VOL.
171, MARCH 21, 1989 369 [here involved] is owned in common by [her] and [her] brother, Horacio G. Adaza.,
Adaza vs. Court of Appeals
G.R. No. 47354. March 21, 1989. *
HORACIO G. ADAZA and FELICIDAD MARUNDAN, petitioners, vs. THE
HONORABLE COURT OF APPEALS and VIOLETA G. ADAZA, assisted by her
husband LINO AMOR, respondents.
Civil Law; Co-Ownership; Intention of donor to make respondent and petitioner co-
owners of the land then being donated to respondent is evident.—We turn to the question of
the intent of the donor. Petitioner Horacio claimed that that intent was precisely to make
both Violeta and himself co-owners of the land then being donated to Violeta. Put a little
differently, according to petitioner Horacio, though respondent Violeta alone was to be the
registered owner, she was to share the land donated by the father with Horacio on an equal
sharing basis. We think this intent is evidenced, firstly, by the Deed of Waiver executed by
Violeta and quoted in full earlier. The Deed of Waiver is important because there Violeta
acknowledged that she owned the land in common with her brother Horacio although the
certificate of title bore only her name. As noted earlier, respondent Violeta strove mightily
to convince both the trial court and the Court of Appeals that she had signed the Deed of
Waiver by reason of fraud, misrepresentation and undue influence exercised upon her by
her brother Horacio. However, both the trial court and the Court of Appeals reached the
conclusion that Violeta had in fact voluntarily signed the Deed of Waiver, even though she
had done so with reluctance. The Deed of Waiver had been signed by Violeta in the
presence of Horacio and of her other brothers Homero Adaza and Victor Adaza, Jr. and her
sister Teresita Adaza. An aunt, Pilar Adaza Soller, was also at that time present in the same
house if not in the same room at that precise moment. The record is bereft of any indication
of any evil intent or malice on the part of Homero, Victor, Jr. and Teresita that would
suggest deliberate collusion against their sister Violeta. Equally important were the
testimonies of Homero Adaza and Teresita Adaza, both of whom explicitly stated that their
father had executed the Deed of Donation with the understanding that the same would be
divided between Horacio and Violeta, that Violeta had signed the Deed of Waiver freely
and voluntarily, and that their brother Horacio had not threatened and forced her to do so.
_______________
* THIRD DIVISION .
370
370 SUPREME COURT REPORTS ANNOTATED
Adaza vs. Court of Appeals
Same; Same; Same; Court concludes and which Violeta had admitted in the Deed of
Waiver that the property is owned in common by her and her brother Horacio G. Adaza
although the certificate of title was issued only in her name.—Finally, it may be noted that
this is not a case of an older brother exploiting or cheating his younger sister. On the
contrary, the evidence showed that petitioner Horacio had taken care of his father and
mother and of his sister Violeta, that petitioner Horacio had been quite relaxed and
unworried about the title remaining in the name of his sister alone until Violeta had gotten
married and her husband began to show what petitioner thought was undue and
indelicate interest in the land in Sinonok. All the above circumstances lead this Court to
the conclusion which Violeta had admitted in the Deed of Waiver, that is, that the “property
although the certificate of title was issued only in [her] name.” We believe and so hold that
this statement is an admission that she held half of the land in trust for petitioner Horacio.
The execution of the Deed of Donation of June 1953 by respondent Violeta’s father created
an implied trust in favor of Violeta’s brother, petitioner Horacio Adaza, in respect of half
of the property donated.
Same; Same; Prescription; The counterclaim for partition and reconveyance of
Horacio’s alleged one-half share was not barred whether by laches or by prescription.—
Respondent Violeta and her husband also contended that the long delay and inaction on
the part of Horacio in taking any steps for reconveyance of the one-half (1/2) share
claimed by him, indicates lack of any color of right over the said one-half (1/2) share. It
was also argued by the two (2) that considering that twelve (12) years had passed since
OCT No. P-11111 was issued and more than nineteen (19) years since the Deed of
Donation was executed, the counterclaim for partition and reconveyance of Horacio’s
alleged one-half share was barred by laches, if not by prescription. Again, we rule for the
petitioners. In determining whether delay in seeking to enforce a right constitutes laches,
the existence of a confidential relationship based upon, for instance, consanguinity, is an
important circumstance for consideration. Delay in a situation where such circumstance
exists, should not be as strictly construed as where the parties are complete strangers vis-
a-vis each other. The doctrine of laches is not to be applied mechanically as between near
relatives; the fact that the parties in the instant case are brother and sister tends to explain
and excuse what would otherwise appears as long delay. Moreover, continued recognition
of the existence of the
371
VOL. 171, MARCH 21, 1989 371
Adaza vs. Court of Appeals
trust precludes the defense of laches. The two (2) letters noted above sent by
respondent Violeta to petitioner Horacio, one in 1969 and the other in 1971, show that
Violeta as late as 1971 had recognized the trust imposed on her by law. Conversely,
Horacio’s reliance upon his blood relationship with his sister and the trust and confidence
normally connoted in our culture by that relationship, should not be taken against him.
Petitioners’ counterclaim in the trial court for partition and reconveyance cannot be
regarded as barred whether by laches or by prescription.
PETITION to review the decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Nitorreda Law Office for petitioners.
Pacatang & Pacatang Law Offices for private respondents.
FELICIANO, J.:
In the lawful wedlock of Victor Adaza and Rosario Gonzales were born six (6)
children: petitioner Horacio, Homero, Demosthenes, respondent Violeta, Teresita
and Victor, Jr.
The head of the family, Victor Adaza, Sr., died in 1956, while the wife died in
1971. During his lifetime, Victor Adaza, Sr. executed a Deed of Donation dated 10
June 1953, covering the parcel of land subject matter of this case, with an area of NOW, THEREFORE, for and in consideration of the premises aforestated, I do
13.3618 hectares, located at Sinonok, Dapitan City, Zamboanga del Norte, in favor hereby WAIVE, TRANSFER, RELINQUISH AND CONVEY unto the said HORACIO
of respondent Violeta, then still single. The donation was accepted in the same G. ADAZA, of legal age, married
instrument, which both donor and donee acknowledged before Notary Public ex
373
officio Milagros C. Galeposo. The land donated was then part of the public domain,
being disposable public land, and had been held and cultivated by Victor Adaza, VOL. 171, MARCH 21, 1989 373
Sr. for many years. Violeta, with the aid of her brother Horacio, filed a homestead Adaza vs. Court of Appeals
application covering the land involved. This application was in due course to Felicidad Marundan, Filipino, and a resident of Dapitan City, all my rights,
approved and a free patent issued to her on 3 October 1956. As a result thereof, interest, participation and ownership over the ONE-HALF (1/2) PORTION of the
on 26 January 1960, an Original Certificate of Title No. P-11111 was issued in her aforesaid property, together with all the improvements, found and existing over the
name. She declared the property in her name under Tax Declaration No. 9808. said one-half.
The record does not show when Violeta Adaza got married. But in 1962, IN WITNESS WHEREOF, I have hereunto affixed my signature this 28th day of
Violeta and her husband Lino Amor, obtained a July, 1971, at Dapitan City, Philippines.
372 (SGD.) VIOLETA G. ADAZA
372 SUPREME COURT REPORTS ANNOTATED
Adaza vs. Court of Appeals Signed in my presence:
loan from the Philippine National Bank which they secured with a mortgage on
the land covered by OCT No. P-11111. The land was, and continued to be (SGD.) ILLEGIBLE (SGD.) ILLEGIBLE
administered by Violeta’s brother, Homero Adaza. Republic of the Philippines )
Petitioner Horacio Adaza was appointed Provincial Fiscal of Davao Oriental City of Dapitan ) S.S.
in 1967. He accordingly moved from Dapitan City to Davao Oriental. Before me, this 28th day of July, 1971, at Dapitan City, personally appeared
Four (4) years later, petitioner Horacio came back to Dapitan City for the town VIOLETA G. ADAZA, with Res. Certificate No. A-2825141, issued at Dapitan City,
fiesta. He invited respondent Violeta and the other brothers and sister for a family Jan. 7, 1971, known to me and to me known to be the same person who executed
gathering in his house. There, Horacio asked Violeta to sign a Deed of Waiver the foregoing instrument and she acknowledged to me that the same is her free
which had been prepared in respect of the property in Sinonok donated by their and voluntary act and deed.
father Victor Adaza, Sr.. This Deed stated that the Sinonok property was owned WITNESS MY HAND AND SEAL, on the date and at the place first above stated.
in common by Violeta and her brother Horacio G. Adaza, even though the (SGD.) GODARDO AD. JACINTO
certificate of title had been issued in her name only. The Deed also provided for Notary Public
the waiver, transfer and conveyance by Violeta in favor of Horacio of one-half Until December 31, 1972
(1/2) of the Sinonok property, together with all improvements existing in that Doc. No. 138
one-half (1/2) portion. Violeta signed this Deed of Waiver: the Deed was also Page No. 50
signed by petitioner Horacio and Homero Adaza as witnesses. The full text of this Book No. VI
Deed of Waiver follows: Series of 1971, p. 6, Folder of Exhibits,
“DEED OF WAIVER Exh. 4.” 1

A few months later, or on 12 October 1971, respondent Violeta joined by her

KNOW ALL MEN BY THESE PRESENTS: husband, Lino Amor, filed a complaint (docketed as Civil Case No. 2213) for
I, VIOLETA G. ADAZA, of legal age, married to Lino Amor, Filipino, with residence annulment of the Deed of Waiver and for damages, against petitioner spouses
and postal address at Dapitan City, am the absolute owner in fee simple of a parcel Horacio and Felisa M. Adaza. In this Complaint, Violeta and her
2

of land situated in Dapitan City, known as Lot No. Psu-141743, with an area of _______________
13.3618 hectares more or less, covered by TRANSFER CERTIFICATE OF TITLE
NO. T-11111, (sic) of the Registry of Property of Zamboanga del Norte, and 1 Rollo, p. 19; Underscoring supplied.
declared for taxation purposes under Tax Declaration No. 2926 (sic), with an 2 Records on Appeal, pp. 1-8.
assessed value of P4,340.00. 374
Whereas, aforesaid property is owned in common by me and my brother,
374 SUPREME COURT REPORTS ANNOTATED
HORACIO G. ADAZA, although the certificate of title was issued only in my sole name;
 Adaza vs. Court of Appeals
husband alleged, among other things: (1) that she was absolute owner of the land
in question by virtue of the unconditional donation executed by their father
Victor Adaza, Sr.: (2) that she was registered owner of the same land; (3) that she
had signed the Deed of Waiver because of petitioner Horacio’s fraud,
misrepresentation and undue influence; and (4) that because of the malicious
acts and conduct of petitioner Horacio, she and her husband were entitled to
P5,000.00 as moral damages, P2,000.00 as exemplary damages. P1,000.00 as
attorney’s fees and P500.00 as litigation expenses.
In their Answer, petitioner Adaza spouses contended that petitioner Horacio
3
and his sister respondent Violeta were coowners of the disputed land although
the same had been registered under Violeta’s name alone, and that Violeta’s
ownership was subject to Horacio’s rights as co-owner and to the obligation to
keep or use the property for the benefit of their parents while either of them was
still alive. Petitioners further contended that Violeta had executed the Deed of
Waiver freely and voluntarily. They also interposed a counterclaim for
accounting of the value of his interest and of his share in the income from the land
and for reconveyance of half of the disputed land.
On 31 May 1974, the trial court rendered a Decision declaring the Deed of
4
Waiver as valid and binding upon respondent Violeta. The Dispositive portion of
this Decision read as follows:
“IN VIEW OF FOREGOING CONSIDERATIONS, the Court is of the opinion and so holds that
the preponderance of evidence is in favor of the defendants and against that of plaintiffs,
wherefore, judgment is hereby rendered as follows:
1. 1)Declaring the Deed of Waiver executed by the plaintiff (Violeta G. Adaza) in
favor of defendant (Horacio G. Adaza), valid for all legal purposes.
2. 2)Declaring the defendant, Horacio G. Adaza, the owner of one-half (1/2)
undivided portion of the parcel of land, including the improvements found
thereon, covered by Original Certificate of Title
______________
3 Id., pp. 12-20.
4 Rollo, pp. 20-42.
375
VOL. 171, MARCH 21, 1989 375
Adaza vs. Court of Appeals
No. P-11111 (Exhibit ‘N’), containing an area of 13.3618 hectares, assessed under Tax
Declaration No. 9708 (Exhibit ‘E’) at P3,000.00.
1. 3)Ordering the plaintiffs to pay to the defendants the sum of P10,500.00
corresponding to one-half (1/2) share of the proceeds of the land in question,
from January 1972 up to the end of the year 1973 and the further sum of the
price of copra every three (3) months, until the possession of the one-half (1/2)
undivided portion of the land, object of this case, is delivered to the defendants.
Plaintiffs shall pay costs.
IT IS SO ORDERED.”
Being unhappy with the trial court’s decision, respondent Violeta and her
husband appealed to the Court of Appeals where their appeal was docketed as
C.A.—G.R. No. 55929-R. In a Decision dated 15 July 1977, the Court of Appeals
5
reversed the decision of the trial court. The Court of Appeals agreed with the
finding of the trial court that the Deed of Waiver had been signed voluntarily, if
reluctantly, by Violeta. The appellate court, however, held that such Deed was
without cause or consideration, because the land had been, in the view of the
appellate court, unconditionally donated to Violeta alone. The Court of Appeals
further held that the Deed of Waiver could not be regarded as a gratuitous
contract or a donation, said Deed being “congenitally bad” in form because it was
not drawn according to the requirements of Articles 749 and 1270 of the Civil
Code. Petitioner’s Motion for Reconsideration was denied.
In the instant Petition for Review, petitioners insist once more that
respondent Violeta was not the sole owner of the disputed land but on the
contrary held one-half (1/2) thereof in trust for petitioner Horacio and that this
fact of co-ownership was sufficient consideration to sustain the validity of the
Deed of Waiver.
The principal issue raised here thus relates to the ownership of the 13.3618
hectares of land covered by OCT No. P-11111. Since Violeta traced her title to and
based her claim of ownership upon the Deed of Donation executed by their father,
it is
______________
5 Id., pp. 43-45.
376
376 SUPREME COURT REPORTS ANNOTATED
Adaza vs. Court of Appeals
necessary to examine this Deed of Donation. That Deed of Donation is noteworthy
for its inclusion of a paragraph that was crossed-out. The crossed-out provision
reads:
“That the donee shall share one-half (1/2) of the entire property with one of her brothers
or sisters after the death of the donor.”
The next succeeding paragraph reads thus:
“That the donee do [sic] hereby receive and accept this gift and donation made in her favor
by the donor, not subject to any condition, and do hereby express her appreciation and
gratefulness for the kindness and generosity of the donor.” (Rollo, p. 50).
Petitioner Horacio testified before the trial court that it had been the intention of
their father to donate the parcel of land covered by the Deed of Donation to him
and to Violeta, as shown by the above provision which was ultimately crossed-
out. Petitioner Horacio further testified that he himself had crossed-out the
aforementioned provision, with the consent of his father, to make it appear that
the land was being donated solely to Violeta, in order to facilitate the issuance of
the title in her name. It seems worthwhile recalling that at the time of execution
of the donation by the father, the land was still public disposable land and that
the final issuance of title was still about seven (7) years down the road. Clearly,
in itself, the crossing out of the above-quoted paragraph was at least an
ambiguous act. The Court of Appeals took what appears to us as a too literal view
of the matter, that is, that the effect of the crossing-out of that paragraph was
precisely to render the donation a simple and unconditional one, such that
respondent Violeta was not obliged to share the property with her brother
Horacio. If, indeed, in the view of the Court of Appeals, an informal agreement had
been reached during the lifetime of the parties’ father that the subject property
would become the property of Horacio and Violeta in equal shares, such informal
agreement, if reached before the execution of the Deed of Donation, would have
to be deemed superseded by the Deed of Donation itself. Upon the other hand, the
Court of Appeals’ decision reasoned, if such informal agreement had been
reached
377
VOL. 171, MARCH 21, 1989 377
Adaza vs. Court of Appeals
after execution of the Deed of Donation on 10 June 1953, then that agreement, to
be effective, must assume the form of another deed of donation to be executed by
Violeta in favor of Horacio and covering a one-half (1/2) share in the property.
We take a different view. We believe that the critical question relates to the
reality of the intent ascribed to the donor and father of Horacio and Violeta to
make the two (2) co-owners of the property in question. Assuming such an intent
is sufficiently shown, it must be respected and implemented through whatever
medium is available under our civil law.
We turn to the question of the intent of the donor. Petitioner Horacio claimed
that that intent was precisely to make both Violeta and himself co-owners of the
land then being donated to Violeta. Put a little differently, according to petitioner
Horacio, though respondent Violeta alone was to be the registered owner, she
was to share the land donated by the father with Horacio on an equal sharing
basis. We think this intent is evidenced, firstly, by the Deed of Waiver executed
by Violeta and quoted in full earlier. The Deed of Waiver is important because
there Violeta acknowledged that she owned the land in common with her brother
Horacio although the certificate of title bore only her name. As noted earlier,
respondent Violeta strove mightily to convince both the trial court and the Court
of Appeals that she had signed the Deed of Waiver by reason of fraud,
misrepresentation and undue influence exercised upon her by her brother
Horacio. However, both the trial court and the Court of Appeals reached the
conclusion that Violeta had in fact voluntarily signed the Deed of Waiver, even
though she had done so with reluctance. The Deed of Waiver had been signed by
Violeta in the presence of Horacio and of her other brothers Homero Adaza and
Victor Adaza, Jr. and her sister Teresita Adaza. An aunt, Pilar Adaza Soller, was
6
also at that time present in the same house if not in the same room at that precise
moment. The record is bereft of any indication of any evil intent or malice on the
7
part of Homero, Victor, Jr. and Teresita that would suggest deliberate collusion
against their
______________
6 Rollo, p. 39.
7 Id.
378
378 SUPREME COURT REPORTS ANNOTATED
Adaza vs. Court of Appeals
sister Violeta. Equally important were the testimonies of Homero Adaza and
Teresita Adaza, both of whom explicitly stated that their father had executed the
Deed of Donation with the understanding that the same would be divided
between Horacio and Violeta, that Violeta had signed the Deed of Waiver freely
and voluntarily, and that their brother Horacio had not threatened and forced her
to do so. The evidence also showed that on the same occasion of the signing of
8
the Deed of Waiver by respondent Violeta, another brother Victor Adaza, Jr. had
also executed a similar Deed of Waiver covering one-half (1/2) share of another
piece of property at Tiwalos, Dapitan City (also titled in Victor, Jr.’s name only) in
favor of his sister Teresita Adaza. The trial court pointed out that Victor Adaza,
9
Sr. and Rosario Gonzales left four (4) parcels of land which were divided among
their six (6) children, as follows:
1. “1.Parcel I—located at Sinonok, Dapitan City Tax Declaration No. 9708
(Exhibit ‘E’) to be divided between Horacio G. Adaza and Violeta G.
Adaza, with an area of 13.3618 hectares (land in dispute).
2. 2.Parcel II—located at Tiwalos, Dapitan City to be divided between
Victor Adaza, Jr. and Teresita G. Adaza (Exhibit ‘5’) with an area of
9.6379 hectares.
3. 3.Parcel III—located at Apao, adjudicated to Demosthenes G. Adaza
(already sold to Dionisio Tan), with an area of seven (7) hectares.
4. 4.Parcel IV—located at Sokon, Dapitan City, allocated to Homero G.
Adaza (already sold to Tecson).” 10
Evidently, the parties’ parents made it a practice, for reasons of their own, to have
lands acquired by them titled in the name of one or another of their children.
Three (3) of the four (4) parcels acquired by the parents were each placed in the
name of one of the children. The land in Tiwalos, Dapitan City, intended for Victor,
Jr. and Teresita, was placed in the name of Victor, Jr. The parcel located in Sokon,
Dapitan City, intended
_____________
379
VOL. 171, MARCH 21, 1989 379
Adaza vs. Court of Appeals
for Homero was placed in the name of petitioner Horacio,11while the parcel in
Sinonok, Dapitan City, was titled in Violeta’s name.
The trial court also pointed to respondent Violeta’s “[t]wo (2) letters to
defendant [petitioner Horacio], written to the latter in Davao City (Exhibits ‘1’
and ‘2’) acknowledging that the defendant is the co-owner of one-half (1/2) share
of said land, titled in her name. In said letters (Exhibits ‘1’ and ‘2’) plaintiff
(respondent Violeta) is requesting the defendant [petitioner Horacio] not to be in
a hurry to divide the lot in question (Exhibit ‘2-C’) and get his one-half share in
order [that she could] meet her obligations.” 12
Finally, it may be noted that this is not a case of an older brother exploiting or
cheating his younger sister. On the contrary, the evidence showed that petitioner
Horacio had taken care of his father and mother and of his sister Violeta, that
petitioner Horacio had been quite relaxed and unworried about the title
remaining in the name of his sister alone until Violeta had gotten married and her
husband began to show what petitioner thought was undue and indelicate
interest in the land in Sinonok. Thus, the trial court found, among other things:
13
1. “12.That from 1946 to 1968, the property in Sinonok covered by Original
Certificate of Title No. P-11111 (Exhibits ‘D’, ‘D-1’ to ‘D-3’) had been
administered by Homero Adaza, and the income from said land was
spent for the expenses of their parents and the plaintiff [Violeta] who
was studying at that time.
2. 13.That defendant waived his share from the [income from the] land in
litigation in favor of plaintiffs [Violeta and her husband] who were
hard-up at that time for they had a child who was suffering from a brain
ailment; that it was also agreed upon that the share of the defendant in
said parcel will be used for the expenses of their mother (at that time
bedridden).
3. 14.That defendant voluntarily relinguished his one-half (1/2) share of
the income of the land now in litigation in favor of plaintiff
______________
380
380 SUPREME COURT REPORTS ANNOTATED
Adaza vs. Court of Appeals
1. during the lifetime of their mother, Rosario Gonzales Adaza, subject to
the condition that his (Horacio’s) share of the proceeds shall be spent
for the expenses of their mother who was at that time bedridden.” 14
All the above circumstances lead this Court to the conclusion which Violeta had
admitted in the Deed of Waiver, that is, that the “property [here involved] is
owned in common by [her] and [her] brother, Horacio G. Adaza, although the
certificate of title was issued only in [her] name.” We believe and so hold that this
statement is an admission that she held half of the land in trust for petitioner
Horacio. The execution of the Deed of Donation of 10 June 1953 by respondent
Violeta’s father created an implied trust in favor of Violeta’s brother, petitioner
Horacio Adaza, in respect of half of the property donated. Article 1449 of the Civil
15
Code is directly in point:
“Art. 1449. There 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.”
Respondent Violeta and her husband also contended that the long delay and
inaction on the part of Horacio in taking any steps for reconveyance of the one-
half (1/2) share claimed by him, indicates lack of any color of right over the said
one-half (1/2) share. It was also argued by the two (2) that considering that
twelve (12) years had passed since OCT No. P-11111 was issued and more than
nineteen (19) years since the Deed of Donation was executed, the counterclaim
for partition and reconveyance of Horacio’s alleged one-half share was barred by
laches, if not by prescription. Again, we rule for the petitioners. In determining
whether delay in seeking to enforce a right constitutes laches, the existence of a
confidential relationship based upon, for instance, consanguinity, is an important
circumstance for consideration. Delay in a situation where
_______________
14 Id., pp. 37-38.
See, e.g., De Buencamino, et al. v. De Matias, et al., 16 SCRA 849(1966).
15
381
VOL. 171, MARCH 21, 1989 381
Adaza vs. Court of Appeals
such circumstance exists, should not be as strictly construed as where the parties
are complete strangers vis-a-vis each other. The doctrine of laches is not to be
applied mechanically as between near relatives; the fact that the parties in the
16
instant case are brother and sister tends to explain and excuse what would
otherwise appears as long delay. Moreover, continued recognition of the
existence of the trust precludes the defense of laches. The two (2) letters noted
17
above sent by respondent Violeta to petitioner Horacio, one in 1969 and the other
in 1971, show that Violeta as late as 1971 had recognized the trust imposed on
her by law. Conversely, Horacio’s reliance upon his blood relationship with his
sister and the trust and confidence normally connoted in our culture by that
relationship, should not be taken against him. Petitioners’ counterclaim in the
trial court for partition and reconveyance cannot be regarded as barred whether
by laches or by prescription.
WHEREFORE, the Petition for Review is hereby GRANTED. The Decision
dated 15 July 1977 of the Court of Appeals in C.A. _G.R. No. 55929-R is SET ASIDE
and the Decision dated 31 May 1974 of the then Court of First Instance, Branch 2,
Dipolog City in Civil Case No. 2213 is REINSTATED. No pronouncement as to
costs.
SO ORDERED.
 Fernan, (C.J.), Gutierrez, Jr., Bidin and Cortés, JJ.,concur.
Petition granted; decision set aside.
Note.—Prescription generally does not run in favor of a coheir or co-owner
as long as he expressly or impliedly recognizes the co-ownership. (David vs.
Bandin, 149 SCRA 140.)

——o0o——
340 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
G.R. No. 72908. August 11, 1989. *
EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN
SUTERIO, petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL
CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS, respondents.
Civil Law; Donation; Party-in-Interest; Petitioners have the legal personality to
challenge the validity of the donation on which Salud bases her claim to the property under
litigation.—We hold at the outset that, contrary to the ruling in the challenged decision,
the petitioners have the legal personality to challenge the validity of the donation on which
Salud bases her claim to the property under litigation. As defendants in the complaint for
reconveyance, they had every right to resist the plaintiffs’ allegation that she was the
owner of the subject property by virtue of the claimed donation. Recognition of that
donation would topple the props of their own contention that Juana could dispose of the
property as its owner when she sold it to Claudio Suterio in 1956.
Same; Same; Felipe and Juana being the owners of the property in question were free
to give the land to whomever they pleased and for whatever reason they saw fit.—Felipe and
Juana had declared themselves the heirs of Perfecta and the owners of the property in
question. As such, they were free to give the land to whomever they pleased and for
whatever reason they saw fit. Hence, if they chose to respect Perfecta’s wishes and carry
out her intentions by donating the land to Salud, there was no legal impediment to their
doing so. In fact, that was not only the legal but also the moral thing to do.
Same; Same; Same; Extrajudicial settlement also reflects donors own affection for
Salud which constituted the valid consideration for their own act of liberality.—There is no
question that Felipe and Juana could have simply disregarded their sister’s sentiments and
decided not to donate the property to Salud, keeping the same for themselves. The fact
that they did not do this speaks well indeed of their integrity and their loyalty as well to
their deceased sister. The extrajudicial settlement also reflects their own affection for
Salud which constituted the valid consideration for their own act of liberality. Notably, in
_______________
*FIRST DIVISION.
341
VOL. 176, AUGUST 11, 1989 341
Pajarillo vs. Intermediate Appellate Court
her acceptance of the donation, Salud referred to “the donors Felipe Balane and
Juana Balane de Suterio,” and not Perfecta.
Same; Same; Form; Court finds that under the circumstances of the case, a literal
adherence to the requirement of the law might result not in justice to the parties but
conversely a distortion of their intentions.—A strict interpretation of Article 633 can lead
to no other conclusion than the annulment of the donation for being defective in form as
urged by the petitioners. This would be in keeping with the unmistakable language of the
above-quoted provision. However, we find that under the circumstances of the present
case, a literal adherence to the requirement of the law might result not in justice to the
parties but conversely a distortion of their intentions. It is also a policy of the Court to
avoid such an intepretation.
Same; Same; Same; Same; Purpose of the formal requirement is to insure that the
acceptance of the donation is duly communicated to the donor.—The purpose of the formal
requirement is to insure that the acceptance of the donation is duly communicated to the
donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance
for she in fact confirmed it later and requested that the donated land be not registered
during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience
declare the donation ineffective because there is no notation in the extrajudicial
settlement of the donee’s acceptance. That would be placing too much stress on mere form
over substance. It would also disregard the clear reality of the acceptance of the donation
as manifested in the separate instrument dated June 20, 1946, and as later acknowledged
by Juana.
Same; Same; Laches; One may expect a person to be vigilant of his rights when dealing
with an acquaintance or associate or even with az friend but not when the other person is a
close relative as in the case at bar.—The problem with the petitioners’ theory is that it
would regard Juana and Salud as strangers when they are in fact mother and daughter.
One may expect a person to be vigilant of his rights when dealing with an acquaintance or
associate, or even with a friend, but not when the other person is a close relative, as in the
case at bar. To begin with, the land came from Juana herself. Secondly, she requested her
daughter not to register the land as long as she was still alive so she could enjoy its fruits
until her death. To Salud, it was not difficult to comply with this request, coming as it did
from her own mother. There was no reason to disobey her. She did not have to protect
herself against her own mother. Indeed, what would have been unseemly was
342
342 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
her registering the land against her mother’s request as if she had no confidence in
her. Salud did no less than what any dutiful daughter would have done under the
circumstances.
Same; Same; Registration; Registration not necessary to make the donation a binding
commitment insofar as the donors and the donee were concerned.—There is nothing in this
instrument to suggest that the donation was to take effect upon the death of the donors as
to make it a donation mortis causa, as urged by the petitioners. The donation became
effective upon acceptance by Salud except that, in obedience to her mother’s request, she
chose not to register the land in the meantime and to allow her mother to enjoy its fruits.
What was deferred was not its effectivity but only its enjoyment by Salud. Registration was
not necessary to make the donation a binding commitment insofar as the donors and the
donee were concerned.
Same; Same; Trust; When Claudio registered the land in his name knowing there was
a flaw in his title, an implied trust was created in favor of Salud as real owner of the
property.—It is clear that Juana Balane de Suterio had no right to sell the subject land to
Claudio because she was no longer its owner, having previously donated it to her daughter
Salud. Juana herself was holding the land merely as a trustee of Salud, who had transferred
possession to her mother at the old woman’s request. The deed of sale was itself vitiated
by bad faith as Claudio is presumed to have known of the previous donation to his sister
Salud, whose acceptance of the donation was formally witnessed by his own wife, the
herein principal petitioner. When Claudio registered the land in his name knowing there
was a flaw in his title, an implied trust was created in favor of Salud as the real owner of
the property in accordance with Article 1456 of the Civil Code.
Same; Same; Prescription; The legal principle is that if the registration of the land is
fraudulent and the person in whose name the land is registered thus holds it as a mere
trustee, the real owner is entitled to file an action for reconveyance within a period of ten
years.—The petitioners do not insist on prescription as a bar to the action for
reconveyance, and understandably so. The legal principle is that if the registration of the
land is fraudulent and the person in whose name the land is registered thus holds it as a
mere trustee, the real owner is entitled to file an action for reconveyance of the property
within a period of ten years. The record shows that while the land was registered in the
name of Claudio Suterio, Sr. in 1958, the complaint for
343
VOL. 176, AUGUST 11, 1989 343
Pajarillo vs. Intermediate Appellate Court
reconveyance was filed by the petitioners in 1965, or still within the ten-year
prescriptive period.
PETITION for certiorari to review the decision of the then Intermediate
Appellate Court. Ejercito, J.
The facts are stated in the opinion of the Court.
Agustin A. Ferrer for petitioners.
Alfredo I. Raya for respondents.
CRUZ, J.:
This is one of those distasteful litigations involving a controversy among close
relatives over properties left by a common ascendant. The petitioners are the
widow and children of the brother of the principal private respondent. She and
her brother appear to be the only remaining issue of the mother who seems to
have caused all the present confusion. The record does not show how close, if at
all, the members of this small family were. What is certain is that there is no
affection now among the protagonists in this case.
The mother was Juana Balane de Suterio, who had a brother named Felipe
Balane and a sister named Perfecta Balane de Cordero. Perfecta died in 1945
leaving inter alia a tract of land consisting of about 28 hectares and covered by
TCT No. 4671 in the Registry of Deeds of Quezon Province. On May 20, 1946,
Juana and Felipe executed a public instrument entitled “Extra-judicial Settlement
of the Estate of the Deceased Perfecta Balane de Cordero.” In it they disposed of
1
the said property as follows:
EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE
CORDERO.
This agreement made this 20th day of May, 1946, by and between Felipe Balane and Juana
Balane de Suterio, both of age and residents of Macalelon, Tayabas, Philippines.
_______________
1Exhibit “A.”
344
344 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
WITNESSETH:
That whereas, the said Felipe Balane and Juana Balane de Suterio are the only
brother and sister respectively and forced heirs of Perfecta Balane de Cordero
who dies intestate on January 21, 1945;
That whereas, the said Perfecta Balane de Cordero, deceased, left property
described as follows:
TRANSFER CERTIFICATE OF TITLE NO. 4671.
Province of Tayabas.
A parcel of land (Lot No. 6-A, Plan Psu-12210), with all buildings and
improvements except those herein expressly noted as belonging to other person,
situated in the barrio of Luctol, Municipality of Macalelon. Bounded on the NE.,
by Lot No. 6-B; on the E., by property by Andrea Fernandez, the sapa Luctob and
the sapa Patay; on the SE., by properties of Andrea Fernandez and Silvestra
Mereis; on the SW., by properties of Felix Rodriguez, Dionisio Fornea, Placido
Abistado and Adriano Abistado and the mangrove of the government; and on the
NW., by properties of Orilleneda, Mariano Glindro, Maxima Orilleneda, Placida
Forcados and Basilio Rabe. xx xx xx xx xx xx xx containing an area of TWO
HUNDRED EIGHTY-FIVE THOUSAND THREE HUNDRED FIFTY-THREE SQUARE
METERS (285,353) more or less.
That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of
the property described above left by the deceased Perfecta Balane de Cordero, do
hereby agree in carrying out the antemortem wish of our beloved deceased sister
that in consideration of love and affection the property described above be
donated to Salud Suterio de Matias.
That whereas, the estate left by the said Perfecta Balane de Castro, deceased,
is not free from obligation or debt. It has an incumbrance of about ONE
THOUSAND PESOS (P1,000.00) to the Philippine National Bank, Tayabas Branch.
That whereas, Salud Suterio de Matias, to whom this property is donated extra-
judicially as agreed upon by both heirs, shall assume the said obligation to the
Philippine National Bank, Tayabas Branch.
NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have
mutually agreed and covenanted to adjudicate, give, transfer and convey the
property described above to Salud Suterio de Matias heirs, executors,
administrators and assign.
And the donee does hereby accept this donation and does hereby express her
gratitutde for the kindness and liberality of the donor.
345
VOL. 176, AUGUST 11, 1989 345
Pajarillo vs. Intermediate Appellate Court
IN WITNESS WHEREOF, we have hereunto set our hands this 20th day of May,
1946.
 (Sgd.) FELIPE BALANE she be allowed to possess the same and enjoy its fruits until her death. It has also
4

FELIPE BALANE
(Sgd.) JUANA BALANE DE SUTERIO
JUANA BALANE DE SUTERIO
(Acknowledgment)
not been controverted that Salud paid the P1,000.00 loan for which the land was
mortgaged.
Salud says that sometime in 1951, acceding to this request, she transferred
the possession of the land to her mother, who was then staying with Claudio and
his family. During the period they were occupying the land, Claudio paid the
realty taxes thereon. On May 25, 1956, Juana executed a deed of absolute sale
5

On June 20, 1946, Salud Suterio executed the following public instrument, with 2 conveying the land to Claudio for the declared consideration of P12,000.00. Two 6

petitioner Eufemia Pajarillo was one of the witnesses: years later, on August 27, 1958, Claudio had the land registered in his name and
was issued TCT No. 32050 in the land records of Quezon Province. 7

KNOW ALL MEN BY THESE PRESENTS: Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private
respondents filed a complaint for the reconveyance of the property on the ground
That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs that the deed of sale in favor of Claudio was fictitious and its registration in his
to the properties of the late PERFECTA BALANE DE CORDERO, executed a DEED OF name was null and void. 8

DONATION in favor of the undersigned and the said donation was made in accordance to Salud (joined by her husband) alleged that she was unaware until later of the
the antemortem wish of my late aunt, Perfecta Balane de Cordero, to the effect that the
supposed sale of the land to Claudio. She faulted it as having been procured
property described in the Deed of Donation, be given to me because of her love and
affection for me, being her only niece.
through fraud and improper influence on her sick and aged mother. She claimed
That, I, SALUD SUTERIO DE MATIAS, the only DONEE, do hereby receive and accept that no
this donation and further express my gratitude for the kindness and liberality of the
DONORS, FELIPE BALANE and JUANA BALANE DE SUTERIO. _______________
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946.
3Exhibit “12-A.”
4Exhibit “D.”
(Sgd.) SALUD SUTERIO DE MATIAS 5Exhibits “4” to “4-G.”
SALUD SUTERIO DE MATIAS 6Exhibit “1.”
Donee 7Exhibit “2.”
8Record on Appeal, p. 1.
Signed in the presence of: 347
(Sgd.) SOFRONIO BALANE VOL. 176, AUGUST 11, 1989 347
Pajarillo vs. Intermediate Appellate Court
(Sgd.) EUFEMIA P. SUTERIO
(Acknowledgment) compensation was actually paid by Claudio and that the transaction was
deliberately concealed from her by her brother and the defendants. For their 9

_______________ part, the defendants assailed the donation to Salud as legally inefficacious and
defective and contended that her complaint was barred by prescription, estoppel
2Exhibit “B.” and res judicata. They also filed a counterclaim questioning the sale to Salud by
346 her mother of another tract of land, in which they said they were entitled to share
346 SUPREME COURT REPORTS ANNOTATED as Juana’s heirs. 10

Pajarillo vs. Intermediate Appellate Court
These instruments were never registered nor was title transferred in Salud’s
name although she says she immediately took possession of the land. Meantime,
intestate proceedings were instituted on the estate of Perfecta and the said land
was among those included in the inventory of the properties belonging to the
On April 17, 1979, Judge Juan M. Montecillo of the Court of First Instance of
Quezon rendered judgment upholding the donation to the plaintiff and annulling
the deed of sale and the registration of the land in favor of Claudio Suterio, Sr. The
defendants were required to reconvey the land to Salud Suterio even as their
counterclaim was dismissed for lack of evidence. 11

decedent. Salud interposed no objection to its inclusion nor did she oppose its
3
On appeal, the decision was affirmed in toto. The respondent court is now
12

subsequent adjudication to her mother Juana in the project of partition. It is not sought to be reversed in this petition for certiorari under Rule 45 of the Rules of
clear if the land was ever registered in Juana’s name. However, there is evidence Court.
that Juana confirmed the earlier donation of the land to Salud but requested that We hold at the outset that, contrary to the ruling in the challenged decision,
the petitioners have the legal personality to challenge the validity of the donation
on which Salud bases her claim to the property under litigation. As defendants in
the complaint for reconveyance, they had every right to resist the plaintiffs’
allegation that she was the owner of the subject property by virtue of the claimed
donation. Recognition of that donation would topple the props of their own
contention that Juana could dispose of the property as its owner when she sold it
to Claudio Suterio in 1956.
The petitioners also assail the intrinsic validity of the extrajudical settlement
and submit that it is not really a donation as conceptually understood in civil law.
Their argument is that the real donor of the property was Perfecta, the deceased
sister, who, however, could no longer bestow the intended gift. For their part,
Felipe and Juana could not have made the donation
_______________
9Ibid., pp. 4-5.
10Id., p. 27.
11Id., p. 69.
12Rollo, p. 46. Penned by Ejercito, J., with Coquia, Zosa and Bartolome, JJ., concurring.
348
348 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
either because they were not moved by the same sentiments Perfecta had for her
niece Salud. That feeling would have provided the required consideration if
Perfecta herself had made the donation, but not the other two.
This appears to be too much nitpicking, if not sophistry. Felipe and Juana had
declared themselves the heirs of Perfecta and the owners of the property in
question. As such, they were free to give the land to whomever they pleased and
for whatever reason they saw fit. Hence, if they chose to respect Perfecta’s wishes
and carry out her intentions by donating the land to Salud, there was no legal
impediment to their doing so. In fact, that was not only the legal but also the moral
thing to do.
There is no question that Felipe and Juana could have simply disregarded
their sister’s sentiments and decided not to donate the property to Salud, keeping
the same for themselves. The fact that they did not do this speaks well indeed of
their integrity and their loyalty as well to their deceased sister. The extrajudicial
settlement also reflects their own affection for Salud which constituted the valid
consideration for their own act of liberality. Notably, in her acceptance of the
donation, Salud referred to “the donors Felipe Balane and Juana Balane de
Suterio,” and not Perfecta.
It is also pointed out that the donation is defective in form because of non-
compliance with the requirements of the law regarding its acceptance. As it was
executed in 1946, the applicable rule is Article 633 of the old Civil Code reading
as follows:
Art. 633. In order that a donation of real property be valid it must be made by public
instrument in which the property donated must be specifically described and the amount
of the charges to be assumed by the donee expressed.
The acceptance may be made in the deed of gift or in a separate public writing; but it
shall produce no effect if not made during the lifetime of the donor.
If the acceptance is made by separate public instrument, authentic notice thereof shall
be given the donor, and this proceeding shall be noted in both instruments.
There is no question that the donation was accepted in a separate public
instrument and that it was duly communicated
349
VOL. 176, AUGUST 11, 1989 349
Pajarillo vs. Intermediate Appellate Court
to the donors. Even the petitioners cannot deny this. But what they do contend is
that such acceptance was not “noted in both instruments,” meaning the
extrajudicial partition itself and the instrument of acceptance, as required by the
Civil Code.
That is perfectly true. There is nothing in either of the two instruments
showing that “authentic notice” of the acceptance was made by Salud to Juana
and Felipe. And while the first instrument contains the statement that “the donee
does hereby accept this donation and does hereby express her gratitude for the
kindness and liberality of the donor,” the only signatories thereof were Felipe
Balane and Juana Balane de Suterio. That was in fact the reason for the separate
instrument of acceptance signed by Salud a month later.
A strict interpretation of Article 633 can lead to no other conclusion than the
annulment of the donation for being defective in form as urged by the petitioners.
This would be in keeping with the unmistakable language of the above-quoted
provision. However, we find that under the circumstances of the present case, a
literal adherence to the requirement of the law might result not in justice to the
parties but conversely a distortion of their intentions. It is also a policy of the
Court to avoid such an intepretation.
The purpose of the formal requirement is to insure that the acceptance of the
donation is duly communicated to the donor. In the case at bar, it is not even
suggested that Juana was unaware of the acceptance for she in fact confirmed it
later and requested that the donated land be not registered during her lifetime
by Salud. Given this significant evidence, the Court cannot in conscience declare
13
the donation ineffective because there is no notation in the extrajudicial
settlement of the donee’s acceptance. That would be placing too much stress on
mere form over substance. It would also disregard the clear reality of the
acceptance of the donation as manifested in the separate instrument dated June
20, 1946, and as later acknowledged by Juana.
The cases cited by the parties in their respective memoranda
_______________
TSN, January 15, 1970, p. 54.
13
350
350 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
are not really in point. In Legasto v. Verzosa, there was no evidence whatsoever
14
that the claimed donations had been accepted, as stressed by Justice Villa-Real.
The same observation is made of Santos v. Robledo, where Justice Torres noted
15
that the acceptance of the donation did not appear in the deed of donation or in
any other instrument.
The petitioners would also fault the private respondents for laches and argue
that Salud’s inaction in protection of her rights should bar her from asserting
them at this late hour. Specifically, it is pointed out that she failed to register the
deed of donation and its acceptance in 1946; did not oppose the inclusion of the
subject land in the inventory of Perfecta’s properties submitted in the intestate
proceedings in 1946; did not object to the adjudication of the land to Juana in the
project of partition in 1951; did not protest the sale of the land to Claudio Suterio
in 1956; and did not question its registration in his name in 1958. It is contended
that all these acts constitute laches, which has been described by this Court thus:
An estoppel by laches arises from the 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. 16
The problem with the petitioners’ theory is that it would regard Juana and Salud
as strangers when they are in fact mother and daughter. One may expect a person
to be vigilant of his rights when dealing with an acquaintance or associate, or even
with a friend, but not when the other person is a close relative, as in the case at
bar. To begin with, the land came from Juana herself. Secondly, she requested her
daughter not to register the land as long as she was still alive so she could enjoy
its fruits until her death. To Salud, it was not difficult to comply with this request,
coming as it did from her own mother. There was no reason to disobey her. She
did not have to protect herself
_______________
54 Phil. 766.
14
28 Phil. 245.
15
Tijam, et al. v. Sibonghanoy, 23 SCRA 29.
16
351
VOL. 176, AUGUST 11, 1989 351
Pajarillo vs. Intermediate Appellate Court
against her own mother. Indeed, what would have been unseemly was her
registering the land against her mother’s request as if she had no confidence in
her. Salud did no less than what any dutiful daughter would have done under the
circumstances.
If Salud did not protest the inclusion of the land in the inventory of Perfecta’s
properties and its subsequent adjudication to Juana in the intestate proceedings,
it was because she did not feel threatened by these acts. She did not distrust her
mother. Moreover, Juana had herself acknowledged the donation when she was
asked in whose name the property would be registered following the intestate
proceedings. Salud felt safe because she had the extrajudicial settlement to rely
on to prove that her mother and her uncle had donated the subject land to her.
There is nothing in this instrument to suggest that the donation was to take
effect upon the death of the donors as to make it a donation mortis causa, as urged
by the petitioners. The donation became effective upon acceptance by Salud
except that, in obedience to her mother’s request, she chose not to register the
land in the meantime and to allow her mother to enjoy its fruits. What was
deferred was not its effectivity but only its enjoyment by Salud. Registration was
not necessary to make the donation a binding commitment insofar as the donors
and the donee were concerned. 17
As for her inaction against the deed of sale in favor of her brother Claudio, it
should be noted in the first place that she was not aware of it when it was
executed in 1956. Her mother, who was already 76 years old at the time, never
informed her about it, nor did her brother or any of the defendants, for reasons
of their own. It was only later, when the sale was registered in 1958 and a new
title to the land was issued to Claudio, that she started asking questions. Even
then, being a sister to Claudio, she did not immediatey take legal steps.
It is natural, even among non-relatives, to seek a non-judicial settlement
through extra-legal measures before going to court. It is more so in the case of
relatives, who should avoid as much
_______________
Sapto, et al. v. Fabiana, 103 Phil. 683.
17
352
352 SUPREME COURT REPORTS ANNOTATED
Pajarillo vs. Intermediate Appellate Court
as possible the asperity and bitterness of litigation. That is what Salud did when
she repeatedly asked the petitioners for the return of the property albeit to no
avail. It was only when it became clear that amicable persuasion was not possible
that she decided to sue the wife and children of her departed brother.
The petitioners stress that it took Salud all of seven years from the
registration of the land in Claudios’s name before she filed the complaint for
reconveyance against them. That is true. But if one remembers that her brother
died only in 1961 and her own mother only in 1963, at the age of 83, it will be
easy to understand the reason for the delay, which would otherwise have been
unjustified. Suits among brothers and sisters are especially painful to their
parents. Salud must have thought many times about filing her complaint against
her brother Claudio while her old mother was still alive. In fact, Salud hesitated
still even after her mother’s death and took two more years before she finally
filed her complaint against Claudio’s wife and children.
It is clear that Juana Balane de Suterio had no right to sell the subject land to
Claudio because she was no longer its owner, having previously donated it to her
daughter Salud. Juana herself was holding the land merely as a trustee of Salud,
who had transferred possession to her mother at the old woman’s request. The
deed of sale was itself vitiated by bad faith as Claudio is presumed to have known
of the previous donation to his sister Salud, whose acceptance of the donation
was formally witnessed by hiw own wife, the herein principal petitioner. When 18
Claudio registered the land in his name knowing there was a flaw in his title, an
implied trust was created in favor of Salud as the real owner of the property in
accordance with Article 1456 of the Civil Code, reading as follows:
If the property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.
As trustor, Salud had every right to sue for the recovery of the
_______________
Exhibit “B.”
18
354 SUPREME COURT REPORTS ANNOTATED
People vs. Songcuan
court. We see no reason to disturb their factual finding, absent a showing that it
was reached arbitrarily. Interestingly, it occurred to the petitioners to question
the transaction only when they were sued by the private respondents, after
fifteen years from the date of the sale. This is an even longer period than the nine
years during which the petitioners say Salud Suterio was sleeping on her rights
following the sale of her land to Claudio Suterio.
WHEREFORE, the petition is DENIED, with costs against the petitioners. It is
so ordered.

353
Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
VOL. 176, AUGUST 11, 1989 353
Petition denied.
Pajarillo vs. Intermediate Appellate Court Notes.—Property donated inter vivos is subject to collation after donor’s
land in the action for reconveyance against Claudio’s heirs. As we said in Vda. de death, whether the donation was made to a compulsory heir or a stranger. (Vda
Jacinto, et al. v. Vda. de Jacinto, et al.:
19

de Tupas vs. RTC of Negros Occidental, Br. XLIII, 144 SCRA 622.)
Public policy demands that a person guilty of fraud or at least, of breach of trust,
Determination of whether a donation is inter vivos or mortis causa depends
should not be allowed to use a Torrens title as a shield against the consequences of his
own wrongdoing. upon the nature of disposition made. (National Treasurer of the Philippines vs.
The petitioners do not insist on prescription as a bar to the action for Vda. de Meimban, 131 SCRA 264.)
reconveyance, and understandably so. The legal principle is that if the
registration of the land is fraudulent and the person in whose name the land is ——o0o——
registered thus holds it as a mere trustee, the real owner is entitled to file an
action for reconveyance of the property within a period of ten years. As we have
held in many cases:
Where the action is one for reconveyance based on constructive trust, a ten-year period is
allowed. 20

An action for reconveyance of realty, based upon a constructive or implied trust

resulting from fraud, may be barred by prescription. The prescriptive period is reckoned
from the issuance of the title which operates as a constructive notice.21

While actions to enforce a constructive trust prescribe in 10 years from registration

of the property, private respondents’ right commenced from actual discovery of
petitioner’s act of defraudation. 22

The record shows that while the land was registered in the name of Claudio
Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners
in 1965, or still within the ten-year prescriptive period.
The last issue raised by the petitioners, viz., the validity of the deed of sale
executed by Juana Balane de Suterio on January 29, 1950, in favor of Salud
Suterio, need not detain us too long. The trial court sustained the contract for
23

lack of sufficient evidence to invalidate it and was upheld by the respondent

_______________

115 Phil. 263.

19

Quiñiano v. Court of Appeals, 39 SCRA 221.

20

Sinaon v. Soroñgon, 136 SCRA 407.

21

Adille v. Court of Appeals, 157 SCRA 455.

22

Exhibit “Q.”
23

354
496 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
G.R. No. 144773. May 16, 2005. *
AZNAR BROTHERS REALTY COMPANY, petitioner, vs.LAURENCIO AYING, in his
own behalf and in behalf of the other heirs of Emiliano Aying, Paulino Aying, in
his own behalf and in behalf of the other heirs of Simeon Aying, and Wenceslao
Sumalinog, in his own behalf and in behalf of the other heirs of Roberta Aying,
respondents.
Succession; Extrajudicial Partition; An Extrajudicial Partition of Real Estate with Deed
of Absolute Sale is valid and binding only as to the heirs who participated in the execution
thereof.—Respondents alleged in their amended complaint that not all the co-owners of
the land in question signed or executed the document conveying ownership thereof to
petitioner and made the conclusion that said document is null and void. We agree with the
ruling of the RTC and the CA that the Extrajudicial Partition of Real Estate with Deed of
Absolute Sale is valid and binding only as to the heirs who participated in the execution
thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not
participate therein, cannot be bound by said document.
Property; Ownership; Trusts; 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.—The facts on record show that petitioner
acquired the entire parcel of land with the mistaken belief that all the heirs have executed
the subject document. Thus, the trial court
_______________
*SECOND DIVISION.
497
VOL. 458, MAY 16, 2005 497
Aznar Brothers Realty Company vs. Aying
is correct that the provision of law applicable to this case is Article 1456 of the Civil
Code which states: ART. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes. In Vda. de Esconde vs. Court of Appeals, the
Court expounded thus: Construing this provision of the Civil Code, in Philippine National
Bank v. Court of Appeals, the Court stated: A deeper analysis of Article 1456 reveals that it
is not a trust in the technical sense for in a typical trust, confidence is reposed in one
person who is named a trustee for the benefit of another who is called the cestui que trust,
respecting property which is held by the trustee for the benefit of the cestui que trust. A
constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary
relation. While in an express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary
relation to speak of and the so-called trustee neither accepts any trust nor intends holding
the property for the beneficiary.
Same; Same; Same; Prescription; Words and Phrases; “Trusts,” Explained; In
constructive implied trusts, prescription may supervene even if the trustee does not repudiate
the relationship.—The concept of constructive trusts was further elucidated in the same
case, as follows: . . . implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or which are superinduced on the
transaction by operation of law as matters of equity, independently of the particular
intention of the parties. In turn, implied trusts are either resulting or constructive trusts.
These two are differentiated from each other as follows: Resulting trusts are based on the
equitable doctrine that valuable consideration and not legal title determines the equitable
title or interest and are presumed always to have been contemplated by the parties. They
arise from the nature of circumstances of the consideration involved in a transaction
whereby one person thereby becomes invested with legal title but is obligated in equity to
hold his legal title for the benefit of another. On the other hand, constructive trusts are
created by the construction of equity in order to satisfy the demands of justice and
prevent unjust enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property
which he ought not, in equity and
498
498 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
good conscience, to hold. (Emphasis supplied) Based on such concept of
constructive trusts, the Court ruled in said case that: The rule that a trustee cannot acquire
by prescription ownership over property entrusted to him until and unless he repudiates
the trust, applies to express trusts and resulting implied trusts. However,
in 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.
Same; Same; Same; Same; Actions; Reconveyance; Quieting of Title; An action for
reconveyance based on an implied or constructive trust must perforce prescribe in ten years
and not otherwise; The ten-year prescriptive period begins to run from the date of
registration of the deed or the date of the issuance of the certificate of title over the property,
but if the person claiming to be the owner thereof is in actual possession of the property, the
right to seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe.—In Amerol vs. Bagumbaran, the Court expounded on the prescriptive period
within which to bring an action for reconveyance of property based on implied or
constructive trust, to wit: . . . under the present Civil Code, we find that just as an implied
or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in favor of the true
owner. In this context, and vis-à-vis prescription, Article 1144 of the Civil Code is
applicable. Article 1144. The following actions must be brought within ten years from the
time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation
created by law; (3) Upon a judgment. x x x x x x x x x An action for reconveyance based on
an implied or constructive trust must perforce prescribe in ten years and not otherwise. A
long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on an implied
or constructive trust prescribes in ten years from the issuance of the Torrens title over the
property. It has also been ruled that the ten-year prescriptive period begins to run from
the date of registration of the deed or the date of the issuance of the certificate of title over
the property, but if the person claiming to be the owner thereof is in actual possession of
the property, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe.
499
VOL. 458, MAY 16, 2005 499
Aznar Brothers Realty Company vs. Aying
 Same; Same; Same; Same; Same; Same; Registration of instruments must be done in
the proper registry in order to affect and bind the land and, thus, operate as constructive
notice to the world, otherwise the prescriptive period will only begin to run from the time the
adversely affected persons have actual notice of the deed.—In Spouses Abrigo vs. De Vera, it
was held that registration of instruments must be done in the proper registry, in order to
affect and bind the land and, thus, operate as constructive notice to the world. Therein, the
Court ruled: x x x If the land is registered under the Land Registration Act (and has
therefore a Torrens Title), and it is sold but the subsequent sale is registered not under
the Land Registration Act but under Act 3344, as amended, such sale is not considered
REGISTERED x x x. In this case, since the Extrajudicial Partition of Real Estate with Deed
of Absolute Sale was registered under Act No. 3344 and not under Act No. 496, said
document is deemed not registered. Accordingly, the ten-year prescriptive period cannot
be reckoned from March 6, 1964, the date of registration of the subject document under
Act No. 3344. The prescriptive period only began to run from the time respondents had
actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.
Same; Same; Same; Same; Same; Same; Evidence; Burden of Proof; The test for
determining where the burden of proof lies is to ask which party to an action or suit will fail
if he offers no evidence competent to show the facts averred as the basis for the relief he seeks
to obtain; It is incumbent upon the party who sets up the affirmative defense of prescription
to prove the date from which the prescriptive period began to run.—The test for determining
where the burden of proof lies is to ask which party to an action or suit will fail if he offers
no evidence competent to show the facts averred as the basis for the relief he seeks to
obtain. Moreover, one alleging a fact that is denied has the burden of proving it and unless
the party asserting the affirmative of an issue sustains the burden of proof of that issue by
a preponderance of the evidence, his cause will not succeed. Thus, the defendant bears the
burden of proof as to all affirmative defenses which he sets up in answer to the plaintiff’s
claim or cause of action; he being the party who asserts the truth of the matter he has
alleged, the burden is upon him to establish the facts on which that matter is predicated
and if he fails to do so, the plaintiff is entitled to a verdict or decision in his favor. In the
case at bar, it was petitioner, as the defendant before the RTC, which set up in its Answer
the
500
500 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
affirmative defense of prescription. It was, therefore, incumbent upon petitioner to
prove the date from which the prescriptive period began to run. Evidence as to the date
when the ten-year prescriptive period began exists only as to the heirs of Roberta Aying,
as Wenceslao Sumalinog admitted that they learned of the existence of the document of
sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying, there is no clear
evidence of the date when they discovered the document conveying the subject land to
petitioner. Petitioner miserably failed to adduce proof of when the heirs of Emiliano Aying
and Simeon Aying were notified of the subject document. Hence, with regard to said heirs,
the Court may consider the admission in the amended complaint that they learned of the
conveyance of the disputed land only in 1991 when petitioner sent notices to vacate to the
occupants of the subject land, as the date from which the ten-year prescriptive period
should be reckoned.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Rolindo A. Navarro for petitioner.
Santos, Pilapil & Associates for respondents.
Corsino B. Soco for Aying Heirs.
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the modification of the
Decision of the Court of Appeals (CA) dated March 7, 2000 which affirmed with
1
modification the Decision of the Regional Trial Court (RTC) of Lapu-Lapu City,
Branch 27 in Civil Case No. 2930-L; and the Resolution dated August 2, 2000
denying petitioner’s motion for reconsideration of the aforementioned decision.
_______________
Penned by Associate Justice Bernardo Ll. Salas (retired), with former Presiding Justice Salome
1
A. Montoya (retired) and Associate Justice Presbitero J. Velasco (now Court Administrator),
concurring.
501
VOL. 458, MAY 16, 2005 501
Aznar Brothers Realty Company vs. Aying
The antecedent facts are as follows:
The disputed property is Lot No. 4399 with an area of 34,325 square meters
located at Dapdap, Lapu-Lapu City. Crisanta Maloloy-on petitioned for the
issuance of a cadastral decree in her favor over said parcel of land. After her death
in 1930, the Cadastral Court issued a Decision directing the issuance of a decree
in the name of Crisanta Maloloy-on’s eight children, namely: Juan, Celedonio,
Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.
The certificate of title was, however, lost during the war.
Subsequently, all the heirs of the Aying siblings executed an Extrajudicial
Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964,
conveying the subject parcel of land to herein petitioner Aznar Brothers Realty
Company. Said deed was registered with the Register of Deeds of Lapu-Lapu City
on March 6, 1964 under Act No. 3344 (the law governing registration for
unregistered land), and since then, petitioner had been religiously paying real
property taxes on said property.
In 1988, herein petitioner filed a Petition for Reconstitution of the Original
Title as the original title over the subject property had been lost during the war.
On April 12, 1988, the court granted said petition, thereby directing the Register
of Deeds of Lapu-Lapu City to issue a reconstituted title in the name of the
abovementioned Aying siblings. Thus, Original Certificate of Title (OCT) No. RO-
2856 was issued.
In 1991, petitioner, claiming to be the rightful owner of the subject property,
sent out notices to vacate, addressed to persons occupying the property.
Unheeded, petitioner then filed a complaint for ejectment against the occupants
before the Metropolitan Trial Court (MTC), Lapu-Lapu City.
 On February 1, 1994, the MTC ordered the occupants to vacate the property.
The case eventually reached this Court, docketed as G.R. No. 128102,
entitled Aznar Brothers Realty
502
502 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
Company vs. Court of Appeals, Luis Aying, Demetrio Sida, Felomino Augusto,
Federico Abing, and Romeo Augusto. On March 7, 2000, a Decision was
2
promulgated in favor of herein petitioner, declaring it as the rightful possessor of
the parcel of land in question.
Meanwhile, herein respondents, along with other persons claiming to be
descendants of the eight Aying siblings, all in all numbering around 220 persons,
had filed a complaint for cancellation of the Extrajudicial Partition with Absolute
Sale, recovery of ownership, injunction and damages with the RTC of Lapu-Lapu
City. The complaint was dismissed twice without prejudice. Said complaint was
re-filed on August 19, 1993, docketed as Civil Case No. 2930-L.
In their amended complaint, herein respondents (plaintiffs before the RTC)
alleged that: they are co-owners of subject property, being descendants of the
registered owners thereof under OCT No. RO-2856; they had been in actual,
peaceful, physical, open, adverse, continuous and uninterrupted possession in
concept of owner of subject parcel of land since time immemorial; their
possession was disturbed only in the last quarter of 1991 when some of them
received notices to vacate from petitioner and several weeks thereafter,
earthmoving equipment entered the disputed land, bulldozing the same and
destroying plants, trees and concrete monuments (“mohon”); respondents
discovered that such activities were being undertaken by petitioner together
with Sta. Lucia Realty and Development, Inc.; petitioner claimed to be the owner
of subject property by virtue of an extrajudicial partition of real estate with deed
of absolute sale executed in petitioner’s favor by the alleged heirs of Crisanta
Maloloy-on; the aforementioned extrajudicial partition of real estate with deed of
absolute sale is a fraud and is null and void ab initio because not all the co-owners
of subject property affixed their signatures on said document and some of the co-
owners who
_______________
G.R. No. 128102, March 7, 2000, 327 SCRA 359.
2
503
VOL. 458, MAY 16, 2005 503
Aznar Brothers Realty Company vs. Aying
supposedly signed said document had been dead at the time of the execution
thereof; petitioner entered subject land in bad faith, knowing fully well that it did
not have any right to the land and used force, threat and intimidation against
respondents; and they suffered moral damages. 3
Petitioner (defendant before the RTC) filed its Answer, denying that
respondents are the lawful owners of subject parcel of land by virtue of their
being descendants or heirs of the registered owners of subject property. Instead,
petitioner alleged that it had been in actual possession of subject land as owner
thereof by virtue of the extrajudicial partition of real property and deed of
absolute sale executed in its favor; that in fact, it had been paying taxes thereon
religiously; that it tolerated about 6 persons to live on said land but said persons
were eventually ejected by court order. Petitioner then raised the affirmative
defenses of failure to state cause of action and prescription, as it took respondents
27 years, 10 months and 27 days to file the action to recover subject property,
when an action to recover property based on an implied trust should be instituted
within 4 years from discovery of the fraud. 4
In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were
narrowed down to the following:
1. 1.Whether or not the plaintiffs [herein respondents] are the heirs of the
registered owners of Lot No. 4399.
2. 2.Whether or not plaintiffs are the owners of Lot No. 4399.
3. 3.Whether or not the defendant Aznar [herein petitioner] is estopped to make
any claim on Lot No. 4399.
4. 4.Whether or not the defendant Aznar is a builder in bad faith.
5. 5.Whether or not the defendants are liable for damages and attorney’s fees in
favor of the plaintiffs.
_______________
3See Amended Complaint, pp. 45-57, Records, Vol. 1.
4See Answer, appearing after page 193 of the Records, Vol. 1. Said pleading bears no pagination.
504
504 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
1. 6.Whether or not the Extrajudicial Partition of Real Estate with Deed of Absolute
Sale is valid and had, in effect, validly conveyed to defendant Aznar Lot No.
4399.
2. 7.Whether or not the plaintiffs’ action has prescribed. 5
After trial, the RTC rendered a Decision dated July 4, 1997, ruling that
respondents’ evidence failed to prove that the extrajudicial partition with deed
of absolute sale was a totally simulated or fictitious contract and concluded that
said document is valid, thus, effectively conveying to petitioner the property in
question. It further held that respondents’ action had prescribed in that the action
is considered as one for reconveyance based on implied or constructive trust, it
prescribed in 10 years from the registration of the deed on March 6, 1964; and if
the action is considered as one for annulment of contract on the ground of fraud,
it should have been filed within 4 years from discovery of the fraud. The trial
court also ruled that respondents failed to present any admissible proof of
filiation, hence, they were not able to prove that they are indeed heirs of the eight
Aying siblings who appear as the registered owners under OCT No. RO-2856.
The dispositive portion of the RTC Decision reads as follows:
“WHEREFORE, judgment is hereby rendered dismissing the amended complaint on the
ground of prescription, and declaring the Extrajudicial Partition of Real Estate with Deed
of Absolute Sale dated March 3, 1964 as valid and binding, adjudging that Lot 4399 with
an area of 34,325 square meters located at Dapdap, Mactan, Lapu-Lapu City had been
validly conveyed to and in favor of Aznar Brothers Realty Company, and directing the
Register of Deeds of Lapu-Lapu City to register the above-mentioned deed in accordance
with law and to cancel Original Certificate of Title No. RO-2856, and to issue a transfer
certificate of title in the name of Aznar Brothers Realty Company upon payment of the
necessary registration fees pursuant thereto.
_______________
5Pre-Trial Order, p. 208, Records, Vol. 1.
505
VOL. 458, MAY 16, 2005 505
Aznar Brothers Realty Company vs. Aying
The Writ of Preliminary Injunction issued in this case is hereby ordered dissolved.
The Motion for Contempt filed by the plaintiffs against defendants is dismissed for
want of factual and legal basis.
Costs against the plaintiffs.
SO ORDERED.” 6
Herein respondents appealed the foregoing decision to the CA and on March 7,
2000, said court promulgated its Decision, the dispositive portion of which is
reproduced hereunder:
“THE FOREGOING CONSIDERED, the contested Decision while AFFIRMED is hereby
MODIFIED. The heirs of Emiliano Aying, Simeon Aying and Roberta Aying are hereby
declared as the lawful owners of the contested property but equivalent only to 3/8.
SO ORDERED.”
In modifying the RTC judgment, the CA ratiocinated that “an action for recovery
of possession of registered land never prescribes in view of the provision of
Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that no title to
registered land in derogation to that of a registered owner shall be acquired by
prescription.” The CA further ruled that even if the action is deemed to be based
on implied trust, prescription did not begin to run since there is no evidence that
positive acts of repudiation were made known to the heirs who did not
participate in the execution of the Extrajudicial Partition of Real Estate with Deed
of Absolute Sale. Thus, striking down the RTC’s ruling that the respondents’
complaint is dismissible on the ground of prescription, the CA held instead that
herein respondents’ action had not prescribed but upheld the validity of the
Extrajudicial Partition of Real Estate with Deed of Absolute Sale, except as to the
shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in
the execution of said document.
_______________
6Rollo, p. 57.
506
506 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
Herein petitioner’s motion for reconsideration of the CA decision was denied per
Resolution dated August 2, 2000.
Hence, the present petition for review on certiorariassailing the CA decision
on the following grounds:
I
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT AN HEIR OF THE
ORIGINAL REGISTERED OWNER MAY LOSE HIS RIGHT TO RECOVER A TITLED
PROPERTY BY REASON OF LACHES;
II
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT THE ACT OF
REGISTRATION OF THE DEED OF PARTITION WITH SALE MAY BE CONSIDERED AN
UNEQUIVOCAL REPUDIATION OF THE TRUST GIVING RISE TO PRESCRIPTION;
III
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE PROVISIONS OF ARTICLE
1104 OF THE CIVIL CODE TO THE EFFECT THAT IN THE ABSENCE OF BAD FAITH OR
FRAUD, THE PARTITION WITH PRETERITION OF ANY COMPULSORY HEIR SHALL NOT
BE RESCINDED. 7
In their Comment, respondents argue that this case is an action to declare as null
and void the Extrajudicial Partition of Real Estate with Deed of Absolute Sale,
hence, under Article 1410 of the Civil Code, an action for declaration of an
inexistent contract does not prescribe. Respondents further posit that the
principle of laches should be applied against petitioner and not against them, as
they (respondents) had been in actual possession of the subject property, while
petitioner merely brought action to eject them more than 29 years after the
alleged execution of the Extrajudicial Partition of
_______________
7Rollo, p. 23.
507
VOL. 458, MAY 16, 2005 507
Aznar Brothers Realty Company vs. Aying
Real Estate with Deed of Absolute Sale. They also refuted petitioner’s arguments
regarding the application of the principles of implied and constructive trusts in
this case.
At the outset, it should be stressed that not all the plaintiffs who filed the
amended complaint before the trial court had been impleaded as respondents in
the present petition. The only parties impleaded are the heirs of Emiliano, Simeon parties. In turn, implied trusts are either resulting or constructive trusts. These two are
and Roberta Aying, whom the CA adjudged as owners of a 3/8 portion of the land differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title
in dispute for not having participated in the execution of the Extrajudicial
determines the equi-
Partition of Real Estate with Deed of Absolute Sale.
It is significant to note that herein petitioner does not question the CA _______________
conclusion that respondents are heirs of the aforementioned three Aying siblings.
Hence, the trial court and appellate court’s findings that the Extrajudicial 8 G.R. No. 103635, February 1, 1996, 253 SCRA 66.
Id., at p. 74.
Partition of Real Estate with Deed of Absolute Sale was not forged nor simulated
9

and that the heirs of Emiliano, Simeon and Roberta Aying did not participate in
the execution thereof, are now beyond cavil.
The issues raised by petitioner for the Court’s resolution are (1) whether or
not respondents’ cause of action is imprescriptible; and (2) if their right to bring
action is indeed imprescriptible, may the principle of laches apply.
Respondents alleged in their amended complaint that not all the co-owners
of the land in question signed or executed the document conveying ownership
thereof to petitioner and made the conclusion that said document is null and void.
We agree with the ruling of the RTC and the CA that the Extrajudicial Partition of
509
VOL. 458, MAY 16, 2005 509
Aznar Brothers Realty Company vs. Aying
table 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. (Emphasis
10

Real Estate with Deed of Absolute Sale is valid and binding only as to the heirs
who participated in the execution thereof, hence, the heirs of Emiliano, Simeon
and Roberta Aying, who undisputedly did not participate therein, cannot be
bound by said document.
However, the facts on record show that petitioner acquired the entire parcel
of land with the mistaken belief that all the heirs have executed the subject
supplied)
Based on such concept of constructive trusts, the Court ruled in said case that:
The rule that a trustee cannot acquire by prescription ownership over property entrusted
to him until and unless he repudiates the trust, applies to express trusts and resulting
implied trusts. However, in 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. 11

document. Thus, the trial The next question is, what is the applicable prescriptive period?
508 In Amerol vs. Bagumbaran, the Court expounded on the prescriptive period
12

508 SUPREME COURT REPORTS ANNOTATED within which to bring an action for reconveyance of property based on implied
or constructive trust, to wit:
Aznar Brothers Realty Company vs. Aying . . . under the present Civil Code, we find that just as an implied or constructive trust is an
court is correct that the provision of law applicable to this case is Article 1456 of offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey
the Civil Code which states: the property and the title thereto in favor of the true owner. In this context, and vis-à-
ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by vis prescription, Article 1144 of the Civil Code is applicable.
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes. _______________
In Vda. de Esconde vs. Court of Appeals, the Court expounded thus:
8

Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals, Id., at pp. 73-74.
10

the Court stated: Id., at pp. 75-76.

11

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical No. L-33261, September 30, 1987, 154 SCRA 396.
12

trust, confidence is reposed in one person who is named a trustee for the benefit of another who is 510
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
510 SUPREME COURT REPORTS ANNOTATED
relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary Aznar Brothers Realty Company vs. Aying
relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and Article 1144. The following actions must be brought within ten years from the time the
the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.
right of action accrues:
9

The concept of constructive trusts was further elucidated in the same case, as
follows:
1. (1)Upon a written contract;
. . . implied trusts are those which, without being expressed, are deducible from the nature
2. (2)Upon an obligation created by law;
of the transaction as matters of intent or which are superinduced on the transaction by
3. (3)Upon a judgment.
operation of law as matters of equity, independently of the particular intention of the
 xxx xxx xxx Laurencio Aying’s (heir of Emiliano Aying) admission that he found out about the
An action for reconveyance based on an implied or constructive trust must perforce sale of the land in dispute a long time ago and can only estimate that it
prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very
recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an _______________
action for reconveyance based on an implied or constructive trust prescribes in ten years
from the issuance of the Torrens title over the property. 13
G.R. No. 154409, June 21, 2004, 432 SCRA 544.
16

It has also been ruled that the ten-year prescriptive period begins to run from the Spouses Abrigo vs. De Vera, G.R. No. 154409, June 21, 2004, 432 SCRA 544, citing Soriano v. Heirs
17

date of registration of the deed or the date of the issuance of the certificate of title of Magali, 8 SCRA 489 (1963).
over the property, but if the person claiming to be the owner thereof is in actual Paras, Civil Code of the Philippines Annotated (1990), Vol. V, p. 154.
18

TSN of September 29, 1995, p. 10.

19

possession of the property, the right to seek reconveyance, which in effect seeks 512
to quiet title to the property, does not prescribe.
512 SUPREME COURT REPORTS ANNOTATED
14

In the present case, respondents Wenceslao Sumalinog, an heir of Roberta

Aying; Laurencio Aying, an heir of Emiliano Aying; and Paulino Aying, an heir of Aznar Brothers Realty Company vs. Aying
Simeon Aying, all testified that they had never occupied or been in possession of must be after martial law. Paulino Aying (heir of Simeon Aying) gave no
20

the land in dispute. Hence, the prescriptive period of ten years would apply to
15 testimony whatsoever as to when the children of Simeon Aying actually learned
herein respondents. of the existence of the document of sale. On the other hand, petitioner did not
The question then arises as to the date from which the ten-year period should present any other evidence to prove the date when respondents were notified of
be reckoned, considering that the Extra-Judicial Partition of Real Estate with the execution of the subject document.
Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. In view of the lack of unambiguous evidence of when the heirs of Emiliano
496 Aying and Simeon Aying discovered the existence of the document of sale, it must
be determined which party had the burden of proof to establish such fact.
_______________ The test for determining where the burden of proof lies is to ask which party
to an action or suit will fail if he offers no evidence competent to show the facts
VOL. 458, MAY 16, 2005 511 averred as the basis for the relief he seeks to obtain. Moreover, one alleging a fact
21

that is denied has the burden of proving it and unless the party asserting the
Aznar Brothers Realty Company vs. Aying
affirmative of an issue sustains the burden of proof of that issue by a
(Land Registration Act), despite the fact the land in dispute was already titled preponderance of the evidence, his cause will not succeed. Thus, the defendant 22

under Act No. 496 in the names of the Aying siblings at the time the subject bears the burden of proof as to all affirmative defenses which he sets up in answer
document was executed. to the plaintiff’s claim or cause of action; he being the party who asserts the truth
In Spouses Abrigo vs. De Vera, it was held that registration of instruments
16

of the matter he has alleged, the burden is upon him to establish the facts on
must be done in the proper registry, in order to affect and bind the land and, thus, which that matter is predicated and if he fails to do so, the plaintiff is entitled to
operate as constructive notice to the world. Therein, the Court ruled:
17

a verdict or decision in his favor. 23

x x x If the land is registered under the Land Registration Act (and has therefore a Torrens
Title), and it is sold but the subsequent sale is registered not under the Land Registration
Act but under Act 3344, as amended, such sale is not considered REGISTERED x x x . 18
In this case, since the Extrajudicial Partition of Real Estate with Deed of Absolute
Sale was registered under Act No. 3344 and not under Act No. 496, said document
is deemed not registered. Accordingly, the ten-year prescriptive period cannot be
reckoned from March 6, 1964, the date of registration of the subject document
under Act No. 3344. The prescriptive period only began to run from the time
respondents had actual notice of the Extrajudicial Partition of Real Estate with
In the case at bar, it was petitioner, as the defendant before the RTC, which
set up in its Answer the affirmative defense of prescription. It was, therefore,
incumbent upon petitioner to prove the date from which the prescriptive period
began to run. Evidence as to the date when the ten-year prescriptive period began
exists only as to the heirs of Roberta
_______________
TSN of November 28, 1995, p. 10.
20

Deed of Absolute Sale. Republic vs. Vda. de Neri, G.R. No. 139588, March 4, 2004, 424 SCRA 676.
21

The only evidence on record as to when such prescriptive period commenced 20 Am. Jur. 138-139.
22

as to each of the respondents are Wenceslao Sumalinog’s (heir of Roberta Aying) Francisco, The Revised Rules of Court in the Philippines, Vol. VII, Part II, 1997 ed., p. 7.
23

513
testimony that about three years after 1964, they already learned of the existence
of the Extrajudicial Partition of Real Estate with Deed of Absolute Sale; and 19
VOL. 458, MAY 16, 2005 513
Aznar Brothers Realty Company vs. Aying
Aying, as Wenceslao Sumalinog admitted that they learned of the existence of the
document of sale in the year 1967. As to the heirs of Emiliano Aying and Simeon
Aying, there is no clear evidence of the date when they discovered the document
conveying the subject land to petitioner. Petitioner miserably failed to adduce
proof of when the heirs of Emiliano Aying and Simeon Aying were notified of the
subject document. Hence, with regard to said heirs, the Court may consider the
admission in the amended complaint that they learned of the conveyance of the
disputed land only in 1991 when petitioner sent notices to vacate to the
occupants of the subject land, as the date from which the ten-year prescriptive
period should be reckoned.
Respondents filed their Amended Complaint on December 6, 1993. Thus, 24
with regard to respondent heirs of Roberta Aying who had knowledge of the
conveyance as far back as 1967, their cause of action is already barred by
prescription when said amended complaint was filed as they only had until 1977
within which to bring action. As to the respondent heirs of Emiliano and Simeon
Aying, they were able to initiate their action for reconveyance of property based
on implied or constructive trust well within the ten-year prescriptive period
reckoned from 1991 when they were sent by petitioner a notice to vacate the
subject property.
Evidently, laches cannot be applied against respondent heirs of Emiliano and
Simeon Aying, as they took action to protect their interest well within the period
accorded them by law.
With regard to petitioner’s argument that the provision of Article 1104 of the
Civil Code, stating that a partition made with preterition of any of the compulsory
heirs shall not be rescinded, should be applied, suffice it to say that the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale is not being rescinded.
In fact, its validity had been upheld but
hereby DECLARED as the LAWFUL OWNERS of a 2/8 portion of the parcel of land
covered by Original Certificate of Title No. RO-2856.
SO ORDERED.
Puno (Chairman), Callejo, Sr., Tinga and Chico-Nazario, JJ., concur.
Petition partially granted, judgment modified.
Notes.—Insofar as third persons are concerned, what could validly transfer
or convey a person’s interest in a property is the registration of the deed of sale
and not of the Deed of Extrajudicial Partition which only mentions the former.
(Vda. de Alcantara vs. Court of Appeals, 252 SCRA 457 [1996])
Where the main issue to be resolved is the authenticity of the Deed of
Extrajudicial Partition and Settlement, the same partakes of a question of fact
rather than of law. (Reyes vs. Court of Appeals, 258 SCRA 651 [1996])
The Statute of Frauds under Article 1403 of the New Civil Code does not apply
to an extrajudicial partition among heirs
515
VOL. 458, MAY 16, 2005 515
Lopez Sugar Corporation vs. Franco
for it is not legally deemed a conveyance of real property, considering that it
involves not a transfer of property from one to the other but rather, a
confirmation or ratification of title or right of property that an heir in renouncing
in favor of another heir who accepts and receives the inheritance. (Castro vs.
Miat, 397 SCRA 271 [2003])
——o0o——

_______________

See Record, Vol. 1, p. 42.

24

514
514 SUPREME COURT REPORTS ANNOTATED
Aznar Brothers Realty Company vs. Aying
only as to the parties who participated in the execution of the same. As discussed
above, what was conveyed to petitioner was ownership over the shares of the
heirs who executed the subject document. Thus, the law, particularly, Article
1456 of the Civil Code, imposed the obligation upon petitioner to act as a trustee
for the benefit of respondent heirs of Emiliano and Simeon Aying who, having
brought their action within the prescriptive period, are now entitled to the
reconveyance of their share in the land in dispute.
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the
Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as follows:
The amended complaint of the heirs of Roberta Aying is DISMISSED on the
ground of prescription. However, the heirs of Emiliano Aying and Simeon Aying,
having instituted the action for reconveyance within the prescriptive period, are