SECOND DIVISION of the deed of sale[15] will eventually be transferred to respondents
[G.R. No. 144148. March 18, 2005] herein who are her nephews and nieces and the children of
SPS. FELIZA DUYAN GOMEZ, petitioners, vs. PURISIMA DUYAN, et al.
respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a petition for review on certiorari assailing
the Decision[1] of the Court of Appeals in CA-G.R. CV No. 49163
ordering the reconveyance by the petitioners to the respondents of
the property covered by Transfer Certificate of Title (TCT) No. 281115
and declaring said title cancelled, thereby reversing the Decision[2] of
the Regional Trial Court (RTC) of Quezon City, Branch 80 which
dismissed the complaint. The dispositive portion of the
challenged Decision reads as follows:
WHEREFORE, premises considered, the assailed decision of the
Regional Trial Court of Quezon City, Branch 80 in Civil Case No. Q-91-
8821 is hereby REVERSED and SET ASIDE. ACCORDINGLY, defendants-
appellees are hereby ordered to RECONVEY in favor of plaintiffs-
appellants the property covered by TCT No. 281115, which title is
hereby declared CANCELLED. With costs.[3]
The facts as culled from the records are as follows:
The parties in this case are relatives residing at 96 General
Avenue, Project 8, Quezon City which consists of four houses situated
in an eight hundred-square meter (800 sq.m.) lot, covered by TCT No.
41717 issued by the Register of Deeds of Quezon City in the name of
Eulogio Duyan (now deceased) married to Purisima Duyan, one of the
respondents in this case. The property in dispute which constitutes
one-half of the property previously covered by TCT No. 41717 is now
covered by TCT No. 281115 issued in the name of petitioner
spouses.[4]
Eulogio Duyan and Feliza Duyan are siblings. In his desire to
help his sister, Eulogio allowed her to construct a house on the
disputed lot sometime in 1968.[5] Petitioners acknowledged the fact
that the disputed property was owned by Eulogio and that they were
staying in the disputed property solely due to his benevolence.
Accordingly, an instrument entitled Pagpapahayag was executed by
the siblings on 5 May 1974. The instrument provides that in the event
that the property will be registered in Felizas name, she will continue
to acknowledge Eulogio as the owner and will never assert ownership
over the same, except in accordance with her brothers wishes.[6] The
pertinent portions of the instrument read:
Na napagkasunduan naming magcapatid na bouin ang documentong
ito bilang katibayan ang lahat;
....
4. Na kaming magkapatid ay magtutulongan at magdadamayan maging
sa hirap at ginhawa alang-alang sa ikabubuti ng aming mga mahal sa
buhay;
5. Na ito ay mailagay sa pangalan man ng aming Ama o pangalan ko ay
itoy hindi ko pag-aari kundi ari ito ng aking kuya, Eulogio V. Duyan, at-
6. Na ito ay aming igagalang maging saan man makarating ngayon at
kailan man.[7]
On 11 May 1974, a deed of sale covering a residential house
situated on the disputed lot was executed by Eulogio and Regina
Velasquez, a common-law wife of the former, in favor of petitioners
for the sum of One Thousand Pesos (P1,000.00). Thereafter,
petitioners allegedly asserted ownership not only over the said house
but over the whole lot covered by TCT No. 41717.[8] This prompted
Eulogios legal wife, Purisima, to file a complaint for recovery of
possession and damages against petitioners with the then Court of
First Instance of Rizal, Branch IV-B, Quezon City.[9]
Deciding the case in favor of Purisima, the trial court ordered
petitioners to surrender possession of the property to her. On appeal,
the Court of Appeals dismissed the case after the parties entered into
an amicable settlement.[10]
On 25 January 1978, Eulogio and Purisima this time, as vendors,
executed a Deed of Absolute Sale in favor of petitioners with respect
to the disputed lot for the sum of Twenty Thousand Pesos
(P20,000.00).[11]
Purisima claims that the deed of sale was executed merely to
give color of legality to petitioners stay in the disputed property so
that she and her children will not drive them away after they
(Purisima and her children) manifested their opposition to Eulogios
decision to let them stay therein.[12] Petitioners claim otherwise,
contending that the sale was freely agreed upon by the parties
thereto; hence, it was authentic and validly executed.[13]
Subsequent to the execution of the deed of sale or on 10
February 1978,[14] another Pagpapahayag was executed between
Eulogio and Feliza, where the latter acknowledged that the lot subject
Eulogio.[16] The pertinent portions of the secondPagpapahayag read:
Na pagkatapos ng lahat ng hidwaan sa Husgado ay aming isasagawa
agad and conwaring pagbibili muli ng nasabing xxx aming binili sa
aking capatid na si Gg. Eulogio V. Duyan. At pag mangyari ang
nasabing hatian ng lote, ay aming ilalagay agad sa pangalan ng aming
mga pamangkin na sina Salome V. Duyan, Divina V. Duyan, Cresencia
V. Duyan, Reulgina V. Duyan, Domincia, Rodrigo at Avencio C.
Duyan.[17]
Notwithstanding the second Pagpapahayag, petitioners caused
the registration of the deed of sale dated 25 January 1978 with the
Register of Deeds of Quezon City. As a consequence, TCT No. 281115
covering the disputed lot was issued on 22 September 1981 in the
name of petitioners.[18]
On 20 May 1991, respondents filed a suit for reconveyance of
real property and cancellation of TCT No. 281115 with damages
against petitioners before Branch 80 of the Quezon City RTC.
On 5 September 1994, the trial court rendered a decision,
dismissing the complaint and ordering respondents to pay jointly and
severally defendants therein, now petitioners, the amount of Ten
Thousand Pesos (P10,000,00) as reasonable attorneys fees and to pay
the costs of the suit.[19]
In dismissing the case, the trial court held that:
[the] TCT No. 281115 (Exh. 4) was validly issued pursuant to the
Absolute Deed of Sale dated January 25, 1978 (Exh. 3) duly registered
at the Office of the Registry of Deeds of Quezon City. The same
became indefeasible and conclusive upon the expiration of one year
period from its entry as it was not attacked directly by anyone due to
fraud.[20]
On appeal, the Court of Appeals reversed the decision and held
that an implied trust arose in favor of respondents over the disputed
property by virtue of the Pagpapahayag dated 10 February 1978. It
held that the action for reconveyance of property was properly filed
by respondents against petitioners.[21]
Petitioners motion for reconsideration[22] having been denied
by the appellate court in a Resolution[23] promulgated on 28 June
2000, the case was elevated to this Court by way of a petition for
review.
Petitioners in their petition for review[24] contend that the
Court of Appeals acted with grave abuse of discretion[25] when it
reversed the RTC decision and that the error, if not corrected, will
cause them great injustice.[26] They claim that the Court of Appeals
erred when it ordered the reconveyance by petitioners to
respondents of the property covered by TCT No. 281115 and declared
the cancellation of said title[27].
The contention is without merit. The Court of Appeals did not
err in ordering the reconveyance of the property in dispute.
As found by the appellate court, the trial court failed to
consider the law on trusts despite the existence of uncontroverted
evidence establishing the creation of a trust as it anchored its decision
solely on the indefeasibility of title aspect. Although it recognized the
instruments creating the trust, the trial court nevertheless held that:
In the document entitled Pagpapahayag (Exh. B), although the
defendant Felisa Gomez stipulated therein that she will not claim
ownership over the lot covered by TCT No. 41717, even in the event
that the same will be transferred in her name, the same does not bar
her totally from becoming as owner because of the exception
provided therein that she can still own the lot or part thereof in
accordance with the wishes of the deceased which was clearly
manifested when the Absolute Deed of Sale of the half of the lot
covered by TCT No. 41717 was executed between the deceased and
his spouse Purisima Duyan (plaintiff) and the defendants.[28]
While citing the provisions of the Pagpapahayag dated 5 May
1974 and concluding therefrom that Feliza was not actually prohibited
from claiming ownership over the property, the trial court completely
disregarded and missed the import of the other Pagpapahayag dated
10 February 1978.
In express terms, Feliza undertook in the
subsequent Pagpapahayag to convey the property subject of the
fictitious deed of sale to her own nephews and nieces who are the
children of her brother Eulogio. To reiterate, Feliza stated At pag
mangyari ang nasabing hatian ng lote, ay aming ilalagay agad sa
pangalan ng aming mga pamangkin na sina Salome V. Duyan, Divina
V. Duyan, Cresencia V. Duyan, Reulgina V. Duyan, Domincia, Rodrigo
at Avencio C. Duyan.[29] It must be noted that this Pagpapahayag was
entered into by Eulogio and Feliza after the supposed sale of the
property on 25 January 1978. Based on the clear provisions of this
document, the intent of the siblings to create a trust was manifest
with Eulogio as the trustor, Feliza as the trustee and Eulogios children
as the beneficiaries or the cestui qui trust[30] of the res[31] which was
the disputed property. This is based on the provision of the law on
trusts which states that:
Art. 1440. A person who establishes a trust is called the trustor; one in
whom confidence is reposed as regards property for the benefit of
another person is known as the trustee; and the person for whose
benefit the trust has been created is referred to as the beneficiary.[32]
However, the trust created was not merely implied as held by
the Court of Appeals but belongs to the express kind. Based on the
provisions of the Civil Code and jurisprudence, Express trusts are
those which the direct and positive acts of the parties create, by some
writing, deed or will, or words evincing an intention to create a
trust.[33]
In this case, the provisions of the Pagpapahayag dated 10
February 1978 left no room for doubt. It was clearly intended therein
by Eulogio and Feliza that the property subject of the sale will
subsequently be placed by the latter in the name of respondents, thus
creating a trust relationship over the property in dispute.
Even if the word trust was not expressly used by the signatories
to the 10 February 1978 Pagpapahayag and the document did not
expressly state that a trust was being established by reason thereof,
the establishment of an express trust cannot be discounted. Under
the Civil Code, No particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly intended.[34] In a
decision penned by Justice Paras, this Court held that under the law
on Trusts, it is not necessary that the document expressly state and
provide for the express trust, for it may even be created orally, no
particular words are required for its creation (Art. 1444, Civil
Code).[35] The Pagpapahayag dated 10 February 1978 having been
freely entered into by Eulogio and Feliza, it had the force of law
between them. It was therefore incumbent upon Feliza as trustee to
comply with the provisions of the instrument and have the subject
property registered in the names of her nephews and nieces.
Petitioners subsequent act of registering the disputed property
in their own names and resisting the action for reconveyance later
filed by respondents was clearly a betrayal of the provisions of the
express trust created by the 10 February 1978 Pagpapahayag. By
these actions, petitioners not only failed to comply with the provisions
of the Pagpapahayag, but actually circumvented them.
It is worthy of note that petitioners never denied the existence,
authenticity and due execution of the 10 February 1978
Pagpapahayag as they merely objected to the purpose of its
presentation.[36] As held by the appellate court:
Neither refutation nor denial of the existence of such document exist
in the records of the case at bar. Particularly, Feliza did not even raise
any objection as to the due execution and authenticity of the
Pagpapahayag dated 10 February 1978. In relation thereto, it is
worthy to note that an objection as to the purpose of its presentation
is not tantamount to an objection as to the authenticity and due
execution of the document. In view of the absence of such objection,
the GOMEZES as signatories thereto, are deemed bound by the
stipulations therein.[37]
A trust is sacred and inviolable. The courts have therefore
shielded fiduciary relations against every manner of chicanery or
detestable design cloaked by legal technicalities.[38]Considering this
pronouncement of the Supreme Court and the betrayal by petitioners
of the provisions of the Pagpapahayag creating the trust in this case,
the Court of Appeals rightly ordered the reconveyance of the disputed
property to respondents and the cancellation of TCT No. 21885.
Moreover, petitioners admitted in the Pagpapahayag itself that
the 25 January 1978 sale was fictitious. This is evident by the use of
the phrase conwaring pagbibili[39] which means simulated or fictitious
sale. Thus, petitioners are estopped from claiming or asserting
ownership over the subject property based on the 25 January 1978
deed of sale. Felizas admission in the said Pagpapahayag of the falsity
of the sale is deemed conclusive upon her and her co-petitioner
Eugenio Gomez. Under the Civil Code, Through estoppel an admission
or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying
thereon.[40] That admission cannot now be denied by Feliza as against
Eulogio and his successors-in-interest, the latter having relied upon
her representation.
Petitioners argue that the action for reconveyance filed by
respondents against them is not proper, the latter not being the
owners of the property in question.[41] Invoking the 25 January 1978
deed of sale despite Felizas admission adverted to above that such
sale was fictitious, petitioners assert that they are the owners of the
subject property. They claim that the best proof of ownership of a
piece of land is the certificate of title, and the TCT being in their name,
they are the rightful owners thereof.[42] They further argue that based
on the case ofDela Pea vs. Court of Appeals[43] among others,
reconveyance is a remedy granted only to the owner of the property
alleged to be wrongfully titled in anothers name.[44]
The argument begs the question. Reconveyance is precisely the
proper action for respondents to take against petitioners since the
former are claiming that they are the rightful owners of the property
in question, not petitioners. By filing an action for reconveyance, a
party seeks to show that the person who secured the registration of
the questioned property is not the real owner thereof.[45]
Petitioners cannot rely on the registration of the disputed
property and the corresponding issuance of a certificate of title in
their name as vesting ownership on them simply because an express
trust over the property was created in favor of respondents. It has
been held that a trustee who obtains a Torrens title over the property
held in trust by him for another cannot repudiate the trust by relying
on the registration.[46]
The law safeguards the rightful partys interest in titled land
from fraud and improper technicalities by allowing such party to bring
an action for reconveyance of whatever he has been deprived of as
long as the property has not been transferred or conveyed to an
innocent purchaser for value.[47] The action while respecting the
registration decree as incontrovertible, seeks to transfer or reconvey
the land from the registered owner to the rightful owner.[48] As this
Court held in the case of Escobar vs. Locsin, The Torrens system was
never calculated to foment betrayal in the performance of a trust.[49]
In a further effort to bolster the claim that they own the
property in dispute, petitioners attempt to introduce new evidence
annexed to their petition in the form of a purported declaration made
by Eulogio dated 19 February 1979.[50] The declaration purports to
state that the previous instruments entered into by him and the
petitioners are void because he had already sold the lot to
them.[51] This declaration, although annexed to the Petition for Review
appears nowhere in the records of the trial court and the appellate
court. This is a piece of factual evidence which should have been
presented before the trial court to be considered and to allow
respondents the opportunity to rebut it or to present evidence to the
contrary. The Rules of Court specifically provides that The court shall
consider no evidence which has not been formally offered[52] The
alleged declaration not having been formally offered in evidence is
deemed to be a mere scrap of paper which has no evidentiary value.
Lastly, petitioners contend that the conflict between the
decision of the appellate court and that of the trial court provides this
Court with a ground to review the decisions of both courts.[53] That
may be true but the circumstance does not suffice to warrant the
reversal of the Court of Appeals Decision. Quite the contrary, the
undisputed facts and the applicable law ineluctably support the
conclusion that the appellate court did not commit any reversible
error.
WHEREFORE, the petition is DENIED due course and the
Decision of the Court of Appeals is AFFIRMED. Costs against
petitioners.
SO ORDERED.
Puno, (Chairman), Tinga, Callejo, Sr., and Chico-Nazario,
JJ., concur.
 FIRST DIVISION
[G.R. No. 147863. August 13, 2004]
PROSPERO RINGOR, , vs. RINGOR et al, respondents.
DECISION
QUISUMBING, J.:
Petitioners seek the review of the Decision[1] dated November
27, 2000 of the Court of Appeals in CA-G.R. CV No. 48581 and
its Resolution,[2] dated April 24, 2001, denying the subsequent motion
for reconsideration. The Court of Appeals affirmed the decision of the
Regional Trial Court (formerly the Court of First Instance) of Dagupan
City, Branch 43, in favor of herein respondents, for partition and
reconveyance of land with damages.
The controversy involves lands in San Fabian, Pangasinan,
owned by the late Jacobo Ringor. By his first wife, Gavina Laranang, he
had two children, Juan and Catalina. He did not have offsprings by his
second and third wives. Catalina predeceased her father Jacobo who
died sometime in 1935, leaving Juan his lone heir.
Juan married Gavina Marcella. They had seven (7) children,
namely: Jose (the father and predecessor-in-interest of herein
petitioners), Genoveva, Felipa, Concordia, Agapito, Emeteria and
Espirita. Genoveva and Agapito are represented in this case by Teofilo
Abalos and Marcelina Ringor, their respective children. Espirita is
represented by her children, Avelina, Cresencia and Felimon Almasen.
Jacobo applied for the registration of his lands under the
Torrens system. He filed three land registration cases alone, with his
son Juan, or his grandson Jose, applying jointly with him.
The first application, docketed as Expediente 241, G.L.R.O.
Record No. 13152 was applied for alone by Jacobo. While Jacobo was
the only applicant in Expediente 241, on November 22, 1921, in
Decree No. 119561, Parcels 1 and 2 of the lands
in Expediente 241 were adjudicated to Jacobo and his son, Juan, in
equal shares as pro-indiviso co-owners.[3] On March 6, 1922, OCT No.
23689 was issued in the names of Jacobo and Juan.[4] With Jacobos
thumbmark, in a Compraventa dated November 6, 1928, the one-half
() undivided interest of Jacobo in the said Parcels 1 and 2 was sold and
transferred to Jose. The OCT was eventually cancelled and replaced
by TCT No. 15918, dated November 6, 1928. The sale to Jose was
registered only on February 15, 1940.[5]
Decree No. 119562 awarded full ownership of Parcel 3 to
Jacobo.[6] Thus, OCT No. 23690 pertaining to Parcel 3, was issued in
Jacobos name.[7] By another Compraventa also dated November 6,
1928, and with the same circumstances as the Compraventa in Parcels
1 and 2, the entire interest of Jacobo in Parcel 3 was likewise sold and
transferred to Jose. Thereafter,TCT No. 5090 was issued in the name
of Jose.[8] All the lands declared to Jacobo in Expediente 241 were
allegedly sold to Jose for P6,000.[9]
In the second application, Expediente 244, G.L.R.O. Record No.
13168, Jacobo named Jose as the applicant. In Decree No. 65500, the
five (5) parcels of land in Expediente 244 were adjudicated to Jose as
a donacion de su abuelo (donation of his grandfather).[10] On April 18,
1918, OCT No. 18797 was issued exclusively to Jose.[11]
The third application docketed as Expediente 4449, G.L.R.O.
Record No. 23643, was filed in the names of Jacobo and his only son
Juan.[12] It covered three parcels of land. Juan died on July 16, 1922, a
year before the decision of the land registration court was issued. On
October 10, 1923, in Decree No. 147191, half of Parcel 1 was
adjudicated to Jacobo and the other half to Jose and later, three-
fourths () of parcels 2 and 3 to Jacobo and one-fourth () to
Jose.[13] Although Juan was one of the named applicants, it later
appeared that Joses name was substituted for Juans name because of
an erroneous information that Jose was the only successor-in-interest
of Juan.[14] Thus, on February 29, 1924, OCT Nos.
25885 and 25886 were issued in the names of Jacobo and Jose
respectively.[15]
Subsequently, in a Compraventa dated November 3, 1928,
Jacobo allegedly sold and transferred to Jose his one-half () undivided
interest in Parcel 1 covered by OCT No. 25885. Jacobos thumbmark
appeared on the Compraventa.[16] These lands are now covered
by TCT No. 15916, in the name of petitioner corporation, Heirs of Jose
M. Ringor, Inc., organized after the initiation of the instant case.[17] By
another Compraventa also dated November 3, 1928, the three-
fourths () undivided interests of Jacobo in Parcels 2 and 3 covered by
OCT No. 25886 were likewise sold and transferred to Jose.
The Compraventas were duly registered sometime in 1940. The OCTs
were cancelled and new TCTs were issued in the name of Jose. Jacobo
allegedly sold to Jose for P800 all the lands declared to him
in Expediente 4449.[18]
During trial, witnesses attested that even after the decisions in
the three land registration cases and the Compraventas, Jacobo
remained in possession of the lands and continued administering
them as he did prior to their registration. He unfailingly gave a share
of the produce to all the 7 children of his son Juan. According to
witness Julio Monsis,[19] Jacobo did not partition the lands since the
latter said that he still needed them.[20] When Jacobo died on June 7,
1935, the lands under the three land registration applications,
including those whichpetitioners sought to partition in their
counterclaim before the trial court, remained undivided. Jose, as the
eldest grandchild, assumed and continued the administration of the
lands.[21] He also conscientiously gave his 5 younger sisters and only
brother Agapito, their share in the produce and income from the
lands.[22] Herein respondents claim they repeatedly asked Jose for
partitioning of the land; however, every time they did, Jose always
answered that it was not going to be easy because there would be big
and small shares.[23] Respondents explained that they did not
zealously press for the immediate partition of the lands because Jose
constantly assured them that he would never cheat them and because
they respected him highly.[24]
Jose died on April 30, 1971. Respondents demanded from Joses
children, herein petitioners, the partition and delivery of their share in
the estate left by Jacobo and under Joses administration. The
petitioners refused and attempts at amicable settlement failed.[25] On
March 27, 1973, respondents filed a Complaint for partition and
reconveyance with damages, docketed as Civil Case No. D-3037.
An Amended Complaint was admitted by the lower court in its Order
of August 6, 1973.[26]
In their Complaint, herein respondents claimed that (1) they
are all grandchildren and/or great grandchildren of Jacobo, who left
intestate the disputed lands with a total area of 322,775 sq. m., all
located in San Fabian, Pangasinan, and declared for tax purposes in
the name of Jose Ringor; (2) that the late Jose Ringor had always been
the administrator and trustee of Jacobo;[27] (3) that after Jacobos
death, they asked for their shares of the intestate properties but was
refused; and (4) that Jose as trustee and overseer of all these
properties was answerable to the respondents for their just shares in
the intestate properties of Jacobo.[28] They asked for (a) the partition
of their corresponding shares, the cancellation of OCT No. 18797
issued in the name of Jose Ringor under Expediente 244 and that
these be subdivided among the seven children of Jose Ringor, and the
six children and grandchildren of Juan Ringor; (b) the payment to
plaintiffs of whatever maybe found as chargeable to the late Jose
Ringor as trustee, as well as liability for administering these properties
from the time of Joses death up to the time the case is terminated;
and (c) the payment of attorneys fees, surveyors expenses and cost of
the suit.[29]
In their Answer, herein petitioners insisted that they rightfully
own and possess the disputed lands. They alleged that their father
acquired legitimate title to and remained in continuous,
uninterrupted and exclusive possession and enjoyment of the said
parcels of land in the concept of an owner at varying times since 1917,
1923, and 1928, as evidenced by the certificates of title issued more
than thirty (30) years ago and in some cases more than fifty (50) years
ago, before the present suit was instituted by respondents. They
claimed that Jacobo sold the parcels of land under Expediente Nos.
4449 and 241 to Jose for valuable consideration on November 3 and
6, 1928, respectively, evidenced by notarial deeds of sale duly
registered in the Registry of Deeds of Pangasinan. The other disputed
lands sought to be divided, petitioners assured, were held by Jose as
exclusive owner.
In their Amended Answer, petitioners averred that the parcels
of land in the exclusive name of Jose are his exclusive properties
acquired by him either by inheritance, homestead patent, or
purchase. They claimed that Jose had long acquired indefeasible and
incontrovertible title to the said properties in accordance with the
provisions of the Land Registration Act. These are evidenced by OCT
No. 18797 issued March 6, 1919 for Lots Nos. 1, 2, 3, 4, 5, Plan Psu-
6099; OCT No. 23797 on May 6, 1922 for Plan Psu-15467; TCT No.
5090 issued December 12, 1929 for Lot No. 3, Plan Psu-6095; TCT No.
15918 issued February 15, 1940 for Lots Nos. 1 & 2, Plan Psu-6095
Amd; TCT No. 15917 on February 15, 1940 for Lots Nos. 1 & 2, Plan
Psu-35491; and TCT No. 15916 issued February 15, 1940 for Plan Psu-
31271, now TCT No. 93019 issued November 22, 1971. Further,
according to petitioners, whatever cause or right of action, if any, the
respondents had with respect to the properties owned and possessed
by them and their late father, including those based on constructive
trust, it had long been barred by prescription and laches and/or prior
judgments since it is an incontrovertible fact that Jose had been, for
more than thirty (30) years and in some cases for more than fifty (50)
years, the exclusive registered owner of the registered
properties.[30] Lastly, petitioners asserted that respondents claim of
express trust concerning the properties in question could not be
proved by parol evidence.
While trial of the case was in progress, Julio Monsis, alleging he
was the only child of Macaria Discipulo and Jacobo, filed a Complaint
in Intervention. So did Leocadia Ringor, alleging she was the only child
of Jacobo with Marcelina Gimeno. When Julio died on February 3,
1977, he was survived by his wife Felipa and their legitimate children
Maria, Federico, Eusebio, Paciencia, Panfilo and Fermin, all surnamed
Monsis. On July 8, 1982, herein respondents filed an Amendment to
their Amended Complaint impleading as additional party-defendants,
the Heirs of Jose M. Ringor, Inc.[31]
On February 10, 1995, the RTC decided in favor of respondents.
The dispositive portion of the Decision set forth its judgment:
(a) Declaring the 7 children of Juan L. Ringor who are the
grandchildren of Jacobo Ringor, namely: Jose, Genoveva, Felipa,
Concordia, Agapito, Emeteria and Espirita, all surnamed Ringor, as
pro-indiviso co-owners of all the lands covered by Expediente Nos.
241, 244 and 4449 described in pages 2, 3, 4 and 5 of this decision
brought under the Land Registration Act and now covered by TCT No.
15918 (Lots 1 and 2) and TCT 5090 (Lot No. 3) in the name of Jose
Ringor (Expediente 241); TCT No. 15916 in the name of defendant
Heirs of Jose M. Ringor, Inc. (Lot 1, Expediente 2449); TCT No. 15917
(Lots 2 and 3, Expediente 4449); and TCT No. 18797 (Lots 1, 2, 3, 4 and
5, Expediente 244), in the name of Jose Ringor;
(b) Ordering the partition of the said parcels of land covered by TCT
Nos. 15918, 5090, 15916, 15917 and 18797, all of the Register of
Deeds of Pangasinan, among Jose, Genoveva, Felipa, Concordia,
Agapito, Emeteria and Espirita, all surnamed Ringor into 7 equal parts;
(c) Ordering defendants to render an accounting to the plaintiffs of all
the income, produce and rents on these parcels of land from 1973
until the respective shares of the plaintiffs are physically and
peacefully delivered to each of them;
(d) Ordering defendants jointly and severally to pay the plaintiffs the
sum of P50,000.00 for attorneys fees;
(e) Dismissing the Complaints-in-Intervention of Julio Mon[sis] and
Leocadia Ringor;
(f) On the Counterclaim, ordering the partition in seven (7) equal
shares the parcels of land described in paragraph 34 (a and b), pages
14 and 15 of this decision, among Jose, Genoveva, Felipa, Concordia,
Agapito, Emeteria and Espirita, all surnamed Ringor.
(g) Ordering the defendants to pay the costs of suit.
SO ORDERED.[32]
The trial court concluded that Jacobo created an express trust
over his entire property in favor of his grandchildren. It found that
Jose held the subject lands as co-owner and trustee of the express
trust. The trial court held that the notarial deeds of sale executed
between Jacobo and Jose in Expediente 241 were false and simulated.
It noted that Jose registered the deed of sale twelve years after their
execution and five years after Jacobos death. More important, the
trial court declared that Jacobo continued to occupy and exercise acts
of ownership over the same parcels of land until his death despite the
supposed sale to Jose.
On Expediente 244, the trial court observed that the document
evidencing that Jacobo donated the lands therein to Jose was never
presented to the registration court, nor was any explanation given for
the failure to register the alleged donation. Hence, the donation was
declared invalid.
On Expediente 4449, the trial court observed that although the
applicants were Jacobo and Juan, the land was erroneously
adjudicated to Jacobo and Jose because it was made to appear that
Jose was the only child who succeeded Juan, who died a year before
the application was adjudicated, when in fact Juan had seven children.
Jacobo knew of this error, yet he did nothing to correct it.
The trial court concluded that all these incidents and
circumstances served as indicia that Jacobo cared little if the lands
were in his name or someone elses. As far as he was concerned, all
these lands belonged to him such that notwithstanding the
subsequent compraventas, he continued to possess and administer
the lands and all the profits from them were at his disposal. Thus, the
trial court continued, from the acts of Jacobo and his full exercise of
dominion over the lands until his death, it could be deduced that
the compraventas were without consideration and this was why
the compraventas were not registered during Jacobos lifetime. The
trial court noted that even after the registration of the compraventas,
until his own death, Jose continued Jacobos practice of sharing the
produce of the land with his siblings, a recognition that even Jose
considered that his siblings were beneficial co-owners of the lands
under his care.[33]
The trial court reasoned that despite the absence of a
document proving the express trust, the same was proven by parol
evidence. The trial court explained that the prohibition in Article
1443[34] of the New Civil Code that no express trust concerning an
immovable or any interest therein may be proved by parol evidence is
a prohibition for purposes of presenting proof on the matter, but it
could be waived by a party.[35] It went on to say that the failure to
object to parol evidence during trial and the cross-examination of the
witnesses is a waiver of the prohibition. Furthermore, it said that Jose,
as trustee, did not repudiate the trust, such that the trust remained,
and since the trust continued to exist, an action to compel the trustee
to convey the properties has not prescribed nor is it barred by
laches.[36]
Before the Court of Appeals, petitioners contended that the
lower court erred when (1) it ruled that Jacobo Ringor constituted an
express trust over the disputed properties abovecited in favor of
respondents as the beneficiaries and with Jose Ringor as trustee; and
(2) it gave weight to the oral evidence of herein respondents to prove
the existence of an express trust in their favor.
The Court of Appeals affirmed the lower courts decision.
The Motion for Reconsideration of petitioners was also denied.
Now before us the petitioners, in their Memorandum, raise the
following issues:
1. WHETHER OR NOT THERE IS A DOCUMENT, INSTRUMENT, DEED OR ANY
WRITING CREATING AN EXPRESS TRUST AND FORMING PART OF THE
EVIDENCE ON RECORD WHICH SUPPORTS THE FINDINGS OF THE TRIAL
COURT, AS THE SAME WAS AFFIRMED BY THE COURT A QUO, THAT
AN EXPRESS TRUST WAS ESTABLISHED BY THE LATE JACOBO RINGOR
OVER THE PARCELS OF LAND IN QUESTION IN FAVOR OF THE
RESPONDENTS AS THE BENEFICIARIES, WITH JOSE RINGOR AS THE
TRUSTEE THEREOF (AND CO-BENEFICIARY AT THE SAME TIME).
2. WHETHER OR NOT THE TRIAL COURTS RULINGS AS THE SAME WERE
AFFIRMED ON APPEAL BY THE COURT A QUO, WERE ANCHORED ONLY
ON PAROL EVIDENCE.
3. WHETHER OR NOT THE ADMISSION OF PAROL EVIDENCE TO PROVE
EXPRESS TRUST AS PROSCRIBED BY ART. 1443 OF THE NEW CIVIL
CODE CAN BE WAIVED.
4. WHETHER OR NOT THE COURT A QUO ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN RULING THAT PETITIONERS VALIDLY
WAIVED THEIR OBJECTION TO THE ADMISSION BY THE TRIAL COURT
OF PAROL EVIDENCE AS PROOF OF THE ESTABLISHMENT OF AN
EXPRESS TRUST.
5. WHETHER OR NOT THE COURT A QUO ERRED IN AFFIRMING THE TRIAL
COURTS RULING ADMITTING AND GIVING WEIGHT AND
CONSIDERATION TO THE PAROL EVIDENCE ON RECORD TO PROVE THE
EXISTENCE OF AN EXPRESS TRUST.
6. WHETHER OR NOT THE FACTUAL FINDINGS OF THE TRIAL COURT WHICH
WERE AFFIRMED IN TOTO BY THE COURT A QUO ARE SUPPORTED BY,
OR CONTRARY TO, THE EVIDENCE ON RECORD.
7. WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS ERRORS
AND GRAVE ABUSE OF DISCRETION IN VIRTUALLY ORDERING THE
NULLIFICATION AND/OR DECLARING THE NULLITY OF --- ALL THE
TITLES (TCT NO. 5090, TCT NO. 15918, OCT NO. 18797, TCT NO. 1597,
AND TCT NO. 93019) OF JOSE RINGOR AND HIS SUCCESSORS-IN-
INTEREST (THE PETITIONERS HEREIN) AND DIVESTING THEM OF THEIR
EXCLUSIVE OWNERSHIP OVER THE PARCELS OF LAND IN QUESTION;
THE DECISIONS OF THE LAND REGISTRATION COURTS
IN EXPEDIENTE 244 AND 4449; THE DONATION REFERRED TO IN THE
DECISION IN EXPEDIENTE 244; AND THE FOUR (4) DULY
NOTARIZEDCOMPRAVENTAS EXECUTED BY JACOBO RINGOR IN FAVOR
OF JOSE RINGOR COVERING THE PARCELS OF LAND DESCRIBED
THEREIN, AND --- WHETHER OR NOT THE COURT A QUO ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING THE
SUBJECT PARCELS OF LAND AS BELONGING TO THE INTESTATE ESTATE
OF JACOBO RINGOR AND UNDER THE CO-OWNERSHIP OF JOSE
RINGOR AND THE RESPONDENTS, AND IN ORDERING THEIR
PARTITION AMONG THE SEVEN CHILDREN OF JUAN RINGOR, IN
VIOLATION OF THE APPLICABLE PROVISIONS OF THE CIVIL CODE, AND
THE PRINCIPLES OF RES JUDICATA AND THE INDEFEASIBILITY OF
A TORRENSTITLE.
8. WHETHER OR NOT RESPONDENTS ACTION WAS ALREADY BARRED BY
PRESCRIPTION, BOTH ACQUISITIVE AND EXTINCTIVE, AND LACHES.[37]
Briefly stated, the issues to be resolved in this petition are: (1)
Were the factual findings of the lower and appellate courts supported
by evidence on record? (2) Was there a valid express trust established
by Jacobo Ringor? (3) May parol evidence be used as proof of the
establishment of the express trust? (4) Did the court in effect nullify
the Torrens titles over the disputed parcels of land? (5) Were
respondents action barred by prescription and laches?
We shall now address these issues together.
At the outset, petitioners urge this Court to review the factual
findings of the case. It is a well-established principle, however, that in
an appeal via certiorari only questions of law may be raised.[38] The
findings of fact of the Court of Appeals especially when not at
variance with those of the trial court may not, generally be reviewed
by this Court. The findings of fact of the lower court are conclusive on
us, absent any palpable error or patent arbitrariness. In this case, we
find no tenable route but to leave the findings of fact of the lower
courts untouched, and move on to the resolution of the other issues.
Petitioners main contention is that the trial and appellate
courts had no basis to conclude that Jacobo constituted an express
trust because respondents did not present any deed, instrument or
document expressly declaring that a trust was constituted. Petitioners
anchor their assertion on the Civil Code, particularly their
interpretation of Articles
1440,[39] 1441,[40]1443,[41] 1444,[42] 1445,[43] and 1446,[44] as they point
out that in these provisions, for an express trust over an immovable to
exist, four elements must be present, namely: (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.
Petitioners aver that these elements are indispensable for an express
trust to exist. Petitioners then lament that respondents did not
present during trial or even attach to the records of the case, any
deed, instrument or document that Jacobo intended to create a trust.
Petitioners, in their petition, insist that the intent to create a trust
must be in writing; and they claimed that they objected, from the
beginning, to the introduction of any oral testimony to prove the
establishment of an express trust.
Respondents, for their part, argue that Jacobo created an
express trust. Respondents cite the three applications for registration
of the lands referred to the Expedientes 241, 244 and4449 and the
three Compraventas as documentary proofs that an express trust was
created by Jacobo. According to them, this conclusion can be gleaned
clearly when Jacobo exercised acts of ownership over all the disputed
lands even after the alleged donation and deeds of sale in favor of
Jose, and when Jacobo religiously gave shares of the income and
produce of the disputed lands to the respondents, a practice Jose
continued until three years before his death.
Express trusts, sometimes referred to as direct trusts, are
intentionally created by the direct and positive acts of the settlor or
the trustor by some writing, deed, or will, or oral declaration.[45] It is
created not necessarily by some written words, but by the direct and
positive acts of the parties. No particular words are required, it being
sufficient that a trust was clearly intended.[46] Unless required by a
statutory provision, such as the Statute of Frauds, a writing is not a
requisite for the creation of a trust.[47] Such a statute providing that no
instruments concerning lands shall be created or declared unless by
written instruments signed by the party creating the trust, or by his
attorney, is not to be construed as precluding a creation of a trust by
oral agreement, but merely as rendering such a trust
unenforceable.[48] Contrary to the claim of petitioners, oral testimony
is allowed to prove that a trust exists. It is not error for the court to
rely on parol evidence, - - i.e., the oral testimonies of witnesses
Emeteria Ringor, Julio Monsis and Teofilo Abalos - - which the
appellate court also relied on to arrive at the conclusion that an
express trust exists. 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.[49]
However, an inference of the intention to create a trust, made
from language, conduct or circumstances, must be made with
reasonable certainty.[50] 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.[51] In the present case, credible
witnesses testified that (1) the lands subject
of Expedientes 241 and 4449 were made and transferred in the name
of Jose merely for convenience since Juan predeceased Jacobo; (2)
despite the Compraventas, transferring all the lands in Joses name,
Jacobo continued to perform all the acts of ownership including
possession, use and administration of the lands; (3) Jacobo did not
want to partition the lands because he was still using them; (4) when
Jacobo died, Jose took over the administration of the lands and
conscientiously and unfailingly gave his siblings their share in the
produce of the lands, in recognition of their share as co-owners; and
(5) Jose did not repudiate the claim of his siblings and only explained
upon their expression of the desire for partitioning, that it was not
going to be an easy task.
From all these premises and the fact that Jose did not repudiate
the claim of his co-heirs, it can be concluded that as far as the lands
covered by Expediente Nos. 241 and 4449 are concerned, when
Jacobo transferred these lands to Jose, in what the lower court said
were simulated or falsified sales, Jacobos intention impressed upon
the titles of Jose a trust in favor of the true party-beneficiaries,
including herein respondents.
Under the doctrine of partial performance recognized in this
jurisdiction, the objection to the oral character of a trust may be
overcome or removed where there has been partial performance of
the terms of the trust as to raise an equity in the promisee.[52] A
trustee may perform the provisions of the trust, and if he does, the
beneficiary is protected in benefits that he has received from such
performance.[53] Thus, when a verbal contract has been completed,
executed or partially consummated, its enforceability will not be
barred by the Statute of Frauds, which applies only to an executory
agreement.[54] Noteworthy, despite the compraventas transferring the
lands in his name, Jose unfailingly gave his siblings their share of the
produce of the lands. Furthermore, not only did he fail to repudiate
the trust, he also assured his co-heirs that it was the inconvenience of
partitioning that kept him from transferring the shares of his siblings
to them. Accordingly, with respect to the lands covered
by Expediente Nos. 241 and 4449, an express trust exists with Jose
Ringor as trustee in favor of all the heirs of Jacobo Ringor. As far as
prescription or laches are concerned, they pose no hindrance or
limitation to the enforcement of an express trust.[55]
Finally, on the lands covered in Expediente 244, we note that as
a donacion de su abuelo, the donation impaired the hereditary rights
of succession of Joses co-heirs. Nevertheless, these were transferred
to Jose by final judgment of the land registration court. Despite the
registration in Joses name, Jose did not take possession over them
from the date of registration to the time of Jacobos death. Instead,
while alive, Jacobo retained possession, and continued the
administration of the lands. Considering then these circumstances,
Article 1449 of the New Civil Code on implied trusts is the pertinent
law. It provides that, [t]here is also an implied trust when a donation
is made to a person but it appears that although the legal estate is
transmitted to the donee, he nevertheless is either to have no
beneficial interest or only a part thereof. Article 1449 creates a
resulting trust where the donee becomes the trustee of the real
beneficiary.[56] Generally, resulting trusts do not prescribe except
when the trustee repudiates the trust.[57] Further, the action to
reconvey does not prescribe so long as the property stands in the
name of the trustee.[58] To allow prescription would be tantamount to
allowing a trustee to acquire title against his principal and true
owner.[59] Here, Jose did not repudiate the trust, and the titles of the
disputed lands are still registered in Joses name or in the name of the
Heirs of Jose M. Ringor, Inc.
Petitioners contend, however, that the court a quo virtually
nullified all the land titles in Joses name when it declared that the
disputed lands belong to the intestate estate of Jacobo and Jose and
his siblings were co-owners thereof. This, petitioners aver, violates the
principle of res judicata and the indefeasibility of the Torrens title.
Nothing is farther from the truth than this contention. A trustee
who obtains a Torrens title over a property held in trust for him by
another cannot repudiate the trust by relying on the registration.[60] A
Torrens Certificate of Title in Joses name did not vest ownership of
the land upon him. The Torrens system does not create or vest title. It
only confirms and records title already existing and vested. It does not
protect a usurper from the true owner.[61] The Torrens system was not
intended to foment betrayal in the performance of a trust.[62] It does
not permit one to enrich himself at the expense of another. Where
one does not have a rightful claim to the property, the Torrens system
of registration can confirm or record nothing.[63] Petitioners cannot
rely on the registration of the lands in Joses name nor in the name of
the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For
Jose could not repudiate a trust by relying on a Torrens title he held in
trust for his co-heirs.[64] The beneficiaries are entitled to enforce the
trust, notwithstanding the irrevocability of the Torrens title. The
intended trust must be sustained.
To recapitulate, we find no reversible error in the assailed
decision of the appellate court. We are in agreement in sustaining the
findings and conclusions of the court a quo. The trial court found in
favor of herein respondents claim that the deeds of sale that caused
the registration of the TCTs in Expedientes 241 and 4449 in Joses
name were invalid. The deeds were false, simulated and clearly
without consideration. The trial court also found that Jose owned only
about three hectares of land which he farmed, and he had no other
means for his alleged purchases. He was never in business, nor
gainfully employed in the government or in the private sector. Neither
were the children of Jose propertied nor employed.[65] In fine, we
sustain its findings on the invalidity of the deeds of sale for being
simulated and false.
As for the donations of the lands in Expediente 244, the basis of
which was an alleged donacion de su abuelo the trial court concluded
they were invalid donations because no deed of donation was ever
shown. The trial court noted that the documents evidencing the
donations were never presented for registration simply because there
was never a donation to Jose and because at the time the application
was filed, Jacobos only son, Juan, was still alive. The donation was
allegedly made merely to facilitate the registration of the lands in
Joses name.[66] As found by the trial court and sustained by the
appellate court, it was merely for convenience that Jacobo registered
the lands in the name of Jose. He did not intend to relinquish his
rights to the lands. His intention was clearly to keep the lands for
himself until his death, and it was to be understood that Jose was
merely a trustee. We are not inclined to disturb these findings and
conclusions of the trial court, sustained by the Court of Appeals,
which persuasively convince us that the transfers of the lands
in Expedientes 241 and 4449 were simulated sales, and inExpediente
244 the transfers were invalid donations.
WHEREFORE, the petition is DENIED for lack of merit. The
Decision dated November 27, 2000 of the Court of Appeals, affirming
the Decision of the Regional Trial Court, formerly the Court of First
Instance of Dagupan City, Branch 43, is hereby AFFIRMED. Costs
against petitioners.
SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila
THIRD DIVISION
ESTATE OF MARGARITA D. CABACUNGAN, represented by LUZ
LAIGO-ALI, Petitioner,
- versus -
MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT and
SPOUSES MARIO B. CAMPOS AND JULIA S. CAMPOS,
Respondents.
x--------------------------------------------------x
DECISION
PERALTA, J.:
This Petition for Review under Rule 45 of the Rules of Court
assails the October 13, 2006 Decision[1] of the Court of Appeals in CA-
G.R. CV No. 72371. The assailed decision affirmed the July 2, 2001
judgment[2] rendered by the Regional Trial Court of La Union, Branch
33 in Civil Case No. 1031-BG a complaint for annulment of sale of real
property, recovery of ownership and possession, cancellation of tax
declarations and damages filed by Margarita
Cabacungan,[3] represented by her daughter, Luz Laigo-Ali against
Marilou Laigo and Pedro Roy Laigo, respondents herein, and against
Estella Balagot,[4] and the spouses Mario and Julia Campos.
The facts follow.
Margarita Cabacungan (Margarita) owned three parcels of
unregistered land in Paringao and in Baccuit, Bauang, La Union, each
measuring 4,512 square meters, 1,986 square meters and 3,454
square meters. The properties were individually covered by tax
declaration all in her name.[5] Sometime in 1968, Margaritas son,
Roberto Laigo, Jr. (Roberto), applied for a non-immigrant visa to
the United States, and to support his application, he allegedly asked
Margarita to transfer the tax declarations of the properties in his
name.[6] For said purpose, Margarita, unknown to her other children,
executed an Affidavit of Transfer of Real Property whereby the subject
properties were transferred by donation to Roberto.[7] Not long after,
Robertos visa was issued and he was able to travel to the U.S. as a
tourist and returned in due time. In 1979, he adopted respondents
Pedro Laigo (Pedro) and Marilou Laigo (Marilou),[8] and then he
married respondent Estella Balagot.
In July 1990, Roberto sold the 4,512 sq m property in
Baccuit to the spouses Mario and Julia Campos for P23,000.00.[9] Then
in August 1992, he sold the 1,986 sq m and 3,454 sq m lots in
Paringao, respectively, to Marilou for P100,000.00 and to Pedro
for P40,000.00.[10] Allegedly, these sales were not known to Margarita
and her other children.[11]
It was only in August 1995, at Robertos wake, that
Margarita came to know of the sales as told by Pedro himself.[12] In
February 1996, Margarita, represented by her daughter, Luz,
instituted the instant complaint for the annulment of said sales and
for the recovery of ownership and possession of the subject
properties as well as for the cancellation of Ricardos tax
declarations. Margarita admitted having accommodated Robertos
request for the transfer of the properties to his name, but pointed out
that the arrangement was only for the specific purpose of supporting
his U.S. visa application. She emphasized that she never intended to
divest herself of ownership over the subject lands and, hence,
Roberto had no right to sell them to respondents and the Spouses
Campos. She likewise alleged that the sales, which were fictitious and
simulated considering the gross inadequacy of the stipulated price,
were fraudulently entered into by Roberto. She imputed bad faith to
Pedro, Marilou and the Spouses Campos as buyers of the lots, as they
supposedly knew all along that Roberto was not the rightful owner of
the properties.[13] Hence, she principally prayed that the sales be
annulled; that Robertos tax declarations be cancelled; and that the
subject properties be reconveyed to her.[14]
The Spouses Campos advanced that they were innocent
purchasers for value and in good faith, and had merely relied on
Robertos representation that he had the right to sell the property;
G.R. No. and
175073 that, hence, they were not bound by whatever agreement
entered by Margarita with her son. They posited that the alleged
Present: gross inadequacy of the price would not invalidate the sale absent a
CARPIO,*vitiation
J., of consent or proof of any other agreement. Further, they
VELASCO,noted
JR., J.,that
Chairperson,
Margaritas claim was already barred by prescription and
BRION,** laches owing to her long inaction in recovering the subject properties.
PERALTA,Finally,
and they believed that inasmuch as Roberto had already passed
SERENO,***
away,JJ. Margarita must have, instead, directed her claim against his
estate.[15]
Promulgated:
August 15, 2011 In much the same way, Marilou and Pedro,[16] who likewise
professed themselves to be buyers in good faith and for value,
believed that Margaritas cause of action had already been barred by
laches, and that even assuming the contrary, the cause of action was
nevertheless barred by prescription as the same had accrued way
back in 1968 upon the execution of the affidavit of transfer by virtue
of which an implied trust had been created. In this regard, they
emphasized that the law allowed only a period of ten (10) years within
which an action to recover ownership of real property or to enforce
an implied trust thereon may be brought, but Margarita merely let it
pass.[17]
On February 3, 1999, prior to pre-trial, Margarita and the
Spouses Campos amicably entered into a settlement whereby they
waived their respective claims against each other.[18] Margarita died
two days later and was forthwith substituted by her
estate.[19] On February 8, 1999, the trial court rendered a Partial
Decision[20] approving the compromise agreement and dismissing the
complaint against the Spouses Campos. Forthwith, trial on the merits
ensued with respect to Pedro and Marilou.
On July 2, 2001, the trial court rendered judgment
dismissing the complaint as follows:
WHEREFORE, in view of the foregoing considerations, the
complaint is DISMISSED.[21]
The trial court ruled that the 1968 Affidavit of Transfer
operated as a simple transfer of the subject properties from Margarita
to Roberto. It found no express trust created between Roberto and
Margarita by virtue merely of the said document as there was no
evidence of another document showing Robertos undertaking to
return the subject properties. Interestingly, it concluded that, instead,
an implied or constructive trust was created between the parties, as if
affirming that there was indeed an agreement albeit unwritten to
have the properties returned to Margarita in due time. [22]
Moreover, the trial court surmised how Margarita could
have failed to recover the subject properties from Roberto at any time
between 1968, following the execution of the Affidavit of Transfer,
and Robertos return from the United States shortly thereafter. Finding
Margarita guilty of laches by such inaction, the trial court barred
recovery from respondents who were found to have acquired the
properties supposedly in good faith and for value.[23] It also pointed
out that recovery could no longer be pursued in this case because
Margarita had likewise exhausted the ten-year prescriptive period for
reconveyance based on an implied trust which had commenced to run
in 1968 upon the execution of the Affidavit of Transfer.[24] Finally, it
emphasized that mere inadequacy of the price as alleged would not
be a sufficient ground to annul the sales in favor of Pedro and Marilou
absent any defect in consent.[25]
Aggrieved, petitioner appealed to the Court of Appeals
which, on October 13, 2006, affirmed the trial courts disposition. The
appellate court dismissed petitioners claim that Roberto was merely a
trustee of the subject properties as there was no evidence on record
supportive of the allegation that Roberto merely borrowed the
properties from Margarita upon his promise to return the same on his
arrival from the United States. Further, it hypothesized that granting
the existence of an implied trust, still Margaritas action thereunder
had already been circumscribed by laches. [26]
 Curiously, while the appellate court had found no implied
trust relation in the transaction between Margarita and Roberto,
nevertheless, it held that the ten-year prescriptive period under
Article 1144 of the Civil Code, in relation to an implied trust created
under Article 1456, had already been exhausted by Margarita because
her cause of action had accrued way back in 1968; and that while
laches and prescription as defenses could have availed against
Roberto, the same would be unavailing against Pedro and Marilou
because the latter were supposedly buyers in good faith and for
value.[27] It disposed of the appeal, thus:
WHEREFORE, the Appeal is hereby DENIED. The
assailed Decision dated 2 July 2001 of the Regional Trial Court of
Bauang, La Union, Branch 33 is AFFIRMED.
SO ORDERED.[28]
Hence, the instant recourse imputing error to the Court of
Appeals in holding: (a) that the complaint is barred by laches and
prescription; (b) that the rule on innocent purchaser for value applies
in this case of sale of unregistered land; and (c) that there is no
evidence to support the finding that there is an implied trust created
between Margarita and her son Roberto.[29]
Petitioner posits that the Court of Appeals should not have
haphazardly applied the doctrine of laches and failed to see that the
parties in this case are bound by familial ties.They assert that laches
must not be applied when an injustice would result from it. Petitioner
believes that the existence of such confidential relationship precludes
a finding of unreasonable delay on Margaritas part in enforcing her
claim, especially in the face of Luzs testimony that she and Margarita
had placed trust and confidence in Roberto.Petitioner also refutes the
Court of Appeals finding that there was a donation of the properties
to Roberto when the truth is that the subject properties were all that
Margarita possessed and that she could not have failed to provide for
her other children nor for means by which to support herself. It
reiterates that the transfer to Roberto was only an accommodation so
that he could submit proof to support his U.S. visa application.
On the issue of prescription, petitioner advances that it
runs from the time Roberto, as trustee, has repudiated the trust by
selling the properties to respondents in August 15, 1992; that hence,
the filing of the instant complaint in 1996 was well within the
prescriptive period. Finally, petitioner states that whether a buyer is in
good or bad faith is a matter that attains relevance in sales of
registered land, as corollary to the rule that a purchaser of
unregistered land uninformed of the sellers defective title acquires no
better right than such seller.
Respondents stand by the ruling of the Court of Appeals. In
their Comment, they theorize that if indeed Margarita and Roberto
had agreed to have the subject properties returned following the
execution of the Affidavit of Transfer, then there should have been a
written agreement evincing such intention of the parties. They note
that petitioners reliance on the Affidavit of Transfer as well as on the
alleged unwritten agreement for the return of the properties must
fail, simply because they are not even parties to it. Be that as it may,
the said document had effectively transferred the properties to
Roberto who, in turn, had acquired the full capacity to sell them,
especially since these properties could well be considered as Robertos
inheritance from Margarita who, on the contrary, did have other
existing properties in her name. Moreover, they believe that the
liberal application of the rule on laches between family members does
not apply in the instant case because there is no fiduciary relationship
and privity between them and Margarita.
There is merit in the petition.
To begin with, the rule is that the latitude of judicial review
under Rule 45 generally excludes factual and evidentiary reevaluation,
and the Court ordinarily abides by the uniform conclusions of the trial
court and the appellate court. Yet, in the case at bar, while the courts
below have both arrived at the dismissal of petitioners complaint,
there still remains unsettled the ostensible incongruence in their
respective factual findings. It thus behooves us to be thorough both in
reviewing the records and in appraising the evidence, especially since
an opposite conclusion is warranted and, as will be shown, justified.
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.[30] Trusts are either express or
implied.[31] Express or direct trusts are created by the direct and
positive acts of the parties, by some writing or deed, or will, or by oral
declaration in words evincing an intention to create a trust.[32]Implied
trusts also called trusts by operation of law, indirect trusts and
involuntary trusts arise by legal implication based on the presumed
intention of the parties or on equitable principles independent of the
particular intention of the parties.[33] They 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 inferred from the transaction by operation of law
basically by reason of equity.[34]
Implied trusts are further classified into constructive trusts and
resulting trusts. Constructive trusts, on the one hand, come about in
the main by operation of law and not by agreement or intention. They
arise 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.[35] Also known as trusts ex
maleficio, trusts ex delicto and trusts de son tort, they are construed
against one who by actual or constructive fraud, duress, abuse of
confidence, commission of a wrong or any form of unconscionable
conduct, artifice, concealment of questionable means, or who in any
way against equity and good conscience has obtained or holds the
legal right to property which he ought not, in equity and good
conscience, hold and enjoy.[36] They are aptly characterized as fraud-
rectifying trust,[37] imposed by equity to satisfy the demands of
justice[38] and to defeat or prevent the wrongful act of one of the
parties.[39] Constructive trusts are illustrated in Articles 1450, 1454,
1455 and 1456.[40]
On the other hand, resulting trusts arise from the nature or
circumstances of the consideration involved in a transaction whereby
one person becomes invested with legal title but is obligated in equity
to hold his title for the benefit of another. This is based on the
equitable doctrine that valuable consideration and not legal title is
determinative of equitable title or interest and is always presumed to
have been contemplated by the parties.[41] Such intent is presumed as
it is not expressed in the instrument or deed of conveyance and is to
be found in the nature of their transaction.[42] Implied trusts of this
nature are hence describable as intention-enforcing trusts.[43] Specific
examples of resulting trusts may be found in the Civil Code,
particularly Articles 1448, 1449, 1451, 1452 and 1453.[44]
Articles 1448 to 1456 of the Civil Code enumerate cases of
implied trust, but the list according to Article 1447 is not exclusive of
others which may be established by the general law on trusts so long
as the limitations laid down in Article 1442 are observed,[45] that is,
that they be not in conflict with the New Civil Code, the Code of
Commerce, the Rules of Court and special laws.[46]
While resulting trusts generally arise on failure of an
express trust or of the purpose thereof, or on a conveyance to one
person upon a consideration from another (sometimes referred to as
a purchase-money resulting trust), they may also be imposed in other
circumstances such that the court, shaping judgment in its most
efficient form and preventing a failure of justice, must decree the
existence of such a trust.[47] A resulting trust, for instance, arises
where, there being no fraud or violation of the trust, the
circumstances indicate intent of the parties that legal title in one be
held for the benefit of another.[48] It also arises in some instances
where the underlying transaction is without consideration, such as
that contemplated in Article 1449[49] of the Civil Code. Where
property, for example, is gratuitously conveyed for a particular
purpose and that purpose is either fulfilled or frustrated, the court
may affirm the resulting trust in favor of the grantor or
transferor,[50] where the beneficial interest in property was not
intended to vest in the grantee.[51]
Intention although only presumed, implied or supposed by
law from the nature of the transaction or from the facts and
circumstances accompanying the transaction, particularly the source
of the consideration is always an element of a resulting trust[52] and
may be inferred from the acts or conduct of the parties rather than
from direct expression of conduct.[53] Certainly, intent as an
indispensable element, is a matter that necessarily lies in the
evidence, that is, by evidence, even circumstantial, of statements
made by the parties at or before the time title passes.[54] Because an
implied trust is neither dependent upon an express agreement nor
required to be evidenced by writing,[55]Article 1457[56] of our Civil Code
authorizes the admission of parole evidence to prove their existence.
Parole evidence that is required to establish the existence of an
implied trust necessarily has to be trustworthy and it cannot rest on
loose, equivocal or indefinite declarations.[57]
Thus, contrary to the Court of Appeals finding that there
was no evidence on record showing that an implied trust relation
arose between Margarita and Roberto, we find that petitioner before
the trial court, had actually adduced evidence to prove the intention
of Margarita to transfer to Roberto only the legal title to the
properties in question, with attendant expectation that Roberto
would return the same to her on accomplishment of that specific
purpose for which the transaction was entered into. The evidence of
course is not documentary, but rather testimonial.
We recall that the complaint before the trial court alleged
that the 1968 Affidavit of Transfer was executed merely to
accommodate Robertos request to have the properties in his name
and thereby produce proof of ownership of certain real properties in
the Philippines to support his U.S. visa application. The agreement,
the complaint further stated, was for Margarita to transfer the tax
declarations of the subject properties to Roberto for the said purpose
and without the intention to divest her of the rights of ownership and
dominion.[58] Margarita, however, died before trial on the merits
ensued;[59] yet the allegation was substantiated by the open-court
statements of her daughter, Luz, and of her niece, Hilaria Costales
(Hilaria), a disinterested witness.
In her testimony, Luz, who affirmed under oath her own
presence at the execution of the Affidavit of Transfer, described the
circumstances under which Margarita and Roberto entered into the
agreement. She narrated that Roberto had wanted to travel to the U.S
and to show the embassy proof of his financial capacity, he asked to
borrow from Margarita the properties involved but upon the
condition that he would give them back to her upon his arrival from
the United States. She admitted that Robertos commitment to return
the properties was not put in writing because they placed trust and
confidence in him, and that while she had spent most of her time in
Mindanao since she married in 1956, she would sometimes come to
La Union to see her mother but she never really knew whether at one
point or another her mother had demanded the return of the
properties from Roberto.[60] She further asserted that even after
Robertos arrival from the United States, it was Margarita who paid off
the taxes on the subject properties and that it was only when her
health started to deteriorate that Roberto had taken up those
obligations.[61] Hilarias testimony ran along the same line. Like Luz, she
was admittedly present at the execution of the Affidavit of Transfer
which took place at the house she shared with Jacinto Costales, the
notarizing officer who was her own brother. She told that Roberto at
the time had wanted to travel to the U.S. but did not have properties
in the Philippines which he could use to back up his visa application;
as accommodation, Margarita lent him the tax declarations covering
the properties but with the understanding that upon his return he
would give them back to Margarita. She professed familiarity with the
properties involved because one of them was actually sitting close to
her own property.[62]
While indeed at one point at the stand both of Luzs and
Hilarias presence at the execution of the affidavit had been put to test
in subtle interjections by respondents counsel to the effect that their
names and signatures did not appear in the Affidavit of Transfer as
witnesses, this, to our mind, is of no moment inasmuch as they had
not been called to testify on the fact of, or on the contents of, the
Affidavit of Transfer or its due execution. Rather, their testimony was
offered to prove the circumstances surrounding its execution the
circumstances from which could be derived the unwritten
understanding between Roberto and Margarita that by their act, no
absolute transfer of ownership would be effected.Besides, it would be
highly unlikely for Margarita to institute the instant complaint if it
were indeed her intention to vest in Roberto, by virtue of the Affidavit
of Transfer, absolute ownership over the covered properties.
It is deducible from the foregoing that the inscription of
Robertos name in the Affidavit of Transfer as Margaritas transferee is
not for the purpose of transferring ownership to him but only to
enable him to hold the property in trust for Margarita. Indeed, in the
face of the credible and straightforward testimony of the two
witnesses, Luz and Hilaria, the probative value of the ownership
record forms in the names of respondents, together with the
testimony of their witness from the municipal assessors office who
authenticated said forms, are utterly minimal to show Robertos
ownership. It suffices to say that respondents did not bother to offer
evidence that would directly refute the statements made by Luz and
Hilaria in open court on the circumstances underlying the 1968
Affidavit of Transfer.
As a trustee of a resulting trust, therefore, Roberto, like the
trustee of an express passive trust, is merely a depositary of legal title
having no duties as to the management, control or disposition of the
property except to make a conveyance when called upon by the cestui
que trust.[63] Hence, the sales he entered into with respondents are a
wrongful conversion of the trust property and a breach of the
trust. The question is: May respondents now be compelled to
reconvey the subject properties to petitioner? We rule in the
affirmative.
Respondents posit that petitioners claim may never be
enforced against them as they had purchased the properties from
Roberto for value and in good faith. They also claim that, at any rate,
petitioners cause of action has accrued way back in 1968 upon the
execution of the Affidavit of Transfer and, hence, with the 28 long
years that since passed, petitioners claim had long become stale not
only on account of laches, but also under the rules on extinctive
prescription governing a resulting trust. We do not agree.
First, fundamental is the rule in land registration law that
the issue of whether the buyer of realty is in good or bad faith is
relevant only where the subject of the sale is registered land and the
purchase was made from the registered owner whose title to the land
is clean, in which case the purchaser who relies on the clean title of
the registered owner is protected if he is a purchaser in good faith and
for value.[64] Since the properties in question are unregistered lands,
respondents purchased the same at their own peril.Their claim of
having bought the properties in good faith, i.e., without notice that
there is some other person with a right to or interest therein, would
not protect them should it turn out, as it in fact did in this case, that
their seller, Roberto, had no right to sell them.
Second, the invocation of the rules on limitation of actions
relative to a resulting trust is not on point because the resulting trust
relation between Margarita and Roberto had been extinguished by
the latters death. A trust, it is said, terminates upon the death of the
trustee, particularly where the trust is personal to him.[65] Besides,
prescription and laches, in respect of this resulting trust relation,
hardly can impair petitioners cause of action. On the one hand, in
accordance with Article 1144[66] of the Civil Code, an action for
reconveyance to enforce an implied trust in ones favor prescribes in
ten (10) years from the time the right of action accrues, as it is based
upon an obligation created by law.[67] It sets in from the time the
trustee performs unequivocal acts of repudiation amounting to an
ouster of the cestui que trust which are made known to the
latter.[68] In this case, it was the 1992 sale of the properties to
respondents that comprised the act of repudiation which, however,
was made known to Margarita only in 1995 but nevertheless impelled
her to institute the action in 1996 still well within the prescriptive
period. Hardly can be considered as act of repudiation Robertos open
court declaration which he made in the 1979 adoption proceedings
involving respondents to the effect that he owned the subject
properties,[69] nor even the fact that he in 1977 had entered into a
lease contract on one of the disputed properties which contract had
been subject of a 1996 decision of the Court of Appeals.[70] These do
not suffice to constitute unequivocal acts in repudiation of the trust.
On the other hand, laches, being rooted in equity, is not
always to be applied strictly in a way that would obliterate an
otherwise valid claim especially between blood relatives. The
existence of a confidential relationship based upon consanguinity is an
important circumstance for consideration; hence, the doctrine is not
to be applied mechanically as between near relatives.[71] Adaza v.
Court of Appeals[72] held that the relationship between the parties
therein, who were siblings, was sufficient to explain and excuse what
would otherwise have been a long delay in enforcing the claim and
the delay in such situation should not be as strictly construed as
where the parties are complete strangers vis-a-vis each other; thus,
reliance by one party upon his blood relationship with the other and
the trust and confidence normally connoted in our culture by that
relationship should not be taken against him. Too, Sotto v.
Teves[73] ruled that 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.
Third, there is a fundamental principle in agency that
where certain property entrusted to an agent and impressed by law
with a trust in favor of the principal is wrongfully diverted, such trust
follows the property in the hands of a third person and the principal is
ordinarily entitled to pursue and recover it so long as the property can
be traced and identified, and no superior equities have
intervened. This principle is actually one of trusts, since the wrongful
conversion gives rise to a constructive trust which pursues the
property, its product or proceeds, and permits the beneficiary to
recover the property or obtain damages for the wrongful conversion
of the property. Aptly called the trust pursuit rule, it applies when a
constructive or resulting trust has once affixed itself to property in a
certain state or form.[74]
Hence, a trust will follow the property through all changes
in its state and form as long as such property, its products or its
proceeds, are capable of identification, even into the hands of a
transferee other than a bona fide purchaser for value, or restitution
will be enforced at the election of the beneficiary through recourse
against the trustee or the transferee personally. This is grounded on
the principle in property law that ownership continues and can be
asserted by the true owner against any withholding of the object to
which the ownership pertains, whether such object of the ownership
is found in the hands of an original owner or a transferee, or in a
different form, as long as it can be identified.[75] Accordingly, the
person to whom is made a transfer of trust property constituting a
wrongful conversion of the trust property and a breach of the trust,
when not protected as a bona fide purchaser for value, is himself
liable and accountable as a constructive trustee. The liability attaches
at the moment of the transfer of trust property and continues until
there is full restoration to the beneficiary. Thus, the transferee is
charged with, and can be held to the performance of the trust, equally
with the original trustee, and he can be compelled to execute a
reconveyance.[76]
This scenario is characteristic of a constructive trust
imposed by Article 1456[77] of the Civil Code, which impresses upon a
person obtaining property through mistake or fraud the status of an
implied trustee for the benefit of the person from whom the property
comes. Petitioner, in laying claim against respondents who are
concededly transferees who professed having validly derived their
ownership from Roberto, is in effect enforcing against respondents a
constructive trust relation that arose by virtue of the wrongful and
fraudulent transfer to them of the subject properties by Roberto.
Aznar Brother Realty Co. v. Aying,[78] citing Buan Vda. de Esconde v.
Court of Appeals,[79] explained this form of implied trust as follows:
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.
xxxx
x x x [C]onstructive 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.[80]
It is settled that an action for reconveyance based on a constructive
implied trust prescribes in 10 years likewise in accordance with Article
1144 of the Civil Code. Yet not like in the case of a resulting implied
trust and an express trust, prescription supervenes in a constructive
implied trust even if the trustee does not repudiate the
relationship. In other words, repudiation of said trust is not a
condition precedent to the running of the prescriptive period.[81]
As to when the prescriptive period commences to
run, Crisostomo v. Garcia[82] elucidated as follows:
When property is registered in another's name, an implied
or constructive trust is created by law in favor of the true owner. The
action for reconveyance of the title to the rightful owner prescribes in
10 years from the issuance of the title. 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.
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.[83]
From the foregoing, it is clear that an action for
reconveyance under a constructive implied trust in accordance with
Article 1456 does not prescribe unless and until the land is registered
or the instrument affecting the same is inscribed in accordance with
law, inasmuch as it is what binds the land and operates constructive
notice to the world.[84]In the present case, however, the lands
involved are concededly unregistered lands; hence, there is no way by
which Margarita, during her lifetime, could be notified of the furtive
and fraudulent sales made in 1992 by Roberto in favor of
respondents, except by actual notice from Pedro himself in August
1995. Hence, it is from that date that prescription began to toll. The
filing of the complaint in February 1996 is well within the prescriptive
period. Finally, such delay of only six (6) months in instituting the
present action hardly suffices to justify a finding of inexcusable delay
or to create an inference that Margarita has allowed her claim to stale
by laches.
WHEREFORE, the Petition is GRANTED. The October 13,
2006 Decision of the Court of Appeals in CA-G.R. CV No. 72371,
affirming the July 2, 2001 judgment of the Regional Trial Court of La
Union, Branch 33 in Civil Case No. 1031-BG, is REVERSED and SET
ASIDE, and a new one is entered (a) directing the cancellation of the
tax declarations covering the subject properties in the name of
Roberto D. Laigo and his transferees; (b) nullifying the deeds of sale
executed by Roberto D. Laigo in favor of respondents Pedro Roy Laigo
and Marilou Laigo; and (c) directing said respondents to execute
reconveyance in favor of petitioner.
SO ORDERED.

Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
MARIA TORBELA
Petitioners,
- versus -
SPOUSES ANDRES
T. ROSARIORespondents.
x-----------------------x
LENA DUQUE-ROSARIO,
Petitioner,
- versus -
BANCO FILIPINO SAVINGS AND
MORTGAGE BANK,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
Presently before the Court are two consolidated Petitions for Review
on Certiorari under Rule 45 of the Rules of Court, both assailing the
Decision[1] dated June 29, 1999 and Resolution[2] dated October 22,
1999 of the Court of Appeals in CA-G.R. CV No. 39770.
The petitioners in G.R. No. 140528 are siblings Maria Torbela,[3] Pedro
Torbela,[4] Eufrosina Torbela Rosario,[5] Leonila Torbela Tamin,
Fernando Torbela,[6] Dolores Torbela Tablada, Leonora Torbela
Agustin,[7] and Severina Torbela Ildefonso (Torbela siblings).
The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-
Rosario), who was married to, but now legally separated from, Dr.
Andres T. Rosario (Dr. Rosario). Dr. Rosario is the son of Eufrosina
Torbela Rosario and the nephew of the other Torbela siblings.
The controversy began with a parcel of land, with an area of 374
square meters, located in Urdaneta City, Pangasinan (Lot No. 356-
A). It was originally part of a larger parcel of land, known as Lot No.
356 of the Cadastral Survey of Urdaneta, measuring 749 square
meters, and covered by Original Certificate of Title (OCT) No.
16676,[8] in the name of Valeriano Semilla (Valeriano), married to
Potenciana Acosta. Under unexplained circumstances, Valeriano
gave Lot No. 356-A to his sister Marta Semilla, married to Eugenio
Torbela (spouses Torbela). Upon the deaths of the spouses Torbela,
Lot No. 356-A was adjudicated in equal shares among their children,
the Torbela siblings, by virtue of a Deed of Extrajudicial
Partition[9] dated December 3, 1962.
On December 12, 1964, the Torbela siblings executed a Deed of
Absolute Quitclaim[10] over Lot No. 356-A in favor of Dr.
Rosario. According to the said Deed, the Torbela siblings for and in
consideration of the sum of NINE PESOS (P9.00) x x x transfer[red] and
convey[ed] x x x unto the said Andres T. Rosario, that undivided
portion of THREE HUNDRED SEVENTY-FOUR square meters of that
parcel of land embraced in Original Certificate of Title No. 16676 of
the land records of Pangasinan x x x.[11] Four days later, on December
16, 1964, OCT No. 16676 in Valerianos name was partially cancelled as
to Lot No. 356-A and TCT No. 52751[12] was issued in Dr. Rosarios
name covering the said property.
Another Deed of Absolute Quitclaim[13] was subsequently executed on
December 28, 1964, this time by Dr. Rosario, acknowledging that he
only borrowed Lot No. 356-A from the Torbela siblings and was
already returning the same to the latter for P1.00. The Deed stated:
That for and in consideration of the sum of one peso
(P1.00), Philippine Currency and the fact that I only borrowed the
above described parcel of land from MARIA TORBELA, married to
Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario,
PEDRO TORBELA, married to Petra Pagador, LEONILA TORBELA,
married to Fortunato Tamen, FERNANDO TORBELA, married to
Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA,
married to Matias Agustin and SEVERINA TORBELA, married to Jorge
Ildefonso, x x x by these presents do hereby cede, transfer and convey
by way of this ABSOLUTE QUITCLAIM unto the said Maria, Eufrosina,
Pedro, Leonila, Fernando, Dolores, Leonora and Severina, all
surnamed Torbela the parcel of land described above.[14] (Emphasis
ours.)
The aforequoted Deed was notarized, but was not immediately
annotated on TCT No. 52751.
Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan
from the Development Bank of the Philippines (DBP) on February 21,
1965 in the sum of P70,200.00, secured by a mortgage constituted on
Lot No. 356-A. The mortgage was annotated on TCT No. 52751
on September 21, 1965 as Entry No. 243537.[15] Dr. Rosario used the
proceeds of the loan for the construction of improvements on Lot No.
356-A.
On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit
of Adverse Claim,[16] on behalf of the Torbela siblings. Cornelio
deposed in said Affidavit:
3. That ANDRES T. ROSARIO later quitclaimed his rights in
favor of the former owners by virtue of a Deed of Absolute Quitclaim
which he executed before Notary Public Banaga, and entered in his
Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of
1964;
4. That it is the desire of the parties, my aforestated kins,
to register ownership over the above-described property or to perfect
their title over the same but their Deed could not be registered
because the registered owner now, ANDRES T. ROSARIO mortgaged
the property with the DEVELOPMENT BANK OF THE PHILIPPINES, on
September 21, 1965, and for which reason, the Title is still impounded
and held by the said bank;
5. That pending payment of the obligation with the DEVELOPMENT
BANK OF THE PHILIPPINES or redemption of the Title from said bank,
I, CORNELIO T. TOSINO, in behalf of my mother MARIA TORBELA-
TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA TORBELA-
TAMEN, DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA
TORBELA-ILDEFONSO, and my Uncles PEDRO TORBELA and
FERNANDO, also surnamed TORBELA, I request the Register of Deeds
of Pangasinan to annotate their adverse claim at the back of Transfer
Certificate of Title No. 52751, based on the annexed document, Deed
of Absolute Quitclaim by ANDRES T. ROSARIO, dated December 28,
1964, marked as Annex A and made a part of this Affidavit, and it is
also requested that the DEVELOPMENT BANK OF THE PHILIPPINES be
informed accordingly.[17]
The very next day, on May 17, 1967, the Torbela siblings
had Cornelios Affidavit of Adverse Claim dated May 16, 1967 and Dr.
Rosarios Deed of Absolute Quitclaim dated December 28,
1964 annotated on TCT No. 52751 as Entry Nos.
274471[18] and 274472,[19] respectively.
The construction of a four-storey building on Lot No. 356-A was
eventually completed. The building was initially used as a hospital, but
was later converted to a commercial building. Part of the building was
leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr.
Rosarios sister, who operated the Rose Inn Hotel and Restaurant.
Dr. Rosario was able to fully pay his loan from DBP. Under Entry No.
520197 on TCT No. 52751[20] dated March 6, 1981, the mortgage
appearing under Entry No. 243537 was cancelled per the Cancellation
and Discharge of Mortgage executed by DBP in favor of Dr. Rosario
and ratified before a notary public on July 11, 1980.
 In the meantime, Dr. Rosario acquired another loan from
the Philippine National Bank (PNB) sometime in 1979-1981. Records
do not reveal though the original amount of the loan from PNB, but
the loan agreement was amended on March 5, 1981 and the loan
amount was increased to P450,000.00. The loan was secured by
mortgages constituted on the following properties: (1) Lot No. 356-A,
covered by TCT No. 52751 in Dr. Rosarios name; (2) Lot No. 4489, with
an area of 1,862 square meters, located in Dagupan City, Pangasinan,
covered by TCT No. 24832; and (3) Lot No. 5-F-8-C-2-B-2-A, with an
area of 1,001 square meters, located in Nancayasan, Urdaneta,
Pangasinan, covered by TCT No. 104189.[21] The amended loan
agreement and mortgage on Lot No. 356-A was annotated on TCT No.
52751 on March 6, 1981 as Entry No. 520099.[22]
Five days later, on March 11, 1981, another
annotation, Entry No. 520469,[23] was made on TCT No. 52751,
canceling the adverse claim on Lot No. 356-A under Entry Nos.
274471-274472, on the basis of the Cancellation and Discharge of
Mortgage executed by Dr. Rosario on March 5, 1981. Entry No.
520469 consisted of both stamped and handwritten portions, and
exactly reads:
Entry No. 520469. Cancellation of Adverse Claim executed by Andres
Rosario in favor of same. The incumbrance/mortgage appearing under
Entry No. 274471-72 is now cancelled as per Cancellation and
Discharge of Mortgage Ratified before Notary Public Mauro G.
Meris on March 5, 1981: Doc. No. 215; Page No. 44; Book No. 1; Series
Of 1981.
Lingayen, Pangasinan, 3-11, 19981
[Signed: Pedro dela Cruz]
Register of Deeds [24]
On December 8, 1981, Dr. Rosario and his wife, Duque-
Rosario (spouses Rosario), acquired a third loan in the amount
of P1,200,000.00 from Banco Filipino Savings and Mortgage Bank
(Banco Filipino). To secure said loan, the spouses Rosario again
constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-
F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT
No. 52751 as Entry No. 533283[25] on December 18, 1981. Since the
construction of a two-storey commercial building on Lot No. 5-F-8-C-
2-B-2-A was still incomplete, the loan value thereof as collateral was
deducted from the approved loan amount. Thus, the spouses Rosario
could only avail of the maximum loan amount of P830,064.00 from
Banco Filipino.
Because Banco Filipino paid the balance of Dr. Rosarios
loan from PNB, the mortgage on Lot No. 356-A in favor of PNB was
cancelled per Entry No. 533478[26] on TCT No. 52751 dated December
23, 1981.
On February 13, 1986, the Torbela siblings filed before the Regional
Trial Court (RTC) of Urdaneta, Pangasinan, a Complaint for recovery of
ownership and possession of Lot No. 356-A, plus damages, against the
spouses Rosario, which was docketed as Civil Case No. U-4359. On the
same day, Entry Nos. 593493 and 593494 were made on TCT No.
52751 that read as follows:
Entry No. 593494 Complaint Civil Case No. U-4359 (For: Recovery of
Ownership and Possession and Damages. (Sup. Paper).
Entry No. 593493 Notice of Lis Pendens The parcel of land described
in this title is subject to Lis Pendens executed by Liliosa B. Rosario,
CLAO, Trial Attorney dated February 13, 1986. Filed to TCT No. 52751
February 13, 1986-1986 February 13 3:30 p.m.
(SGD.) PACIFICO M. BRAGANZA
Register of Deeds[27]
The spouses Rosario afterwards failed to pay their loan from Banco
Filipino. As of April 2, 1987, the spouses Rosarios outstanding principal
obligation and penalty charges amounted to P743,296.82
and P151,524.00, respectively.[28]
Banco Filipino extrajudicially foreclosed the mortgages on
Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. During the
public auction on April 2, 1987, Banco Filipino was the lone bidder for
the three foreclosed properties for the price of P1,372,387.04. The
Certificate of Sale[29] dated April 2, 1987, in favor of Banco Filipino,
was annotated on TCT No. 52751 on April 14, 1987 as Entry No.
610623.[30]
On December 9, 1987, the Torbela siblings filed before the
RTC their Amended Complaint,[31] impleading Banco Filipino as
additional defendant in Civil Case No. U-4359 and praying that the
spouses Rosario be ordered to redeem Lot No. 356-A from Banco
Filipino.
The spouses Rosario instituted before the RTC on March 4,
1988 a case for annulment of extrajudicial foreclosure and damages,
with prayer for a writ of preliminary injunction and temporary
restraining order, against Banco Filipino, the Provincial Ex
Officio Sheriff and his Deputy, and the Register of Deeds of
Pangasinan. The case was docketed as Civil Case No. U-4667. Another
notice of lis pendens was annotated on TCT No. 52751 on March 10,
1988 as Entry No. 627059, viz:
Entry No. 627059 Lis Pendens Dr. Andres T. Rosario and Lena Duque
Rosario, Plaintiff versus Banco Filipino, et. al. Civil Case No. U-4667 or
Annulment of ExtraJudicial Foreclosure of Real Estate Mortgage The
parcel of land described in this title is subject to Notice of Lis Pendens
subscribed and sworn to before Notary Public Mauro G. Meris, as Doc.
No. 21; Page No. 5; Book 111; S-1988. March 7, 1988-1988 March
10, 1:00 p.m.
(SGD.) RUFINO M. MORENO, SR.
Register of Deeds[32]
The Torbela siblings intervened in Civil Case No. U-4667. Eventually,
on October 17, 1990, the RTC issued an Order[33] dismissing without
prejudice Civil Case No. U-4667 due to the spouses Rosarios failure to
prosecute.
Meanwhile, the Torbela siblings tried to redeem Lot No.
356-A from Banco Filipino, but their efforts were unsuccessful. Upon
the expiration of the one-year redemption period in April 1988, the
Certificate of Final Sale[34] and Affidavit of Consolidation[35] covering all
three foreclosed properties were executed on May 24, 1988 and May
25, 1988, respectively.
On June 7, 1988, new certificates of title were issued in the
name of Banco Filipino, particularly, TCT No. 165812 for Lot No. 5-F-8-
C-2-B-2-A and TCT No. 165813 for Lot No. 356-A .[36]
The Torbela siblings thereafter filed before the RTC on
August 29, 1988 a Complaint[37] for annulment of the Certificate of
Final Sale dated May 24, 1988, judicial cancelation of TCT No. 165813,
and damages, against Banco Filipino, the Ex Officio Provincial Sheriff,
and the Register of Deeds of Pangasinan, which was docketed as Civil
Case No. U-4733.
On June 19, 1991, Banco Filipino filed before the RTC of
Urdaneta City a Petition for the issuance of a writ of possession. In
said Petition, docketed as Pet. Case No. U-822, Banco Filipino prayed
that a writ of possession be issued in its favor over Lot No. 5-F-8-C-2-
B-2-A and Lot No. 356-A, plus the improvements thereon, and the
spouses Rosario and other persons presently in possession of said
properties be directed to abide by said writ.
The RTC jointly heard Civil Case Nos. U-4359 and U-4733
and Pet. Case No. U-822. The Decision[38] on these three cases was
promulgated on January 15, 1992, the dispositive portion of which
reads:
WHEREFORE, judgment is rendered:
1. Declaring the real estate mortgage over Lot
356-A covered by TCT 52751 executed by Spouses Andres Rosario in
favor of Banco Filipino, legal and valid;
2. Declaring the sheriffs sale dated April 2, 1987
over Lot 356-A covered by TCT 52751 and subsequent final Deed of
Sale dated May 14, 1988 over Lot 356-A covered by TCT No. 52751
legal and valid;
3. Declaring Banco Filipino the owner of Lot 356-
A covered by TCT No. 52751 (now TCT 165813);
4. Banco Filipino is entitled to a Writ of
Possession over Lot 356-A together with the improvements thereon
(Rose Inn Building). The Branch Clerk of Court is hereby ordered to
issue a writ of possession in favor of Banco Filipino;
5. [The Torbela siblings] are hereby ordered to
render accounting to Banco Filipino the rental they received from
tenants of Rose Inn Building from May 14, 1988;
6. [The Torbela siblings] are hereby ordered to
pay Banco Filipino the sum of P20,000.00 as attorneys fees;
7. Banco Filipino is hereby ordered to give [the
Torbela siblings] the right of first refusal over Lot 356-A. The Register
of Deeds is hereby ordered to annotate the right of [the Torbela
siblings] at the back of TCT No. 165813 after payment of the required
fees;
8. Dr. Rosario and Lena Rosario are hereby
ordered to reimburse [the Torbela siblings] the market value
of Lot 356-A as of December, 1964 minus payments made by the
former;
9. Dismissing the complaint of [the Torbela
siblings] against Banco Filipino, Pedro Habon and Rufino Moreno in
Civil Case No. U-4733; and against Banco Filipino in Civil Case No. U-
4359.[39]
The RTC released an Amended Decision[40] dated January
29, 1992, adding the following paragraph to the dispositive:
Banco Filipino is entitled to a Writ of Possession over Lot-5-
F-8-C-2-[B]-2-A of the subdivision plan (LRC) Psd-122471, covered by
Transfer Certificate of Title 104189 of the Registry of Deeds of
Pangasinan[.][41]
The Torbela siblings and Dr. Rosario appealed the
foregoing RTC judgment before the Court of Appeals. Their appeal
was docketed as CA-G.R. CV No. 39770.
In its Decision[42] dated June 29, 1999, the Court of Appeals
decreed:
WHEREFORE, foregoing considered, the appealed decision
is hereby AFFIRMED with modification. Items No. 6 and 7 of the
appealed decision are DELETED. Item No. 8 is modified requiring [Dr.
Rosario] to pay [the Torbela siblings] actual damages, in the amount
of P1,200,000.00 with 6% per annum interest from finality of this
decision until fully paid. [Dr. Rosario] is further ORDERED to pay [the
Torbela siblings] the amount of P300,000.00 as moral
damages; P200,000.00 as exemplary damages and P100,000.00 as
attorneys fees.
Costs against [Dr. Rosario].[43]
The Court of Appeals, in a Resolution[44] dated October 22,
1999, denied the separate Motions for Reconsideration of the Torbela
siblings and Dr. Rosario.
The Torbela siblings come before this Court via the Petition
for Review in G.R. No. 140528, with the following assignment of
errors:
First Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE REGISTRATION OF THE DEED OF ABSOLUTE
QUITCLAIM EXECUTED BY [DR. ANDRES T. ROSARIO] IN FAVOR OF THE
[TORBELA SIBLINGS] DATED DECEMBER 28, 1964 AND THE
REGISTRATION OF THE NOTICE OF ADVERSE CLAIM EXECUTED BY THE
[TORBELA SIBLINGS], SERVE AS THE OPERATIVE ACT TO CONVEY OR
AFFECT THE LAND AND IMPROVEMENTS THEREOF IN SO FAR AS
THIRD PERSONS ARE CONCERNED.
Second Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE SUBJECT PROPERTY COVERED BY T.C.T. NO. 52751 IS CLEAN
AND FREE, DESPITE OF THE ANNOTATION OF ENCUMBRANCES OF THE
NOTICE OF ADVERSE CLAIM AND THE DEED OF ABSOLUTE QUITCLAIM
APPEARING AT THE BACK THEREOF AS ENTRY NOS. 274471 AND
274472, RESPECTIVELY.
Third Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE NOTICE OF ADVERSE CLAIM OF THE [TORBELA SIBLINGS]
UNDER ENTRY NO. 274471 WAS VALIDLY CANCELLED BY THE
REGISTER OF DEEDS, IN THE ABSENCE OF A PETITION DULY FILED IN
COURT FOR ITS CANCELLATION.
Fourth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RESPONDENT BANCO FILIPINO SAVINGS AND MORTGAGE BANK
IS A MORTGAGEE IN GOOD FAITH.
Fifth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE FILING OF A CIVIL CASE NO. U-4359 ON DECEMBER
9, 1987, IMPLEADING RESPONDENT BANCO FILIPINO AS ADDITIONAL
PARTY DEFENDANT, TOLL OR SUSPEND THE RUNNING OF THE ONE
YEAR PERIOD OF REDEMPTION.
Sixth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
FINDING THAT THE OWNERSHIP OVER THE SUBJECT PROPERTY WAS
PREMATURELY CONSOLIDATED IN FAVOR OF RESPONDENT BANCO
FILIPINO SAVINGS AND MORTGAGE BANK.
Seventh Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT THE SUBJECT PROPERTY IS AT LEAST WORTH P1,200,000.00.[45]
The Torbela siblings ask of this Court:
WHEREFORE, in the light of the foregoing considerations,
the [Torbela siblings] most respectfully pray that the questioned
DECISION promulgated on June 29, 1999 (Annex A, Petition) and the
RESOLUTION dated October 22, 1999 (Annex B, Petition) be REVERSED
and SET ASIDE, and/or further MODIFIED in favor of the [Torbela
siblings], and another DECISION issue ordering, among other reliefs,
the respondent Banco Filipino to reconvey back Lot No. 356-A,
covered by T.C.T. No. 52751, in favor of the [Torbela siblings] who are
the actual owners of the same.
The [Torbela siblings] likewise pray for such other reliefs
and further remedies as may be deemed just and equitable under the
premises.[46]
Duque-Rosario, now legally separated from Dr. Rosario,
avers in her Petition for Review in G.R. No. 140553 that Lot No. 4489
and Lot No. 5-F-8-C-2-B-2-A were registered in her name, and she was
unlawfully deprived of ownership of said properties because of the
following errors of the Court of Appeals:
A
THE HON. COURT OF APPEALS PATENTLY ERRED IN NOT FINDING
THAT THE PERIOD TO REDEEM THE PROPERTY HAS NOT
COMMENCED, HENCE, THE CERTIFICATE OF SALE, THE
 CONSOLIDATION OF OWNERSHIP BY [BANCO FILIPINO], ARE NULL
AND VOID.
B Section 3. Venue. Disputes between or among persons
THE COURT OF APPEALS PATENTLY ERRED IN REFUSING TO RULE THAT
THE FILING OF THE COMPLAINT BEFORE THE COURT A QUO BY THE
[TORBELA SIBLINGS] HAD ALREADY BEEN PRESCRIBED.[47]
Duque-Rosario prays that the appealed decision of the
Court of Appeals be reversed and set aside, and that Lot No. 4489 and
Lot No. 5-F-8-C-2-B-2-A be freed from all obligations and
encumbrances and returned to her.
Review of findings of fact by the RTC and the Court of Appeals
warranted.
A disquisition of the issues raised and/or errors assigned in
the Petitions at bar unavoidably requires a re-evaluation of the facts
and evidence presented by the parties in the court a quo.
In Republic v. Heirs of Julia Ramos,[48] the Court summed up
the rules governing the power of review of the Court:
Ordinarily, this Court will not review, much less reverse, the factual
findings of the Court of Appeals, especially where such findings coincide with
those of the trial court. The findings of facts of the Court of Appeals are, as a
general rule, conclusive and binding upon this Court, since this Court is not a
trier of facts and does not routinely undertake the re-examination of the
evidence presented by the contending parties during the trial of the case.
The above rule, however, is subject to a number of exceptions,
such as (1) when the inference made is manifestly mistaken, absurd or
impossible; (2) when there is grave abuse of discretion; (3) when the finding is
grounded entirely on speculations, surmises, or conjectures; (4) when the
judgment of the Court of Appeals is based on 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 parties; (7) when the findings of the Court of Appeals
are contrary to those of the trial court; (8) when the findings of fact are
conclusions without citation of specific evidence on which they are based; (9)
when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties and which, if properly considered, would justify a
different conclusion; and (10) when the findings of fact of the Court of Appeals
are premised on the absence of evidence and are contradicted by the evidence
on record.[49]
As the succeeding discussion will bear out, the first, fourth, and
ninth exceptions are extant in these case.
Barangay conciliation was not a pre-requisite to the institution of
Civil Case No. U-4359.
Dr. Rosario contends that Civil Case No. U-4359, the Complaint of the
Torbela siblings for recovery of ownership and possession of Lot No.
356-A, plus damages, should have been dismissed by the RTC because
of the failure of the Torbela siblings to comply with the prior
requirement of submitting the dispute to barangay conciliation.
The Torbela siblings instituted Civil Case No. U-4359 on February 13,
1986, when Presidential Decree No. 1508, Establishing a System of
Amicably Settling Disputes at the Barangay Level, was still in
effect.[50] Pertinent provisions of said issuance read:
Section 2. Subject matters for amicable settlement. The
Lupon of each barangay shall have authority to bring together
the parties actually residing in the same city or municipalityfor
amicable settlement of all disputes except:
1. Where one party is the government, or any subdivision or instrumentality
thereof;
2. Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
3. Offenses punishable by imprisonment exceeding 30 days, or a fine
exceeding P200.00;
4. Offenses where there is no private offended party;
5. Such other classes of disputes which the Prime Minister may in the interest of
justice determine upon recommendation of the Minister of Justice
and the Minister of Local Government.
actually residing in the same barangay shall be brought for amicable
settlement before the Lupon of said barangay. Those involving actual
residents of different barangays within the same city or municipality
shall be brought in the barangay where the respondent or any of the
respondents actually resides, at the election of the complainant.
However, all disputes which involved real property or any interest
therein shall be brought in the barangay where the real property or
any part thereof is situated.
The Lupon shall have no authority over disputes:
1. involving parties who actually reside in barangays of different cities or
municipalities, except where such barangays adjoin each other; and
2. involving real property located in different municipalities.
xxxx
Section 6. Conciliation, pre-condition to filing of
complaint. No complaint, petition, action or proceeding involving any
matter within the authority of the Lupon as provided in Section 2
hereof shall be filed or instituted in court or any other government
office for adjudication unless there has been a confrontation of the
parties before the Lupon Chairman or the Pangkat and no conciliation
or settlement has been reached as certified by the Lupon Secretary or
the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or
unless the settlement has been repudiated. x x x. (Emphases
supplied.)
The Court gave the following elucidation on the jurisdiction
of the Lupong Tagapayapa in Tavora v. Hon. Veloso[51]:
The foregoing provisions are quite clear. Section 2 specifies
the conditions under which the Lupon of a barangay shall have
authority to bring together the disputants for amicable settlement of
their dispute: The parties must be actually residing in the same city or
municipality. At the same time, Section 3 while reiterating that the
disputants must be actually residing in the same barangay or in
different barangays within the same city or municipality
unequivocably declares that the Lupon shall have no authority over
disputes involving parties who actually reside in barangays
of different cities or municipalities, except where such barangays
adjoin each other.
Thus, by express statutory inclusion and exclusion, the
Lupon shall have no jurisdiction over disputes where the parties are
not actual residents of the same city or municipality, except where
the barangays in which they actually reside adjoin each other.
It is true that immediately after specifying the barangay
whose Lupon shall take cognizance of a given dispute, Sec. 3 of PD
1508 adds:
"However, all disputes which involve real property or any
interest therein shall be brought in the barangay where the real
property or any part thereof is situated."
Actually, however, this added sentence is just an
ordinary proviso and should operate as such.
The operation of a proviso, as a rule, should be limited to
its normal function, which is to restrict or vary the operation of the
principal clause, rather than expand its scope, in the absence of a
clear indication to the contrary.
The natural and appropriate office of a proviso is . . . to
except something from the enacting clause; to limit, restrict, or qualify
the statute in whole or in part; or to exclude from the scope of the
statute that which otherwise would be within its terms. (73 Am Jur 2d
467.)
Therefore, the quoted proviso should simply be deemed to
restrict or vary the rule on venue prescribed in the principal clauses of
the first paragraph of Section 3, thus: Although venue is generally
determined by the residence of the parties, disputes involving real
property shall be brought in the barangay where the real property or
any part thereof is situated, notwithstanding that the parties reside
elsewhere within the same city/municipality.[52] (Emphases supplied.)
The original parties in Civil Case No. U-4359 (the Torbela siblings and
the spouses Rosario) do not reside in the same barangay, or in
different barangays within the same city or municipality, or in
different barangays of different cities or municipalities but are
adjoining each other. Some of them reside outside Pangasinan and
even outside of the country altogether. The Torbela siblings reside
separately in Barangay Macalong, Urdaneta, Pangasinan; Barangay
Consolacion, Urdaneta, Pangasinan; Pangil, Laguna; Chicago, United
States of America; and Canada. The spouses Rosario are residents of
Calle Garcia, Poblacion, Urdaneta, Pangasinan. Resultantly, the Lupon
had no jurisdiction over the dispute and barangay conciliation was not
a pre-condition for the filing of Civil Case No. U-4359.
The Court now looks into the merits of Civil Case No. U-4359.
There was an express trust between the Torbela siblings and Dr.
Rosario.
There is no dispute that the Torbela sibling inherited the
title to Lot No. 356-A from their parents, the Torbela spouses, who, in
turn, acquired the same from the first registered owner of Lot No.
356-A, Valeriano.
Indeed, the Torbela siblings executed a Deed of Absolute
Quitclaim on December 12, 1964 in which they transferred and
conveyed Lot No. 356-A to Dr. Rosario for the consideration
of P9.00. However, the Torbela siblings explained that they only
executed the Deed as an accommodation so that Dr. Rosario could
have Lot No. 356-A registered in his name and use said property to
secure a loan from DBP, the proceeds of which would be used for
building a hospital on Lot No. 356-A a claim supported by testimonial
and documentary evidence, and borne out by the sequence of events
immediately following the execution by the Torbela siblings of said
Deed. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A,
was already issued in Dr. Rosarios name. On December 28, 1964, Dr.
Rosario executed his own Deed of Absolute Quitclaim, in which he
expressly acknowledged that he only borrowed Lot No. 356-A and was
transferring and conveying the same back to the Torbela siblings for
the consideration of P1.00. OnFebruary 21, 1965, Dr. Rosarios loan in
the amount of P70,200.00, secured by a mortgage on Lot No. 356-A,
was approved by DBP. Soon thereafter, construction of a hospital
building started on Lot No. 356-A.
Among the notable evidence presented by the Torbela
siblings is the testimony of Atty. Lorenza Alcantara (Atty. Alcantara),
who had no apparent personal interest in the present case. Atty.
Alcantara, when she was still a boarder at the house of Eufrosina
Torbela Rosario (Dr. Rosarios mother), was consulted by the Torbela
siblings as regards the extrajudicial partition of Lot No. 356-A. She also
witnessed the execution of the two Deeds of Absolute Quitclaim by
the Torbela siblings and Dr. Rosario.
In contrast, Dr. Rosario presented TCT No. 52751, issued in
his name, to prove his purported title to Lot No. 356-A. In Lee Tek
Sheng v. Court of Appeals,[53] the Court made a clear distinction
between title and the certificate of title:
The certificate referred to is that document issued by the Register of
Deeds known as the Transfer Certificate of Title (TCT). By title, the law
refers to ownership which is represented by that document.
Petitioner apparently confuses certificate with title. Placing a parcel of
land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Ownership is different
from a certificate of title. The TCT is only the best proof of ownership
of a piece of land. Besides, the certificate cannot always be
considered as conclusive evidence of ownership. Mere issuance of the
certificate of title in the name of any person does not foreclose the
possibility that the real property may be under co-ownership with
persons not named in the certificate or that the registrant may only
be a trustee or that other parties may have acquired interest
subsequent to the issuance of the certificate of title. To repeat,
registration is not the equivalent of title, but is only the best evidence
thereof. Title as a concept of ownership should not be confused with
the certificate of title as evidence of such ownership although both
are interchangeably used. x x x.[54] (Emphases supplied.)
Registration does not vest title; it is merely the evidence of
such title. Land registration laws do not give the holder any better
title than what he actually has.[55]Consequently, Dr. Rosario must still
prove herein his acquisition of title to Lot No. 356-A, apart from his
submission of TCT No. 52751 in his name.
Dr. Rosario testified that he obtained Lot No. 356-A after
paying the Torbela siblings P25,000.00, pursuant to a verbal
agreement with the latter. The Court though observes that Dr.
Rosarios testimony on the execution and existence of the verbal
agreement with the Torbela siblings lacks significant details (such as
the names of the parties present, dates, places, etc.) and is not
corroborated by independent evidence.
In addition, Dr. Rosario acknowledged the execution of the
two Deeds of Absolute Quitclaim dated December 12,
1964 and December 28, 1964, even affirming his own signature on the
latter Deed. The Parol Evidence Rule provides that when the terms of
the agreement have been reduced into writing, it is considered as
containing all the terms agreed upon and there can be, between the
parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement.[56] Dr. Rosario may
not modify, explain, or add to the terms in the two written Deeds of
Absolute Quitclaim since he did not put in issue in his pleadings (1) an
intrinsic ambiguity, mistake, or imperfection in the Deeds; (2) failure
of the Deeds to express the true intent and the agreement of the
parties thereto; (3) the validity of the Deeds; or (4) the existence of
other terms agreed to by the Torbela siblings and Dr. Rosario after the
execution of the Deeds.[57]
Even if the Court considers Dr. Rosarios testimony on his
alleged verbal agreement with the Torbela siblings, the Court finds the
same unsatisfactory. Dr. Rosario averred that the two Deeds were
executed only because he was planning to secure loan from the
Development Bank of the Philippines and Philippine National Bank
and the bank needed absolute quitclaim[.][58] While Dr. Rosarios
explanation makes sense for the first Deed of Absolute Quitclaim
dated December 12, 1964 executed by the Torbela siblings (which
transferred Lot No. 356-A to Dr. Rosario for P9.00.00), the same could
not be said for the second Deed of Absolute Quitclaim dated
December 28, 1964 executed by Dr. Rosario.In fact, Dr. Rosarios Deed
of Absolute Quitclaim (in which he admitted that he only borrowed
Lot No. 356-A and was transferring the same to the Torbela siblings
for P1.00.00) would actually work against the approval of Dr. Rosarios
loan by the banks. Since Dr. Rosarios Deed of Absolute Quitclaim
dated December 28, 1964 is a declaration against his self-interest, it
must be taken as favoring the truthfulness of the contents of said
Deed.[59]
It can also be said that Dr. Rosario is estopped from
claiming or asserting ownership over Lot No. 356-A based on his Deed
of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's
admission in the said Deed that he merely borrowed Lot No. 356-A is
deemed conclusive upon him. Under Article 1431 of the Civil Code,
[t]hrough estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.[60] That admission
cannot now be denied by Dr. Rosario as against the Torbela siblings,
the latter having relied upon his representation.
Considering the foregoing, the Court agrees with the RTC
and the Court of Appeals that Dr. Rosario only holds Lot No. 356-A in
trust for the Torbela siblings.
Trust is the right to the beneficial enjoyment of property,
the legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between parties may either
be express or implied. An express trust is created by the intention of
the trustor or of the parties, while an implied trust comes into being
by operation of law.[61]
Express trusts are created by 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. Under Article 1444
of the Civil Code, [n]o particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly intended.[62] It
is possible to create a trust without using the word trust or
trustee. Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust.The question in each
case is whether the trustor manifested an intention to create the kind
of relationship which to lawyers is known as trust. It is immaterial
whether or not he knows that the relationship which he intends to
create is called a trust, and whether or not he knows the precise
characteristics of the relationship which is called a trust.[63]
In Tamayo v. Callejo,[64] the Court recognized that a trust
may have a constructive or implied nature in the beginning, but the
registered owners subsequent express acknowledgement in a public
document of a previous sale of the property to another party, had the
effect of imparting to the aforementioned trust the nature of an
express trust.The same situation exists in this case. When Dr. Rosario
was able to register Lot No. 356-A in his name under TCT No. 52751
on December 16, 1964, an implied trust was initially established
between him and the Torbela siblings under Article 1451 of the Civil
Code, which provides:
ART. 1451. When land passes by succession to any person
and he causes the legal title to be put in the name of another, a trust
is established by implication of law for the benefit of the true owner.
Dr. Rosarios execution of the Deed of Absolute Quitclaim
on December 28, 1964, containing his express admission that he only
borrowed Lot No. 356-A from the Torbela siblings, eventually
transformed the nature of the trust to an express one. The express
trust continued despite Dr. Rosario stating in his Deed of Absolute
Quitclaim that he was already returning Lot No. 356-A to the Torbela
siblings as Lot No. 356-A remained registered in Dr. Rosarios name
under TCT No. 52751 and Dr. Rosario kept possession of said property,
together with the improvements thereon.
The right of the Torbela siblings to recover Lot No. 356-A has not yet
prescribed.
The Court extensively discussed the prescriptive period for
express trusts in the Heirs of Maximo Labanon v. Heirs of Constancio
Labanon,[65] to wit:
On the issue of prescription, we had the opportunity to
rule in Bueno v. Reyes that unrepudiated written express trusts are
imprescriptible:
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 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.
This principle was amplified in Escay v. Court of
Appeals this way: Express trusts prescribe 10 years from the
repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho et al.,
54 O.G. p. 8429, Sec. 40, Code of Civil Procedure).
In the more recent case of Secuya v. De Selma, we again
ruled that the prescriptive period for the enforcement of an express
trust of ten (10) years starts upon the repudiation of the trust by the
trustee.[66]
To apply the 10-year prescriptive period, which would bar
a beneficiarys action to recover in an express trust, the repudiation of
the trust must be proven by clear and convincing evidence and made
known to the beneficiary.[67] The express trust disables 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 an express
trust, the delay of the beneficiary is directly attributable to the trustee
who undertakes to hold the property for the former, or who is linked
to the beneficiary by confidential or fiduciary relations. The trustee's
possession is, therefore, not adverse to the beneficiary, until and
unless the latter is made aware that the trust has been repudiated.[68]
Dr. Rosario argues that he is deemed to have repudiated the trust on
December 16, 1964, when he registered Lot No. 356-A in his name
under TCT No. 52751, so when on February 13, 1986, the Torbela
siblings instituted before the RTC Civil Case No. U-4359, for the
recovery of ownership and possession of Lot No. 356-A from the
spouses Rosario, over 21 years had passed. Civil Case No. U-4359 was
already barred by prescription, as well as laches.
The Court already rejected a similar argument in Ringor v.
Ringor[69] for the following reasons:
A trustee who obtains a Torrens title over a property held in trust for
him by another cannot repudiate the trust by relying on the
registration. A Torrens Certificate of Title in Joses name did not vest
ownership of the land upon him. The Torrens system does not create
or vest title. It only confirms and records title already existing and
vested. It does not protect a usurper from the true
owner. The Torrens system was not intended to foment betrayal in
the performance of a trust. It does not permit one to enrich himself at
the expense of another. Where one does not have a rightful claim to
the property, the Torrens system of registration can confirm or record
nothing. Petitioners cannot rely on the registration of the lands in
Joses name nor in the name of the Heirs of Jose M. Ringor, Inc., for
the wrong result they seek. For Jose could not repudiate a trust by
relying on a Torrens title he held in trust for his co-heirs. The
beneficiaries are entitled to enforce the trust, notwithstanding the
irrevocability of the Torrens title. The intended trust must be
sustained.[70] (Emphasis supplied.)
In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose
Labiste,[71] the Court refused to apply prescription and laches and
reiterated that:
[P]rescription and laches will run only from the time the express trust
is repudiated. The Court has held that for acquisitive prescription to
bar the action of the beneficiary against the trustee in an express trust
for the recovery of the property held in trust it must be shown that:
(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. Respondents cannot
rely on the fact that the Torrenstitle was issued in the name of
Epifanio and the other heirs of Jose. It has been held that a trustee
who obtains a Torrens title over property held in trust by him for
another cannot repudiate the trust by relying on the
registration. The rule requires a clear repudiation of the trust duly
communicated to the beneficiary. The only act that can be construed
as repudiation was when respondents filed the petition for
reconstitution in October 1993. And since petitioners filed their
complaint in January 1995, their cause of action has not yet
prescribed, laches cannot be attributed to them.[72] (Emphasis
supplied.)
It is clear that under the foregoing jurisprudence, the
registration of Lot No. 356-A by Dr. Rosario in his name under TCT No.
52751 on December 16, 1964 is not the repudiation that would have
caused the 10-year prescriptive period for the enforcement of an
express trust to run.
The Court of Appeals held that Dr. Rosario repudiated the
express trust when he acquired another loan from PNB and
constituted a second mortgage on Lot No. 356-A sometime in 1979,
which, unlike the first mortgage to DBP in 1965, was without the
knowledge and/or consent of the Torbela siblings.
The Court only concurs in part with the Court of Appeals on
this matter.
For repudiation of an express trust to be effective, the
unequivocal act of repudiation had to be made known to the Torbela
siblings as the cestuis que trust and must be proven by clear and
conclusive evidence. A scrutiny of TCT No. 52751 reveals the following
inscription:
Entry No. 520099
Amendment of the mortgage in favor of PNB inscribed under Entry
No. 490658 in the sense that the consideration thereof has been
increased to PHILIPPINE PESOS Four Hundred Fifty Thousand Pesos
only (P450,000.00) and to secure any and all negotiations with PNB,
whether contracted before, during or after the date of this
instrument, acknowledged before Notary Public of Pangasinan Alejo
M. Dato as Doc. No. 198, Page No. 41, Book No. 11, Series of 1985.
Date of Instrument March 5, 1981
Date of Inscription March 6, 1981[73]
Although according to Entry No. 520099, the original loan
and mortgage agreement of Lot No. 356-A between Dr. Rosario and
PNB was previously inscribed as Entry No. 490658, Entry No. 490658
does not actually appear on TCT No. 52751 and, thus, it cannot be
used as the reckoning date for the start of the prescriptive period.
The Torbela siblings can only be charged with knowledge
of the mortgage of Lot No. 356-A to PNB on March 6, 1981 when the
amended loan and mortgage agreement was registered on TCT No.
52751 as Entry No. 520099. Entry No. 520099 is constructive notice to
the whole world[74] that Lot No. 356-A was mortgaged by Dr. Rosario
to PNB as security for a loan, the amount of which was increased
to P450,000.00. Hence, Dr. Rosario is deemed to have effectively
repudiated the express trust between him and the Torbela siblings on
March 6, 1981, on which day, the prescriptive period for the
enforcement of the express trust by the Torbela siblings began to run.
From March 6, 1981, when the amended loan and
mortgage agreement was registered on TCT No. 52751, to February
13, 1986, when the Torbela siblings instituted before the RTC Civil
Case No. U-4359 against the spouses Rosario, only about five
years had passed. The Torbela siblings were able to institute Civil Case
No. U-4359 well before the lapse of the 10-year prescriptive period
for the enforcement of their express trust with Dr. Rosario.
Civil Case No. U-4359 is likewise not barred by
laches. Laches means 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. As the Court explained in the preceding
paragraphs, the Torbela siblings instituted Civil Case No. U-4359 five
years after Dr. Rosarios repudiation of the express trust, still within
the 10-year prescriptive period for enforcement of such trusts. This
does not constitute an unreasonable delay in asserting one's right. A
delay within the prescriptive period is sanctioned by law and is not
considered to be a delay that would bar relief. Laches apply only in
the absence of a statutory prescriptive period.[75]
Banco Filipino is not a mortgagee and buyer in good faith.
Having determined that the Torbela siblings are the true
owners and Dr. Rosario merely the trustee of Lot No. 356-A, the Court
is next faced with the issue of whether or not the Torbela siblings may
still recover Lot No. 356-A considering that Dr. Rosario had already
mortgaged Lot No. 356-A to Banco Filipino, and upon Dr. Rosarios
default on his loan obligations, Banco Filipino foreclosed the
mortgage, acquired Lot No. 356-A as the highest bidder at the
foreclosure sale, and consolidated title in its name under TCT No.
165813. The resolution of this issue depends on the answer to the
question of whether or not Banco Filipino was a mortgagee in good
faith.
Under Article 2085 of the Civil Code, one of the essential
requisites of the contract of mortgage is that the mortgagor should be
the absolute owner of the property to be mortgaged; otherwise, the
mortgage is considered null and void. However, an exception to this
rule is the doctrine of mortgagee in good faith. Under this doctrine,
even if the mortgagor is not the owner of the mortgaged property,
the mortgage contract and any foreclosure sale arising therefrom are
given effect by reason of public policy. This principle is based on the
rule that all persons dealing with property covered by a Torrens
Certificate of Title, as buyers or mortgagees, are not required to go
beyond what appears on the face of the title. This is the same rule
that underlies the principle of innocent purchasers for value. The
prevailing jurisprudence is that a mortgagee has a right to rely in good
faith on the certificate of title of the mortgagor to the property given
as security and in the absence of any sign that might arouse suspicion,
has no obligation to undertake further investigation. Hence, even if
the mortgagor is not the rightful owner of, or does not have a valid
title to, the mortgaged property, the mortgagee in good faith is,
nonetheless, entitled to protection.[76]
On one hand, the Torbela siblings aver that Banco Filipino
is not a mortgagee in good faith because as early as May 17, 1967,
they had already annotated Cornelios Adverse Claim dated May 16,
1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December
28, 1964 on TCT No. 52751 as Entry Nos. 274471-274472,
respectively.
On the other hand, Banco Filipino asseverates that it is a
mortgagee in good faith because per Section 70 of Presidential Decree
No. 1529, otherwise known as the Property Registration Decree, the
notice of adverse claim, registered on May 17, 1967 by the Torbela
siblings under Entry Nos. 274471-274472 on TCT No. 52751, already
lapsed after 30 days or on June 16, 1967. Additionally, there was an
express cancellation of Entry Nos. 274471-274472 by Entry No.
520469 dated March 11, 1981. So when Banco Filipino approved Dr.
Rosarios loan for P1,200,000.00 and constituted a mortgage on Lot
No. 356-A (together with two other properties) on December 8, 1981,
the only other encumbrance on TCT No. 52751 was Entry No. 520099
dated March 6, 1981, i.e., the amended loan and mortgage agreement
between Dr. Rosario and PNB (which was eventually cancelled after it
was paid off with part of the proceeds from Dr. Rosarios loan from
Banco Filipino). Hence, Banco Filipino was not aware that the Torbela
siblings adverse claim on Lot No. 356-A still subsisted.
The Court finds that Banco Filipino is not a mortgagee in
good faith. Entry Nos. 274471-274472 were not validly cancelled, and
the improper cancellation should have been apparent to Banco
Filipino and aroused suspicion in said bank of some defect in Dr.
Rosarios title.
The purpose of annotating the adverse claim on the title of
the disputed land is to apprise third persons that there is a
controversy over the ownership of the land and to preserve and
protect the right of the adverse claimant during the pendency of the
controversy. It is a notice to third persons that any transaction
regarding the disputed land is subject to the outcome of the
dispute.[77]
Adverse claims were previously governed by Section 110 of
Act No. 496, otherwise known as the Land Registration Act, quoted in
full below:
ADVERSE CLAIM
SEC. 110. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date of the
original registration, may, if no other provision is made in this Act for
registering the same, make a statement in writing setting forth fully
his alleged right or interest, and how or under whom acquired, and a
reference to the volume and page of the certificate of title of the
registered owner, and a description of the land in which the right or
interest is claimed.
The statement shall be signed and sworn to, and shall state the
adverse claimants residence, and designate a place at which all
notices may be served upon him. This statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any
party in interest, shall grant a speedy hearing upon the question of
the validity of such adverse claim and shall enter such decree therein
as justice and equity may require. If the claim is adjudged to be
invalid, the registration shall be cancelled. If in any case the court
after notice and hearing shall find that a claim thus registered was
frivolous or vexatious, it may tax the adverse claimant double or
treble costs in its discretion.
Construing the aforequoted provision, the Court stressed
in Ty Sin Tei v. Lee Dy Piao[78] that [t]he validity or efficaciousness of
the [adverse] claim x x x may only be determined by the Court upon
petition by an interested party, in which event, the Court shall order
the immediate hearing thereof and make the proper adjudication as
justice and equity may warrant. And it is ONLY when such claim is
found unmeritorious that the registration thereof may be
cancelled. The Court likewise pointed out in the same case that while
a notice of lis pendens may be cancelled in a number of ways, the
same is not true in a registered adverse claim, for it may be cancelled
only in one instance, i.e., after the claim is adjudged invalid or
unmeritorious by the Court x x x; and if any of the registrations should
be considered unnecessary or superfluous, it would be the notice
of lis pendens and not the annotation of the adverse claim which is
more permanent and cannot be cancelled without adequate hearing
and proper disposition of the claim.
With the enactment of the Property Registration Decree
on June 11, 1978, Section 70 thereof now applies to adverse claims:
SEC. 70. Adverse claim. Whoever claims any part or
interest in registered land adverse to the registered owner, arising
subsequent to the date of the original registrations, may, if no other
provision is made in this Decree for registering the same, make a
statement in writing setting forth fully his alleged right, or interest,
and how or under whom acquired, a reference to the number of the
certificate of title of the registered owner, the name of the registered
owner, and a description of the land in which the right or interest is
claimed.
The statement shall be signed and sworn to, and shall state
the adverse claimants residence, and a place at which all notices may
be served upon him. This statement shall be entitled to registration as
an adverse claim on the certificate of title. The adverse claim shall be
effective for a period of thirty days from the date of
registration. After the lapse of said period, the annotation of
adverse claim may be cancelled upon filing of a verified petition
therefor by the party in interest: Provided, however, that after
cancellation, no second adverse claim based on the same ground shall
be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in
interest may file a petition in the Court of First Instance where the
land is situated for the cancellation of the adverse claim, and the
court shall grant a speedy hearing upon the question of the validity
of such adverse claim, and shall render judgment as may be just and
equitable. If the adverse claim is adjudged to be invalid, the
registration thereof shall be ordered cancelled. If, in any case, the
court, after notice and hearing, shall find that the adverse claim thus
registered was frivolous, it may fine the claimant in an amount not
less than one thousand pesos nor more than five thousand pesos, in
its discretion. Before the lapse of thirty days, the claimant may
withdraw his adverse claim by filing with the Register of Deeds a
sworn petition to that effect. (Emphases supplied.)
In Sajonas v. Court of Appeals,[79]the Court squarely
interpreted Section 70 of the Property Registration Decree,
particularly, the new 30-day period not previously found in Section
110 of the Land Registration Act, thus:
In construing the law aforesaid, care should be taken that
every part thereof be given effect and a construction that could
render a provision inoperative should be avoided, and inconsistent
provisions should be reconciled whenever possible as parts of a
harmonious whole. For taken in solitude, a word or phrase might
easily convey a meaning quite different from the one actually
intended and evident when a word or phrase is considered with those
with which it is associated. In ascertaining the period of effectivity of
an inscription of adverse claim, we must read the law in its entirety.
Sentence three, paragraph two of Section 70 of P.D. 1529 provides:
The adverse claim shall be effective for a period of thirty
days from the date of registration.
At first blush, the provision in question would seem to
restrict the effectivity of the adverse claim to thirty days. But the
above provision cannot and should not be treated separately, but
should be read in relation to the sentence following, which reads:
After the lapse of said period, the annotation of adverse
claim may be cancelled upon filing of a verified petition therefor by
the party in interest.
If the rationale of the law was for the adverse claim to ipso
facto lose force and effect after the lapse of thirty days, then it would
not have been necessary to include the foregoing caveat to clarify and
complete the rule. For then, no adverse claim need be cancelled. If it
has been automatically terminated by mere lapse of time, the law
would not have required the party in interest to do a useless act.
A statute's clauses and phrases must not be taken
separately, but in its relation to the statute's totality. Each statute
must, in fact, be construed as to harmonize it with the pre-existing
body of laws. Unless clearly repugnant, provisions of statutes must be
reconciled. The printed pages of the published Act, its history, origin,
and its purposes may be examined by the courts in their construction.
x x x.
xxxx
Construing the provision as a whole would reconcile the
apparent inconsistency between the portions of the law such that the
provision on cancellation of adverse claim by verified petition would
serve to qualify the provision on the effectivity period. The law, taken
together, simply means that the cancellation of the adverse claim is
still necessary to render it ineffective, otherwise, the inscription will
remain annotated and shall continue as a lien upon the property. For
if the adverse claim has already ceased to be effective upon the
lapse of said period, its cancellation is no longer necessary and the
process of cancellation would be a useless ceremony.
It should be noted that the law employs the phrase "may
be cancelled," which obviously indicates, as inherent in its decision
making power, that the court may or may not order the cancellation
of an adverse claim, notwithstanding such provision limiting the
effectivity of an adverse claim for thirty days from the date of
registration. The court cannot be bound by such period as it would be
inconsistent with the very authority vested in it. A fortiori, the
limitation on the period of effectivity is immaterial in determining the
validity or invalidity of an adverse claim which is the principal issue to
be decided in the court hearing. It will therefore depend upon the
evidence at a proper hearing for the court to determine whether it
will order the cancellation of the adverse claim or not.
To interpret the effectivity period of the adverse claim as
absolute and without qualification limited to thirty days defeats the
very purpose for which the statute provides for the remedy of an
inscription of adverse claim, as the annotation of an adverse claim is a
measure designed to protect the interest of a person over a piece of
real property where the registration of such interest or right is not
otherwise provided for by the Land Registration Act or Act 496 (now
P.D. 1529 or the Property Registration Decree), and serves as a
warning to third parties dealing with said property that someone is
claiming an interest or the same or a better right than the registered
owner thereof.
The reason why the law provides for a hearing where the
validity of the adverse claim is to be threshed out is to afford the
adverse claimant an opportunity to be heard, providing a venue
where the propriety of his claimed interest can be established or
revoked, all for the purpose of determining at last the existence of
any encumbrance on the title arising from such adverse claim. This is
in line with the provision immediately following:
 Provided, however, that after cancellation, no second
adverse claim shall be registered by the same claimant.
Should the adverse claimant fail to sustain his interest in
the property, the adverse claimant will be precluded from registering
a second adverse claim based on the same ground.
It was held that validity or efficaciousness of the claim may
only be determined by the Court upon petition by an interested party,
in which event, the Court shall order the immediate hearing thereof
and make the proper adjudication as justice and equity may warrant.
And it is only when such claim is found unmeritorious that the
registration of the adverse claim may be cancelled, thereby protecting
the interest of the adverse claimant and giving notice and warning to
third parties.[80] (Emphases supplied.)
Whether under Section 110 of the Land Registration Act or
Section 70 of the Property Registration Decree, notice of adverse
claim can only be cancelled after a party in interest files a petition for
cancellation before the RTC wherein the property is located, and the
RTC conducts a hearing and determines the said claim to be invalid or
unmeritorious.
No petition for cancellation has been filed and no hearing
has been conducted herein to determine the validity or merit of the
adverse claim of the Torbela siblings. Entry No. 520469 cancelled the
adverse claim of the Torbela siblings, annotated as Entry Nos. 274471-
774472, upon the presentation by Dr. Rosario of a mere Cancellation
and Discharge of Mortgage.
Regardless of whether or not the Register of Deeds should
have inscribed Entry No. 520469 on TCT No. 52751, Banco Filipino
could not invoke said inscription in support of its claim of good
faith. There were several things amiss in Entry No. 520469 which
should have already aroused suspicions in Banco Filipino, and
compelled the bank to look beyond TCT No. 52751 and inquire into
Dr. Rosarios title. First, Entry No. 520469 does not mention any court
order as basis for the cancellation of the adverse claim. Second, the
adverse claim was not a mortgage which could be cancelled with Dr.
Rosarios Cancellation and Discharge of Mortgage. And third, the
adverse claim was against Dr. Rosario, yet it was cancelled based on a
document also executed by Dr. Rosario.
It is a well-settled rule that a purchaser or mortgagee
cannot close his eyes to facts which should put a reasonable man
upon his guard, and then claim that he acted in good faith under the
belief that there was no defect in the title of the vendor or
mortgagor. His mere refusal to believe that such defect exists, or his
willful closing of his eyes to the possibility of the existence of a defect
in the vendor's or mortgagor's title, will not make him an innocent
purchaser or mortgagee for value, if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of
the defects as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a
like situation.[81]
While the defective cancellation of Entry Nos. 274471-
274472 by Entry No. 520469 might not be evident to a private
individual, the same should have been apparent to Banco
Filipino. Banco Filipino is not an ordinary mortgagee, but is a
mortgagee-bank, whose business is impressed with public interest. In
fact, in one case, [82] the Court explicitly declared that the rule that
persons dealing with registered lands can rely solely on the certificate
of title does not apply to banks. In another case,[83] the Court
adjudged that unlike private individuals, a bank is expected to exercise
greater care and prudence in its dealings, including those involving
registered lands. A banking institution is expected to exercise due
diligence before entering into a mortgage contract. The ascertainment
of the status or condition of a property offered to it as security for a
loan must be a standard and indispensable part of its operations.
Banco Filipino cannot be deemed a mortgagee in good
faith, much less a purchaser in good faith at the foreclosure sale of Lot
No. 356-A. Hence, the right of the Torbela siblings over Lot No. 356-A
is superior over that of Banco Filipino; and as the true owners of Lot
No. 356-A, the Torbela siblings are entitled to a reconveyance of said
property even from Banco Filipino.
Nonetheless, the failure of Banco Filipino to comply with
the due diligence requirement was not the result of a dishonest
purpose, some moral obliquity, or breach of a known duty for some
interest or ill will that partakes of fraud that would justify damages.[84]
Given the reconveyance of Lot No. 356-A to the Torbela
siblings, there is no more need to address issues concerning
redemption, annulment of the foreclosure sale and certificate of sale
(subject matter of Civil Case No. U-4733), or issuance of a writ of
possession in favor of Banco Filipino (subject matter of Pet. Case No.
U-822) insofar as Lot No. 356-A is concerned. Such would only be
superfluous. Banco Filipino, however, is not left without any recourse
should the foreclosure and sale of the two other mortgaged
properties be insufficient to cover Dr. Rosarios loan, for the bank may
still bring a proper suit against Dr. Rosario to collect the unpaid
balance.
The rules on accession shall govern the improvements on Lot No.
356-A and the rents thereof.
The accessory follows the principal. The right of accession is
recognized under Article 440 of the Civil Code which states that [t]he
ownership of property gives the right by accession to everything
which is produced thereby, or which is incorporated or attached
thereto, either naturally or artificially.
There is no question that Dr. Rosario is the builder of the
improvements on Lot No. 356-A. The Torbela siblings themselves
alleged that they allowed Dr. Rosario to register Lot No. 356-A in his
name so he could obtain a loan from DBP, using said parcel of land as
security; and with the proceeds of the loan, Dr. Rosario had a building
constructed on Lot No. 356-A, initially used as a hospital, and then
later for other commercial purposes. Dr. Rosario supervised the
construction of the building, which began in 1965; fully liquidated the
loan from DBP; and maintained and administered the building, as well
as collected the rental income therefrom, until the Torbela siblings
instituted Civil Case No. U-4359 before the RTC on February 13, 1986.
When it comes to the improvements on Lot No. 356-A,
both the Torbela siblings (as landowners) and Dr. Rosario (as builder)
are deemed in bad faith. The Torbela siblings were aware of the
construction of a building by Dr. Rosario on Lot No. 356-A, while Dr.
Rosario proceeded with the said construction despite his knowledge
that Lot No. 356-A belonged to the Torbela siblings. This is the case
contemplated under Article 453 of the Civil Code, which reads:
ART. 453. If there was bad faith, not only on the part of the
person who built, planted or sowed on the land of another, but also
on the part of the owner of such land, the rights of one and the other
shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the
landowner whenever the act was done with his knowledge and
without opposition on his part. (Emphasis supplied.)
When both the landowner and the builder are in good faith, the
following rules govern:
ART. 448. The owner of the land on which anything has
been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in articles 546 and 548, or to oblige the
one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of
the building or trees. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms
of the lease and in case of disagreement, the court shall fix the terms
thereof.
ART. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the thing
until he has been reimbursed therefor.
 Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof.
ART. 548. Expenses for pure luxury or mere pleasure shall
not be refunded to the possessor in good faith; but he may remove
the ornaments with which he has embellished the principal thing if it
suffers no injury thereby, and if his successor in the possession does
not prefer to refund the amount expended.
Whatever is built, planted, or sown on the land of another,
and the improvements or repairs made thereon, belong to the owner
of the land. Where, however, the planter, builder, or sower has acted
in good faith, a conflict of rights arises between the owners and it
becomes necessary to protect the owner of the improvements
without causing injustice to the owner of the land. In view of the
impracticability of creating what Manresa calls a state of "forced co-
ownership," the law has provided a just and equitable solution by
giving the owner of the land the option to acquire the improvements
after payment of the proper indemnity or to oblige the builder or
planter to pay for the land and the sower to pay the proper rent. It is
the owner of the land who is allowed to exercise the option because
his right is older and because, by the principle of accession, he is
entitled to the ownership of the accessory thing.[85]
The landowner has to make a choice between appropriating the
building by paying the proper indemnity or obliging the builder to pay
the price of the land. But even as the option lies with the landowner,
the grant to him, nevertheless, is preclusive. He must choose one. He
cannot, for instance, compel the owner of the building to remove the
building from the land without first exercising either option. It is only
if the owner chooses to sell his land, and the builder or planter fails to
purchase it where its value is not more than the value of the
improvements, that the owner may remove the improvements from
the land. The owner is entitled to such remotion only when, after
having chosen to sell his land, the other party fails to pay for the
same.[86]
This case then must be remanded to the RTC for the
determination of matters necessary for the proper application of
Article 448, in relation to Article 546, of the Civil Code. Such matters
include the option that the Torbela siblings will choose; the amount of
indemnity that they will pay if they decide to appropriate the
improvements on Lot No. 356-A; the value of Lot No. 356-A if they
prefer to sell it to Dr. Rosario; or the reasonable rent if they opt to sell
Lot No. 356-A to Dr. Rosario but the value of the land is considerably
more than the improvements. The determination made by the Court
of Appeals in its Decision dated June 29, 1999 that the current value
of Lot No. 356-A isP1,200,000.00 is not supported by any evidence on
record.
Should the Torbela siblings choose to appropriate the improvements
on Lot No. 356-A, the following ruling of the Court in Pecson v. Court
of Appeals[87] is relevant in the determination of the amount of
indemnity under Article 546 of the Civil Code:
Article 546 does not specifically state how the value of the
useful improvements should be determined. The respondent court
and the private respondents espouse the belief that the cost of
construction of the apartment building in 1965, and not its current
market value, is sufficient reimbursement for necessary and useful
improvements made by the petitioner. This position is, however, not
in consonance with previous rulings of this Court in similar cases.
In Javier vs. Concepcion, Jr., this Court pegged the value of the useful
improvements consisting of various fruits, bamboos, a house and
camarin made of strong material based on the market value of the
said improvements. In Sarmiento vs. Agana, despite the finding that
the useful improvement, a residential house, was built in 1967 at a
cost of between eight thousand pesos (P8,000.00) to ten thousand
pesos (P10,000.00), the landowner was ordered to reimburse the
builder in the amount of forty thousand pesos (P40,000.00), the value
of the house at the time of the trial. In the same way, the landowner
was required to pay the "present value" of the house, a useful
improvement, in the case of De Guzman vs. De la Fuente, cited by the
petitioner.
The objective of Article 546 of the Civil Code is to
administer justice between the parties involved. In this regard, this
Court had long ago stated in Rivera vs. Roman Catholic Archbishop of
Manila that the said provision was formulated in trying to adjust the
rights of the owner and possessor in good faith of a piece of land, to
administer complete justice to both of them in such a way as neither
one nor the other may enrich himself of that which does not belong to
him. Guided by this precept, it is therefore the current market
value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private
respondents who would otherwise be allowed to acquire a highly
valued income-yielding four-unit apartment building for a measly
amount. Consequently, the parties should therefore be allowed to
adduce evidence on the present market value of the apartment
building upon which the trial court should base its finding as to the
amount of reimbursement to be paid by the landowner.[88] (Emphases
supplied.)
Still following the rules of accession, civil fruits, such as rents, belong
to the owner of the building.[89] Thus, Dr. Rosario has a right to the
rents of the improvements on Lot No. 356-A and is under no
obligation to render an accounting of the same to anyone. In fact, it is
the Torbela siblings who are required to account for the rents they
had collected from the lessees of the commercial building and turn
over any balance to Dr. Rosario. Dr. Rosarios right to the rents of the
improvements on Lot No. 356-A shall continue until the Torbela
siblings have chosen their option under Article 448 of the Civil
Code. And in case the Torbela siblings decide to appropriate the
improvements, Dr. Rosario shall have the right to retain said
improvements, as well as the rents thereof, until the indemnity for
the same has been paid.[90]
Dr. Rosario is liable for damages to the Torbela siblings.
The Court of Appeals ordered Dr. Rosario to pay the Torbela
siblings P300,000.00 as moral damages; P200,000.00 as exemplary
damages; and P100,000.00 as attorneys fees.
Indeed, Dr. Rosarios deceit and bad faith is evident when, being fully
aware that he only held Lot No. 356-A in trust for the Torbela siblings,
he mortgaged said property to PNB and Banco Filipino absent the
consent of the Torbela siblings, and caused the irregular cancellation
of the Torbela siblings adverse claim on TCT No. 52751. Irrefragably,
Dr. Rosarios betrayal had caused the Torbela siblings (which included
Dr. Rosarios own mother, Eufrosina Torbela Rosario) mental anguish,
serious anxiety, and wounded feelings.Resultantly, the award of moral
damages is justified, but the amount thereof is reduced
to P200,000.00.
In addition to the moral damages, exemplary damages may also be
imposed given that Dr. Rosarios wrongful acts were accompanied by
bad faith. However, judicial discretion granted to the courts in the
assessment of damages must always be exercised with balanced
restraint and measured objectivity. The circumstances of the case call
for a reduction of the award of exemplary damages to P100,000.00.
As regards attorney's fees, they may be awarded when the
defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest. Because of
Dr. Rosarios acts, the Torbela siblings were constrained to institute
several cases against Dr. Rosario and his spouse, Duque-Rosario, as
well as Banco Filipino, which had lasted for more than 25
years. Consequently, the Torbela siblings are entitled to an award of
attorney's fees and the amount of P100,000.00 may beconsidered
rational, fair, and reasonable.
Banco Filipino is entitled to a writ of possession for Lot No. 5-F-8-C-2-
B-2-A.
The Court emphasizes that Pet. Case No. U-822, instituted
by Banco Filipino for the issuance of a writ of possession before the
RTC of Urdaneta, included only Lot No. 5-F-8-C-2-B-2-A and Lot No.
356-A (Lot No. 4489, the third property mortgaged to secure Dr.
Rosarios loan from Banco Filipino, is located in Dagupan City,
Pangasinan, and the petition for issuance of a writ of possession for
the same should be separately filed with the RTC of Dagupan
City). Since the Court has already granted herein the reconveyance of
Lot No. 356-A from Banco Filipino to the Torbela siblings, the writ of
possession now pertains only to Lot No. 5-F-8-C-2-B-2-A.
To recall, the Court of Appeals affirmed the issuance by the
RTC of a writ of possession in favor of Banco Filipino. Dr. Rosario no
longer appealed from said judgment of the appellate court. Already
legally separated from Dr. Rosario, Duque-Rosario alone challenges
the writ of possession before this Court through her Petition in G.R.
No. 140553.
Duque-Rosario alleges in her Petition that Lot No. 5-F-8-C-
2-B-2-A had been registered in her name under TCT No. 104189. Yet,
without a copy of TCT No. 104189 on record, the Court cannot give
much credence to Duque-Rosarios claim of sole ownership of Lot No.
5-F-8-C-2-B-2-A. Also, the question of whether Lot No. 5-F-8-C-2-B-2-A
was the paraphernal property of Duque-Rosario or the conjugal
property of the spouses Rosario would not alter the outcome of
Duque-Rosarios Petition.
The following facts are undisputed: Banco Filipino extrajudicially
foreclosed the mortgage constituted on Lot No. 5-F-8-C-2-B-2-A and
the two other properties after Dr. Rosario defaulted on the payment
of his loan; Banco Filipino was the highest bidder for all three
properties at the foreclosure sale on April 2, 1987; the Certificate of
Sale dated April 2, 1987 was registered in April 1987; and based on
the Certificate of Final Sale dated May 24, 1988 and Affidavit of
Consolidation dated May 25, 1988, the Register of Deeds cancelled
TCT No. 104189 and issued TCT No. 165812 in the name of Banco
Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7, 1988.
The Court has consistently ruled that the one-year redemption period
should be counted not from the date of foreclosure sale, but from the
time the certificate of sale is registered with the Registry of
Deeds.[91] No copy of TCT No. 104189 can be found in the records of
this case, but the fact of annotation of the Certificate of Sale thereon
was admitted by the parties, only differing on the date it was
made: April 14, 1987 according to Banco Filipino and April 15, 1987 as
maintained by Duque-Rosario. Even if the Court concedes that the
Certificate of Sale was annotated on TCT No. 104189 on the later
date, April 15, 1987, the one-year redemption period already expired
on April 14, 1988.[92] The Certificate of Final Sale and Affidavit of
Consolidation were executed more than a month thereafter, on May
24, 1988 and May 25, 1988, respectively, and were clearly not
premature.
It is true that the rule on redemption is liberally construed
in favor of the original owner of the property. The policy of the law is
to aid rather than to defeat him in the exercise of his right of
redemption.[93] However, the liberal interpretation of the rule on
redemption is inapplicable herein as neither Duque-Rosario nor Dr.
Rosario had made any attempt to redeem Lot No. 5-F-8-C-2-B-2-
A. Duque-Rosario could only rely on the efforts of the Torbela siblings
at redemption, which were unsuccessful. While the Torbela siblings
made several offers to redeem Lot No. 356-A, as well as the two other
properties mortgaged by Dr. Rosario, they did not make any valid
tender of the redemption price to effect a valid redemption. The
general rule in redemption is that it is not sufficient that a person
offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender
of payment. The redemption price should either be fully offered in
legal tender or else validly consigned in court. Only by such means can
the auction winner be assured that the offer to redeem is being made
in good faith.[94] In case of disagreement over the redemption price,
the redemptioner may preserve his right of redemption through
judicial action, which in every case, must be filed within the one-year
period of redemption. The filing of the court action to enforce
redemption, being equivalent to a formal offer to redeem, would have
the effect of preserving his redemptive rights and freezing the
expiration of the one-year period.[95] But no such action was instituted
by the Torbela siblings or either of the spouses Rosario.
Duque-Rosario also cannot bar the issuance of the writ of
possession over Lot No. 5-F-8-C-2-B-2-A in favor of Banco Filipino by
invoking the pendency of Civil Case No. U-4359, the Torbela siblings
action for recovery of ownership and possession and damages, which
supposedly tolled the period for redemption of the foreclosed
properties.Without belaboring the issue of Civil Case No. U-4359
suspending the redemption period, the Court simply points out to
Duque-Rosario that Civil Case No. U-4359 involved Lot No. 356-A only,
and the legal consequences of the institution, pendency, and
resolution of Civil Case No. U-4359 apply to Lot No. 356-A alone.
Equally unpersuasive is Duque-Rosarios argument that the
writ of possession over Lot No. 5-F-8-C-2-B-2-A should not be issued
given the defects in the conduct of the foreclosure sale (i.e., lack of
personal notice to Duque-Rosario) and consolidation of title (i.e.,
failure to provide Duque-Rosario with copies of the Certificate of Final
Sale).
The right of the purchaser to the possession of the
foreclosed property becomes absolute upon the expiration of the
redemption period. The basis of this right to possession is the
purchaser's ownership of the property. After the consolidation of title
in the buyer's name for failure of the mortgagor to redeem, the writ
of possession becomes a matter of right and its issuance to a
purchaser in an extrajudicial foreclosure is merely a ministerial
function.[96]
The judge with whom an application for a writ of
possession is filed need not look into the validity of the mortgage or
the manner of its foreclosure. Any question regarding the validity of
the mortgage or its foreclosure cannot be a legal ground for the
refusal to issue a writ of possession. Regardless of whether or not
there is a pending suit for the annulment of the mortgage or the
foreclosure itself, the purchaser is entitled to a writ of possession,
without prejudice, of course, to the eventual outcome of the pending
annulment case. The issuance of a writ of possession in favor of the
purchaser in a foreclosure sale is a ministerial act and does not entail
the exercise of discretion.[97]
WHEREFORE, in view of the foregoing, the Petition of the Torbela
siblings in G.R. No. 140528 is GRANTED, while the Petition of Lena
Duque-Rosario in G.R. No. 140553 is DENIED for lack of merit. The
Decision dated June 29, 1999 of the Court of Appeals in CA-G.R. CV
No. 39770, which affirmed with modification the Amended Decision
dated January 29, 1992 of the RTC in Civil Case Nos. U-4359 and U-
4733 and Pet. Case No. U-822, is AFFIRMED WITH MODIFICATIONS,
to now read as follows:
(1) Banco Filipino is ORDERED to reconvey Lot No. 356-A to the
Torbela siblings;
(2) The Register of Deeds of Pangasinan is ORDERED to
cancel TCT No. 165813 in the name of Banco Filipino and to issue a
new certificate of title in the name of the Torbela siblings for Lot No.
356-A;
(3) The case is REMANDED to the RTC for further
proceedings to determine the facts essential to the proper application
of Articles 448 and 546 of the Civil Code, particularly: (a) the present
fair market value of Lot No. 356-A; (b) the present fair market value of
the improvements thereon; (c) the option of the Torbela siblings to
appropriate the improvements on Lot No. 356-A or require Dr. Rosario
to purchase Lot No. 356-A; and (d) in the event that the Torbela
siblings choose to require Dr. Rosario to purchase Lot No. 356-A but
the value thereof is considerably more than the improvements, then
the reasonable rent of Lot No. 356-A to be paid by Dr. Rosario to the
Torbela siblings;
(4) The Torbela siblings are DIRECTED to submit an
accounting of the rents of the improvements on Lot No. 356-A which
they had received and to turn over any balance thereof to Dr. Rosario;
(5) Dr. Rosario is ORDERED to pay the Torbela
siblings P200,000.00 as moral damages, P100,000.00 as exemplary
damages, and P100,000.00 as attorneys fees; and
(6) Banco Filipino is entitled to a writ of possession over
Lot-5-F-8-C-2-B-2-A, covered by TCT No. 165812. The RTC Branch Clerk
of Court is ORDERED to issue a writ of possession for the said
property in favor of Banco Filipino.
SO ORDERED.
 SECOND DIVISION PROJECT OF PARTITION

RICHARD B. LOPEZ, in his G.R. No. 157784 14. Pursuant to the terms of the Will, one-half (1/2) of the following
Capacity as Trustee of the Trust properties, which are not burdened with any obligation, shall be
Estate of the late Juliana Lopez- constituted into the Fidei-comiso de Juliana LopezManzano and
Manzano, Present: delivered to Jose Lopez Manzano as trustee thereof:
Petitioner,
Location Title No. Area (Sq. M.) Improvements

- versus - TINGA, Abra de Ilog, TCT - 540 2,940,000 pasture, etc.

VELASCO, JR. Mindoro
Respondents.
x--------------------------------------------------------------------------------x Antorcha St. TCT 1217-A 13,040 residential
DECISION Balayan, Batangas (1/6 thereof)
TINGA, J.:
and all those properties to be inherited by the decedent, by intestacy,
This is a petition for review on certiorari [1]under Rule 45 of the 1997 from her sister, Clemencia Lopez y Castelo.
Rules of Civil Procedure, assailing the Decision[2] and Resolution[3] of
the Court of Appeals in CA-G.R. CV No. 34086. The Court of Appeals 15. The other half (1/2) of the aforesaid properties is adjudicated to
decision affirmed the summary judgment of the Regional Trial Court Jose Lopez Manzano as heir.
(RTC), Branch 10, Balayan, Batangas, dismissing petitioners action
for reconveyance on the ground of prescription. Then, Jose listed those properties which he alleged were registered in
both his and Julianas names, totaling 13 parcels in all. The disputed
The instant petition stemmed from an action properties consisting of six (6) parcels, all located
for reconveyance instituted by petitioner Richard B. Lopez in his in Balayan, Batangas, were included in said list. These properties, as
capacity as trustee of the estate of the late Juliana described in the project of partition, are as follows:
LopezManzano (Juliana) to recover from respondents several large Location Title No. Area (Sq. M.) Improvements
tracts of lands allegedly belonging to the trust estate of Juliana.
Pantay, Calaca, 91,283 coconuts
The decedent, Juliana, was married to Jose Batangas
Lopez Manzano (Jose). Their union did not bear any children. Juliana
was the owner of several properties, among them, the properties Mataywanak, OCT-29[6]94 485,486 sugar
subject of this dispute. The disputed properties totaling more than Tuy, Batangas
1,500 hectares consist of six parcels of land, which are all located
in Batangas. They were the exclusive paraphernal properties of Juliana Patugo, Balayan, OCT-2807 16,757,615 coconut,
together with a Batangas
parcel sugar,
of land
citrus,situated in Mindoro known
as Abra de Ilog and pasteur
a fractional interest in a residential land
on Antorcha St.,Balayan, Batangas.
Cagayan, Balayan, TCT-1220 411,331 sugar
Juliana executed a notarial will,[4] whereby she
On 23 March 1968,Batangas
expressed that she wished to constitute a trust fund for
her paraphernal properties,
Pook, Baayan
denominated
TCT-1281 135,922
asFideicomiso
sugar de Juliana
Lopez Manzano (Fideicomiso),
Batangas to be administered by her husband. If
her husband were to die or renounce the obligation, her nephew,
Enrique Lopez, was Bolbok,
to become
Balayan, TCT-18845
administrator444,998
and sugar
executor of
the Fideicomiso. Two-thirds
Batangas (2/3) of the income from rentals over
these properties were
Calzada,
to answer
Balayan,
forTCT
the1978
education
2,312 sugar
of deserving but
needy honor students,
Batangas
while one-third 1/3 was to shoulder the
expenses and fees ofGumamela,
the administrator.
Balayan, As
TCT-2575
to her conjugal
829 properties,
Juliana bequeathedBatangas
the portion that she could legally dispose to her
husband, and after Bombon,
his death,
Balayan,
said4,532
properties were to pass to
her biznietos or great
Batangas
grandchildren.
Paraaque, Rizal TCT-282340 800 residential
Juliana initiated the
Paraaque,
probateRizal
of TCT-11577
her will five
800 residential
(5) days after its
execution, but she Modesto
died on 12St.,August
Manila 1968,
TCT-52212
before
137.8
theresidential
petition for
probate could be heard. The petition was pursued instead in Special and the existing sugar quota in the name of the deceased with the
Proceedings (S.P.) No. 706 by her husband, Jose, who was the Central Azucarera Don Pedro at Nasugbo.
designated executor in the will. On 7 October 1968, the Court of First
Instance, Branch 3,Balayan, Batangas, acting as probate court, 16. The remaining shall likewise go to Jose Lopez Manzano, with the
admitted the will to probate and issued the letters testamentary to condition to be annotated on the titles thereof, that upon his death,
Jose. Jose then submitted an inventory of Julianas real and personal the same shall pass on to Corazon Lopez, Ferdinand Lopez, and
properties with their appraised values, which was approved by the Roberto Lopez:
probate court.
Location Title No. Area (Sq. M.) Improvements
Thereafter, Jose filed a Report dated 16 August 1969, which included
a proposed project of partition. In the report, Jose explained that as Dalig, Balayan, TCT-10080 482,872 sugar
the only compulsory heir of Juliana, he was entitled by operation of Batangas
law to one-half (1/2) of Julianas paraphernal properties as San Juan, Rizal TCT-53690 523 residential
his legitime, while the other one-half (1/2) was to be constituted into
the Fideicomiso. At the same time, Jose alleged that he and Juliana On 25 August 1969, the probate court issued an order approving the
had outstanding debts totaling P816,000.00 excluding interests, and project of partition. As to the properties to be constituted into
that these debts were secured by real estate mortgages. He noted the Fideicomiso, the probate court ordered that the certificates of title
that if these debts were liquidated, the residuary estate available for thereto be cancelled, and, in lieu thereof, new certificates be issued in
distribution would, value-wise, be very small. favor of Jose as trustee of the Fideicomiso covering one-half (1/2) of
the properties listed under paragraph 14 of the project of partition;
From these premises, Jose proceeded to offer a project of partition. and regarding the other half, to be registered in the name of Jose as
The relevant portion pertaining to the Fideicomiso stated, thus: heir of Juliana. The properties which Jose had alleged as registered in
his and Julianas names, including the disputed lots, were adjudicated
to Jose as heir, subject to the condition that Jose would settle the
obligations charged on these properties. The probate court, thus,
directed that new certificates of title be issued in favor of Jose as the
registered owner thereof in its Order dated 15 September 1969. On
even date, the certificates of title of the disputed properties were
issued in the name of Jose.
The Fideicomiso was constituted in S.P No. 706 encompassing one-half
(1/2) of the Abra de Ilog lot on Mindoro, the 1/6 portion of the lot
in Antorcha St. in Balayan, Batangasand all other properties
inherited ab intestato by Juliana from her sister, Clemencia, in
accordance with the order of the probate court in S.P. No. 706. The
disputed lands were excluded from the trust.
Jose died on 22 July 1980, leaving a holographic will
disposing of the disputed properties to respondents. The will was
allowed probate on 20 December 1983 in S.P. No. 2675 before the
RTC of Pasay City. Pursuant to Joses will, the RTC ordered on 20
December 1983 the transfer of the disputed properties to the
respondents as the heirs of Jose. Consequently, the certificates of title
of the disputed properties were cancelled and new ones issued in the
names of respondents.
Petitioners father, Enrique Lopez, also assumed the
trusteeship of Julianas estate. On 30 August 1984, the RTC
of Batangas, Branch 9 appointed petitioner as trustee of Julianas
estate in S.P. No. 706. On 11 December 1984, petitioner instituted an
action for reconveyance of parcels of land with sum of money before
the RTC of Balayan, Batangasagainst respondents. The
complaint[5] essentially alleged that Jose was able to register in his
name the disputed properties, which were the paraphernal properties
of Juliana, either during their conjugal union or in the course of the
performance of his duties as executor of the testate estate of Juliana
and that upon the death of Jose, the disputed properties were
included in the inventory as if they formed part of Joses estate when
in fact Jose was holding them only in trust for the trust estate of
Juliana.
Respondents Maria Rolinda Manzano, Maria Rosario
Santos, Jose Manzano, Jr., Narciso Manzano, Maria
Cristina Manzano Rubio and Irene Monzon filed a joint answer[6] with
counterclaim for damages. Respondents Corazon, Fernando and
Roberto, all surnamed Lopez, who were minors at that time and
represented by their mother, filed a motion to dismiss,[7] the
resolution of which was deferred until trial on the merits. The RTC
scheduled several pre-trial conferences and ordered the parties to
submit pre-trial briefs and copies of the exhibits.
On 10 September 1990, the RTC rendered a summary
judgment,[8] dismissing the action on the ground of prescription of
action. The RTC also denied respondents motion to set date of hearing
on the counterclaim.
Both petitioner and respondents elevated the matter to the Court of
Appeals. On 18 October 2002, the Court of Appeals rendered the
assailed decision denying the appeals filed by both petitioner and
respondents. The Court of Appeals also denied petitioners motion for
reconsideration for lack of merit in its Resolution dated 3 April 2003.
Hence, the instant petition attributing the following errors to the
Court of Appeals:
I. THE COURT OF APPEALS CONCLUSION THAT PETITIONERS
ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING AS
BASIS SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE
TRANSFERRED TO THE NAME OF THE LATE JOSE LOPEZ MANZANO IN
RELATION TO DECEMBER 12, 1984 WHEN THE ACTION FOR
RECONVEYANCE WAS FILED IS ERRONEOUS.
II. THE RESPONDENT COURT OF APPEALS CONCLUSION IN
FINDING THAT THE FIDUCIARY RELATION ASSUMED BY THE LATE JOSE
LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE LAST WILL AND
TESTAMENT OF JULIANA LOPEZ MANZANO WAS IMPLIED TRUST,
INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.
None of the respondents filed a comment on the petition. The counsel
for respondents Corazon, Fernando and Roberto, all surnamed Lopez,
explained that he learned that respondents had migrated to
the United States only when the case was pending before the Court of
Appeals.[9] Counsel for the rest of the respondents likewise
manifested that the failure by said respondents to contact or
communicate with him possibly signified their lack of interest in the
case.[10] In a Resolution dated 19 September 2005, the Court
dispensed with the filing of a comment and considered the case
submitted for decision.[11]
The core issue of the instant petition hinges on whether petitioners
action for reconveyance has prescribed. The resolution of this issue
calls for a determination of whether an implied trust was constituted
over the disputed properties when Jose, the trustee, registered them
in his name.
Petitioner insists that an express trust was constituted over
the disputed properties; thus the registration of the disputed
properties in the name of Jose as trustee cannot give rise to
prescription of action to prevent the recovery of the disputed
properties by the beneficiary against the trustee.
Evidently, Julianas testamentary intent was to constitute
an express trust over her paraphernal properties which was carried
out when the Fideicomiso was established in S.P. No. 706.[12] However,
the disputed properties were expressly excluded from
the Fideicomiso. The probate court adjudicated the disputed
properties to Jose as the sole heir of Juliana. If a mistake was made in
excluding the disputed properties from the Fideicomiso and
adjudicating the same to Jose as sole heir, the mistake was not
rectified as no party appeared to oppose or appeal the exclusion of
the disputed properties from the Fideicomiso. Moreover, the
exclusion of the disputed properties from the Fideicomiso bore the
approval of the probate court. The issuance of the probate courts
order adjudicating the disputed properties to Jose as the sole heir of
Juliana enjoys the presumption of regularity.[13]
On the premise that the disputed properties were
the paraphernal properties of Juliana which should have been
included in the Fideicomiso, their registration in the name of Jose
would be erroneous and Joses possession would be that of a trustee
in an implied trust. 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.[14]
The provision on implied trust governing the factual milieu
of this case is provided in 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 Aznar Brothers Realty Company v. Aying,[15] the Court
differentiated two kinds of implied trusts, to wit:
x x x 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.[16]
A resulting trust is presumed 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 itself.[17] Specific
examples of resulting trusts may be found in the Civil Code,
particularly Arts. 1448,[18] 1449,[19] 1451,[20] 1452[21] and 1453.[22] WHEREFORE, the instant petition for review on certiorari is
DENIED and the decision and resolution of the Court of Appeals in CA-
A constructive trust is created, not by any word evincing a G.R. CV No. 34086 are AFFIRMED. Costs against petitioner.
direct intention to create a trust, but by operation of law in order to
satisfy the demands of justice and to prevent unjust enrichment.[23] It SO ORDERED.
is raised by equity in respect of property, which has been acquired by
fraud, or where although acquired originally without fraud, it is
against equity that it should be retained by the person holding
it.[24] Constructive trusts are illustrated in Arts.
1450,[25] 1454,[26] 1455[27] and 1456.[28]
The disputed properties were excluded from
the Fideicomiso at the outset. Jose registered the disputed properties
in his name partly as his conjugal share and partly as his inheritance
from his wife Juliana, which is the complete reverse of the claim of the
petitioner, as the new trustee, that the properties are intended for
the beneficiaries of theFideicomiso. Furthermore, the exclusion of the
disputed properties from the Fideicomiso was approved by the
probate court and, subsequently, by the trial court having jurisdiction
over the Fideicomiso. The registration of the disputed properties in
the name of Jose was actually pursuant to a court order. The apparent
mistake in the adjudication of the disputed properties to Jose created
a mere implied trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso.

Now that it is established that only a constructive trust was

constituted over the disputed properties, may prescription for the
recovery of the properties supervene?

Petitioner asserts that, if at all, prescription should be

reckoned only when respondents caused the registration of the
disputed properties in their names on 13 April 1984and not on 15
September 1969, when Jose registered the same in his name pursuant
to the probate courts order adjudicating the disputed properties to
him as the sole heir of Juliana. Petitioner adds, proceeding on the
premise that the prescriptive period should be counted from the
repudiation of the trust, Jose had not performed any act indicative of
his repudiation of the trust or otherwise declared an adverse claim
over the disputed properties.

The argument is tenuous.

The right to seek reconveyance based on an implied or

constructive trust is not absolute. It is subject to extinctive
prescription.[29] An action for reconveyance based on implied or
constructive trust prescribes in 10 years. This period is reckoned from
the date of the issuance of the original certificate of title or transfer
certificate of title. Since such issuance operates as a constructive
notice to the whole world, the discovery of the fraud is deemed to
have taken place at that time.[30]

In the instant case, the ten-year prescriptive period to

recover the disputed property must be counted from its registration
in the name of Jose on 15 September 1969, when petitioner was
charged with constructive notice that Jose adjudicated the disputed
properties to himself as the sole heir of Juana and not as trustee of
the Fideicomiso.

It should be pointed out also that Jose had already

indicated at the outset that the disputed properties did not form part
of the Fideicomiso contrary to petitioners claim that no overt acts of
repudiation may be attributed to Jose. It may not be amiss to state
that in the project of partition submitted to the probate court, Jose
had indicated that the disputed properties were conjugal in nature
and, thus, excluded from Julianas Fideicomiso. This act is clearly
tantamount to repudiating the trust, at which point the period for
prescription is reckoned.
In any case, the rule that a trustee cannot acquire by
prescription ownership over property entrusted to him until and
unless he repudiates the trust applies only 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 said trust is not a condition
precedent to the running of the prescriptive period.[31] Thus, for the
purpose of counting the ten-year prescriptive period for the action to
enforce the constructive trust, the reckoning point is deemed to be
on 15 September 1969 when Jose registered the disputed properties
in his name.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 110115 October 8, 1997
RODOLFO TIGNO AND SPOUSES EDUALINO and EVELYN
CASIPIT, petitioners,
vs.
COURT OF APPEALS AND EDUARDO TIGNO, respondents.
PANGANIBAN, J.:
In denying this petition, the Court takes this occasion to apply the
principles of implied trust. As an exception to the general rule barring
factual reviews in petitions under Rule 45, the Court wades into the
transcript of stenographic notes only to find that the Court of Appeals,
indeed, correctly overturned the trial court's findings of facts.
The Case
Petitioners challenge the Decision 1 of Respondent Court of
Appeals 2 in CA-G.R. CV No. 29781 promulgated on October 15, 1992
and its Resolution 3 promulgated on May 5, 1993. The dispositive
portion of the assailed Decision reads: 4
WHEREFORE, in view of the foregoing, the decision appealed from is
hereby REVERSED and another one ENTERED as follows:
1. Declaring plaintiff-appellant Eduardo M. Tigno as the true and
lawful owner of the lands described in the complaint;
2. Declaring the Deed of Sale executed by defendant-appellee Rodolfo
M. Tigno in favor of defendant-appellee spouses Edualino Casipit and
Avelina Estrada as null and void and of no effect; and
3. Ordering defendant-appellee Rodolfo M. Tigno to vacate the
parcels of land described in the complaint and surrender possession
thereof to plaintiff-appellant Eduardo M. Tigno.
With costs against defendants-appellees.
Petitioners' subsequent motion for reconsideration was "denied for
lack of merit" in the assailed Resolution. 5
The Facts
Respondent Court adequately recited the facts of the case as follows: 6
The facts from the standpoint of plaintiff-appellant's (herein private
respondent's) evidence are summarized in his brief, to wit:
Sometime in January, 1980, Bienvenido Sison, Remedios Sison and the
heirs of Isaac Sison, namely: Manuel Sison, Gerardo Sison and
Adelaida Sison appointed Dominador Cruz as agent to sell three (3)
parcels of land adjoining each other located at Padilla St., Lingayen,
Pangasinan (TSN, Sept. 5, 1989, pp. 6-8). These parcels of land
belonging to the abovenamed persons are more particularly described
as follows:
Bienvenido Sison:
A parcel of fishpond situated at Padilla Street, Lingayen, Pangasinan,
with an area of 3006.67 square meters, more or less, bounded on the
North by Padilla Street, on the South by Lots 1105, 1106, 1107, 1108,
etc., on the East by alley, and on the West by Alejandro Vinluan and
Thomas Caldito: (Exh. B)
Heirs of Isaac Sison (i.e. Manuel, Gerardo and Adelaida Sison)
A parcel of fishpond, situated at Padilla Street, Lingayen, Pangasinan,
with an area of 3006.66 square meters, more or less, bounded on the
North by Padilla Street; On the South by Bienvenido Sison, on the East
by Alley, and on the West by Mariano Sison; (Exh. A)
Remedios Sison
A parcel of unirrigated riceland (now fishpond) situated in Poblacion,
Lingayen, Pangasinan, containing an area of 3006.66 square meters,
more or less, bounded on the North by Padilla Street; on the East by
Path; on the South by Dionisio and Domingo Sison; and on the West
by Path; (Exh. C)
Sometime in April 1980, Rodolfo Tigno learned that the
abovedescribed properties were for sale. Accordingly, he approached
Cruz and told the latter to offer these parcels of land to his brother,
Eduardo Tigno, herein appellant (TSN, Sept. 5, 1989, p. 9).
Pursuant thereto, Cruz and Rodolfo Tigno went to appellant's Makati
office to convince the latter to buy the properties earlier described. At
first, appellant was reluctant, but upon Rodolfo Tigno's prodding,
appellant was finally convinced to buy them (TSN, Sept. 5, 1989, pp. 9-
11). In that meeting between Cruz and appellant at the latter's office,
it was agreed that each parcel of land would cost Ten Thousand Pesos
(P10,000.00) [TSN, Oct. 16, 1989, p. 9].
Having reached an agreement of sale, appellant then instructed Cruz
to bring the owners of these parcels of land to his ancestral house at
Guilig Street, Lingayen, Pangasinan on May 2, 1980, as he will be there
to attend the town fiesta (TSN, Sept. 5, 1989, p. 13).
After leaving appellant's office, Cruz and Rodolfo Tigno went to
Manila City Hall to visit the latter's uncle, Epifanio Tigno, who works
there. At the Manila City Hall, Cruz and Rodolfo Tigno intimated to
Epifanio Tigno that appellant has agreed to buy the 3 parcels of land
abovedescribed (TSN, Sept. 5, 1989, p. 19; TSN, Sept. 29, 1989, pp. 8-
10).
After leaving Manila City Hall, Cruz and Rodolfo Tigno left for
Lingayen, Pangasinan (TSN, Sept. 5, 1989, p. 15).
On May 2, 1980, Cruz, together with Bienvenido Sison, Manuel Sison,
Adelaida Sison and Remedios Sison went to appellant's house at Guilig
Street, Lingayen, Pangasinan. At around 5:00 o'clock in the afternoon,
the abovenamed persons and appellant went to Atty. Modesto
Manuel's house at Defensores West Street, Lingayen, Pangasinan for
the preparation of the appropriate deeds of sale (TSN, Sept. 5, 1989,
pp. 15-17).
At Atty. Manuel's house, it was learned that Bienvenido Sison failed to
bring the tax declarations relating to his property. Also, Remedios
Sison had mortgaged her property to a certain Mr. Tuliao, which
mortgage was then existent. Further, Manuel Sison did not have a
Special Power of Attorney from his sister in the United States of
America to evidence her consent to the sale. In view thereof, no deed
of sale was prepared on that day (TSN, Sept. 5, 1989, pp. 17-19).
However, despite the fact that no deed of sale was prepared by Atty.
Manuel, Remedios Sison, Bienvenido Sison and Manuel Sison asked
appellant to pay a fifty percent (50%) downpayment for the
properties. The latter acceded to the request and gave Five Thousand
Pesos (P5,000.00) each to the 3 abovenamed persons for a total of
Fifteen Thousand Pesos (P15,000.00) (TSN, Sept. 5, 1989, pp. 19-20).
This was witnessed by Cruz and Atty. Manuel. After giving the
downpayment, appellant instructed Cruz and Atty. Manuel to place
the name of Rodolfo Tigno as "vendee" in the deeds of sale to be
subsequently prepared. This instruction was given to enable Rodolfo
Tigno to mortgage these properties at the Philippine National Bank
(PNB), Lingayen Branch, for appropriate funds needed for the
development of these parcels of land as "fishponds" (TSN, Sept. 27,
1989, pp. 16-23).
On May 6, 1980, May 12, 1980 and June 12, 1980, the appropriate
deeds of sale (Exhs. A, B, C) were finally prepared by Atty. Manuel and
signed by Bienvenido Sison, the heirs of Isaac Sison (Manuel, Gerardo
and Adelaida Sison), and Remedios Sison, respectively. In all these
deeds of sale, Rodolfo Tigno was named as "vendee" pursuant to the
verbal instruction of herein appellant. Cruz, the agent in the sale,
signed in these three (3) deeds of sale as a witness (Exhs. A-2, B-l and
C-l).
Sometime in the second week of July 1980, Cruz brought and showed
these deeds of sale to appellant in his Makati office. After seeing
these documents, appellant gave Cruz a Pacific Bank check in the
amount of Twenty Six Thousand Pesos (P26,000.00) representing the
following:
a) P15,000.00 as the balance for the three (3) parcels of land;
b) P6,000.00 representing Cruz's commission as agent; and
c) P5,000.00 for capital gains tax, registration and other incidental
expense. (TSN, Sept. 5, 1989, pp. 39-41).
Upon encashment of this check at PNB, Lingayen Branch, Cruz paid
Remedios Sison, Manuel Sison and Bienvenido Sison, through
Adelaida Sison, the balance due them from appellant (TSN, Sept. 5,
1989, pp. 42-43).
On April 29, 1989, Rodolfo Tigno, without the knowledge and consent
of appellant, sold to Spouses Edualino Casipit and Avelina Casipit
508.56 square meters of the land previously owned by Bienvenido
Sison (Exh. E). At the time of sale, the Casipits were aware that the
portion of the land they bought was owned by appellant, not Rodolfo
Tigno (TSN, Oct. 16, 1989, pp. 30-31; TSN, Nov. 6, 1989, p. 10).
On May 16, 1989, appellant learned that Rodolfo Tigno is
"negotiating" a portion of his land to the Casipits. Accordingly,
appellant sent a letter (Exh. D) to the Casipits advising them to desist
from the intended sale, not knowing that the sale was already
consummated as early as April 29, 1989.
A few days thereafter, upon learning that the sale was already
consummated, appellant confronted the Casipits and Rodolfo Tigno
and asked them to annul the sale, but his request was not heeded
(TSN, Oct. 16, 1989, pp. 29-32). (pp. 12-B to 12-j, rollo)
On May 24, 1989, the plaintiff filed Civil Case No. 16673 for
"Reconveyance, Annulment of Document, Recovery of Possession and
Damages" against Rodolfo M. Tigno and defendant spouses Edualino
Casipit and Avelina Estrada. The complaint alleged, among others,
that plaintiff purchased the three (3) parcels of land in question so
that his brother Rodolfo Tigno, who was then jobless, could have a
source of income as a caretaker of the fishponds; that plaintiff and
Rodolfo agreed that the latter would secure a loan from the Philippine
National Bank at Lingayen using said lands as collateral; that
considering the busy schedule of plaintiff, then as executive vice-
president of an American firm based in Makati, Metro Manila, it was
made to appear in the deeds of sale that Rodolfo M. Tigno was the
vendee so that the latter could, as he actually did, secure a loan from
the PNB without need of plaintiff's signature and personal presence,
the loan proceeds to be used as seed capital for the fishponds; that
there being trust and confidence as brothers between plaintiff and
defendant, the former instructed the Notary Public, who prepared the
Deeds of Sale, to put in said Deeds the name of Rodolfo M. Tigno as
vendee.
The plaintiff further averred in said Complaint that some time on May
16, 1989, when he was in Lingayen, Pangasinan, he came to know
from friends that Rodolfo was negotiating the sale to defendant
spouses of a portion of one of the parcels of land; that after
requesting in writing the defendant-spouses to desist from buying the
land, and after confronting Rodolfo himself, plaintiff found out upon
verification with the Register of Deeds of Lingayen, that Rodolfo had
already sold on April 29, 1989 said portion of 508.56 square meters to
his co-defendant spouses who had previous knowledge that plaintiff,
and not Rodolfo Tigno, is the real owner of said lands; that there
being a violation of trust and confidence by defendant Rodolfo,
plaintiff demanded from said defendants the reconveyance of said
lands, the surrender of the possession thereof to him and the
cancellation of the Deed of Sale of said portion of 508.56 square
meters, but all the demands were unjustifiably refused.
In their Answer (pp. 8-11, records), defendants denied the material
allegations of the complaint and alleged, by way of special and
affirmative defense, that Rodolfo M. Tigno became the absolute and
exclusive owner of the parcels of land having purchased the same
after complying with all legal requirements for a valid transfer and
that in selling a portion thereof to his co-defendants, he was merely
exercising his right to dispose as owner; and that defendant spouses
Casipit acquired the portion of 508.56 square meters in good faith and
for value, relying upon the validity of the vendor's ownership.
After trial on the merits, the trial court 7 dismissed the complaint and
disposed as follows: 8
Wherefore, in the light of the facts and circumstances discussed
above, the court hereby renders judgment against the plaintiff and in
favor of the defendants.
1. Ordering the dismissal of the plaintiffs complaint for lack of basis in
fact and in law;
2. Ordering the plaintiff to pay the defendants the sum of three
thousand (P3,000.00) pesos as atty's fees and further to pay the costs
of the proceedings.
As earlier stated, Respondent Court reversed the trial court. Hence,
this petition for review.
The Issues
Petitioners raise the following issues: 9
I Evidence of record definitely show that the receipts of payments of
Petitioner Rodolfo Tigno for the fishponds in question are
authenticated, contrary to the decision of the Court of Appeals
II Documents and circumstances substantiate ownership of petitioner
Rodolfo Tigno
III No fiduciary relationship existed between Petitioner Rodolfo Tigno
and Private Respondent Eduardo Tigno
The main issue is whether the evidence on record proves the
existence of an implied trust between Petitioner Rodolfo Tigno and
Private Respondent Eduardo Tigno. In petitions for review under Rule
45, this Court ordinarily passes upon questions of law only. However,
in the present case, there is a conflict between the factual findings of
the trial court and those of the Respondent Court. Hence, this Court
decided to take up and rule on such factual issue, as an exception to
the general rule. A corollary question is whether Petitioners Edualino
and Evelyn Casipit are purchasers in good faith and for value of a
portion of the lots allegedly held in trust and whether they may thus
acquire ownership over the said property.
The Court's Ruling
The petition has no merit.
First Issue: Was an Implied Trust Created?
Implied trusts are those which are deducible by operation of law from
the nature of the transaction as matters of equity, independently of
the particular intention of the parties. 10 An implied trust arises where
a person purchases land with his own money and takes conveyance
thereof in the name of another. In such a case, the property is held on
resulting trust in favor of the one furnishing the consideration for the
transfer, unless a different intention or understanding appears. The
trust which results under such circumstances does not arise from a
contract or an agreement of the parties, but from the facts and
circumstances; that is to say, the trust results because of equity and it
arises by implication or operation of law. 11 The species of implied
trust raised by private respondent was extensively discussed by the
Court, through the learned Mr. Justice Hilario G. Davide, Jr.,
in Morales, et al. vs. Court of Appeals, et al.: 12
A trust is the legal relationship between one person having an
equitable ownership in 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. 13 The characteristics of a trust are:
1. It is a relationship;
2. it is a relationship of fiduciary character;
3. it is a relationship with respect to property, not one involving
merely personal duties;
4. it involves the existence of equitable duties imposed upon the
holder of the title to the property to deal with it for the benefit of
another; and
5. it arises as a result of a manifestation of intention to create the
relationship. 14
Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties, while implied trusts come
into being by operation of law, 15 In turn, implied trusts are either
resulting or constructive trusts. 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 or
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. 16
A resulting trust is exemplified by Article 1448 of the Civil Code, which
reads:
Art. 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by another for
the purpose of having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is implied
by law, it being disputably presumed that there is a gift in favor of the
child.
The trust created under the first sentence of Article 1448 is
sometimes referred to as a purchase money resulting trust. 17 The
trust is created in order to effectuate what the law presumes to have
been the intention of the parties in the circumstances that the person
to whom the land was conveyed holds it as trustee for the person who
supplied the purchase money. 18
To give rise to a purchase money resulting trust, it is essential that
there be:
1. an
actual payment of money, property or services, or an equivalent,
constituting valuable consideration;
2. and
such consideration must be furnished by the alleged beneficiary of a
resulting trust. 19
There are recognized exceptions to the establishment of an implied
resulting trust. The first is stated in the last part of Article 1448 itself.
Thus, where A pays the purchase money and title is conveyed by
absolute deed to A's child or to a person to whom A stands in loco
parentis and who makes no express promise, a trust does not result,
the presumption being that a gift was intended. Another exception is,
of course, that in which an actual contrary intention is proved. Also
where the purchase is made in violation of an existing statute and in
evasion of its express provision, no trust can result in favor of the
party who is guilty of the fraud. 20
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. 21 While implied
trusts may be proved by oral evidence, 22 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. 23
In Chiao Liong Tan vs. Court of Appeals, we ruled: 24
A certificate of registration of a motor vehicle in one's name indeed
creates a strong presumption of ownership. For all practical purposes,
the person in whose favor it has been issued is virtually the owner
thereof unless proved otherwise. In other words, such presumption is
rebuttable by competent proof.
The New Civil Code recognizes cases of implied trust other than those
enumerated therein. (fn: Art. 1447, New Civil Code) Thus, although no
specific provision could be cited to apply to the parties herein, it is
undeniable that an implied trust was created when the certificate of
registration of the motor vehicle was placed in the name of petitioner
although the price thereof was not paid by him but by private
respondent. The principle that a trustee who puts a certificate of
registration in his name cannot repudiate the trust by relying on the
registration is one of the well-known limitations upon a title. A trust,
which derives its strength from the confidence one reposes on
another especially between brothers, does not lose that character
simply because of what appears in a legal document.
Even under the Torrens System of land registration, this Court in some
instances did away with the irrevocability or indefeasibility of a
certificate of title to prevent injustice against the rightful owner of the
property. (fn: Bornales v. IAC, G.R. No. 75336, 166 SCRA 524 [1988];
Amerol v. Bagumbayan, G.R. No. L-33261, 154 SCRA 403 [1987];
Cardiente v. IAC, G.R. No. 73651, 155 SCRA 689 [1987].)
In this petition, petitioners deny that an implied trust was constituted
between the brothers Rodolfo and Eduardo. They contend that,
contrary to the findings of Respondent Court, their Exhibit 16 25 and
Exhibit 17 26 were fully authenticated by Dominador Cruz, an
"instrumental witness." Hence, he should not be allowed to vary the
plain content of the two documents indicating that Rodolfo Tigno was
the vendee.
We not persuaded. Witness Dominador Cruz did not authenticate the
genuineness of Exhibit 16: 27
ATTY. BERMUDEZ:
As Exhibit "16" dated June 12, 1980 signed by Remedios Sison, is that
the document executed Remedios Sison?
ATTY. VIRAY:
That is only a xerox copy, we object, Your Honor.
ATTY. BERMUDEZ:
At any rate there was a receipt, is this the receipt?
A Maybe this or maybe not, sir.
ATTY. BERMUDEZ:
Q I am showing to you another document, which we respectfully
request that the same be marked as Exhibit "17".
In any event, these two exhibits are proof merely of the receipt of
money by the seller; they do not show that Rodolfo paid the balance
of the purchase price. 28 On the other hand, Witness Dominador Cruz
was unshakable in testifying that Private Respondent Eduardo, though
not named in the receipts or in the deeds of sale, was definitely the
real buyer: 29
COURT: (The Court will ask few questions.)
Q Do you know if there [is] a document executed between the
brothers to show the real vendee in these three deeds of absolute
sale is Eduardo Tigno?
A I don't know of any document because according to Eduardo Tigno
it will be placed in the name of his brother, Rodolfo Tigno so that it
can be used as collateral.
COURT:
Q Being the agent of this transaction did you not try to advice Eduardo
Tigno to be safe for him a document will have to be executed showing
that he is really the vendee?
A I also explained that matter to him I know that matter to happen in
the long run they will have dispute but Eduardo Tigno said he is his
brother, he have [sic] trust and confidence in his brother, sir.
COURT:
Q When did you give that advice?
A Before the preparation of the documents, sir.
Q Do you know already that it will be in the name of Rofolfo [sic]
Tigno before the execution?
A Yes, sir. During the time we have conversation on May 2, 1980, he
instructed me to place the name of Rodolfo Tigno in the document,
Atty. Manuel was present when he gave that advice, sir.
COURT:
Q What did Atty. Manuel advised [sic]?
A The reason for [sic] Eduardo Tigno have trust and confidence on his
elder brother, Rodolfo Tigno.
COURT: (Propounding questions)
Q So there is nothing written that will show that the money or
purchase price came from Eduardo Tigno, is that correct?
A None, sir. It's by trust and confidence,
Q Considering that you know that the money came from Eduardo
Tigno, why did you consent that the deed of absolute sale in the name
of Rodolfo Tigno and not Eduardo Tigno?
A Because Atty. Manuel called for Rodolfo Tigno because the
document was in the name of Rodolfo Tigno, sir.
Q The document is already defective, why did you not ask the
preparation of the document to be executed by Rodolfo Tigno
accordingly that the real owner who sold to you is the brother,
Eduardo Tigno?
A I did not think of it, what I know is that the real owner is Eduardo
Tigno, sir, and has the power to disposed.
COURT:
Q Eduardo Tigno is the real owner, why did you agree that Rodolfo
Tigno to execute the document?
A Yes, sir. Atty. Manuel called for Rodolfo Tigno so I consented.
Aside from the "trust and confidence" reposed in him by his brother,
Petitioner Rodolfo was named as vendee in the deeds of sale to
facilitate the loan and mortgage the brothers were applying for to
rehabilitate the fishponds. Be it remembered that private respondent
was a Makati-based business executive who had no time to follow up
the loan application at the PNB branch in Lingayen, Pangasinan and, at
the same time, to tend the fish farm on a daily basis. Atty. Modesto
Manuel, who prepared and notarized the deeds of sale, unhesitatingly
affirmed the unwritten agreement between the two brothers: 30
ATTY. VIRAY:
Will you please tell the Court what is the reason, if ever there was,
why the plaintiff, Eduardo Tigno, instructed you to put the name of
Rodolfo Tigno as vendee in the papers?
ATTY. BERMUDEZ:
We object, Your Honor. The best witness to that is the plaintiff, Your
Honor.
COURT:
Q Do you know the reason why Eduardo Tigno requested you to place
the name of his brother as vendee?
WITNESS:
A Eduardo Tigno requested me to place the name of his brother as
vendee so that the brother can use the lands as collateral for possible
loan at the PNB (Philippine National Bank), sir.
COURT:
Go ahead.
ATTY. VIRAY:
Q When was that when the plaintiff instructed you to place the name
of his brother, the defendant, Rodolfo Tigno as vendee in the
documents so that the defendant, Rodolfo Tigno, could use the
properties as collateral for possible loan to the PNB?
WITNESS:
A It was sometimes during a fiesta in Guilig when Eduardo Tigno and
Dominador Cruz, I think that was May 2, 1980, when Eduardo Tigno
and Dominador Cruz and some of the vendors went to my house and
they requested me to prepare the deeds of sale, sir.
In his direct examination, Atty. Manuel convincingly explained why
Petitioner Rodolfo was named as vendee: 31
ATTY. VIRAY:
Q When the plaintiff Eduardo Tigno instructed you to place the name
of his brother as the vendee in the deeds of sale you were to prepare,
what did you tell him or did you give any advice?
A Yes, sir. I certainly did, sir.
Q What advice?
A Why will I put the name of your brother as vendee when you were
here as real buyer who will give the money to the vendors? Why not
you, I told him, sir.
Q What else did you tell him?
A I remember he is to make Special Power of Attorney in order his
brother (sic) will execute the loan to the PNB, sir.
Q What did the plaintiff, Eduardo Tigno, tell you when you said it
would be best to execute the Special Power of Attorney instead of
placing the name directly in the deeds of sale, what is his answer?
A He acceded to my advised [sic], sir. All right, make the deeds of sale,
he said, agreeable to the deed of sale to my advised but when I told
him that It would take the document probably by the middle of June,
he back [sic] out, sir, because he told me he is going abroad and he
may not be around and then he instructed me to place the name of
his brother as the vendee not the plaintiff anymore, sir.
Q In other words, Mr. Witness, at first he was agreeable and that he
would execute Special Power of Attorney?
A Yes, sir.
Q Since he was going to the United States and he could not wait the
preparation of the documents he just instructed you to go ahead with
the first instruction, is that what you mean, Mr. Witness?
A Yes, sir. (Emphasis supplied.)
This testimony of Atty. Manuel was corroborated by Dominador Cruz
who was the real estate agent cum witness in all three deeds of sale.
As a witness, he pointed out that Petitioner Rodolfo was named as the
vendee in the deeds of sale upon the order of private respondent: 32
ATTY. VIRAY:
Q When you said Atty. Manuel was not able to prepare the deed of
sale on May 2, 1980, what then happened in the house of Atty.
Manuel?
A When Atty. Manuel was not able to prepare the document, my
cousins wanted to get advance payment, one half of ten thousand
pesos, sir, each.
ATTY. VIRAY:
Q Did Eduardo Tigno agreed [sic] to the request of your cousins to get
one half of the price of their land?
A He agreed to give five thousand pesos each but he prepared
temporary receipt fpr [sic] five thousand pesos, sir.
Q Who prepared the receipt?
A Atty. Manuel, sir.
Q By the way, how much all in all did Eduardo Tigno give on May 2,
1980 as advanced consideration?
A P15,000.00, sir.
Q You mean to say five thousand pesos for each parcel of land?
A Yes, sir.
Q After the plaintiff, Eduardo Tigno paid the advanced payment for
five thousand pesos for each parcel of land, what else happened?
A When the three of us, I, Atty. Manuel and Eduardo Tigno were
talking, I heard Eduardo Tigno said to Attyl. [sic] Manuel that the deed
of sale will be placed in the name of my brother, Rodolfo because we
will mortgage the land with the P.N.B., the proceeds will be used in
the development of the fishpond. He requested that the buyer of the
fishpond will be placed in the name of the brother of Eduardo Tigno.
Q Who is that brother of Eduardo Tigno?
A Rodolfo Tigno.
xxx xxx xxx
Q How about the balance of the purchase price of the property, is
there any instruction made by Eduardo Tigno with respect to the
payment thereof?
A With respect to the balance after the preparation of the document
they will bring it to Eduardo Tigno for him to pay the balance, sir.
Q By the way, was the deed of sale to these parcels of land finally
executed?
A Yes, sir.
From the foregoing, it is clear that the name of Rodolfo Tigno
appeared in the deeds of sale not for the purpose of transferring
ownership to him but only to enable him to hold the property in trust
for his brother, herein private respondent.
In the face of the credible and straightforward testimony of the two
witnesses, Cruz and Manuel, the probative value, if any, of the tax
declarations being in the name of Petitioner Rodolfo is utterly minimal
to show ownership. Suffice it to say that these documents, by
themselves, are not conclusive evidence of ownership. 33
Contrary to petitioners' insistence, no delay may be imputed to
private respondent. When private respondent went to Pangasinan to
pay the taxes on his property in Bugallon, he learned from his
relatives that his brother was negotiating the sale of a portion of the
fishponds to Spouses Casipit. Failing to find his brother, he
immediately wrote a letter dated May 16, 1989 addressed to the
Casipits advising them to desist from buying the property because he
was the real owner. On May 18, 1989, he confronted Petitioner
Edualino Casipit about the impending sale, only to learn that the sale
had already been consummated as early as April 29, 1989. 34 Failing to
convince petitioners to annul the sale, private respondent instituted
this case on May 24, 1989 35 or five (5) days after learning from
Edualino of the consummation of the sale. 36 Before the institution of
this case, private respondent had no reason to sue. Indeed, he filed
this case after only five days from learning of the infidelity of his
brother. Clearly, no delay may be attributed to private respondent.
We agree with the detailed disquisitions of the Court of Appeals on
this point: 37
The trial court's conclusion that defendant-appellee is the true buyer
and owner of the lands in question, mainly relying on the Deeds of
Sale where defendant Rodolfo's name appears as vendee, and on the
Tax Declarations and Tax payment receipts in his name, must
inevitably yield to the clear and positive evidence of plaintiff. Firstly,
as has thus been fully established, the only reason why defendant
Rodolfo was made to appear as the buyer in the Deeds of Sale was to
facilitate their mortgage with the PNB Branch at Lingayen to generate
seed capital for the fishponds, out of which Rodolfo could derive
income. With Rodolfo's name as vendee, there would be no need
anymore for the personal presence of plaintiff-appellant who was
very busy with his work in Manila. Moreover, aside from the fact that
plaintiff was to travel abroad for thirty (30) days sometime in June,
1980, he could not have executed a Special Power of Attorney in favor
of Rodolfo, as the Deeds of Sale were not yet prepared on May 2,
1980. Thus, to enable Rodolfo to mortgage the lands, his name was
put as vendee in view of the mutural [sic] trust and confidence
existing between said parties who are brothers. Secondly, it is well-
settled that the tax declarations or the payments of real estate taxes
on the land are not conclusive evidence of ownership of the declarant
or payor (De Guzman v. CA, et al., L-47378, Feb. 27, 1987, and cases
cited therein; Cited in II Regalado REMEDIAL LAW COMPENDIUM, p.
563 [1988]). Since defendant Rodolfo is named as vendee in the
Deeds of Sale, it is only natural that Tax Declarations and the
corresponding tax payment receipts be in his name so as to effect
payment thereof.
Petitioners contend that there was no "fiduciary relationship" created
between the brothers Tigno. Petitioners argue that Rodolfo Tigno
"had exercised all the acts of dominion and ownership over the
fishponds in question," as nobody "shared in the produce of the
fishponds for the past nine (9) years." Therefore, Petitioner Rodolfo,
"being the real purchaser" of the parcels of land, "could validly
transfer the ownership of a portion" to Spouses Casipit. 38
We firmly reject these contentions and need only to cite Respondent
Court's incisive findings:
After a careful examination of the evidence on record, we hold that an
implied trust was created in favor of the plaintiff [private respondent
herein] within the meaning of Article 1448 of the Civil Code, which
provides:
Art. 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by another for
the purpose of having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary. . . . .
An implied trust arises where a person purchases land with his own
money and takes conveyance thereof in the name of another. In such
case, the property is held on a resulting trust in favor of the one
furnishing the consideration for the transfer, unless a different
intention or understanding appears. (Lim vs. Court of Appeals, 65
SCRA 160)
In the earlier case of Heirs of Candelaria, et al. v. Romero, at al., 109
Phil. 500, the Supreme Court elucidated on implied trust:
The trust alleged to have been created in our opinion, is an implied
trust. As held, in effect, by this Court in the case of Martinez
v. Griño (42 Phil. 35), where property is taken by a person under an
agreement to hold it for or convey it to another or the grantor, a
resulting or implied trust arises in favor of the person for whose
benefit the property was intended.
xxx xxx xxx
It is also the rule that an implied trust arises where a person
purchases land with his own money and takes a conveyance thereof in
the name of another. In such a case, the property is held on a
resulting trust in favor of the one furnishing the consideration for the
transfer, unless a different intention or understanding appears. The
trust which results under such circumstances does not arise from
contract or agreement on the parties, but from the facts and
circumstances, that is to say, it results because of equity and arises by
implication or operation of law.
We disagree with the trial court's ruling that if, indeed, a trust has
been established, it is an express trust which cannot be proved by
parol evidence. It must be noted that Article 1441 of the Civil Code
defines both express trust and implied trust in general terms, thus:
Art. 1441. Trusts are either express or implied. Express trust are
created by the intention of the trustor or of the parties. Implied trust
come into being by operation of law.
Specific instances or examples of implied trusts are given in the Civil
Code, one of which is described under Article 1448 quoted
heretofore. Since Article 1448 is a specific provision, it prevails over
and qualifies Article 1441, which is a general provision, under the
rule generalia specialibus non derogant(Alcantara, Statutes, 1990 Ed.,
p. 101).
Therefore, since this case involves an implied trust falling under
Article 1448, parol evidence is allowed to prove its existence pursuant
to Article 1457, Civil Code, which states:
Art. 1457. An implied trust may be proved by oral evidence.
xxx xxx xxx
On the other hand, the record is replete with clear and convincing
evidence to show that (1) plaintiff Eduardo Tigno is the real buyer and
true owner of the lands in question and (2) defendant Rodolfo M.
Tigno is merely a trustee constituted over said lands on behalf of
plaintiff.
It was established thru plaintiff's testimony that plaintiff paid
P5,000.00 each, as first installment, to the three vendors for a total of
P15,000.00 (TSN, Sept. 5, 1989, pp. 19-20), which was witnessed by
Dominador Cruz and Atty. Manuel. Later, he gave a check to
Dominador Cruz, the agent, in the amount of P26,000.00,
representing the following:
a) P15,000.00 as the balance for the three (3) parcels of land;
b) P6,000.00 representing Cruz's commission as agent;
c) P5,000.00 for capital gains tax, registration and other incidental
expenses. (TSN, Sept. 5, 1989, pp. 39-41).
When this check was encashed, Cruz paid the three vendors the
balance due them (TSN, Sept. 5, 1989, pp. 42-43). That plaintiff was
able to pay these amounts is believable, because plaintiff had the
financial means to pay said amounts. At the time of the sale in 1980,
plaintiff was an executive of Meryll Lynch, Pierce, Fennon S. Smith
Phil., Inc., where he received P311,700.79 in 1980 alone, as shown by
his Certificate of Income Tax Withheld on Wages for said year (Exhibit
G for plaintiff).
Indeed, by express provision of the Civil Code, 39 oral evidence is
admissible to establish a trust relation between the Tigno brothers.
Private respondent explained how this trust was created: 40
ATTY. VIRAY
Q When you said Dominador Cruz was able to bring the vendors at
Guilig street, Lingayen, what happened there?
A They came to our family home at Guilig street and we went to the
house of Atty. Modesto Manuel, sir.
Q Why did you go to the house of Atty. Manuel?
A For the executionof [sic] the deed of sale of the property I am going
to buy, sir.
Q Was the deed of sale finished on that day?
A No, sir.
Q What was the reason?
A The vendors did not bring the tax declarations, secondly, the other
heirs failed to get the power of attorney from their sister in United
States.
Q When the deed of sale were not executed on that day, what
transpired?
A The vendors requested for advance payment of P5,000.00 each for
the three parcels of land.
Q Did you agree to the request of the vendors for the advance
payment of P5,000.00 each for the three parcels of land?
A Yes, sir.
Q Did you comply?
A Yes, sir.
Q How much all in all?
A P15,000.00 in cash, sir.
Q Was there any receipt signed evidencing receipt for that?
A There was receipt for the P15,000.00
Q Where is that receipt now?
A I gave all the papers to him in my brown envelope, I trust [sic] him.
Q Do you remember in whose name the vendors allegedly to have
received the P15,000.00?
A In my name, received from Eduardo Tigno.
Q After giving the P15,000.00 advance payment which you said the
deed of sale were not executed because of some requirement were
not available, what happened next?
A I talked to Atty. Manuel separately from the vendors, and I told him
to prepare the deed of sale at that time and I told him to place my
older brother, Rodolfo Tigno as vendee because I have plan to
mortgage the property in PNB, Lingayen, sir.
xxx xxx xxx
Q Aside from instructing Atty. Manuel to place the name of your
brother, Rodolfo Tigno, did you also instruct Dominador Cruz for the
payment of the balance?
A Yes, sir.
Q What was your instruction to Dominador Cruz?
A I told Dominador Cruz, I am leaving for United States, I will be back
first week of July, after the completion of the papers, see me on the
second week of July and I will give the whole payment of the property.
Q And was the deed of sale covering the three parcels of land
completed?
A Yes, sir.
Q Did Dominador Cruz bring the documents to you in your office in
Makati?
A Yes, sir.
Q When was that?
A First week of July 1980, sir.
Q Did you give the payment of the balance?
A Yes, sir. After going over the documents, I issued to him a check
payable in the sum of P26,000.00.
The previously quoted testimonies of Modesto Manuel and
Dominador Cruz substantially corroborate private respondent's
testimony.
On the other hand, Petitioner Rodolfo, although in possession of the
deeds of sale in his name, failed to present a single witness to
corroborate his claim that he bought the property partly with his own
money and partly with the money he allegedly borrowed from a
certain Jose Manaoat. His failure to present Manaoat gives rise to a
presumption that the latter's testimony, if given, would have been
unfavorable to the former. 41 Respondent Court did not give credence
to the financial capacity of Petitioner Rodolfo Tigno: 42
Defendant Rodolfo's denial of plaintiff's evidence, and his bare
testimony that he was the real buyer, without corroboration by other
witnesses, cannot be given credence and do not deserve belief. It was
unlikely that he had the financial means to pay for the lands in the
total amount of P53,000.00. As testified to by Arnulfo Peralta (TSN,
Sept. 29, 1988, pp. 36-37), Rodolfo was jobless then, and at one time
or another was even supported financially by plaintiff, as testified to
by plaintiff (TSN, Oct. 16, 1989, pp. 11-12), which in fact was
confirmed by Rodolfo during his cross-examination (TSN, Oct. 18,
1989, pp. 6-7). If indeed he was engaged in some piggery, as he
claimed, his financial capability is rendered doubtful by the fact that
no evidence, other than his bare testimony, was presented to show
his income, like an income tax return. His bare testimony that he
borrowed P20,000.00 from Jose Manaoat to raise partly the amount
of P53,000.00 lacks credibility. Manaoat, who was in the best position
to testify that Rodolfo borrowed money from him, was never
presented, which would gives rise to the presumption that his
testimony would be adverse to defendant, if presented. (Sec. 3[e],
Rule 131, Rules of Court).
From the foregoing, it is ineludible that Article 1448 of the Civil Code
finds application in this case. Although the deeds of sale were in the
name of Petitioner Rodolfo, the purchase price was paid by private
respondent who was the real owner of the property. Petitioner
Rodolfo is the trustee, and private respondent is the beneficiary.
Second Issue: Are Petitioners Casipit Purchasers in Good Faith?
Spouses Edualino and Evelyn Casipit contend that they "are
purchasers in good faith" and for valuable consideration; thus, they
cannot be deprived of the land they bought from Rodolfo Tigno. 43
This posturing is unacceptable. First, unrebutted is the emphatic
testimony of private respondent that Edualino was invited on May 2,
1980 to a picnic in the fishpond. At the picnic, private respondent
informed Petitioner Edualino Casipit that he was the owner of the
property. On this point, private respondent testified: 44
ATTY. VIRAY:
Q You said Edualino Casipit very well knew that the property is owned
by you, what made you say that the defendant Edualino Casipit very
well knew that you are the owner of the property he bought?
A Way back in 1980 when I gave the advance payment to the vendors,
I invited my friends and right there in the fishpond, we had small
picnic and that my father, and Boy Casipit were there.
ATTY. VIRAY:
Q What if you invited them, sign that from that time you were the one
who bought the parcels of land?
A Yes, sir.
Second, also uncontested is the testimony of Dominador Cruz that he
met Edualino on April 24, 1989, or five (5) days before the
consummation of the sale between Rodolfo and Spouses Casipit.
During that meeting, Cruz told Edualino that he bought from private
respondent a portion of the subject property for the purpose of
building a dike. Thereafter, Edualino asked Cruz to buy a portion of
the property from private respondent. 45
Third, and in any event, Spouses Casipit did not acquire absolute
ownership over the property since the apparent vendor, Petitioner
Rodolfo, did not have the right to transfer ownership thereof. Be it
remembered that the fishponds were not registered under the
Torrens system. Again, we cite public respondent's ruling, which we
find totally persuasive: 46
It is our well-considered opinion, however, that whether or not
defendant-appellee spouses are in good faith is entirely immaterial,
because no valid sale in the first place was made between defendant-
appellees covering the portion of land in question. The fact is, as
established by the evidence on record, that defendant Rodolfo M.
Tigno is not the owner of the lands in question, but a mere trustee
thereof, and could not have transferred ownership of said lands, by
way of sale, to his co-defendant-appellee spouses. As a matter of
basic principle in the law on sales, a person cannot transfer
ownership, by way of sale, of something over which he has no right to
transfer. Thus, Article 1459 of the Civil Code provides:
Art. 1459. The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered. (Emphasis
supplied)
Since defendant-appellee is not the owner of the lands in question,
which are not registered under the Torrens system, he could not by
way of sale have transferred, as he has no right to transfer, ownership
of a portion thereof, at the time of delivery.
WHEREFORE, premises considered, the petition is hereby DENIED and
the assailed Decision and Resolution are AFFIRMED in toto. Costs
against petitioners.
SO ORDERED.