G.R. No. 108525 September 13, 1994 SPOUSES RICARDO AND MILAGROS HUANG, petitioners, vs.

COURT OF APPELAS, JUDGE, PEDRO N. LAGGUI, Presiding Judge, RTC, Makati, Br. 60, and SPOUSES DOLORES AND ANICETO SANDOVAL, respondents. Sometime in 1965 respondent Dolores Sandoval wanted to buy two (2) lots in Dasmarias Village, Makati, but was advised by petitioner Milagros Huang, wife of her brother, petitioner Ricardo Huang, that the policy of the subdivision owner forbade the acquisition of two (2) lots by a single individual. Consequently, Dolores purchased Lot 21 and registered it in her name. She also purchased the adjacent lot, Lot 20, but heading the advice of Milagros, the deed of sale was placed in the name of Ricardo and Registered in his name under TCT No. 204783. On 19 March 1968, to protect her rights and interests as the lawful owner of Lot 20 and its improvements, Dolores requested the Huangs to execute in her favor a deed of absolute sale with assumption of mortgage over the property. The latter obliged. On 15 March 1980, the Huang spouses leased the house to Deltron-Sprague Electronics Corporation for its various executives as official quarters without first securing the permission of Dolores. Dolores tolerated the lease of the property as she did not need it at that time. But, after sometime, the lessees started prohibiting the Sandoval family from using the swimming pool and the Huangs then began challenging the Sandovals' ownership of the property. On the basis of the evidence presented, the trial court found that it was indeed Dolores who brought Lot 20 but had it registered in the name of Ricardo; and, it was she who built the house and swimming pool thereon and the fence enclosing Lots 20 and 21. As regards the deed of sale with assumption of mortgage, the trial court found that it was signed voluntarily by the Huang spouses so much so that their claim that they were misled into signing it was unbelievable.

ISSUE: Whether or Not there is an implied trust and W/N Dolores action has already prescribed? HELD: Petitioners assert that the finding of the Court of Appeals of a resulting or implied trust between them and Dolores is not supported by evidence. On the contrary, the deed of sale with assumption of mortgage has all the elements of an equitable mortgage. Granting arguendo that a resulting or implied trust exists between the parties, its enforcement is already barred by prescription. Petitioners argue that when the suit in the trial court was filed by Dolores on 19 February 1981 more than ten (10) years had already lapsed since TCT No. 204783 was issued on 11 October 1967. They also contend that jurisprudence has established the rule that the prescriptive period for an action for reconveyance based on fraud is ten (10) years, and that a resulting or implied trust is totally incompatible with the deed of sale with assumption of mortgage, hence, the existence of said deed cannot be vaguelly dismissed as a mere security. On the part of Dolores, she was able to prove by overwhelming evidence that she purchased Lot 20 with her own funds. As a whole, spouses Huang's evidence failed to help them in their bid to establish ownership over Lot 20 and its improvements. They should know the Chinese proverb that "one simply cannot attain his purpose of chewing food well if he were to do it by means of loose teeth." Ricardo's version of the circumstances under which he signed the deed of question is incredible. Human experience argues against the claim that a highly educated and mature man like Ricardo would sign a deed of sale without reading or knowing its contents. On the contrary, the testimony of Dolores is more in accord with reason and clearly disproves Ricardo's gratuitous allegations. She testified that she asked Ricardo and Milagros to sign the deed of sale for her and her children's protection because time would come when they would want the property for themselves

In the present case, Dolores provided the money for the purchase of Lot 20 but the corresponding deed of sale and transfer certificate of title were placed in the name of Ricardo Huang because she was advised that the subdivision owner prohibited the acquisition of two (2) lots by a single individual. Guided by the foregoing definitions, we are in conformity with the common finding of the trial court and respondent court that a resulting trust was created. Ricardo became the trustee of Lot 20 and its improvements for the benefit of Dolores as owner. Petitioners raise the issue of prescription. But the action to compel the trustee to convey the property registered in his 28 name for the benefits of the cestui que trust does not prescribe. If at all, it is only when the trustee repudiates the trust 29 that the period of prescription commences to run. The prescriptive period is ten (10) years from the repudiation of the trust. We agree with the trial court that the action filed by Dolores has not prescribed. Firstly, Ricardo has not performed any unequivocal act of repudiation amounting to an ouster of Dolores. The only acts which may be considered as indicative of his intention not to respect the trust anymore were his leasing the house without the prior knowledge of Dolores; his refusal to carry out the demand of Dolores that he must ask the lessees to vacate the house; and, his refusal to give the necessary papers to Dolores to enable her to get the title from the SSS. Secondly, the foregoing acts are not positive acts of repudiation; and, thirdly, the evidence on such acts is unclear and inconclusive. But even if the foregoing acts were manifest acts of repudiation made known to Dolores, the fact remains that they were done at the earliest only on 15 March 1980 when Ricardo leased Lot 20 and its improvements to Deltron. Dolores' complaint before the trial court was filed on 19 February 1981, or within the 10-year prescriptive period. Petitioners are of the mistaken notion that the 10-year prescriptive period is counted from the date of issuance of the Torrens certificate of title. This rule applies only to the remedy of reconveyance which has its basis on Sec. 53, 34 par. 3, P.D. No. 1529, otherwise known as the Property Registration Decree, and Art. 1456 of the Civil 35 Code. Reconveyance is available in case of registration of property procured by fraud thereby creating a constructivetrust between the parties, a situation which does not obtain in this case. WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 28 September 1992 and its resolution dated 8 January 1993, both sustaining the decision of the Regional Trial Court, are AFFIRMED, with costs against petitioners. SO ORDERED

G.R. No. L-17951

February 28, 1963

CONRADO C. FULE and LOURDES F. ARAGON, petitioners, vs. EMILIA E. DE LEGARE and COURT OF APPEALS, respondents. It appears in evidence that the plaintiff, Emilia E. de Legare, was the owner of a parcel of land, together with a residential house erected thereon, situated at No. 146 Sta. Mesa Boulevard Extension, San Juan, Rizal, her ownership being evidenced by Transfer Certificate of Title No. 21253, issued by the Office of the Register of Deeds of the province of Rizal. She was living in that house together with defendant John W. Legare, her adopted son, and a maid named Purita Tarrosa. On September 26, 1951, the plaintiff, thru a public deed, constituted on the above mentioned house and lot a first class mortgage in favor of defendant Tomas Q. Soriano to guarantee the payment of a loan in the amount of P8,000.00. This deed of mortgage was on the same date recorded in the Office of the Register of Deeds of the province of Rizal and annotated in the memorandum of encumbrances of transfer certificate of title No. 21253. At about 9:00 o'clock in the evening of March 29, 1953, while the plaintiff, John W. Legare, and Purita Tarrosa were seated in the drawing room of the house above referred to, an unknown man intruded into the room, approached

the plaintiff, covered her mouth, and, pressing a knife on her side, demanded that she give him P10,000.00 if she did not like to be killed. The plaintiff replied that she did not have that amount. After the intruder was gone John W. Legare approached the plaintiff, and exhibiting to her a paper told her to sign it as with the same he could secure from the U.S. Veterans Administration the amount which they needed to deliver to that intruder. The plaintiff, who did not know how to read nor write, although she could sign her name, asked John W. Legare what that paper was. The latter answered that it was an application for payment of compensation. As plaintiff had confidence in John W. Legare and prior to that occasion she had received from the U.S. Veterans Administration a letter concerning some compensation she was to receive, she signed that paper. After the paper was signed by the plaintiff, John W. Legare had Purita Tarrosa sign it as a witness, without however, allowing the latter to read it. After that paper was thus signed, John W. Legare told the plaintiff and Purita Tarrosa to pack up their things as they were leaving the house to hide in a hotel, adding that the men who came earlier that evening were Huks. On May 7, 1953, however, John W. Legare came to the hotel, gave the plaintiff a five-peso bill, and told her that she could use the amount for transportation expenses if she wanted to leave the hotel. On the following morning the plaintiff and Purita Tarrosa left the hotel and went direct to her house at Sta. Mesa Boulevard Extension. When they arrived at the house, however, they found that it was occupied by strangers, and that all her furniture and personal belongings had disappeared. Inquiring from those strangers how they happened to occupy the house, the latter told her that John W. Legare had sold the house to them and that it was no longer hers. The plaintiff thereupon sought the help of her attorney. It was then discovered that the paper which John W. Legare had the plaintiff and Purita Tarrosa sign in the evening of March 29, 1953 was a deed of sale of the lot and house in question in favor of John W. Legare for the sum of P12,000.00, and that it was supposed to have been executed on the 7th day of April, 1953, and acknowledged before a notary public on that date

ISSUE: Were the herein petitioners purchasers in good faith and for value of the properties here contested? HELD: Guided by the facts found by the Court of Appeals, We hold the herein petitioners innocent purchasers for value of the house and lot here disputed. In consequence, they are here adjudged the lawful owners thereof. A purchaser in good faith is one who buys property of another, without notice that some other persons has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another (Cui and Joven v. Henson, 51 Phil. 606). We have measured the conduct of the petitioner spouses by this yardstick. These facts were uncontroverted. The negotiation and transaction which eventually caused the certificate of title to be transferred from the herein respondent to the petitioner spouses were conducted by a real estate broker licensed since 1938. Nothing in John W. Legare's person or behaviour suggested anything suspicious. He was the adopted son of the herein respondent, and, to the time that he was contracting with the petitioner spouses, he had not been known to commit crime or dishonesty. On the contrary, John has had previous dealings with the real estate broker during which he exhibited the expected degree of trustworthiness.. It is true that at the time the herein petitioners purchased the properties from John W. Legare, he was not yet the registered owner of the same. This fact alone, however, could not have caused the herein petitioners to lose their status as innocent purchasers for value. It should be recalled that although the title was in the name of the respondent Emilia E. de Legare, the certificate of title was in the possession of her adopted son, John. Under Section 55 of Act 496, as amended, John's possession of the certificate and his subsequent production of it to the herein petitioners operated as a "conclusive authority from the registered owner to the register of deeds to enter a new certificate." Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was able to secure a registered title to the house and lot. It was this title which he subsequently conveyed to the herein petitioners. We have indeed ruled that a forged or fraudulent deed is a nullity and conveys no title (Director of Lands v. Addison, 49 Phil. 19). However, We have also laid down the doctrine that there are instances when such a fraudulent document may become the root of valid title. One such instance is where the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960). We have been constrained to adopt the conclusion here set forth because under the Torrens system, "registration is the operative act that gives validity to the transfer or creates a lien upon the land (Secs. 50 and 51, Land Registration Act).

Consequently, where there was nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This Court sympathizes with the respondent. It is aware of the treacherous, painful fraud committed on her by her adopted son. But positive provisions of law and settled jurisprudence cannot be subordinated to that feeling. Besides, the records of this case reveal that the herein respondent is herself not entirely free from blame. We note that when John presented to her the document which turned out to be a bed of conveyance in his favor, she readily affixed her signature thereto upon the simple representation of John that it was a document pertaining to her claim with the U.S. Veterans Administration. She could have asked her maid to read the contents of the same for her and yet she did not. These, We believe, amount to a lack of prudence and precaution on the part of Mrs. Emilia de Legare. IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby reversed and set aside. A new one is here entered dismissing the respondent's complaint and declaring the petitioners herein the lawful owners of the properties here involved. Without pronouncement as to costs

G.R. No. 120122 November 6, 1997 GLORIA R. CRUZ, petitioner, vs. COURT OF APPEALS, ROMY V. SUZARA and MANUEL R. VIZCONDE, respondents. Gloria R. Cruz was the owner of Lot 10, BLK. 565, PSD-38911, with an area of 747.7 square meters, together with the improvements thereon, situated at 22 Bituan St., Bgy. Doa Imelda, Quezon City, covered by TCT No. 242553 in her name; in 1977 she and respondent Romeo V. Suzara lived together as husband and wife without benefit of marriage; in September 1982, solely out of love and affection for Suzara, she executed a deed of absolute sale over Lot 10 in favor of Suzara without any monetary consideration; thereafter, Suzara registered the document in his favor and used the property as collateral for a bank loan P350,000.00; he however failed to pay the loan so that after four (4) years the mortgage was foreclosed. She paid the bank P40,638.88 to restructure the loan resulting in the extension of the redemption period to two (2) years. However, without her knowledge and before the expiration of the extended period, Suzara redeemed the property. She tried to talk to him but he avoided her. Finally, to protect her interest, she executed an Affidavit of Adverse Claim which she filed with the Register the Deeds of Quezon City asserting that her sale in favor of Suzara was null and void for lack of consideration and being contrary to law and public policy. Denying petitioner's claim, respondent Suzara claimed that he was already the registered owner of the property as evidenced by TCT No. 295388, having acquired the same from petitioner through a notarized deed of absolute sale; the sale was for a valuable consideration and not tainted with fraud nor executed under duress; and, petitioner was estopped from impugning the validity of the sale and questioning his title over the property. On 22 May 1990 the Register of Deeds filed a manifestation informing the trial court that the property had been sold by respondent Suzara to his co-respondent Vizconde who was already the registered owner thereof and since Vizconde was not impleaded in the case the notice of lis pendens could not be annotated on his title until the requirements of law were met and the annotation of the notice judicially ordered. As stated in the immediately preceding paragraph, the motion to 1 admit amended complaint impleading respondent Vizconde was filed ex parteon 3 April 1990. On 24 September 1990, responding to the amended complaint, Vizconde answered that there was no privity of contract between him and petitioner; he (Vizconde) was a purchaser for value in good faith; the sale between him and Suzara was executed on 22 December 1989 or long before the execution of the Affidavit of Adverse Claim; and, the action was barred by laches, estoppel and prescription. On 24 May 1993 the trial court rendered a decision dismissing the complaint and the counterclaims as well as the cross claim of respondent Vizconde. It ruled that the sale between petitioner and respondent Suzara was valid with "love, affection and accommodation" being the consideration for the sale. It also found Vizconde an innocent purchaser for value 2 because at the time he purchased the property he was unaware of the adverse claim of petitioner.

ISSUE: Whether or Not the sale between petitioner and suzara was valid and whether Vizconde was an innocent purchaser for value? HELD:

We cannot sustain petitioner. Although under Art. 1490 the husband and wife cannot sell property to one another as a rule which, for policy consideration and the dictates of morality require that the prohibition apply to common-law 4 relationships, petitioner can no longer seek reconveyance of the property to her as it has already been acquired by respondent Vizconde in good faith and for value from her own transferee. The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise 5 subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the 7 property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law Both lower courts found that at the time respondent Suzara executed the deed of absolute sale on 22 December 1989 in favor of respondent Vizconde, which was acknowledged before a notary public, Suzara was the registered owner appearing in the certificate of title. When the sale was executed, nothing was annotated in the certificate to indicate any adverse claim of a third person or the fact that the property was the subject of a pending litigation. It was only on 22 January 1990, after the sale to respondent Vizconde, that petitioner filed her adverse claim with the Register of Deeds. We cannot grant petitioner's prayer to have respondent Vizconde's certificate of title declared null and void. Neither can we order the reconveyance of the property to petitioner. Vizconde being a purchaser of registered land for value in good faith holds an indefeasible title to the land. This is without prejudice however to any appropriate remedy petitioner may take against her erstwhile common-law husband, respondent Suzara. WHEREFORE, the petition is DENIED. The decision of the Court of Appeals affirming that of the trial court is AFFIRMED. Costs against petitioner. SO ORDERED.