying real property taxes on said property.
In 1988, herein petitioner filed a Petition for Reconstitution of the Original
Title as the original title over the subject property had been lost during the
war. On April 12, 1988, the court granted said petition, thereby directing
the Register of Deeds of Lapu-Lapu City to issue a reconstituted title in the
name of the abovementioned Aying siblings. Thus, Original Certificate of
Title (OCT) No. RO-2856 was issued.
In 1991, petitioner, claiming to be the rightful owner of the subject property,
sent out notices to vacate, addressed to persons occupying the property.
Unheeded, petitioner then filed a complaint for ejectment against the
occupants before the Metropolitan Trial Court (MTC), Lapu-Lapu City.
On February 1, 1994, the MTC ordered the occupants to vacate the property.
The case eventually reached this Court, docketed as G.R. No. 128102,
entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis Aying,
Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto.2 On
March 7, 2000, a Decision was promulgated in favor of herein petitioner,
declaring it as the rightful possessor of the parcel of land in question.
Meanwhile, herein respondents, along with other persons claiming to be
descendants of the eight Aying siblings, all in all numbering around 220
persons, had filed a complaint for cancellation of the Extra-Judicial Partition
with Absolute Sale, recovery of ownership, injunction and damages with the
RTC of Lapu-Lapu City. The complaint was dismissed twice without
prejudice. Said complaint was re-filed on August 19, 1993, docketed as Civil
Case No. 2930-L.
In their amended complaint, herein respondents (plaintiffs before the RTC)
alleged that: they are co-owners of subject property, being descendants of
the registered owners thereof under OCT No. RO-2856; they had been in
actual, peaceful, physical, open, adverse, continuous and uninterrupted
possession in concept of owner of subject parcel of land since time
immemorial; their possession was disturbed only in the last quarter of 1991
when some of them received notices to vacate from petitioner and several
weeks thereafter, earthmoving equipment entered the disputed land,
bulldozing the same and destroying plants, trees and concrete monuments
("mohon"); respondents discovered that such activities were being
undertaken by petitioner together with Sta. Lucia Realty and Development,
Inc.; petitioner claimed to be the owner of subject property by virtue of an
extra-judicial partition of real estate with deed of absolute sale executed in
petitioner’s favor by the alleged heirs of Crisanta Maloloy-on; the
aforementioned extra-judicial partition of real estate with deed of absolute
sale is a fraud and is null and void ab initio because not all the co-owners of
subject property affixed their signature on said document and some of the
co-owners who supposedly signed said document had been dead at the time
of the execution thereof; petitioner entered subject land in bad faith,
knowing fully well that it did not have any right to the land and used force,
threat and intimidation against respondents; and they suffered moral
damages.3
2
Petitioner (defendant before the RTC) filed its Answer, denying that
respondents are the lawful owners of subject parcel of land by virtue of their
being descendants or heirs of the registered owners of subject property.
Instead, petitioner alleged that it had been in actual possession of subject
land as owner thereof by virtue of the extra-judicial partition of real property
and deed of absolute sale executed in its favor; that in fact, it had been
paying taxes thereon religiously; that it tolerated about 6 persons to live on
said land but said persons were eventually ejected by court order. Petitioner
then raised the affirmative defenses of failure to state cause of action and
prescription, as it took respondents 27 years, 10 months and 27 days to file
the action to recover subject property, when an action to recover property
based on an implied trust should be instituted within 4 years from discovery
of the fraud.4
In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were
narrowed down to the following:
1. Whether or not the plaintiffs [herein respondents] are the heirs
of the registered owners of Lot No. 4399.
2. Whether or not plaintiffs are the owners of Lot No. 4399.
3. Whether or not the defendant Aznar [herein petitioner] is
estopped to make any claim on Lot No. 4399.
4. Whether or not the defendant Aznar is a builder in bad faith.
5. Whether or not the defendants are liable for damages and
attorney’s fees in favor of the plaintiffs.
6. Whether or not the Extra-Judicial Partition of Real Estate with
Deed of Absolute Sale is valid and had, in effect, validly conveyed
to defendant Aznar Lot No. 4399.
7. Whether or not the plaintiffs’ action has prescribed.5
After trial, the RTC rendered a Decision dated July 4, 1997, ruling that
respondents’ evidence failed to prove that the extra-judicial partition with
deed of absolute sale was a totally simulated or fictitious contract and
concluded that said document is valid, thus, effectively conveying to
petitioner the property in question. It further held that respondents’ action
had prescribed in that the action is considered as one for reconveyance
based on implied or constructive trust, it prescribed in 10 years from the
registration of the deed on March 6, 1964; and if the action is considered as
one for annulment of contract on the ground of fraud, it should have been
filed within 4 years from discovery of the fraud. The trial court also ruled
that respondents failed to present any admissible proof of filiation, hence,
they were not able to prove that they are indeed heirs of the eight Aying
siblings who appear as the registered owners under OCT No. RO-2856.
The dispositive portion of the RTC Decision reads as follows:
WHEREFORE, judgment is hereby rendered dismissing the amended
complaint on the ground of prescription, and declaring the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale dated
March 3, 1964 as valid and binding, adjudging that Lot 4399 with
an area of 34,325 square meters located at Dapdap, Mactan, Lapu-
Lapu City had been validly conveyed to and in favor of Aznar
Brothers Realty Company, and directing the Register of Deeds of
Lapu-Lapu City to register the above-mentioned deed in accordance
with law and to cancel Original Certificate of Title No. RO-2856, and
to issue a transfer certificate of title in the name of Aznar Brothers
Realty Company upon payment of the necessary registration fees
pursuant thereto.
The Writ of Preliminary Injunction issued in this case is hereby
ordered dissolved.
The Motion for Contempt filed by the plaintiffs against defendants is
dismissed for want of factual and legal basis.
Costs against the plaintiffs.
SO ORDERED.6
Herein respondents appealed the foregoing decision to the CA and on March
7, 2000, said court promulgated its Decision, the dispositive portion of which
is reproduced hereunder:
THE FOREGOING CONSIDERED, the contested Decision while
AFFIRMED is hereby MODIFIED. The heirs of Emiliano Aying, Simeon
Aying and Roberta Aying are hereby declared as the lawful owners
of the contested property but equivalent only to 3/8.
SO ORDERED.
In modifying the RTC judgment, the CA ratiocinated that "an action for
recovery of possession of registered land never prescribes in view of the
provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect
that no title to registered land in derogation to that of a registered owner
3
shall be acquired by prescription." The CA further ruled that even if the
action is deemed to be based on implied trust, prescription did not begin to
run since there is no evidence that positive acts of repudiation were made
known to the heirs who did not participate in the execution of the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale. Thus, striking
down the RTC’s ruling that the respondents’ complaint is dismissible on the
ground of prescription, the CA held instead that herein respondents’ action
had not prescribed but upheld the validity of the Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale, except as to the shares of the heirs
of Emiliano, Simeon and Roberta, who did not participate in the execution
of said document.
Herein petitioner’s motion for reconsideration of the CA decision was denied
per Resolution dated August 2, 2000.
Hence, the present petition for review on certiorari assailing the CA decision
on the following grounds:
I Judicial Partition of Real Estate with Deed of Absolute Sale was not forged
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE
THAT AN HEIR OF THE ORIGINAL REGISTERED OWNER MAY LOSE
HIS RIGHT TO RECOVER A TITLED PROPERTY BY REASON OF
LACHES;
II
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE
THAT THE ACT OF REGISTRATION OF THE DEED OF PARTITION
WITH SALE MAY BE CONSIDERED AN UNEQUIVOCAL REPUDIATION
OF THE TRUST GIVING RISE TO PRESCRIPTION;
III
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE
PROVISIONS OF ARTICLE 1104 OF THE CIVIL CODE TO THE EFFECT
THAT IN THE ABSENCE OF BAD FAITH OR FRAUD, THE PARTITION
WITH PRETERITION OF ANY COMPULSORY HEIR SHALL NOT BE
RESCINDED.7
In their Comment, respondents argue that this case is an action to declare
as null and void the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale, hence, under Article 1410 of the Civil Code, an action for
declaration of an inexistent contract does not prescribe. Respondents further
posit that the principle of laches should be applied against petitioner and not
against them, as they (respondents) had been in actual possession of the
subject property, while petitioner merely brought action to eject them more
than 29 years after the alleged execution of the Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale. They also refuted petitioner’s
arguments regarding the application of the principles of implied and
constructive trusts in this case.
At the outset, it should be stressed that not all the plaintiffs who filed the
amended complaint before the trial court had been impleaded as
respondents in the present petition. The only parties impleaded are the heirs
of Emiliano, Simeon and Roberta Aying, whom the CA adjudged as owners
of a 3/8 portion of the land in dispute for not having participated in the
execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute
Sale.
It is significant to note that herein petitioner does not question the CA
conclusion that respondents are heirs of the aforementioned three Aying
siblings. Hence, the trial court and appellate court’s findings that the Extra-
nor simulated and that the heirs of Emiliano, Simeon and Roberta Aying did
not participate in the execution thereof, are now beyond cavil.
The issues raised by petitioner for the Court’s resolution are (1) whether or
not respondents’ cause of action is imprescriptible; and (2) if their right to
bring action is indeed imprescriptible, may the principle of laches apply.
Respondents alleged in their amended complaint that not all the co-owners
of the land in question signed or executed the document conveying
ownership thereof to petitioner and made the conclusion that said document
is null and void. We agree with the ruling of the RTC and the CA that the
Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and
binding only as to the heirs who participated in the execution thereof, hence,
the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not
participate therein, cannot be bound by said document.
However, the facts on record show that petitioner acquired the entire parcel
of land with the mistaken belief that all the heirs have executed the subject
document. Thus, the trial court is correct that the provision of law applicable
to this case is Article 1456 of the Civil Code which states:
ART. 1456. 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 Vda. De Esconde vs. Court of Appeals,8 the Court expounded thus:
4
 Construing this provision of the Civil Code, in Philippine National
Bank v. Court of Appeals, the Court stated:
A deeper analysis of Article 1456 reveals that it is not a trust
in the technical sense for in a typical trust, confidence is
reposed in one person who is named a trustee for the benefit
of another who is called the cestui que trust, respecting
property which is held by the trustee for the benefit of the
cestui que trust. A constructive trust, unlike an express
trust, does not emanate from, or generate a fiduciary
relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a
constructive trust, there is neither a promise nor any
fiduciary relation to speak of and the so-called trustee
neither accepts any trust nor intends holding the property
for the beneficiary.9
The concept of constructive trusts was further elucidated in the same case,
as follows:
. . . implied trusts are those which, without being expressed, are
deducible from the nature of the transaction as matters of intent or
which are superinduced on the transaction by operation of law as
matters of equity, independently of the particular intention of the
parties. In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable title or interest and are presumed always to have
been contemplated by the parties. They arise from the
nature of circumstances of the consideration involved in a
transaction whereby one person thereby becomes invested
with legal title but is obligated in equity to hold his legal title
for the benefit of another. On the other hand, constructive
trusts are created by the construction of equity in
order to satisfy the demands of justice and prevent
unjust enrichment. They arise contrary to intention
against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to
property which he ought not, in equity and good
conscience, to hold.10 (Emphasis supplied)
Based on such concept of constructive trusts, the Court ruled in said case
that:
The rule that a trustee cannot acquire by prescription ownership
over property entrusted to him until and unless he repudiates the
trust, applies to express trusts and resulting implied trusts.
However, in constructiveimplied trusts, prescription may supervene
even if the trustee does not repudiate the relationship. Necessarily,
repudiation of said trust is not a condition precedent to the running
of the prescriptive period.11
The next question is, what is the applicable prescriptive period?
In Amerol vs. Bagumbaran,12 the Court expounded on the prescriptive
period within which to bring an action for reconveyance of property based
on implied or constructive trust, to wit:
. . . under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code),
so is the corresponding obligation to reconvey the property and the
title thereto in favor of the true owner. In this context, and vis-à-vis
prescription, Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
An action for reconveyance based on an implied or constructive trust
must perforce prescribe in ten years and not otherwise. A long line
of decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled that an action
for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over
the property.13
It has also been ruled that the ten-year prescriptive period begins to run
from the date of registration of the deed or the date of the issuance of the
certificate of title over the property, but if the person claiming to be the
owner thereof is in actual possession of the property, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe.14
5
In the present case, respondents Wenceslao Sumalinog, an heir of Roberta
Aying; Laurencio Aying, an heir of Emiliano Aying; and Paulino Aying, an
heir of Simeon Aying, all testified that they had never occupied or been in
possession of the land in dispute.15 Hence, the prescriptive period of ten
years would apply to herein respondents.
The question then arises as to the date from which the ten-year period
should be reckoned, considering that the Extra-Judicial Partition of Real
Estate with Deed of Absolute Sale was registered under Act No. 3344 and
not under Act No. 496 (Land Registration Act), despite the fact the land in
dispute was already titled under Act No. 496 in the names of the Aying
siblings at the time the subject document was executed.
In Spouses Abrigo vs. De Vera,16 it was held that registration of instruments
must be done in the proper registry, in order to affect and bind the land and,
thus, operate as constructive notice to the world.17 Therein, the Court ruled:
x x x If the land is registered under the Land Registration Act (and
has therefore a Torrens Title), and it is sold but the subsequent sale
is registered not under the Land Registration Act but under Act
3344, as amended, such sale is not considered REGISTERED x x x
.18
In this case, since the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale was registered under Act No. 3344 and not under Act No. 496,
said document is deemed not registered. Accordingly, the ten-year
prescriptive period cannot be reckoned from March 6, 1964, the date of
registration of the subject document under Act No. 3344. The prescriptive
period only began to run from the time respondents had actual notice of the
Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.
The only evidence on record as to when such prescriptive period commenced
as to each of the respondents are Wenceslao Sumalinog’s (heir of Roberta
Aying) testimony that about three years after 1964, they already learned of
the existence of the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale;19 and Laurencio Aying’s (heir of Emiliano Aying) admission
that he found out about the sale of the land in dispute a long time ago and
can only estimate that it must be after martial law. 20 Paulino Aying (heir of
Simeon Aying) gave no testimony whatsoever as to when the children of
Simeon Aying actually learned of the existence of the document of sale. On
the other hand, petitioner did not present any other evidence to prove the
date when respondents were notified of the execution of the subject
document.
In view of the lack of unambiguous evidence of when the heirs of Emiliano
Aying and Simeon Aying discovered the existence of the document of sale,
it must be determined which party had the burden of proof to establish such
fact.
The test for determining where the burden of proof lies is to ask which party
to an action or suit will fail if he offers no evidence competent to show the
facts averred as the basis for the relief he seeks to obtain.21 Moreover, one
alleging a fact that is denied has the burden of proving it and unless the
party asserting the affirmative of an issue sustains the burden of proof of
that issue by a preponderance of the evidence, his cause will not
succeed.22 Thus, the defendant bears the burden of proof as to all
affirmative defenses which he sets up in answer to the plaintiff’s claim or
cause of action; he being the party who asserts the truth of the matter he
has alleged, the burden is upon him to establish the facts on which that
matter is predicated and if he fails to do so, the plaintiff is entitled to a
verdict or decision in his favor.23
In the case at bar, it was petitioner, as the defendant before the RTC, which
set up in its Answer the affirmative defense of prescription. It was, therefore,
incumbent upon petitioner to prove the date from which the prescriptive
period began to run. Evidence as to the date when the ten-year prescriptive
period began exists only as to the heirs of Roberta Aying, as Wenceslao
Sumalinog admitted that they learned of the existence of the document of
sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying,
there is no clear evidence of the date when they discovered the document
conveying the subject land to petitioner. Petitioner miserably failed to
adduce proof of when the heirs of Emiliano Aying and Simeon Aying were
notified of the subject document. Hence, with regard to said heirs, the Court
may consider the admission in the amended complaint that they learned of
the conveyance of the disputed land only in 1991 when petitioner sent
notices to vacate to the occupants of the subject land, as the date from
which the ten-year prescriptive period should be reckoned.
Respondents filed their Amended Complaint on December 6, 1993. 24 Thus,
with regard to respondent heirs of Roberta Aying who had knowledge of the
conveyance as far back as 1967, their cause of action is already barred by
prescription when said amended complaint was filed as they only had until
1977 within which to bring action. As to the respondent heirs of Emiliano
and Simeon Aying, they were able to initiate their action for reconveyance
of property based on implied or constructive trust well within the ten-year
prescriptive period reckoned from 1991 when they were sent by petitioner
a notice to vacate the subject property.
Evidently, laches cannot be applied against respondent heirs of Emiliano and
Simeon Aying, as they took action to protect their interest well within the
period accorded them by law.
6
With regard to petitioner’s argument that the provision of Article 1104 of
the Civil Code, stating that a partition made with preterition of any of the
compulsory heirs shall not be rescinded, should be applied, suffice it to say
that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is
not being rescinded. In fact, its validity had been upheld but only as to the
parties who participated in the execution of the same. As discussed above,
what was conveyed to petitioner was ownership over the shares of the heirs
who executed the subject document. Thus, the law, particularly, Article 1456
of the Civil Code, imposed the obligation upon petitioner to act as a trustee
for the benefit of respondent heirs of Emiliano and Simeon Aying who,
having brought their action within the prescriptive period, are now entitled
to the reconveyance of their share in the land in dispute.

IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and

the Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as
follows: The amended complaint of the heirs of Roberta Aying is DISMISSED
on the ground of prescription. However, the heirs of Emiliano Aying and
Simeon Aying, having instituted the action for reconveyance within the
prescriptive period, are hereby DECLARED as the LAWFUL OWNERS of a 2/8
portion of the parcel of land covered by Original Certificate of Title No. RO-
2856.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

7
SOLEDAD CAÑEZO vs. CONCEPCION ROJAS
G.R. No. 148788, November 23, 2007
NACHURA, J.
FACTS:
The subject property is an unregistered land with an area of 4,169
square meters situated at Naval, Biliran. In a complaint on 1997, petitioner
Soledad Cañezo alleged that she bought such parcel of land in 1939 from
Crisogono Limpiado, although the sale was not reduced into writing.
Thereafter, she immediately took possession of the property. In 1948, she
and her husband left for Mindanao and entrusted the said land to her father,
Crispulo Rojas, who took possession of, and cultivated the property. In
1980, she found out that the respondent, Concepcion Rojas, her
stepmother, was in possession of the property and was cultivating the same.
She also discovered that the tax declaration over the property was already
in the name of his father.
Respondent asserted that it was her husband who bought the
property from Limpiado, which accounts for the tax declaration being in
Crispulo’s name.
After the hearing, MTC rendered a decision in favor of the petitioner,
making her the real and lawful owner of the land. Respondent appealed to
the RTC of Naval, Biliran, which reversed the MTC decision on the ground
that the action had already prescribed and acquisitive prescription had set
in. However, acting on petitioner’s motion for reconsideration, the RTC
amended its original decision and held that the action had not yet prescribed
considering that the petitioner merely entrusted the property to her
father. The ten-year prescriptive period for the recovery of a property held
in trust would commence to run only from the time the trustee repudiates
the trust. The RTC found no evidence on record showing that Crispulo Rojas
ever ousted the petitioner from the property.
Petitioner filed a petition for review with the CA, which reversed the
amended decision of the RTC. The CA held that, assuming that there was a
trust between the petitioner and her father over the property, her right of
action to recover the same would still be barred by prescription since 49
years had already lapsed since Crispulo adversely possessed the contested
property in 1948.
Hence, this petition for review.
ISSUE:
Whether or not there is an existence of trust over the property –
express or implied – between the petitioner and her father
HELD:
NONE. A trust is the legal relationship between one person having
an equitable ownership of property and another person owning the legal title
to such property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the
latter. Trusts are either express or implied. 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 evincing an intention to create a trust. Implied
trusts are those which, without being expressed, are deducible from the
nature of the transaction as matters of intent or, independently, of the
particular intention of the parties, as being superinduced on the transaction
by operation of law basically by reason of equity.
As a rule, the burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be clear and satisfactorily
show the existence of the trust and its elements. The presence of the
following elements must be proved: (1) a trustor or settlor who executes
the instrument creating the trust; (2) a trustee, who is the person expressly
designated to carry out the trust; (3) the trust res, consisting of duly
identified and definite real properties; and (4) the cestui que trust, or
beneficiaries whose identity must be clear. Accordingly, it was incumbent
upon petitioner to prove the existence of the trust relationship. And
petitioner sadly failed to discharge that burden.
The existence of express trusts concerning real property may not be
established by parol evidence. It must be proven by some writing or deed.
In this case, the only evidence to support the claim that an express trust
existed between the petitioner and her father was the self-serving testimony
of the petitioner.
Although no particular words are required for the creation of an
express trust, a clear intention to create a trust must be shown; and the
proof of fiduciary relationship must be clear and convincing. The creation of
an express trust must be manifested with reasonable certainty and cannot
be inferred from loose and vague declarations or from ambiguous
circumstances susceptible of other interpretations.
In the case at bench, an intention to create a trust cannot be
inferred from the petitioner’s testimony and the attendant facts and
circumstances. The petitioner testified only to the effect that her agreement
with her father was that she will be given a share in the produce of the
property. This allegation, standing alone as it does, is inadequate to
establish the existence of a trust because profit-sharing per se, does not
necessarily translate to a trust relation.
In light of the disquisitions, we hold that there was no express trust
or resulting trust established between the petitioner and her father. Thus,
in the absence of a trust relation, we can only conclude that Crispulo’s
uninterrupted possession of the subject property for 49 years, coupled with
the performance of acts of ownership, such as payment of real estate taxes,
ripened into ownership.
Petition denied. Decision of the CA affirmed.
8

G.R. No. 148788 November 23, 2007
SOLEDAD CAÑEZO, substituted by WILLIAM CAÑEZO and
VICTORIANO CAÑEZO Petitioners,
vs.
CONCEPCION ROJAS, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari from the
Decision1
of the Court of
Appeals, dated September 7, 2000, in CA-G.R. SP No. 53236, and Resolution
dated May 9, 2001.
On January 29, 1997, petitioner Soledad Cañezo filed a Complaint2 for the
recovery of real property plus damages with the Municipal Trial Court (MTC)
of Naval, Biliran, against her father’s second wife, respondent Concepcion
Rojas. The subject property is an unregistered land with an area of 4,169
square meters, situated at Higatangan, Naval, Biliran. Cañezo attached to
the complaint a Joint Affidavit3 executed on May 10, 1979 by Isidro
Catandijan and Maximina Cañezo attesting to her acquisition of the property.
In her complaint, the petitioner alleged that she bought the parcel of land
in 1939 from Crisogono Limpiado, although the transaction was not reduced
into writing. Thereafter, she immediately took possession of the property.
When she and her husband left for Mindanao in 1948, she entrusted the said
land to her father, Crispulo4 Rojas, who took possession of, and cultivated,
the property. In 1980, she found out that the respondent, her stepmother,
was in possession of the property and was cultivating the same. She also
discovered that the tax declaration over the property was already in the
name of Crispulo Rojas.5
In her Answer, the respondent asserted that, contrary to the petitioner’s
claim, it was her husband, Crispulo Rojas, who bought the property from
Crisogono Limpiado in 1948, which accounts for the tax declaration being in
Crispulo’s name. From then on, until his death in 1978, Crispulo possessed
and cultivated the property. Upon his death, the property was included in
his estate, which was administered by a special administrator, Bienvenido
Ricafort. The petitioner, as heir, even received her share in the produce of
the estate. The respondent further contended that the petitioner ought to
have impleaded all of the heirs as defendants. She also argued that the fact
that petitioner filed the complaint only in 1997 means that she had already
abandoned her right over the property.6
On July 3, 1998, after hearing, the MTC rendered a Decision in favor of the
petitioner, thus:
WHEREFORE, premises considered, the Court finds a preponderance of
evidence in favor of plaintiff Soledad Cañezo and against defendant
Concepcion Rojas by declaring plaintiff the true and lawful owner of the land
more particularly described under paragraph 5 of the complaint and hereby
orders defendant Concepcion Rojas:
a) To vacate and surrender possession of the land to plaintiff;
b) To pay plaintiff the sum of ₱34,000.00 actual damages,
₱10,000.00 for attorney’s fees and litigation expenses; and
c) To pay the costs.
SO ORDERED.7
Despite the respondent’s objection that the verbal sale cannot be proven
without infringing the Statute of Frauds, the MTC gave credence to the
testimony of the petitioners’ two witnesses attesting to the fact that
Crisogono Limpiado sold the property to the petitioner in 1939. The MTC
also found no evidence to show that Crispulo Rojas bought the property from
Crisogono Limpiado in 1948. It held that the 1948 tax declaration in
Crispulo’s name had little significance on respondent’s claim, considering
that in 1948, the "country was then rehabilitating itself from the ravages of
the Second World War" and "the government was more interested in the
increase in tax collection than the observance of the niceties of law."8
The respondent appealed the case to the Regional Trial Court (RTC) of Naval,
Biliran. On October 12, 1998, the RTC reversed the MTC decision on the
ground that the action had already prescribed and acquisitive prescription
had set in. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the decision of the Municipal Trial Court
of Naval, Biliran awarding ownership of the disputed land to the plaintiff and
further allowing recovery of damages is hereby REVERSED in toto. There is
no award of damages.
The said property remains as the legitime of the defendant Concepcion Rojas
and her children.
9
SO ORDERED.9
However, acting on petitioner’s motion for reconsideration, the RTC
amended its original decision on December 14, 1998. 10 This time, it held
that the action had not yet prescribed considering that the petitioner merely
entrusted the property to her father. The ten-year prescriptive period for
the recovery of a property held in trust would commence to run only from
the time the trustee repudiates the trust. The RTC found no evidence on
record showing that Crispulo Rojas ever ousted the petitioner from the
property. The dispositive portion of the amended decision reads as follows:
WHEREFORE, in view of the foregoing considerations, the decision of this
Court dated October 12, 1998 is hereby set aside and another is hereby
entered modifying the decision of the Court a quo and declaring Soledad
Rojas Vda. De Cañezo as the true and lawful owner of a parcel of land, more
particularly described and bounded as follows:
A parcel of land situated at Higatangan, Naval, Biliran, bounded on the North
by Policarpio Limpiado; on the South by Fidel Limpiado; on the East by
Seashore; and on the West by Crispolo (sic) Limpiado with an approximate
area of 4,169 square meters per Tax Declaration No. 2258, later under Tax
Declaration No. 4073 in the name of Crispolo Rojas and later in the name of
the Heirs of Crispolo Rojas.
Further, ordering defendant-appellant Concepcion Rojas and all persons
claiming rights or interest under her to vacate and surrender possession of
the land aforecited to the plaintiff or any of her authorized representatives,
Ordering the Provincial and/or Municipal Assessor’s Office to cancel the
present existing Tax Declaration in the name of Heirs of Crispolo Rojas
referring to the above-described property in favor of the name of Soledad
Rojas Vda. De Cañezo, Ordering the defendant-appellant Concepcion Rojas
to pay the plaintiff-appellee the sum of ₱34,000.00 in actual damages, and
to pay for the loss of her share in money value of the products of the
coconuts of said land from 1979 to 1997 and to pay further until the case is
terminated at the rate of ₱200.00 per quarter based on the regular
remittances of the late Crispolo Rojas to the plaintiff-appellee, and to pay
the costs.
SO ORDERED.11
The respondent filed a motion to reconsider the Amended Decision but the
RTC denied the same in an Order dated April 25, 1999.
She then filed a petition for review with the Court of Appeals (CA), which
reversed the Amended Decision of the RTC on September 7, 2000, thus:
WHEREFORE, the amended decision dated December 14, 1998 rendered in
Civil Case No. B-1041 is hereby REVERSED and SET ASIDE. The complaint
filed by Soledad Cañezo before the Municipal Trial Court of Naval, Biliran is
hereby DISMISSED on grounds of laches and prescription and for lack of
merit.
SO ORDERED.12
The CA held that the petitioner’s inaction for several years casts a serious
doubt on her claim of ownership over the parcel of land. It noted that 17
years lapsed since she discovered that respondent was in adverse
possession of the property before she instituted an action to recover the
same. And during the probate proceedings, the petitioner did not even
contest the inclusion of the property in the estate of Crispulo Rojas. 13
The CA was convinced that Crispulo Rojas owned the property, having
bought the same from Crisogono Limpiado in 1948. Supporting this
conclusion, the appellate court cited the following circumstances: (1) the
property was declared for taxation purposes in Crispulo’s name and he had
been paying the taxes thereon from 1948 until his death in 1978; (2)
Crispulo adversely possessed the same property from 1948 until his death
in 1978; and (3) upon his death in 1978, the property was included in his
estate, the proceeds of which were distributed among his heirs.14
The CA further held that, assuming that there was an implied trust between
the petitioner and her father over the property, her right of action to recover
the same would still be barred by prescription since 49 years had already
lapsed since Crispulo adversely possessed the contested property in 1948.15
On May 9, 2001, the CA denied the petitioner’s motion for reconsideration
for lack of merit.16
In this petition for review, the petitioner, substituted by her heirs, assigns
the following errors:
That the Court of Appeals committed grave abuse of discretion in setting
aside petitioner’s contention that the Petition for Review filed by respondent
CONCEPCION ROJAS before the Court of Appeals was FILED OUT OF TIME;
That the Court of Appeals erred and committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it decided that the filing of
the case by SOLEDAD CAÑEZO for Recovery of Real Property was already
barred by PRESCRIPTION AND LACHES.17
10
The petitioner insists that the respondent’s petition for review before the CA
was filed out of time. The petitioner posits that the CA may not grant an
additional extension of time to file the petition except for the most
compelling reason. She contends that the fact that respondent’s counsel
needed additional time to secure the certified copy of his annexes cannot be
considered as a compelling reason that would justify an additional period of
extension. She admits, though, that this issue was raised for the first time
in their motion for reconsideration, but insists that it can be raised at any
time since it concerns the jurisdiction of the CA over the petition.
The petitioner further posits that prescription and laches are unavailing
because there was an express trust relationship between the petitioner and
Crispulo Rojas and his heirs, and express trusts do not prescribe. Even
assuming that it was not an express trust, there was a resulting trust which
generally does not prescribe unless there is repudiation by the trustee.
For her part, the respondent argues that the petitioners are now estopped
from questioning the CA Resolution granting her second motion for
extension to file the petition for review. She notes that the petitioner did not
raise this issue in the comment that she filed in the CA. In any case, the
grant of the second extension of time was warranted considering that the
certified true copy of the assailed RTC orders did not arrive at the office of
respondent’s counsel in Cebu City in time for the filing of the petition.
On the merits, the respondent asserts that the complaint is barred by
prescription, laches and estoppel. From 1948 until his death in 1978,
Crispulo cultivated the property and was in adverse, peaceful and
continuous possession thereof in the concept of owner. It took the petitioner
49 years from 1948 before she filed the complaint for recovery of the
property in 1997. Granting that it was only in 1980 that she found out that
the respondent adversely possessed the property, still petitioner allowed 17
years to elapse before she asserted her alleged right over the property.
Finally, the respondent maintains that the other co-owners are
indispensable parties to the case; and because they were not impleaded,
the case should be dismissed.
The petition has no merit.
On the procedural issue raised by the petitioner, we find no reversible error
in the grant by the CA of the second motion for extension of time to file the
respondent’s petition. The grant or denial of a motion for extension of time
is addressed to the sound discretion of the court.18 The CA obviously
considered the difficulty in securing a certified true copy of the assailed
decision because of the distance between the office of respondent’s counsel
and the trial court as a compelling reason for the request. In the absence of
any showing that the CA granted the motion for extension capriciously, such
exercise of discretion will not be disturbed by this Court.
On the second issue, the petitioner insists that her right of action to recover
the property cannot be barred by prescription or laches even with the
respondent’s uninterrupted possession of the property for 49 years because
there existed between her and her father an express trust or a resulting
trust. Indeed, if no trust relations existed, the possession of the property by
the respondent, through her predecessor, which dates back to 1948, would
already have given rise to acquisitive prescription in accordance with Act No.
190 (Code of Civil Procedure).19 Under Section 40 of Act No. 190, an action
for recovery of real property, or of an interest therein, can be brought only
within ten years after the cause of action accrues. This period coincides with
the ten-year period for acquisitive prescription provided under Section
4120 of the same Act.
Thus, the resolution of the second issue hinges on our determination of the
existence of a trust over the property --- express or implied --- between the
petitioner and her father.
A trust is the legal relationship between one person having an equitable
ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the
latter.21 Trusts are either express or implied.22 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 evincing an intention to create a
trust.23 Implied trusts are those which, without being expressed, are
deducible from the nature of the transaction as matters of intent or,
independently, of the particular intention of the parties, as being
superinduced on the transaction by operation of law basically by reason of
equity.24 An implied trust may either be a resulting trust or a constructive
trust.
It is true that in express trusts and resulting trusts, a trustee cannot acquire
by prescription a property entrusted to him unless he repudiates the
trust.25 The following discussion is instructive:
There is a rule that a trustee cannot acquire by prescription the ownership
of property entrusted to him, or that an action to compel a trustee to convey
property registered in his name in trust for the benefit of the cestui que trust
does not prescribe, 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, or that property held in trust can be recovered by the beneficiary
regardless of the lapse of time.
11
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.
xxxx
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 que trust; (b) such positive acts of
repudiation have been made known to the cestui que trust, and (c) the
evidence thereon is clear and conclusive.26
As a rule, however, the burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be clear and satisfactorily
show the existence of the trust and its elements.27 The presence of the
following elements must be proved: (1) a trustor or settlor who executes
the instrument creating the trust; (2) a trustee, who is the person expressly
designated to carry out the trust; (3) the trust res, consisting of duly
identified and definite real properties; and (4) the cestui que trust, or
beneficiaries whose identity must be clear.28 Accordingly, it was incumbent
upon petitioner to prove the existence of the trust relationship. And
petitioner sadly failed to discharge that burden.
The existence of express trusts concerning real property may not be
established by parol evidence.29 It must be proven by some writing or deed.
In this case, the only evidence to support the claim that an express trust
existed between the petitioner and her father was the self-serving testimony
of the petitioner. Bare allegations do not constitute evidence adequate to
support a conclusion. They are not equivalent to proof under the Rules of
Court.30
In one case, the Court allowed oral testimony to prove the existence of a
trust, which had been partially performed. It was stressed therein that what
is important is that there should be an intention to create a trust, thus:
What is crucial is the intention to create a trust. While oftentimes the
intention is manifested by the trustor in express or explicit language, such
intention may be manifested by inference from what the trustor has said or
done, from the nature of the transaction, or from the circumstances
surrounding the creation of the purported trust.
However, an inference of the intention to create a trust, made from
language, conduct or circumstances, must be made with reasonable
certainty. It cannot rest on vague, uncertain or indefinite declarations. An
inference of intention to create a trust, predicated only on circumstances,
can be made only where they admit of no other interpretation.31
Although no particular words are required for the creation of an express
trust, a clear intention to create a trust must be shown; and the proof of
fiduciary relationship must be clear and convincing. The creation of an
express trust must be manifested with reasonable certainty and cannot be
inferred from loose and vague declarations or from ambiguous
circumstances susceptible of other interpretations.32
In the case at bench, an intention to create a trust cannot be inferred from
the petitioner’s testimony and the attendant facts and circumstances. The
petitioner testified only to the effect that her agreement with her father was
that she will be given a share in the produce of the property, thus:
Q: What was your agreement with your father Crispulo Rojas when
you left this property to him?
A: Every time that they will make copra, they will give a share.
Q: In what particular part in Mindanao [did] you stay with your
husband?
A: Bansalan, Davao del Sur.
Q: And while you were in Bansalan, Davao del Sur, did Crispolo
Rojas comply with his obligation of giving your share the proceeds
of the land?
A: When he was still alive, he gave us every three months
sometimes ₱200.00 and sometimes ₱300.00.33
This allegation, standing alone as it does, is inadequate to establish the
existence of a trust because profit-sharing per se, does not necessarily
translate to a trust relation. It could also be present in other relations, such
as in deposit.
What distinguishes a trust from other relations is the separation of the legal
title and equitable ownership of the property. In a trust relation, legal title
12
is vested in the fiduciary while equitable ownership is vested in a cestui que
trust. Such is not true in this case. The petitioner alleged in her complaint
that the tax declaration of the land was transferred to the name of Crispulo
without her consent. Had it been her intention to create a trust and make
Crispulo her trustee, she would not have made an issue out of this because
in a trust agreement, legal title is vested in the trustee. The trustee would
necessarily have the right to transfer the tax declaration in his name and to
pay the taxes on the property. These acts would be treated as beneficial to
the cestui que trust and would not amount to an adverse possession.34
Neither can it be deduced from the circumstances of the case that a resulting
trust was created.1âwphi1 A resulting trust is a species of implied trust that
is presumed always to have been contemplated by the parties, the intention
as to which can be found in the nature of their transaction although not
expressed in a deed or instrument of conveyance. A resulting trust is based
on the equitable doctrine that it is the more valuable consideration than the
legal title that determines the equitable interest in property.35
While implied trusts may be proved by oral evidence, the evidence must be
trustworthy and received by the courts with extreme caution, and should
not be made to rest on loose, equivocal or indefinite declarations.
Trustworthy evidence is required because oral evidence can easily be
fabricated.36 In order to establish an implied trust in real property by parol
evidence, the proof should be as fully convincing as if the acts giving rise to
the trust obligation are proven by an authentic document. An implied trust,
in fine, cannot be established upon vague and inconclusive proof.37 In the
present case, there was no evidence of any transaction between the
petitioner and her father from which it can be inferred that a resulting trust
was intended.
In light of the disquisitions, we hold that there was no express trust or
resulting trust established between the petitioner and her father. Thus, in
the absence of a trust relation, we can only conclude that Crispulo’s
uninterrupted possession of the subject property for 49 years, coupled with
the performance of acts of ownership, such as payment of real estate taxes,
ripened into ownership. The statutory period of prescription commences
when a person who has neither title nor good faith, secures a tax declaration
in his name and may, therefore, be said to have adversely claimed
ownership of the lot.38 While tax declarations and receipts are not conclusive
evidence of ownership and do not prove title to the land, nevertheless, when
coupled with actual possession, they constitute evidence of great weight and
can be the basis of a claim of ownership through prescription. 39 Moreover,
Section 41 of Act No. 190 allows adverse possession in any character to
ripen into ownership after the lapse of ten years. There could be prescription
under the said section even in the absence of good faith and just title.40
All the foregoing notwithstanding, even if we sustain petitioner’s claim that
she was the owner of the property and that she constituted a trust over the
property with her father as the trustee, such a finding still would not advance
her case.
Assuming that such a relation existed, it terminated upon Crispulo’s death
in 1978. A trust terminates upon the death of the trustee where the trust is
personal to the trustee in the sense that the trustor intended no other person
to administer it.41 If Crispulo was indeed appointed as trustee of the
property, it cannot be said that such appointment was intended to be
conveyed to the respondent or any of Crispulo’s other heirs. Hence, after
Crispulo’s death, the respondent had no right to retain possession of the
property. At such point, a constructive trust would be created over the
property by operation of law. Where one mistakenly retains property which
rightfully belongs to another, a constructive trust is the proper remedial
device to correct the situation.42
A constructive trust is one created not by any word or phrase, either
expressly or impliedly, evincing a direct intention to create a trust, but one
which arises in order to satisfy the demands of justice. It does not come
about by agreement or intention but in the main by operation of law,
construed against one who, by fraud, duress or abuse of confidence, obtains
or holds the legal right to property which he ought not, in equity and good
conscience, to hold.43
As previously stated, the rule that a trustee cannot, by prescription, acquire
ownership over property entrusted to him until and unless he repudiates the
trust, applies to express trusts and resulting implied trusts. However, in
constructive implied trusts, prescription may supervene even if the trustee
does not repudiate the relationship. Necessarily, repudiation of the said trust
is not a condition precedent to the running of the prescriptive period.44 A
constructive trust, unlike an express trust, does not emanate from, or
generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive
trust, there is neither a promise nor any fiduciary relation to speak of and
the so-called trustee neither accepts any trust nor intends holding the
property for the beneficiary.45 The relation of trustee and cestui que
trust does not in fact exist, and the holding of a constructive trust is for the
trustee himself, and therefore, at all times adverse.
In addition, a number of other factors militate against the petitioner’s case.
First, the petitioner is estopped from asserting ownership over the subject
property by her failure to protest its inclusion in the estate of Crispulo. The
CA, thus, correctly observed that:
13
Even in the probate proceedings instituted by the heirs of Crispulo Rojas,
which included her as a daughter of the first marriage, Cañezo never
contested the inclusion of the contested property in the estate of her father.
She even participated in the project of partition of her father’s estate which
was approved by the probate court in 1984. After personally receiving her
share in the proceeds of the estate for 12 years, she suddenly claims
ownership of part of her father’s estate in 1997.

The principle of estoppel in pais applies when -- by one’s acts,

representations, admissions, or silence when there is a need to speak out -
- one, intentionally or through culpable negligence, induces another to
believe certain facts to exist; and the latter rightfully relies and acts on such
belief, so as to be prejudiced if the former is permitted to deny the existence
of those facts.46 Such a situation obtains in the instant case.

Second, the action is barred by laches. The petitioner allegedly discovered

that the property was being possessed by the respondent in
1980.47 However, it was only in 1997 that she filed the action to recover the
property. Laches is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to it has
either abandoned or declined to assert it.48

Finally, the respondent asserts that the court a quo ought to have dismissed
the complaint for failure to implead the other heirs who are indispensable
parties. We agree. We note that the complaint filed by the petitioner sought
to recover ownership, not just possession of the property; thus, the suit is
in the nature of an action for reconveyance. It is axiomatic that owners of
property over which reconveyance is asserted are indispensable parties.
Without them being impleaded, no relief is available, for the court cannot
render valid judgment. Being indispensable parties, their absence in the suit
renders all subsequent actions of the trial court null and void for want of
authority to act, not only as to the absent parties but even as to those
present. Thus, when indispensable parties are not before the court, the
action should be dismissed.49 At any rate, a resolution of this issue is now
purely academic in light of our finding that the complaint is already barred
by prescription, estoppel and laches.

WHEREFORE, premises considered, the petition is DENIED. The Decision of

the Court of Appeals, dated September 7, 2000, and Resolution dated May
9, 2001, are AFFIRMED.

SO ORDERED.

14