27. Carantes vs.

Court of Appeals
Facts: Mateo Carantes, original owner of Lot No. 44 situated at Loakan, Baguio City, died in 1913 leaving his widow
Ogasia, and six children, namely, Bilad, Lauro, Crispino, Maximino, Apung and Sianang,. In 1930, the government, in
order to expand the landing field of the Loakan Airport, filed for the expropriation of a portion of Lot. No. 44. Said lot
was subdivided into Lots. No. 44A to 44E for the purpose. In 1913, Maximino Carrantes (MAX) was appointed the judicial
administrator of the estate of Mateo. Four heirs, namely, Bilad, Lauro, Sianang, and Crisipino, executed a deed
denominated “Assignment of Right to Inheritance” assigning to Max their rights over said lot in 1939. The stated
monetary consideration is P1.00. On same date, Max sold Lot Nos. 44B and 44C to the government. One year later the
Court of First Instance, upon joint petition of the Carrantes heirs, issued an order cancelling O.C.T. No. 3 and TCT No.
2533 was issued in its place. On 16 March 1940, Max registered the deed of “Assignment of Right to Inheritance”. Thus,
TCT No. 2533 was cancelled and TCT 2540 was issued in the name of Max. A formal deed of Sale was also executed by
Max on the same date in favor of the government. Hence, TCT 2540 was cancelled and new TCTs were issued in favor of
the government and Max, respectively. On 4 Sept. 1958, Bilad, Lauro, and Crispino, along with the surviving heirs of
Apung and Sianang filed complaint in the CFI. They claimed that the execution of the deed of assignment was attended
by fraud. The trial court decided that the action of the heirs had already prescribed since an action on fraud prescribes
on four years from discovery of such, in this case, on 16 March 1940 when Max registered the deed of assignment. The
Court of Appeals reversed and found that a constructive trust was created. Hence, the present petition.
Issue: Whether or not Implied trust is covered with statute of limitations
Held: Yes. Definitely, no express trust was created in favor of the private respondents. If trust there was, it could only be
—as held by respondent court—a constructive trust, which is imposed by law. In constructive trusts there is neither
promise nor fiduciary relation; the so-called trustee does not recognize any trust and has no intent to hold the property
for the beneficiary. In at least two cases, the rule of constructive notice was applied by this Court although a
constructive trust had been created. Thus, in Lopez, et al. vs. Gonzaga, et al., where the plaintiffs and the defendants
were co-heirs and the decedent owner of the landshad merely allowed the principal defendant to use the products and
rentals of the lands for purposes of coconut oil experimentation, but said defendant later caused the transfer of the
certificates of title in his own name through the registration of certain judicial orders, this Court held that the recording
of the judicial orders sufficed as notice to the other heirs, for the rule is that knowledge of what might have been
revealed by proper inquiry is imputable to the inquirer. In any event, it is now settled that an action for reconveyance
based on implied or constructive trust is prescriptible; it prescribes in ten years. From March 16, 1940, when the
petitioner registered the deed of assignment and had the certificate of title in the names of the heirs cancelled and a
new certificate of title issued in his own name, he began to hold the property in open and clear repudiation of any trust.
It will be noted that on the same date, the petitioner also executed a formal deed of sale over portions of Lot No. 44 in
favor of the government. In 1948 he mortgaged Lot No. 44-D with the Philippine National Bank as his exclusive property.
The petitioner’s exercise of such rights of dominion is anathema to the concept of a continuing and subsisting trust.