G.R. No.

159494

July 31, 2008

ROGELIO, GEORGE, LOLITA, ROSALINDA, and JOSEPHINE, all surnamed

PASIO, represented by their father and attorney-in-fact JOSE
PASIO Petitioners,
vs.
DR. TEOFILO EDUARDO F. MONTERROYO, ROMUALDO MONTERROYO, MARIA
TERESA MONTERROYO, and STEPHEN MONTERROYO, Respondents.
Held: Principle of Constructive Trust Applies
Under the principle of constructive trust, 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.29 In the action for
reconveyance, the decree of registration is respected as incontrovertible but what is
sought instead is the transfer of the property wrongfully or erroneously registered in
anothers name to its rightful owner or to one with a better right.30 If the
registration of the land is fraudulent, the person in whose name the land is
registered holds it as a mere trustee, and the real owner is entitled to file an action
for reconveyance of the property.31
In the case before us, respondents were able to establish that they have a better
right to Lot No. 2139 since they had long been in possession of the property in the
concept of owners, by themselves and through their predecessors-in-interest.
Hence, despite the irrevocability of the Torrens titles issued in their names and even
if they are already the registered owners under the Torrens system, petitioners may
still be compelled under the law to reconvey the property to respondents.32
PASINO v MONTERROYO
FACTS: Lot No. 2139, with an area of 19,979 square meters, located at Panuliran,
Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and cleared by
Laureano Pasio. The 24-hectare land formed part of the public domain which was
later declared alienable and disposable. Laureano filed a homestead application
over the entire 24-hectare land. The Bureau of Forestry wrote Laureano and
informed him that the tract of land covered by his application was not needed for
forest purposes. The Director of Lands issued an Order approving Laureanos
homestead application and stating that Homestead Entry No. 154651 was recorded
in his name for the land applied for by him. After Laureano died, the Director of
Lands issued an Order for the issuance of a homestead patent in favor of Laureano,
married to Graciana Herbito. Laureanos heirs did not receive the order and
consequently, the land was not registered under Laureanos name or under that of
his heirs. The property was thereafter covered by a tax declaration in the name of
Laureano with Graciana as administrator. A Cadastral Survey was conducted in
Iligan City, and the surveyor found that a small creek divided the 24-hectare parcel
of land into two portions, identified as Lot No. 2138 and Lot No. 2139. Petitioners
(Rogelio, George, Lolita, Rosalinda and Josephine, all surnamed Pasio) claimed that
Laureanos heirs, headed by his son Jose, continuously possessed and cultivated
both lots. Joses co-heirs executed a Deed of Quitclaim renouncing their rights and
interest over the land in favor of Jose. Jose secured a title in his name for Lot No.
2138. Later, Jose alienated Lot No. 2139 in favor of his children (petitioners in this
case) who simultaneously filed applications for grant of Free Patent Titles over their
respective shares of Lot No. 2139 before the Land Management Bureau of the
Department of Environment and Natural Resources. The DENR granted petitioners
applications and issued Original Certificate of Titles in favor of them. Petitioners
alleged that their possession of Lot No. 2139 was interrupted when respondents
forcibly took possession of the property. Respondents (Dr. Teofilo Eduardo F.

Monterroyo, later substituted by his heirs Romualdo, Maria Teresa and Stephen, all
surnamed Monterroyo) alleged that they had been in open, continuous, exclusive
and notorious possession of Lot No. 2139, by themselves and through their
predecessors-ininterest. They alleged that Rufo Larumbe sold Lot No. 2139 to Petra
Teves. Petra thereafter executed a deed of sale over Lot No. 2139 in favor of Vicente
Teves. Later, Vicente executed a pacto de retro sale over the land in favor of Arturo
Teves. Arturo then sold Lot No. 2139 in favor of respondents father, Dr. Monterroyo,
by virtue of an oral contract. He Arturo executed a Deed of Confirmation of Absolute
Sale of Unregistered Land in favor of Dr. Monterroyos heirs
ISSUE W/N petitioners are rightful owners and possessors of Lot No. 2139.
HELD NO. The preponderance of evidence favors respondents as the possessors of
Lot No. 2139 for over 30 years, by themselves and through their predecessors-ininterest. Respondents were able to present the original Deed of Absolute Sale
executed by Larumbe in favor of Petra. Respondents also presented the succeeding
Deeds of Sale showing the transfer of Lot No. 2139 from Petra to Vicente and from
Vicente to Arturo and the Deed of Confirmation of Absolute Sale of Unregistered
Real Property executed by Arturo in favor of respondents. Respondents also
presented a certification executed by P/Sr. Superintendent Julmunier Akbar Jubail,
City Director of Iligan City Police Command and verified from the Log Book records
by Senior Police Officer Betty Dalongenes Mab-Abo confirming that Andres
Quinaquin made a report that Jose, Rogelio and Luciana Pasio, Lucino Pelarion and
Nando Avilo forcibly took his copra. This belied petitioners allegation that they were
in possession of Lot No. 2139 and respondents forcibly took possession of the
property. Considering that petitioners application for free patent titles was filed only
when Lot No. 2139 had already become private land ipso jure, the Land
Management Bureau had no jurisdiction to entertain petitioners application. Under
the principle of constructive trust, 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. In the action for reconveyance, the
decree of registration is respected as incontrovertible but what is sought instead is
the transfer of the property wrongfully or erroneously registered in anothers name
to its rightful owner or to one with a better right. If the registration of the land is
fraudulent, the person in whose name the land is registered holds it as a mere
trustee, and the real owner is entitled to file an action for reconveyance of the
property
(Rodrigo v. Ancilla, G.R. No. 139897, [June 26, 2006], 525 PHIL 590-598)
Held: The remedy of a landowner whose property has been wrongfully or
erroneously registered in another's name is an action for reconveyance, or an action
for damages if the property has passed onto the hands of an innocent purchaser for
value. Paragraph 3, Section 53 of PD 1529 provides that in all cases of registration
procured by fraud, the owner may pursue all his legal and equitable remedies
against the parties to such fraud without prejudice, however, to the rights of any
innocent holder for value of the decree of registration.
To be read in conjunction with the foregoing provision is Article 1456 of the Civil
Code which provides that "[i]f the 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."
The foregoing circumstances lead to only one conclusion: petitioners are holding Lot
434 merely as trustees under an implied trust for respondent. "An implied trust is
one that, without being express, is deducible from the nature of the transaction as a

matter of intent or which is superinduced on the transaction by operation of law as

a matter of equity, independently of the particular intention of the parties." 18 The
law itself creates the obligation of the trustees to convey the property and the title
thereof in favor of the true owner. 19
Lastly, the action for reconveyance has not prescribed. An action for reconveyance
based on implied or constructive trust prescribes in 10 years. 20 This period is
reckoned from the date of issuance of the transfer certificate of title which operates
as constructive notice to the whole world. Here, TCT No. T-3062 in the name of
Vicente Sauza was issued on January 13, 1971. Thus, respondent's suit for
reconveyance filed on December 28, 1979 was well within the prescribed period.
Clearly, prescription did not attach.

G.R. No. 164787

January 31, 2006

MARLENE
CRISOSTOMO
&
JOSE
FLORITO M. GARCIA, JR., Respondent.

G.

CRISOSTOMO, Petitioners, vs.

In the case at bar, respondents action which is for Reconveyance and Cancellation
of Title is based on an implied trust under Art. 1456 of the Civil Code since he
averred in his complaint that through fraud petitioners were able to obtain a
Certificate of Title over the property. He does not seek the annulment of a voidable
contract whereby Articles 1390 and 1391 of the Civil Code would find application
such that the cause of action would prescribe in four years.
Art. 1456 of the Civil Code provides:
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.
Thus, it was held that when a party uses fraud or concealment to obtain a certificate
of title of property, a constructive trust is created in favor of the defrauded party.36
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."37
When property is registered in anothers name, an implied or constructive trust is
created by law in favor of the true owner.38 The action for reconveyance of the title
to the rightful owner prescribes in 10 years from the issuance of the title.39
An action for reconveyance based on implied or constructive trust prescribes in ten
years from the alleged fraudulent registration or date of issuance of the certificate
of title over the property.40
It is now well-settled that the prescriptive period to recover property obtained by
fraud or mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is
10 years pursuant to Art. 1144. This ten-year prescriptive period begins to run from
the date the adverse party repudiates the implied trust, which repudiation takes
place when the adverse party registers the land.41

Clearly, the applicable prescriptive period is ten years under Art. 1144 and not four
years under Arts. 1389 and 1391.42
Applying the law and jurisprudential declaration above-cited to the allegations of
fact in the complaint, it can clearly be seen that respondent has a period of 10
years from the registration of the title within which to file the action. Since the title
was registered in the name of the petitioners on 16 November 1993, respondent
had a period of 10 years from the time of the registration within which to file the
complaint. Since the complaint was filed on 20 June 2002, the action clearly has not
prescribed and was timely-filed.
[G.R. No. 140457. January 19, 2005]
HEIRS OF MAXIMO SANJORJO, namely, VICENTE SANJORJO, MACARIA
SANJORJO, DOMINGO SANJORJO, ALFREDO CASTRO, and SPOUSES SANTOS
AND LOLITA INOT, petitioners, vs. HEIRS OF MANUEL Y. QUIJANO, namely,
ROSA Q. LEDESMA, MILAGROS Q. YULIONGSIU, ALAN P. QUIJANO AND
GWENDOLYN P. ENRIQUEZ, and VICENTE Z. GULBE, respondents.
On the second issue, we agree with the petitioners that their action against the
private respondents for the reconveyance of Lots 374 and 379, covered by OCT No.
OP-38221 issued on September 6, 1988 and OCT No. OP-39847 issued on February
11, 1989, respectively, was not barred by Section 32 of P.D. No. 1529, which reads:
SEC. 32. Review of decree of registration; Innocent purchaser for value. The decree
of registration shall not be reopened or revised by reason of absence, minority, or
other disability of any person adversely affected thereby, nor by any proceeding in
any court for reversing judgments, subject, however, to the right of any person,
including the government and the branches thereof, deprived of land or of any
estate or interest therein by such adjudication or confirmation of title obtained
by actual fraud, to file in the proper Court of First Instance a petition for reopening
and review of the decree of registration not later than one year from and after the
date of the entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired the
land or an interest therein, whose rights may be prejudiced. Whenever the phrase
innocent purchaser for value or any equivalent phrase occurs in this Decree, it shall
be deemed to include an innocent lessee, mortgagee, or other encumbrancer for
value.[18]
We agree with the ruling of the CA that the torrens title issued on the basis of the
free patents became as indefeasible as one which was judicially secured upon the
expiration of one year from date of issuance of the patent.[19] The order or decision
of the DENR granting an application for a free patent can be reviewed only within
one year thereafter, on the ground of actual fraudvia a petition for review in the
Regional Trial Court (RTC) provided that no innocent purchaser for value has
acquired the property or any interest thereon. However, an aggrieved party may
still file an action for reconveyance based on implied or constructive trust, which
prescribes in ten years from the date of the issuance of the Certificate of Title over
the property provided that the property has not been acquired by an innocent
purchaser for value. Thus:
The basic rule is that after the lapse of one (1) year, a decree of registration is no
longer open to review or attack although its issuance is attended with actual fraud.
This does not mean, however, that the aggrieved party is without a remedy at law. If
the property has not yet passed to an innocent purchaser for value, an action for
reconveyance is still available. The decree becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree so that the only

remedy of the landowner whose property has been wrongfully or erroneously

registered in anothers name is to bring an ordinary action in court for reconveyance,
which is an action in personam and is always available as long as the property has
not passed to an innocent third party for value. If the property has passed into the
hands of an innocent purchaser for value, the remedy is an action for damages. In
this case, the disputed property is still registered in the name of respondent
Demetrio Caringal, so that petitioner was correct in availing himself of the
procedural remedy of reconveyance.[20]
An action for reconveyance is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner.[21] All that must be alleged in
the complaint are two (2) facts which, admitting them to be true, would entitle the
plaintiff to recover title to the disputed land, namely, (1) that the plaintiff was the
owner of the land and, (2) that the defendant had illegally dispossessed him of the
same.[22] The body of the pleading or complaint determines the nature of an
action, not its title or heading.[23] In their complaint, the petitioners clearly
asserted that their predecessors-in-interest have long been the absolute and
exclusive owners of the lots in question and that they were fraudulently deprived of
ownership thereof when the private respondents obtained free patents and
certificates of title in their names.[24] These allegations certainly measure up to the
requisite statement of facts to constitute an action for reconveyance.
Article 1456 of the New Civil Code provides that a person acquiring property
through fraud becomes by operation of law a trustee of an implied trust for the
benefit of the real owner of the property. The presence of fraud in this case created
an implied trust in favor of the petitioners, giving them the right to seek
reconveyance of the property from the private respondents. However, because of
the trial courts dismissal order adverted to above, the petitioners have been unable
to prove their charges of fraud and misrepresentation.
The petitioners action for reconveyance may not be said to have prescribed, for,
basing the present action on implied trust, the prescriptive period is ten years.
[25] The questioned titles were obtained on August 29, 1988 and November 11,
1988, in OCT Nos. OP-38221 and OP-39847, respectively. The petitioners
commenced their action for reconveyance on September 13, 1993. Since the
petitioners cause of action is based on fraud, deemed to have taken place when the
certificates of title were issued,[26] the complaint filed on September 13, 1993 is,
therefore, well within the prescriptive period.

E. Prescription see also Art. 1144

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. (n)
i. Action for Reconveyance
- Vagilidad vs. Vagilidad, 507 SCRA 94 G.R. No. 161136
WILFREDO T. VAGILIDAD and LOLITA A. VAGILIDAD, Petitioners, - versus - SANDOVAL
-GUTIERREZ, DOROTHY VAGILIDAD, Respondents. November 16, 2006

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 wellsettled 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
Facts: A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique,
measuring 4,280 square meters, was owned by Zoilo Labiao. Sometime in 1931,
ZOILO died. Subsequently, on May 12, 1986, Loreto Labiao (hereafter LORETO), son
of ZOILO, sold to Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of Lot No.
1253 (hereafter Lot 1253-B), measuring 1,604 square meters as evidenced by the
Deed of Absolute Sale executed by LORETO.
In view of the death of ZOILO, his children, LORETO, Efren Labiao (hereafter EFREN)
and
Priscilla Espanueva (hereafter
PRISCILLA)
executed
an
Extrajudicial
x x x Settlement of Estate dated January 20, 1987, adjudicating the entire Lot No.
1253, covering 4,280 square meters, to LORETO. On January 29, 1987, Transfer
Certificate of Title (TCT) No. T-16693 was issued in favor of LORETO, EFREN and
PRISCILLA, but on even date, TCT No. T-16693 was cancelled and TCT No. T-16694,
covering the said property, was issued in the name of LORETO alone.
On July 31, 1987, GABINO JR., as petitioner, filed a Petition for the Surrender of TCT
No. T-16694, covering Lot No. 1253, with the Regional Trial Court of San Jose City,
Sixth Judicial Region, against LORETO, docketed as Cadastral Case No. 87-731-A.
The plaintiff alleged that, being the owner of x x x Lot No. 1253-B, under TCT No. T16694, by virtue of the sale that took place on May 12, 1986, he is entitled to ask
for the surrender of the owners copy of TCT No. T-16694 to the Register of Deeds of
Antique in order to effect the transfer of title to the name of the petitioner. However,
as per motion of both counsels since the parties seemed to have already reached an
amicable settlement without the knowledge of their counsels, the trial court
issued an Order dated March 21, 1994 sending the case to the archives.
On September 21, 1988, [GABINO JR.] paid real estate taxes on the land he bought
from LORETO as per Tax Declaration No. 1038 where the property was specified as
Lot No. 1253-B. GABINO JR. thereafter sold the same lot to Wilfredo Vagilidad
(hereafter WILFREDO) as per Deed of Absolute Sale dated December 7, 1989. On
even date, Deed of Absolute Sale of a Portion of Land involving the opt-described
property was also executed by LORETO in favor of WILFREDO. The aforementioned
deeds, which were both executed on December 7, 1989 [and] notarized by Atty.
Warloo Cardenal[,] [appear] to have been given the same entry number in his
notarial books as both contained the designation Document No. 236, Page No. 49,
Book No. XI, Series of 1989.
WILFREDO obtained another loan from Development Bank of the Philippines (DBP
for brevity) in the amount of P200,000.00 and mortgaged Lot No. 1253-B as
collateral of the xxx loan and the transaction was inscribed at the back of TCT No.
18023 as Entry No. 196268. The said loan was paid and, consequently, the
mortgage was cancelled as Entry No. 202500.
On September 29, 1995, spouses GABINO and Ma. Dorothy Vagilidad (hereafter
DOROTHY), as plaintiffs, filed a Complaint for Annulment of Document,
Reconveyance and Damages, with the Regional Trial Court of Antique, Sixth Judicial
Region, Branch 11, against spouses WILFREDO and Lolita Vagilidad (hereafter
LOLITA). The plaintiffs claimed that they are the lawful owners of Lot No. 1253-B
which was sold to him by LORETO in 1986.

They likewise raised that when GABINO SR. died, defendant WILFREDO requested
GABINO
JR.
to
transfer
the
ownership
of
Lot
No.
1253-B
in
defendant WILFREDOs name for loaning purposes with the agreement that the land
will be returned when the plaintiffs need the same. They added that, pursuant to
the mentioned agreement, plaintiff GABINO JR., without the knowledge and consent
of his spouse, DOROTHY, executed the Deed of Sale dated December 7, 1989 in
favor of defendant WILFREDO receiving nothing as payment therefor. They pointed
out that after defendant WILFREDO was able to mortgage the property, plaintiffs
demanded the return of the property but the defendants refused to return the same.
The plaintiffs claimed that the same document is null and void for want of
consideration and the same does not bind the non-consenting spouse.
ISSUES:
1. W/O THE DOCTRINE OF DOUBLE SALE THAT THE BUYER WHO IS IN POSSESSION
OF THE TORRENS TITLE AND HAD THE DEED OF SALE REGISTERED MUST PREVAIL
2. W/O THE DOCTRINE OF DOUBLE SALE THAT THE BUYER WHO IS IN POSSESSION
OF THE TORRENS TITLE AND HAD THE DEED OF SALE REGISTERED MUST PREVAIL
HELD:
SC deny the petition.
1. The trial court itself comprehensively traced the origin of Lot No. 1253-B. It
clearly demonstrated that the subject parcel was originally part of the registered lot
of ZOILO. It also showed how the subject parcel was eventually bounded by Lot No.
1253-A on the West and by Lot No. 1253-C on the East, as the lot would be later
described in the Deed of Absolute Sale of Portion of Land.
2. In the case at bar, although the TCT of WILFREDO became indefeasible after the
lapse of one year from the date of registration, the attendance of fraud in its
issuance created an implied trust in favor of GABINO, JR. under Article 1456 of the
Civil Code. Being an implied trust, the action for reconveyance of the subject
property therefore prescribes within a period of ten years from February 15, 1990.
Thus, when respondents filed the instant case with the court a quo on September
26, 1995, it was well within the prescriptive period.