1.

Canezo v Rojas

SOLEDAD CAÑEZO, substituted by WILLIAM CAÑEZO and VICTORIANO CAÑEZO Petitioners,

vs.
CONCEPCION ROJAS, Respondent.

On January 29, 1997, petitioner Soledad Cañezo filed a Complaint2 for the recovery of real property plus damages with the MTC
against her father’s second wife, respondent Concepcion Rojas. The subject property is an unregistered land . Cañezo attached to the
complaint a Joint Affidavit3 executed on May 10, 1979 by Isidro Catandijan and Maximina Cañezo attesting to her acquisition of the
property.In her complaint, the Cañezo alleged that she bought the parcel of land from Crisogono Limpiado, although the transaction
was not reduced into writing. She immediately took possession of the property. She entrusted the said land to her father,
Crispulo4 Rojas, who took possession of, and cultivated, the property. In 1980, she found out that the respondent, her stepmother, was
in possession of the property and was cultivating the same. She also discovered that the tax declaration over the property was already
in the name of Crispulo Rojas.5Concepcion asserted that it was Crispulo Rojas, bought the property from Crisogono Limpiado in 1948,
which accounts for the tax declaration being in Crispulo’s name. Crispulo possessed and cultivated the property. Upon his death, the
property was included in his estate, which was administered by a special administrator, The petitioner, as heir, even received her share
in the produce of the estate. The respondent further contended that the petitioner ought to have impleaded all of the heirs as
defendants. She also argued that the fact that petitioner filed the complaint only in 1997 means that she had already abandoned her
right over the property.6 MTC rendered a Decision in favor of Cañezo, thus:declaring plaintiff the true and lawful owner of the land
Despite the respondent’s objection that the verbal sale cannot be proven without infringing the Statute of Frauds, the MTC gave
credence to the testimony of the petitioners’ two witnesses attesting to the fact that Crisogono Limpiado sold the property to the
petitioner in 1939. The MTC also found no evidence to show that Crispulo Rojas bought the property from Crisogono Limpiado in 1948.
It held that the 1948 tax declaration in Crispulo’s name had little significance on respondent’s claim, considering that in 1948, the
"country was then rehabilitating itself from the ravages of the Second World War" and "the government was more interested in the
increase in tax collection than the observance of the niceties of law."8The RTC reversed the MTC decision on the ground that the
action had already prescribed and acquisitive prescription had set in. The said property remains as the legitime of the defendant
Concepcion Rojas and her children.However, acting on petitioner’s motion for reconsideration, the RTC amended its original decision
on December 14, 1998.10 This time, it held that the action had not yet prescribed considering that the petitioner merely entrusted the
property to her father. The ten-year prescriptive period for the recovery of a property held in trust would commence to run only from the
time the trustee repudiates the trust. The RTC found no evidence on record showing that Crispulo Rojas ever ousted the petitioner from
the property. Further, ordering Concepcion Rojas and all persons claiming rights or interest under her to vacate and surrender
possession of the land aforecited to the plaintiff or any of her authorized representatives, Ordering the Provincial and/or Municipal
Assessor’s Office to cancel the present existing Tax Declaration in the name of Heirs of Crispolo Rojas referring to the above-described
property in favor of the name of Soledad Rojas Vda. De Cañezo, Ordering the defendant-appellant Concepcion Rojas to pay the
plaintiff-appellee the sum of ₱34,000.00 in actual damages, and to pay for the loss of her share in money value of the products of the
coconuts of said land from 1979 to 1997 and to pay further until the case is terminated at the rate of ₱200.00 per quarter based on the
regular remittances of the late Crispolo Rojas to the plaintiff-appellee, and to pay the costs.The respondent filed a motion to reconsider
the Amended Decision but the RTC denied the same in an Order dated April 25, 1999.She then filed a petition for review with the Court
of Appeals (CA), which reversed the Amended Decision of the RTC on September 7, 2000, thus:WHEREFORE, the amended decision
dated December 14, 1998 rendered in Civil Case No. B-1041 is hereby REVERSED and SET ASIDE. The complaint filed by Soledad
Cañezo before the Municipal Trial Court of Naval, Biliran is hereby DISMISSED on grounds of laches and prescription and for lack of
merit.The CA held that the petitioner’s inaction for several years casts a serious doubt on her claim of ownership over the parcel of
land. It noted that 17 years lapsed since she discovered that respondent was in adverse possession of the property before she
instituted an action to recover the same. And during the probate proceedings, the petitioner did not even contest the inclusion of the
property in the estate of Crispulo Rojas. 13The CA was convinced that Crispulo Rojas owned the property, having bought the same from
Crisogono Limpiado in 1948. Supporting this conclusion, the appellate court cited the following circumstances: (1) the property was
declared for taxation purposes in Crispulo’s name and he had been paying the taxes thereon from 1948 until his death in 1978; (2)
Crispulo adversely possessed the same property from 1948 until his death in 1978; and (3) upon his death in 1978, the property was
included in his estate, the proceeds of which were distributed among his heirs.14The CA further held that, assuming that there was an
implied trust between the petitioner and her father over the property, her right of action to recover the same would still be barred by
prescription since 49 years had already lapsed since Crispulo adversely possessed the contested property in 1948.15

On May 9, 2001, the CA denied the petitioner’s motion for reconsideration for lack of merit. 16In this petition for review, the petitioner,
substituted by her heirs, assigns the following errors:That the Court of Appeals committed grave abuse of discretion in setting aside
petitioner’s contention that the Petition for Review filed by respondent CONCEPCION ROJAS before the Court of Appeals was FILED
OUT OF TIME;That the Court of Appeals erred and committed grave abuse of discretion amounting to lack or excess of jurisdiction
when it decided that the filing of the case by SOLEDAD CAÑEZO for Recovery of Real Property was already barred by
PRESCRIPTION AND LACHES.17The petitioner insists that the respondent’s petition for review before the CA was filed out of time. The
petitioner posits that the CA may not grant an additional extension of time to file the petition except for the most compelling reason. She
contends that the fact that respondent’s counsel needed additional time to secure the certified copy of his annexes cannot be
considered as a compelling reason that would justify an additional period of extension. She admits, though, that this issue was raised
for the first time in their motion for reconsideration, but insists that it can be raised at any time since it concerns the jurisdiction of the
CA over the petition.The petitioner further posits that prescription and laches are unavailing because there was an express trust
relationship between the petitioner and Crispulo Rojas and his heirs, and express trusts do not prescribe. Even assuming that it was not
an express trust, there was a resulting trust which generally does not prescribe unless there is repudiation by the trustee.For her part,
the respondent argues that the petitioners are now estopped from questioning the CA Resolution granting her second motion for
extension to file the petition for review. She notes that the petitioner did not raise this issue in the comment that she filed in the CA. In
any case, the grant of the second extension of time was warranted considering that the certified true copy of the assailed RTC orders
did not arrive at the office of respondent’s counsel in Cebu City in time for the filing of the petition.On the merits, the respondent
asserts that the complaint is barred by prescription, laches and estoppel. From 1948 until his death in 1978, Crispulo cultivated the
property and was in adverse, peaceful and continuous possession thereof in the concept of owner. It took the petitioner 49 years from
1948 before she filed the complaint for recovery of the property in 1997. Granting that it was only in 1980 that she found out that the
respondent adversely possessed the property, still petitioner allowed 17 years to elapse before she asserted her alleged right over the
property.Finally, the respondent maintains that the other co-owners are indispensable parties to the case; and because they were not
impleaded, the case should be dismissed.The petition has no merit.On the procedural issue raised by the petitioner, we find no
reversible error in the grant by the CA of the second motion for extension of time to file the respondent’s petition. The grant or denial of
a motion for extension of time is addressed to the sound discretion of the court. 18 The CA obviously considered the difficulty in securing
a certified true copy of the assailed decision because of the distance between the office of respondent’s counsel and the trial court as a
compelling reason for the request. In the absence of any showing that the CA granted the motion for extension capriciously, such
exercise of discretion will not be disturbed by this Court.On the second issue, the petitioner insists that her right of action to recover the
property cannot be barred by prescription or laches even with the respondent’s uninterrupted possession of the property for 49 years
because there existed between her and her father an express trust or a resulting trust. Indeed, if no trust relations existed, the
possession of the property by the respondent, through her predecessor, which dates back to 1948, would already have given rise to
acquisitive prescription in accordance with Act No. 190 (Code of Civil Procedure).19 Under Section 40 of Act No. 190, an action for
recovery of real property, or of an interest therein, can be brought only within ten years after the cause of action accrues. This period
coincides with the ten-year period for acquisitive prescription provided under Section 4120 of the same Act.

a trust over the property --- express or implied --- between the petitioner and her father.
A trust is the legal relationship between one person having an equitable ownership of property and another person owning the legal title
to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain
powers by the latter.21 Trusts are either express or implied.22 Express trusts are those which are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. 23 Implied trusts are those which,
without being expressed, are deducible from the nature of the transaction as matters of intent or, independently, of the particular
intention of the parties, as being superinduced on the transaction by operation of law basically by reason of equity.24 An implied trust
may either be a resulting trust or a constructive trust.

It is true that in express trusts and resulting trusts, a trustee cannot acquire by prescription a property entrusted to him unless he
repudiates the trust.25 The following discussion is instructive:There is a rule that a trustee cannot acquire by prescription the ownership
of property entrusted to him, or that an action to compel a trustee to convey property registered in his name in trust for the benefit of the
cestui que trust does not prescribe, or that the defense of prescription cannot be set up in an action to recover property held by a
person in trust for the benefit of another, or that property held in trust can be recovered by the beneficiary regardless of the lapse of
time.That rule applies squarely to express trusts. The basis of the rule is that the possession of a trustee is not adverse. Not being
adverse, he does not acquire by prescription the property held in trust. Thus, Section 38 of Act 190 provides that the law of prescription
does not apply "in the case of a continuing and subsisting trust."

The rule of imprescriptibility of the action to recover property held in trust may possibly apply to resulting trusts as long as the trustee
has not repudiated the trust.Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust for the
recovery of the property held in trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the
cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is
clear and conclusive.26As a rule, however, the burden of proving the existence of a trust is on the party asserting its existence, and such
proof must be clear and satisfactorily show the existence of the trust and its elements. 27 The presence of the following elements must
be proved: (1) a trustor or settlor who executes the instrument creating the trust; (2) a trustee, who is the person expressly designated
to carry out the trust; (3) the trust res, consisting of duly identified and definite real properties; and (4) the cestui que trust, or
beneficiaries whose identity must be clear.28 Accordingly, it was incumbent upon petitioner to prove the existence of the trust
relationship. And petitioner sadly failed to discharge that burden.The existence of express trusts concerning real property may not be
established by parol evidence.29 It must be proven by some writing or deed. In this case, the only evidence to support the claim that an
express trust existed between the petitioner and her father was the self-serving testimony of the petitioner. Bare allegations do not
constitute evidence adequate to support a conclusion. They are not equivalent to proof under the Rules of Court. 30In one case, the
Court allowed oral testimony to prove the existence of a trust, which had been partially performed. It was stressed therein that what is
important is that there should be an intention to create a trust, thus:What is crucial is the intention to create a trust. While oftentimes the
intention is manifested by the trustor in express or explicit language, such intention may be manifested by inference from what the
trustor has said or done, from the nature of the transaction, or from the circumstances surrounding the creation of the purported
trust.However, an inference of the intention to create a trust, made from language, conduct or circumstances, must be made with
reasonable certainty. It cannot rest on vague, uncertain or indefinite declarations. An inference of intention to create a trust, predicated
only on circumstances, can be made only where they admit of no other interpretation. 31Although no particular words are required for the
creation of an express trust, a clear intention to create a trust must be shown; and the proof of fiduciary relationship must be clear and
convincing. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague
declarations or from ambiguous circumstances susceptible of other interpretations.32In the case at bench, an intention to create a trust
cannot be inferred from the petitioner’s testimony and the attendant facts and circumstances. The petitioner testified only to the effect
that her agreement with her father was that she will be given a share in the produce of the property, thus:

Q: What was your agreement with your father Crispulo Rojas when you left this property to him?

A: Every time that they will make copra, they will give a share.

This allegation, standing alone as it does, is inadequate to establish the existence of a trust because profit-sharing per se, does not
necessarily translate to a trust relation. It could also be present in other relations, such as in deposit.What distinguishes a trust from
other relations is the separation of the legal title and equitable ownership of the property. In a trust relation, legal title is vested in the
fiduciary while equitable ownership is vested in a cestui que trust. Such is not true in this case. The petitioner alleged in her complaint
that the tax declaration of the land was transferred to the name of Crispulo without her consent. Had it been her intention to create a
trust and make Crispulo her trustee, she would not have made an issue out of this because in a trust agreement, legal title is vested in
the trustee. The trustee would necessarily have the right to transfer the tax declaration in his name and to pay the taxes on the
property. These acts would be treated as beneficial to the cestui que trust and would not amount to an adverse possession. 34Neither
can it be deduced from the circumstances of the case that a resulting trust was created.1âwphi1 A resulting trust is a species of implied
trust that is presumed always to have been contemplated by the parties, the intention as to which can be found in the nature of their
transaction although not expressed in a deed or instrument of conveyance. A resulting trust is based on the equitable doctrine that it is
the more valuable consideration than the legal title that determines the equitable interest in property.35While implied trusts may be
proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to
rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated. 36 In
order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to
the trust obligation are proven by an authentic document. An implied trust, in fine, cannot be established upon vague and inconclusive
proof.37 In the present case, there was no evidence of any transaction between the petitioner and her father from which it can be
inferred that a resulting trust was intended.In light of the disquisitions, we hold that there was no express trust or resulting trust
established between the petitioner and her father. Thus, in the absence of a trust relation, we can only conclude that Crispulo’s
uninterrupted possession of the subject property for 49 years, coupled with the performance of acts of ownership, such as payment of
real estate taxes, ripened into ownership. The statutory period of prescription commences when a person who has neither title nor good
faith, secures a tax declaration in his name and may, therefore, be said to have adversely claimed ownership of the lot. 38 While tax
declarations and receipts are not conclusive evidence of ownership and do not prove title to the land, nevertheless, when coupled with
actual possession, they constitute evidence of great weight and can be the basis of a claim of ownership through
prescription.39 Moreover, Section 41 of Act No. 190 allows adverse possession in any character to ripen into ownership after the lapse
of ten years. There could be prescription under the said section even in the absence of good faith and just title. 40All the foregoing
notwithstanding, even if we sustain petitioner’s claim that she was the owner of the property and that she constituted a trust over the
property with her father as the trustee, such a finding still would not advance her case.Assuming that such a relation existed, it
terminated upon Crispulo’s death in 1978. A trust terminates upon the death of the trustee where the trust is personal to the trustee in
the sense that the trustor intended no other person to administer it.41 If Crispulo was indeed appointed as trustee of the property, it
cannot be said that such appointment was intended to be conveyed to the respondent or any of Crispulo’s other heirs. Hence, after
Crispulo’s death, the respondent had no right to retain possession of the property. At such point, a constructive trust would be created
over the property by operation of law. Where one mistakenly retains property which rightfully belongs to another, a constructive trust is
the proper remedial device to correct the situation.42A constructive trust is one created not by any word or phrase, either expressly or
impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the demands of justice. It does not come
about by agreement or intention but in the main by operation of law, construed 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. 43As previously
stated, the rule that a trustee cannot, by prescription, acquire 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 the said trust is not a condition precedent to the
running of the prescriptive period.44 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.45 The relation of trustee and cestui que trust does not in fact exist, and the holding of a constructive
trust is for the trustee himself, and therefore, at all times adverse.In addition, a number of other factors militate against the petitioner’s
case. First, the petitioner is estopped from asserting ownership over the subject property by her failure to protest its inclusion in the
estate of Crispulo. The CA, thus, correctly observed that:Even in the probate proceedings instituted by the heirs of Crispulo Rojas,
which included her as a daughter of the first marriage, Cañezo never contested the inclusion of the contested property in the estate of
her father. She even participated in the project of partition of her father’s estate which was approved by the probate court in 1984. After
personally receiving her share in the proceeds of the estate for 12 years, she suddenly claims ownership of part of her father’s estate in
1997.The principle of estoppel in pais applies when -- by one’s acts, representations, admissions, or silence when there is a need to
speak out -- one, intentionally or through culpable negligence, induces another to believe certain facts to exist; and the latter rightfully
relies and acts on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts. 46 Such a situation
obtains in the instant case.Second, the action is barred by laches. The petitioner allegedly discovered that the property was being
possessed by the respondent in 1980.47 However, it was only in 1997 that she filed the action to recover the property. Laches is
negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to it has either
abandoned or declined to assert it.48Finally, the respondent asserts that the court a quo ought to have dismissed the complaint for
failure to implead the other heirs who are indispensable parties. We agree. We note that the complaint filed by the petitioner sought to
recover ownership, not just possession of the property; thus, the suit is in the nature of an action for reconveyance. It is axiomatic that
owners of property over which reconveyance is asserted are indispensable parties. Without them being impleaded, no relief is
available, for the court cannot render valid judgment. Being indispensable parties, their absence in the suit renders all subsequent
actions of the trial court null and void for want of authority to act, not only as to the absent parties but even as to those present. Thus,
when indispensable parties are not before the court, the action should be dismissed.49 At any rate, a resolution of this issue is now
purely academic in light of our finding that the complaint is already barred by prescription, estoppel and laches.WHEREFORE,
premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated September 7, 2000, and Resolution dated
May 9, 2001, are AFFIRMED.

2. PNB v CA

G.R. No. 97995 January 21, 1993

PHILIPPINE NATIONAL BANK, petitioner,

vs.
COURT OF APPEALS AND B.P. MATA AND CO., INC., respondents.Rarely is this Court confronted with a case calling for the
delineation in broad strokes of the distinctions between such closely allied concepts as the quasi-contract called "solutio indebiti" under
the venerable Spanish Civil Code and the species of implied trust denominated "constructive trusts," commonly regarded as of Anglo-
American origin. Such a case is the one presented to us now which has highlighted more of the affinity and less of the dissimilarity
between the two concepts as to lead the legal scholar into the error of interchanging the two. Presented below are the factual
circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-contract and the Anglo-American trust.Private
Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and services to shipping companies.
Since 1966, it has acted as a manning or crewing agent for several foreign firms, one of which is Star Kist Foods, Inc., USA (Star Kist).
As part of their agreement, Mata makes advances for the crew's medical expenses, National Seaman's Board fees, Seaman's Welfare
fund, and standby fees and for the crew's basic personal needs. Subsequently, Mata sends monthly billings to its foreign principal Star
Kist, which in turn reimburses Mata by sending a telegraphic transfer through banks for credit to the latter's account.Against this
background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los Angeles which had an agency arrangement with
Philippine National Bank (PNB), transmitted a cable message to the International Department of PNB to pay the amount of US$14,000
to Mata by crediting the latter's account with the Insular Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt of this
cabled message on February 24, 1975, PNB's International Department noticed an error and sent a service message to SEPAC Bank.
The latter replied with instructions that the amount of US$14,000 should only be for US$1,400.On the basis of the cable message dated
February 24, 1975 Cashier's Check No. 269522 in the amount of US$1,400 (P9,772.95) representing reimbursement from Star Kist,
was issued by the Star Kist for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America
(IBAA).However, fourteen days after or on March 11, 1975, PNB effected another payment through Cashier's Check No. 270271 in the
amount of US$14,000 (P97,878.60) purporting to be another transmittal of reimbursement from Star Kist, private respondent's foreign
principal.Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000 (P97,878.60) after it
discovered its error in effecting the second payment.On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000
against Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it has a right to recover the said amount it
erroneously credited to respondent Mata.1After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint
ruling that the instant case falls squarely under Article 2154 on solutio indebiti and not under Article 1456 on constructive trust. The
lower court ruled out constructive trust, applying strictly the technical definition of a trust as "a right of property, real or personal, held by
one party for the benefit of another; that there is a fiduciary relation between a trustee and a cestui que trust as regards certain
property, real, personal, money or choses in action."2In affirming the lower court, the appellate court added in its opinion that under
Article 2154 on solutio indebiti, the person who makes the payment is the one who commits the mistake vis-a-vis the recipient who is
unaware of such a mistake.3 Consequently, recipient is duty bound to return the amount paid by mistake. But the appellate court
concluded that petitioner's demand for the return of US$14,000 cannot prosper because its cause of action had already prescribed
under Article 1145, paragraph 2 of the Civil Code which states:

The following actions must be commenced within six years:(2) Upon a quasi-contract.This is because petitioner's complaint was filed
only on February 4, 1982, almost seven years after March 11, 1975 when petitioner mistakenly made payment to private
respondent.Hence, the instant petition for certiorari proceeding seeking to annul the decision of the appellate court on the basis that
Mata's obligation to return US$14,000 is governed, in the alternative, by either Article 1456 on constructive trust or Article 2154 of the
Civil Code on quasi-contract.4Article 1456 of the Civil Code provides: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.On
the other hand, Article 2154 states:If something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises.Petitioner naturally opts for an interpretation under constructive trust as its action filed on
February 4, 1982 can still prosper, as it is well within the prescriptive period of ten (10) years as provided by Article 1144, paragraph 2
of the Civil Code.5If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period for quasi-
contracts of six years applies, as provided by Article 1145. As pointed out by the appellate court, petitioner's cause of action thereunder
shall have prescribed, having been brought almost seven years after the cause of action accrued. However, even assuming that the
instant case constitutes a constructive trust and prescription has not set in, the present action has already been barred by laches.To
recall, trusts are either express or implied. While express trusts are created by the intention of the trustor or of the parties, implied trusts
come into being by operation of law.6 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.7In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A resulting trust is a
trust raised by implication of law and presumed always to have been contemplated by the parties, the intention of which is found in the
nature of the transaction, but not expressed in the deed or instrument of conveyance.9 Examples of resulting trusts are found in Articles
1448 to 1455 of the Civil Code. 10 On the other hand, a constructive trust is one not created by words either expressly or impliedly, but
by construction of equity in order to satisfy the demands of justice. An example of a constructive trust is Article 1456 quoted above. 11A
deeper analysis of Article 1456 reveals that it is not a trust in the technical sense 12 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.13 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.14

In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding the same for a supposed
beneficiary or cestui que trust, namely PNB. But under Article 1456, the law construes a trust, namely a constructive trust, for the
benefit of the person from whom the property comes, in this case PNB, for reasons of justice and equity.At this juncture, a historical
note on the codal provisions on trust and quasi-contracts is in order.Originally, under the Spanish Civil Code, there were only two kinds
of quasi contracts: negotiorum gestio and solutio indebiti. But the Code Commission, mindful of the position of the eminent Spanish
jurist, Manresa, that "the number of quasi contracts may be indefinite," added Section 3 entitled "Other Quasi-Contracts." 15Moreover,
even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding article provides that: "The provisions for quasi-contracts
in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article." 16Indubitably, the Civil
Code does not confine itself exclusively to the quasi-contracts enumerated from Articles 2144 to 2175 but is open to the possibility that,
absent a pre-existing relationship, there being neither crime nor quasi-delict, a quasi-contractual relation may be forced upon the
parties to avoid a case of unjust enrichment.17 There being no express consent, in the sense of a meeting of minds between the parties,
there is no contract to speak of. However, in view of the peculiar circumstances or factual environment, consent is presumed to the end
that a recipient of benefits or favors resulting from lawful, voluntary and unilateral acts of another may not be unjustly enriched at the
expense of another.Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as defined in Article 2154 that
something (in this case money) has been received when there was no right to demand it and (2) the same was unduly delivered
through mistake. There is a presumption that there was a mistake in the payment "if something which had never been due or had
already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for
any other just cause."18

In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No. 269522 had already been made by
PNB for the account of Mata on February 25, 1975. Strangely, however, fourteen days later, PNB effected another payment through
Cashier's Check No. 270271 in the amount of US$14,000, this time purporting to be another transmittal of reimbursement from Star
Kist, private respondent's foreign principal.While the principle of undue enrichment or solutio indebiti, is not new, having been
incorporated in the subject on quasi-contracts in Title XVI of Book IV of the Spanish Civil Code entitled "Obligations incurred without
contract,"19 the chapter on Trusts is fairly recent, having been introduced by the Code Commission in 1949. Although the concept of
trusts is nowhere to be found in the Spanish Civil Code, the framers of our present Civil Code incorporated implied trusts, which
includes constructive trusts, on top of quasi-contracts, both of which embody the principle of equity above strict legalism. 20In analyzing
the law on trusts, it would be instructive to refer to Anglo-American jurisprudence on the subject. Under American Law, a court of equity
does not consider a constructive trustee for all purposes as though he were in reality a trustee; although it will force him to return the
property, it will not impose upon him the numerous fiduciary obligations ordinarily demanded from a trustee of an express trust. 21 It must
be borne in mind that in an express trust, the trustee has active duties of management while in a constructive trust, the duty is merely to
surrender the property.Still applying American case law, quasi-contractual obligations give rise to a personal liability ordinarily
enforceable by an action at law, while constructive trusts are enforceable by a proceeding in equity to compel the defendant to
surrender specific property. To be sure, the distinction is more procedural than substantive.22Further reflection on these concepts
reveals that a constructive "trust" is as much a misnomer as a "quasi-contract," so far removed are they from trusts and contracts
proper, respectively. In the case of a constructive trust, as in the case of quasi-contract, a relationship is "forced" by operation of law
upon the parties, not because of any intention on their part but in order to prevent unjust enrichment, thus giving rise to certain
obligations not within the contemplation of the parties.23Although we are not quite in accord with the opinion that "the trusts known to
American and English equity jurisprudence are derived from the fidei commissa of the Roman Law,"24 it is safe to state that their roots
are firmly grounded on such Civil Law principles are expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari
potest," 25 particularly the concept of constructive trust.Returning to the instant case, while petitioner may indeed opt to avail of an
action to enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has
effectively blocked quasi-contract as an alternative, leaving only constructive trust as the feasible option.Petitioner argues that the lower
and appellate courts cannot indulge in semantics by holding that in Article 1456 the recipient commits the mistake while in Article 2154,
the recipient commits no mistake. 26 On the other hand, private respondent, invoking the appellate court's reasoning, would impress
upon us that under Article 1456, there can be no mutual mistake. Consequently, private respondent contends that the case at bar is
one of solutio indebiti and not a constructive trust.We agree with petitioner's stand that under Article 1456, the law does not make any
distinction since mutual mistake is a possibility on either side — on the side of either the grantor or the grantee.27 Thus, it was error to
conclude that in a constructive trust, only the person obtaining the property commits a mistake. This is because it is also possible that a
grantor, like PNB in the case at hand, may commit the mistake.Proceeding now to the issue of whether or not petitioner may still claim
the US$14,000 it erroneously paid private respondent under a constructive trust, we rule in the negative. Although we are aware that
only seven (7) years lapsed after petitioner erroneously credited private respondent with the said amount and that under Article 1144,
petitioner is well within the prescriptive period for the enforcement of a constructive or implied trust, we rule that petitioner's claim
cannot prosper since it is already barred by laches. It is a well-settled rule now that an action to enforce an implied trust, whether
resulting or constructive, may be barred not only by prescription but also by laches.28While prescription is concerned with the fact of
delay, laches deals with the effect of unreasonable delay.29 It is amazing that it took petitioner almost seven years before it discovered
that it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume of international transactions
handled by the Cable and Remittance Division of the International Department of PNB. Such specious reasoning is not persuasive. It is
unbelievable for a bank, and a government bank at that, which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide operations, PNB cannot afford to
commit such costly mistakes. Moreover, as between parties where negligence is imputable to one and not to the other, the former must
perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of its own negligence.WHEREFORE, the decision
of the Court of Appeals dismissing petitioner's claim against private respondent is AFFIRMED.

3. Salao v Salao

BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO ALCURIZA, ARTURO ALCURIZA, OSCAR
ALCURIZA and ANITA ALCURIZA, the latter two being minors are represented by guardian ad litem, ARTURO
ALCURIZA, plaintiffs-appellants,
vs.
JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the Intestate of JUAN S. SALAO; now MERCEDES P.
VDA. DE SALAO, ROBERTO P. SALAO, MARIA SALAO VDA. DE SANTOS, LUCIANA P. SALAO, ISABEL SALAO DE SANTOS,
and PABLO P. SALAO, as successors-in-interest of the late JUAN S. SALAO, together with PABLO P. SALAO,
Administrator, defendants-appellants.The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot four
children named Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel Salao died in 1885. His eldest son, Patricio, died in 1886
survived by his only child. Valentin Salao.There is no documentary evidence as to what, properties formed part of Manuel Salao's
estate, if any. His widow died on May 28, 1914. After her death, her estate was administered by her daughter Ambrosia.It was
partitioned extrajudicially in a deed dated December 29, 1918 but notarized on May 22, 1919 (Exh. 21). The deed was signed by her
four legal heirs, namely, her three children, Alejandra, Juan and Ambrosia, and her grandson, Valentin Salao, in representation of his
deceased father, Patricio.The lands left by Valentina Ignacio, all located at Barrio Dampalit were as follows:

Nature of Land

Area in

square meters
(1) One-half interest in a fishpond which she had inherited from her parents, Feliciano Ignacio and Damiana Mendoza, and the other
half of which was owned by her co-owner, Josefa Sta. Ana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700

(2) Fishpond inherited from her parents . . . . . . . . . . . . 7,418

(3) Fishpond inherited from her parents . . . . . . . . . . . . . 6,989

(4) Fishpond with a bodega for salt . . . . . . . . . . . . . . . . 50,469

(5) Fishpond with an area of one hectare, 12 ares and 5 centares purchased from Bernabe and Honorata Ignacio by Valentina Ignacio
on November 9, 1895 with a bodega for salt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,205

(6) Fishpond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

(7) One-half interest in a fishpond with a total area of 10,424 square meters, the other half was owned by A.
Aguinaldo . . . . . . . . . . . . . . . . . . . . . . . 5,217

(8) Riceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,454

(9) Riceland purchased by Valentina Ignacio from Eduardo Salao on January 27, 1890 with a house and two camarins thereon . . . . . . .
. . . . . . . . . . . 8,065

(10) Riceland in the name of Ambrosia Salao, with an area of 11,678 square meters, of which 2,173 square meters were sold to Justa
Yongco . . . . . . . . . .9,505

TOTAL . . . . . . . . . . . . .. 179,022 square

meters

To each of the legal heirs of Valentina Ignacio was adjudicated a distributive share valued at P8,135.25. In satisfaction of his distributive
share, Valentin Salao (who was then already forty-eight years old) was given the biggest fishpond with an area of 50,469 square
meters, a smaller fishpond with an area of 6,989 square meters and the riceland with a net area of 9,905 square meters. Those parcels
of land had an aggregate appraised value of P13,501 which exceeded Valentin's distributive share. So in the deed of partition he was
directed to pay to his co-heirs the sum of P5,365.75. That arrangement, which was obviously intended to avoid the fragmentation of the
lands, was beneficial to Valentin.In that deed of partition (Exh. 21) it was noted that "desde la muerte de Valentina Ignacio y Mendoza,
ha venido administrando sus bienes la referida Ambrosia Salao" "cuya administracion lo ha sido a satisfaccion de todos los herederos y
por designacion los mismos". It was expressly stipulated that Ambrosia Salao was not obligated to render any accounting of her
administration "en consideracion al resultado satisfactorio de sus gestiones, mejoradas los bienes y pagodas por ella las
contribusiones (pages 2 and 11, Exh. 21).By virtue of the partition the heirs became "dueños absolutos de sus respectivas
propiedadas, y podran inmediatamente tomar posesion de sus bienes, en la forma como se han distribuido y llevado a cabo las
adjudicaciones" (page 20, Exh. 21).The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio her two
children, Juan Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, OCT No. 185 of the Registry of Deeds of Pampanga, in their
names for a forty-seven-hectare fishpond located at Sitio Calunuran, Lubao, Pampanga (Exh. 14). It is also known as Lot No. 540 of the
Hermosa cadastre because that part of Lubao later became a part of Bataan.The Calunuran fishpond is the bone of contention in this
case.Plaintiffs' theory is that Juan Y. Salao, Sr. and his sister Ambrosia had engaged in the fishpond business. Where they obtained the
capital is not shown in any documentary evidence. Plaintiffs' version is that Valentin Salao and Alejandra Salao were included in that
joint venture, that the funds used were the earnings of the properties supposedly inherited from Manuel Salao, and that those earnings
were used in the acquisition of the Calunuran fishpond. There is no documentary evidence to support that theory.On the other hand,
the defendants contend that the Calunuran fishpond consisted of lands purchased by Juan Y. Salao, Sr. and Ambrosia Salao in 1905,
1906, 1907 and 1908 as, shown in their Exhibits 8, 9, 10 and 13. But this point is disputed by the plaintiffs.However, there can be no
controversy as to the fact that after Juan Y. Salao, Sr. and Ambrosia Salao secured a Torrens title for the Calunuran fishpond in 1911
they exercised dominical rights over it to the exclusion of their nephew, Valentin Salao.Thus, on December 1, 1911 Ambrosia Salao
sold under pacto de retro for P800 the Calunuran fishpond to Vicente Villongco. The period of redemption was one year. In the deed of
sale (Exh19) Ambrosia confirmed that she and her brother Juan were the dueños proindivisos of the said pesqueria. On December 7,
1911 Villongco, the vendee a retro, conveyed the same fishpond to Ambrosia by way of lease for an anual canon of P128 (Exh. 19-
a).After the fishpond was redeemed from Villongco or on June 8, 1914 Ambrosia and Juan sold it under pacto de retro to Eligio Naval
for the sum of P3,360. The period of redemption was also one year (Exh. 20). The fishpond was later redeemed and Naval reconveyed
it to the vendors a retro in a document dated October 5, 1916 (Exh. 20-a).The 1930 survey shown in the computation sheets of the
Bureau of Lands reveals that the Calunuran fishpond has an area of 479,205 square meters and that it was claimed by Juan Salao and
Ambrosia Salao, while the Pinanganacan fishpond (subsequently acquired by Juan and Ambrosia) has an area of 975,952 square
meters (Exh. 22).

Likewise, there is no controversy as to the fact that on May 27, 1911 Ambrosia Salao bought for four thousand pesos from the heirs of
Engracio Santiago a parcel of swampland planted to bacawan and nipa with an area of 96 hectares, 57 ares and 73 centares located at
Sitio Lewa, Barrio Pinanganacan, Lubao, Pampanga (Exh. 17-d).The record of Civil Case No. 136, General Land Registration Office
Record No. 12144, Court of First Instance of Pampanga shows that Ambrosia Salao and Juan Salao filed an application for the
registration of that land in their names on January 15, 1916. They alleged in their petition that "han adquirido dicho terreno por partes
iguales y por la compra a los herederos del finado, Don Engracio Santiago" (Exh. 17-a).At the hearing on October 26, 1916 before
Judge Percy M. Moir, Ambrosia testified for the applicants. On that same day Judge Moir rendered a decision, stating, inter alia, that
the heirs of Engracio Santiago had sold the land to Ambrosia Salao and Juan Salao. Judge Moir "ordena la adjudicacion y registro del
terreno solicitado a nombre de Juan Salao, mayor de edad y de estado casado y de su esposa Diega Santiago y Ambrosia Salao, de
estado soltera y mayor de edad, en participaciones iguales" (Exh. 17-e).On November 28, 1916 Judge Moir ordered the issuance of a
decree for the said land. The decree was issued on February 21, 1917. On March 12, 1917 Original Certificate of Title No. 472 of the
Registry of Deeds of Pampanga was issued in the names of Juan Salao and Ambrosia Salao.

That Pinanganacan or Lewa fishpond later became Cadastral Lot No. 544 of the Hermosa cadastre (Exh. 23). It adjoins the Calunuran
fishpond (See sketch, Exh. 1).Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years (Exh. C). His nephew, Valentin
Salao, died on February 9, 1933 at the age of sixty years according to the death certificate (Exh. A. However, if according to Exhibit 21,
he was forty-eight years old in 1918, he would be sixty-three years old in 1933).The intestate estate of Valentin Salao was partitioned
extrajudicially on December 28, 1934 between his two daughters, Benita Salao-Marcelo and Victorina Salao-Alcuriza (Exh. 32). His
estate consisted of the two fishponds which he had inherited in 1918 from his grandmother, Valentina Ignacio.If it were true that he had
a one-third interest in the Calunuran and Lewa fishponds with a total area of 145 hectares registered in 1911 and 1917 in the names of
his aunt and uncle, Ambrosia Salao and Juan Y. Salao, Sr., respectively, it is strange that no mention of such interest was made in the
extrajudicial partition of his estate in 1934.It is relevant to mention that on April 8, 1940 Ambrosia Salao donated to her grandniece,
plaintiff Benita Salao, three lots located at Barrio Dampalit with a total area of 5,832 square meters (Exit. L). As donee Benita Salao
signed the deed of donation.On that occasion she could have asked Ambrosia Salao to deliver to her and to the children of her sister,
Victorina, the Calunuran fishpond if it were true that it was held in trust by Ambrosia as the share of Benita's father in the alleged joint
venture.

But she did not make any such demand. It was only after Ambrosia Salao's death that she thought of filing an action for the
reconveyance of the Calunuran fishpond which was allegedly held in trust and which had become the sole property of Juan Salao y
Santiago (Juani).On September 30, 1944 or during the Japanese occupation and about a year before Ambrosia Salao's death on
September 14, 1945 due to senility (she was allegedly eighty-five years old when she died), she donated her one-half proindiviso share
in the two fishponds in question to her nephew, Juan S. Salao, Jr. (Juani) At that time she was living with Juani's family. He was already
the owner of the the other half of the said fishponds, having inherited it from his father, Juan Y. Salao, Sr. (Banli) The deed of denotion
included other pieces of real property owned by Ambrosia. She reserved for herself the usufruct over the said properties during her
lifetime (Exh. 2 or M).The said deed of donation was registered only on April 5, 1950 (page 39, Defendants' Record on Appeal).The
lawyer of Benita Salao and the Children of Victorina Salao in a letter dated January 26, 1951 informed Juan S. Salao, Jr. that his clients
had a one-third share in the two fishponds and that when Juani took possession thereof in 1945, he refused to give Benita and
Victorina's children their one-third share of the net fruits which allegedly amounted to P200,000 (Exh. K).Juan S. Salao, Jr. in his
answer dated February 6, 1951 categorically stated that Valentin Salao did not have any interest in the two fishponds and that the sole
owners thereof his father Banli and his aunt Ambrosia, as shown in the Torrens titles issued in 1911 and 1917, and that he Juani was
the donee of Ambrosia's one-half share (Exh. K-1).Benita Salao and her nephews and niece filed their original complaint against Juan
S. Salao, Jr. on January 9, 1952 in the Court of First Instance of Bataan (Exh. 36). They amended their complaint on January 28, 1955.
They asked for the annulment of the donation to Juan S. Salao, Jr. and for the reconveyance to them of the Calunuran fishpond as
Valentin Salao's supposed one-third share in the 145 hectares of fishpond registered in the names of Juan Y. Salao, Sr. and Ambrosia
Salao.Juan S. Salao, Jr. in his answer pleaded as a defense the indefeasibility of the Torrens title secured by his father and aunt. He
also invoked the Statute of Frauds, prescription and laches. As counter-claims, he asked for moral damages amounting to P200,000,
attorney's fees and litigation expenses of not less than P22,000 and reimbursement of the premiums which he has been paying on his
bond for the lifting of the receivership Juan S. Salao, Jr. died in 1958 at the age of seventy-one. He was substituted by his widow,
Mercedes Pascual and his six children and by the administrator of his estate.In the intestate proceedings for the settlement of his estate
the two fishponds in question were adjudicated to his seven legal heirs in equal shares with the condition that the properties would
remain under administration during the pendency of this case (page 181, Defendants' Record on Appeal).After trial the trial court in its
decision consisting of one hundred ten printed pages dismissed the amended complaint and the counter-claim. In sixty-seven printed
pages it made a laborious recital of the testimonies of plaintiffs' fourteen witnesses, Gregorio Marcelo, Norberto Crisostomo, Leonardo
Mangali Fidel de la Cruz, Dionisio Manalili, Ambrosio Manalili, Policarpio Sapno, Elias Manies Basilio Atienza, Benita Salao, Emilio
Cagui Damaso de la Peña, Arturo Alcuriza and Francisco Buensuceso, and the testimonies of defendants' six witnesses, Marcos
Galicia, Juan Galicia, Tiburcio Lingad, Doctor Wenceslao Pascual, Ciriaco Ramirez and Pablo P. Salao. (Plaintiffs presented Regino
Nicodemus as a fifteenth witness, a rebuttal witness).The trial court found that there was no community of property among Juan Y.
Salao, Sr., Ambrosia Salao and Valentin Salao when the Calunuran and Pinanganacan (Lewa) lands were acquired; that a co-
ownership over the real properties of Valentina Ignacio existed among her heirr after her death in 1914; that the co-ownership was
administered by Ambrosia Salao and that it subsisted up to 1918 when her estate was partitioned among her three children and her
grandson, Valentin Salao.The trial court surmised that the co-ownership which existed from 1914 to 1918 misled the plaintiffs and their
witnesses and caused them to believe erroneously that there was a co-ownership in 1905 or thereabouts. The trial court speculated
that if valentin had a hand in the conversion into fishponds of the Calunuran and Lewa lands, he must have done so on a salary or
profit- sharing basis. It conjectured that Valentin's children and grandchildren were given by Ambrosia Salao a portion of the earnings of
the fishponds as a reward for his services or because of Ambrosia's affection for her grandnieces.The trial court rationalized that
Valentin's omission during his lifetime to assail the Torrens titles of Juan and Ambrosia signified that "he was not a co-owner" of the
fishponds. It did not give credence to the testimonies of plaintiffs' witnesses because their memories could not be trusted and because
no strong documentary evidence supported the declarations. Moreover, the parties involved in the alleged trust were already dead.It
also held that the donation was validly executed and that even if it were void Juan S. Salao, Jr., the donee, would nevertheless be the
sole legal heir of the donor, Ambrosia Salao, and would inherit the properties donated to him.Both parties appealed. The plaintiffs
appealed because their action for reconveyance was dismissed. The defendants appealed because their counterclaim for damages
was dismissed.The appeals, which deal with factual and legal issues, were made to the Court of Appeals. However, as the amounts
involved exceed two hundred thousand pesos, the Court of Appeals elevated the case to this Court in its resolution of Octoter 3, 1966
(CA-G.R. No. 30014-R).Plaintiffs' appeal. — An appellant's brief should contain "a subject index index of the matter in the brief with a
digest of the argument and page references" to the contents of the brief (Sec. 16 [a], Rule 46, 1964 Rules of Court; Sec. 17, Rule 48,
1940 Rules of Court).The plaintiffs in their appellants' brief consisting of 302 pages did not comply with that requirement. Their
statements of the case and the facts do not contain "page references to the record" as required in section 16[c] and [d] of Rule 46,
formerly section 17, Rule 48 of the 1940 Rules of Court.Lawyers for appellants, when they prepare their briefs, would do well to read
and re-read section 16 of Rule 46. If they comply strictly with the formal requirements prescribed in section 16, they might make a
competent and luminous presentation of their clients' case and lighten the burden of the Court.What Justice Fisher said in 1918 is still
true now: "The pressure of work upon this Court is so great that we cannot, in justice to other litigants, undertake to make an
examination of the voluminous transcript of the testimony (1,553 pages in this case, twenty-one witnesses having testified), unless the
attorneys who desire us to make such examination have themselves taken the trouble to read the record and brief it in accordance with
our rules" (Palara vs. Baguisi 38 Phil. 177, 181). As noted in an old case, this Court decides hundreds of cases every year and in
addition resolves in minute orders an exceptionally considerable number of petitions, motions and interlocutory matters (Alzua and
Arnalot vs. Johnson, 21 Phil. 308, 395; See In re Almacen, L-27654, February 18, 1970, 31 SCRA 562, 573).

Plaintiffs' first assignment of error raised a procedural issue. In paragraphs 1 to 14 of their first cause of action they made certain
averments to establish their theory that Valentin Salao had a one-third interest in the two fishponds which were registrered in the names
of Juan Y. Salao, Sr. (Banli) and Ambrosia Salao.Juan S. Salao, Jr. (Juani) in his answer "specifically" denied each and all the
allegations" in paragraphs I to 10 and 12 of the first cause of action with the qualification that Original certificates of Title Nos. 185 and
472 were issued "more than 37 years ago" in the names of Juan (Banli) and Ambrosia under the circumstances set forth in Juan S.
Salao, Jr.'s "positive defenses" and "not under the circumstances stated in the in the amended complaint".The plaintiffs contend that the
answer of Juan S. Salao, Jr. was in effect tin admission of the allegations in their first cause of action that there was a co-ownership
among Ambrosia, Juan, AIejandra and Valentin, all surnamed Salao, regarding the Dampalit property as early as 1904 or 1905; that the
common funds were invested the acquisition of the two fishponds; that the 47-hectare Calunuran fishpond was verbally adjudicated to
Valentin Salao in the l919 partition and that there was a verbal stipulation to to register "said lands in the name only of Juan Y.
Salao".That contention is unfounded. Under section 6, Rule 9 of the 1940 of Rules of Court the answer should "contain either a specific
dinial a statement of matters in accordance of the cause or causes of action asserted in the complaint". Section 7 of the same rule
requires the defendant to "deal specificaly with each material allegation of fact the truth of wihich he does not admit and, whenever
practicable shall set forth the substance of the matters which he will rely upon to support his denial". "Material averments in the
complaint, other than those as to the amount damage, shall be deemed admitted when specifically denied" (Sec. 8). "The defendant
may set forth set forth by answer as many affirmative defenses as he may have. All grounds of defenses as would raise issues of fact
not arising upon the preceding pleading must be specifically pleaded" (Sec. 9).

What defendant Juan S. Salao, Jr. did in his answer was to set forth in his "positive defenses" the matters in avoidance of plaintiffs' first
cause of action which which supported his denials of paragraphs 4 to 10 and 12 of the first cause of action. Obviously, he did so
because he found it impracticable to state pierceneal his own version as to the acquisition of the two fishponds or to make a tedious
and repetitious recital of the ultimate facts contradicting allegations of the first cause of action.We hold that in doing so he substantially
complied with Rule 9 of the 1940 Rules of Court. It may be noted that under the present Rules of Court a "negative defense is the
specific denial of t the material fact or facts alleged in the complaint essential to plaintiff's cause of causes of action". On the other hand,
"an affirmative defense is an allegation of new matter which, while admitting the material allegations of the complaint, expressly or
impliedly, would nevertheless prevent or bar recovery by the plaintiff." Affirmative defenses include all matters set up "by of confession
and avoidance". (Sec. 5, Rule 6, Rules of Court).The case of El Hogar Filipino vs. Santos Investments, 74 Phil. 79 and similar cases
are distinguishable from the instant case. In the El Hogar case the defendant filed a laconic answer containing the statement that it
denied "generally ans specifically each and every allegation contained in each and every paragraph of the complaint". It did not set forth
in its answer any matters by way of confession and avoidance. It did not interpose any matters by way of confession and avoidance. It
did not interpose any affirmative defenses.Under those circumstances, it was held that defendant's specific denial was really a general
denial which was tantamount to an admission of the allegations of the complaint and which justified judgment on the pleadings. That is
not the situation in this case.The other nine assignments of error of the plaintiffs may be reduced to the decisive issue of whether the
Calunuran fishpond was held in trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao. That issue is tied up with the
question of whether plaintiffs' action for reconveyance had already prescribed.The plaintiffs contend that their action is "to enforce a
trust which defendant" Juan S. Salao, Jr. allegedly violated. The existence of a trust was not definitely alleged in plaintiffs' complaint.
They mentioned trust for the first time on page 2 of their appelants' brief.To determine if the plaintiffs have a cause of action for the
enforcement of a trust, it is necessary to maek some exegesis on the nature of trusts (fideicomosis). Trusts in Anglo-American
jurisprudence were derived from the fideicommissa of the Roman law (Government of the Philippine Islands vs. Abadilla, 46 Phil. 642,
646)."In its technical legal sense, a trust is defined as the right, enforceable solely in equity, to the beneficial enjoyment of property, the
legal title to which is vested in another, but the word 'trust' is frequently employed to indicate duties, relations, and responsibilities which
are not strictly technical trusts" (89 C.J.S. 712).

A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another
person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary" (Art. 1440,
Civil Code). There is a fiduciary relation between the trustee and the cestui que trust as regards certain property, real, personal, money
or choses in action (Pacheco vs. Arro, 85 Phil. 505)."Trusts are either express or implied. Express trusts are created by the intention of
the trustor or of the parties. Implied trusts come into being by operation of law" (Art. 1441, Civil Code). "No express trusts concerning an
immovable or any interest therein may be proven by parol evidence. An implied trust may be proven by oral evidence" (Ibid, Arts. 1443
and 1457)."No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended"
(Ibid, Art. 1444; Tuason de Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30, 1967, 21 SCRA 543, 546).
"Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to create a trust" (89 C.J.S. 72)."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 matter of equity, independently of the particular intention of the parties" (89 C.J.S. 724). They are ordinarily
subdivided into resulting and constructive trusts (89 C.J.S. 722)."A resulting trust. is broadly defined as a trust which is raised or
created by the act or construction of law, but in its more restricted sense it is a trust raised by implication of law and presumed to have
been contemplated by the parties, the intention as to which is to be found in the nature of their transaction, but not expressed in the
deed or instrument of conveyance (89 C.J.S. 725). Examples of resulting trusts are found in articles 1448 to 1455 of the Civil Code.
(See Padilla vs. Court of Appeals, L-31569, September 28, 1973, 53 SCRA 168, 179; Martinez vs. Graño 42 Phil. 35).On the other
hand, a constructive trust is -a trust "raised by construction of law, or arising by operation of law". In a more restricted sense and as
contra-distinguished from a resulting trust, a constructive trust is "a trust not created by any words, either expressly or impliedly
evincing a direct intension to create a trust, but by the construction of equity in order to satisfy the demands of justice." It does not arise
"by agreement or intention, but by operation of law." (89 C.J.S. 726-727).Thus, "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" (Art. 1456, Civil Code).Or "if a person obtains legal title to property by fraud or concealment, courts of equity will impress upon
the title a so-called constructive trust in favor of the defrauded party". Such a constructive trust is not a trust in the technical sense.
(Gayondato vs. Treasurer of the P. I., 49 Phil. 244).Not a scintilla of documentary evidence was presented by the plaintiffs to prove that
there was an express trust over the Calunuran fishpond in favor of Valentin Salao. Purely parol evidence was offered by them to prove
the alleged trust. Their claim that in the oral partition in 1919 of the two fishponds the Calunuran fishpond was assigned to Valentin
Salao is legally untenable.It is legally indefensible because the terms of article 1443 of the Civil Code (already in force when the action
herein was instituted) are peremptory and unmistakable: parol evidence cannot be used to prove an express trust concerning realty.Is
plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or constructive, regarding the two fishponds?Plaintiffs'
pleadings and evidence cannot be relied upon to prove an implied trust. The trial court's firm conclusion that there was no community of
property during the lifetime of Valentina; Ignacio or before 1914 is substantiated by defendants' documentary evidence. The existence
of the alleged co-ownership over the lands supposedly inherited from Manuel Salao in 1885 is the basis of plaintiffs' contention that the
Calunuran fishpond was held in trust for Valentin Salao.But that co-ownership was not proven by any competent evidence. It is quite
improbable because the alleged estate of Manuel Salao was likewise not satisfactorily proven. The plaintiffs alleged in their original
complaint that there was a co-ownership over two hectares of land left by Manuel Salao. In their amended complaint, they alleged that
the co-ownership was over seven hectares of fishponds located in Barrio Dampalit, Malabon, Rizal. In their brief they alleged that the
fishponds, ricelands and saltbeds owned in common in Barrio Dampalit had an area of twenty-eight hectares, of which sixteen hectares
pertained to Valentina Ignacio and eleven hectares represented Manuel Salao's estate.They theorized that the eleven hectares "were,
and necessarily, the nucleus, nay the very root, of the property now in litigation (page 6, plaintiffs-appellants' brief). But the eleven
hectares were not proven by any trustworthy evidence. Benita Salao's testimony that in 1918 or 1919 Juan, Ambrosia, Alejandra and
Valentin partitioned twenty-eight hectares of lands located in Barrio Dampalit is not credible. As noted by the defendants, Manuel Salao
was not even mentioned in plaintiffs' complaints.The 1919 partition of Valentina Ignacio's estate covered about seventeen hectares of
fishponds and ricelands (Exh. 21). If at the time that partition was made there were eleven hectares of land in Barrio Dampalit belonging
to Manuel Salao, who died in 1885, those eleven hectares would have been partitioned in writing as in the case of the seventeen
hectares belonging to Valentina Ignacio's estate.It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to
Valentin Salao mere by by word of mouth. Incredible because for the partition of the seventeen hectares of land left by Valentina
Ignacio an elaborate "Escritura de Particion" consisting of twenty-two pages had to be executed by the four Salao heirs. Surely, for the
partition of one hundred forty-five hectares of fishponds among three of the same Salao heirs an oral adjudication would not have
sufficed.The improbability of the alleged oral partition becomes more evident when it is borne in mind that the two fishponds were
registered land and "the act of registration" is "the operative act" that conveys and affects the land (Sec. 50, Act No. 496). That means
that any transaction affecting the registered land should be evidenced by a registerable deed. The fact that Valentin Salao and his
successors-in-interest, the plaintiffs, never bothered for a period of nearly forty years to procure any documentary evidence to establish
his supposed interest ox participation in the two fishponds is very suggestive of the absence of such interest.The matter may be viewed
from another angle. As already stated, the deed of partition for Valentina Ignacio's estate wag notarized in 1919 (Exh. 21). The plaintiffs
assert that the two fishponds were verbally partitioned also in 1919 and that the Calunuran fishpond was assigned to Valentin Salao as
his share.Now in the partition of Valentina Ignacio's estate, Valentin was obligated to pay P3,355.25 to Ambrosia Salao. If, according to
the plaintiffs, Ambrosia administered the two fishponds and was the custodian of its earnings, then it could have been easily stipulated
in the deed partitioning Valentina Ignacio's estate that the amount due from Valentin would just be deducted by Ambrosia from his
share of the earnings of the two fishponds. There was no such stipulation. Not a shred of documentary evidence shows Valentin's
participation in the two fishponds.The plaintiffs utterly failed to measure up to the yardstick that a trust must be proven by clear,
satisfactory and convincing evidence. It cannot rest on vague and uncertain evidence or on loose, equivocal or indefinite declarations
(De Leon vs. Molo-Peckson, 116 Phil. 1267, 1273).

Trust and trustee; establishment of trust by parol evidence; certainty of proof. — Where a trust is to be established by oral proof, the
testimony supporting it must be sufficiently strong to prove the right of the alleged beneficiary with as much certainty as if a document
proving the trust were shown. A trust cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive
proof. (Syllabus, Suarez vs. Tirambulo, 59 Phil. 303).Trusts; evidence needed to establish trust on parol testimony. — In order to
establish a trust in real property by parol evidence, the proof should be as fully convincing as if the act giving rise to the trust obligation
were proven by an authentic document. Such a trust cannot be established upon testimony consisting in large part of insecure surmises
based on ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110).The foregoing rulings are good under article 1457 of
the Civil Code which, as already noted, allows an implied trust to be proven by oral evidence. Trustworthy oral evidence is required to
prove an implied trust because, oral evidence can be easily fabricated.On the other hand, a Torrens title is generally a conclusive of the
ownership of the land referred to therein (Sec. 47, Act 496). A strong presumption exists. that Torrens titles were regularly issued and
that they are valid. In order to maintain an action for reconveyance, proof as to the fiduciary relation of the parties must be clear and
convincing (Yumul vs. Rivera and Dizon, 64 Phil. 13, 17-18).

The real purpose of the Torrens system is, to quiet title to land. "Once a title is registered, the owner may rest secure, without the
necessity of waiting in the portals of the court, or sitting in the mirador de su casa, to avoid the possibility of losing his land" (Legarda
and Prieto vs. Saleeby, 31 Phil. 590, 593).There was no resulting trust in this case because there never was any intention on the part of
Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There was no constructive trust because the registration of
the two fishponds in the names of Juan and Ambrosia was not vitiated by fraud or mistake. This is not a case where to satisfy the
demands of justice it is necessary to consider the Calunuran fishpond " being held in trust by the heirs of Juan Y. Salao, Sr. for the
heirs of Valentin Salao.And even assuming that there was an implied trust, plaintiffs' action is clearly barred by prescription or laches
(Ramos vs. Ramos, L-19872, December 3, 1974, 61 SCRA 284; Quiniano vs. Court of Appeals, L-23024, May 31, 1971, 39 SCRA 221;
Varsity Hills, Inc. vs. Navarro, 9, February 29, 1972, 43 SCRA 503; Alzona vs. Capunitan and Reyes, 114 Phil. 377).Under Act No. 190,
whose statute of limitation would apply if there were an implied trust in this case, the longest period of extinctive prescription was only
ten year (Sec. 40; Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266).The Calunuran fishpond was registered in 1911. The written
extrajudicial demand for its reconveyance was made by the plaintiffs in 1951. Their action was filed in 1952 or after the lapse of more
than forty years from the date of registration. The plaintiffs and their predecessor-in-interest, Valentin Salao, slept on their rights if they
had any rights at all. Vigilanti prospiciunt jura or the law protects him who is watchful of his rights (92 C.J.S. 1011, citing Esguerra vs.
Tecson, 21 Phil. 518, 521)."Undue delay in the enforcement of a right is strongly persuasive of a lack of merit in the claim, since it is
human nature for a person to assert his rights most strongly when they are threatened or invaded". "Laches or unreasonable delay on
the part of a plaintiff in seeking to enforce a right is not only persuasive of a want of merit but may, according to the circumstances, be
destructive of the right itself." (Buenaventura vs. David, 37 Phil. 435, 440-441).Having reached the conclusion that the plaintiffs are not
entitled to the reconveyance of the Calunuran fishpond, it is no longer n to Pass upon the validity of the donation made by Ambrosia
Salao to Juan S. Salao, Jr. of her one-half share in the two fishponds The plaintiffs have no right and personality to assil that
donation.Even if the donation were declared void, the plaintiffs would not have any successional rights to Ambrosia's share. The sole
legal heir of Ambrosia was her nephew, Juan, Jr., her nearest relative within the third degree. Valentin Salao, if living in 1945 when
Ambrosia died, would have been also her legal heir, together with his first cousin, Juan, Jr. (Juani). Benita Salao, the daughter of
Valentin, could not represent him in the succession to the estate of Ambrosia since in the collateral line, representation takes place only
in favor of the children of brothers or sisters whether they be of the full or half blood is (Art 972, Civil Code). The nephew excludes a
grandniece like Benita Salao or great-gandnephews like the plaintiffs Alcuriza (Pavia vs. Iturralde 5 Phil. 176).The trial court did not err
in dismissing plaintiffs' complaint.Defendants' appeal. — The defendants dispute the lower court's finding that the plaintiffs filed their
action in good faith. The defendants contend that they are entitled to damages because the plaintiffs acted maliciously or in bad faith in
suing them. They ask for P25,000 attorneys fees and litigation expenses and, in addition, moral damages.We hold that defemdamts'
appeal is not meritorious. The record shows that the plaintiffs presented fifteen witnesses during the protracted trial of this case which
lasted from 1954 to 1959. They fought tenaciously. They obviously incurred considerable expenses in prosecuting their case. Although
their causes of action turned out to be unfounded, yet the pertinacity and vigor with which they pressed their claim indicate their
sincerity and good faith.There is the further consideration that the parties were descendants of common ancestors, the spouses Manuel
Salao and Valentina Ignacio, and that plaintiffs' action was based on their honest supposition that the funds used in the acquisition of
the lands in litigation were earnings of the properties allegedly inherited from Manuel Salao.Considering those circumstances, it cannot
be concluded with certitude that plaintiffs' action was manifestly frivolous or was primarily intended to harass the defendants. An award
for damages to the defendants does not appear to be just and proper.The worries and anxiety of a defendant in a litigation that was not
maliciously instituted are not the moral damages contemplated in the law (Solis & Yarisantos vs. Salvador, L-17022, August 14, 1965,
14 SCRA 887; Ramos vs. Ramos, supra). The instant case is not among the cases mentioned in articles 2219 and 2220 of the Civil
Code wherein moral damages may be recovered. Nor can it be regarded as analogous to any of the cases mentioned in those
articles.The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages.
The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be
charged on those who may exercise it erroneously. (Barreto vs. Arevalo, 99 Phil. 771. 779).The defendants invoke article 2208 (4) (11)
of the Civil Code which provides that attorney's fees may be recovered "in case of a clearly unfounded civil action or proceeding against
the plaintiff" (defendant is a plaintiff in his counterclaim) or "in any other case where the court deems it just and equitable" that
attorney's fees should he awarded.But once it is conceded that the plaintiffs acted in good faith in filing their action there would be no
basis for adjudging them liable to the defendants for attorney's fees and litigation expenses (See Rizal Surety & Insurance Co., Inc. vs.
Court of Appeals, L-23729, May 16, 1967, 20 SCRA 61).

It is not sound public policy to set a premium on the right to litigate. An adverse decision does not ipso facto justify the award of
attorney's fees to the winning party (Herrera vs. Luy Kim Guan, 110 Phil. 1020, 1028; Heirs of Justiva vs. Gustilo, 61 O. G. 6959).The
trial court's judgment is affirmed. No pronouncement as to costs.

4. Bernardo Delos Santos v Faustino Reyes

BERNARDO DE LOS SANTOS, Petitioner, v. FAUSTINO B. REYES, THE HON. COURT OF APPEALS and SPOUSES
BENJAMIN DIESTRO and AIDA LAGAREJOS, Respondents.

1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE COURT OF APPEALS ARE CONCLUSIVE; EXCEPTIONS. —
Well a settled is the general rule that the jurisdiction of this Court in cases brought before it from the Court of Appeals
is limited to reviewing or revising errors of law; findings of fact of the latter are conclusive. It is not the function of
this Court to analyze or weigh such evidence all over again. It is only in exceptional cases where this Court may
review findings of fact of the Court of Appeals. In Medina v. Asistio, Jr., this Court took occasion to enumerate such
exceptional circumstances, to wit: (1) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) When there is a grave
abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are
conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) The findings of the Court of Appeals are contrary to
those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which
they are based; (9) When the facts set forth in the petition as well as in the petitioners’ main and reply briefs are not
disputed by the respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed
absence of evidence and is contradicted by the evidence on record."cralaw virtua1aw library

2. ID.; APPEAL; ISSUE NOT RAISED IN BRIEF SUBMITTED TO COURT OF APPEALS CANNOT BE RAISED FOR THE
FIRST TIME IN THE PETITION FOR REVIEW. — Where the issue of estoppel was not raised by petitioner in the Brief he
submitted to the respondent Court, he cannot raise it for the first time in this petition for review on certiorari.

3. CIVIL LAW; TRUST; NO TRUST IS IMPLIED BY LAW WHERE TITLE IS CONVEYED TO A CHILD, LEGITIMATE OR
ILLEGITIMATE OF ONE PAYING THE PRICE. — There is no express trust over an immovable, when it was made to
appear that the land in question was sold to and registered in the name of Faustino Reyes’ daughter, Virginia — wife
of petitioner — to conform with the limitation imposed by the vendor that no vendee could purchase from the former
more than two lots. The applicable provision of the Civil Code, as correctly pointed out by respondent Court, is Article
1448 which provides as follows: "There is an implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former
is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably
presumed that there us a gift in favor of the child."

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner urges this Court to review and
set aside the decision of the respondent Court of Appeals in C.A.-G.R. No. 41943-R 1 promulgated on 23 July 1975,
which affirmed in toto the decision of the then Court of First Instance (now Regional Trial Court) of Rizal in Civil Case
No. 8640, dated 12 February 1968, 2 dismissing herein petitioner’s complaint for reconveyance of a parcel of land
located in Biga-a, San Roque, Angono, Rizal, the dispositive portion of which reads as follows:jgc:chanrobles.com.ph

"FOR ALL THE FOREGOING CONSIDERATIONS, the Court hereby dismiss this case and declares the defendant
Faustino B. Reyes the owner of the parcel of land subject of this action.

Plaintiff is hereby ordered to pay the amount of ONE THOUSAND FIVE HUNDRED (P1,500.00) PESOS as moral
damages and for attorney’s fees plus the costs of suit.

SO ORDERED." 3

In a bid to obtain a reversal of the trial court’s decision, petitioner attempted to persuade the Court of Appeals to
agree with his proposition that the trial court:chanrob1es virtual 1aw library

. . . committed grave abuse of discretion in not considering the relevant documentary evidence submitted by the
plaintiff in support of his cause of action alleged in the complaint;
. . . erred in finding and concluding that plaintiff failed to substantiate his complaint and did not even bother to
contradict defendant Faustino Reyes’ testimonies,
. . . erred in admitting and considering the oral testimony of defendant Faustino B. Reyes in establishing express trust
over the parcel of land in question over and above the objection of the plaintiff; and.
. . . erred in finding and holding that the present action of plaintiff is clearly unfounded and without merit." 4

Respondent Court was not persuaded. Its rejection of the assigned errors deserves to be
quoted:jgc:chanrobles.com.ph

"As to the first assignment of error, appellant has no reason to complain that the trial court did not consider the
documents that he presented as his only evidence (Exhs. A, A-1 to K). In ruling in favor of the appellees and against
appellant, it cannot be seriously asserted that the trial court did not give due regard to the prima-facie effect or value
of appellant’s documentary evidence, particularly the deed of sale (Exhibit A), the certificate of title, TCT No. 59373 in
the name of his wife Virgina T. Reyes (Exh. B), the tax declaration also in her name (Exh. K), and the extrajudicial
settlement affidavit of appellant Reyes (Exh. C). Otherwise, the court should not have found it necessary to enter, as
it did, into a thorough, extensive analysis of the evidence of the appellee, both testimonial and documentary (Exh. 1).

It cannot, likewise, be denied that appellant failed to contradict the testimony of appellee Reyes to the effect that he
placed the land in question in the name of his daughter, Virginia, only to conform with the requirement of the
hacienda-owner, Justa G. Vda de Guido, that no one person can buy more than two lots at a time, and that since the
sale, the property had been taken into his possession up to the time it was sold, the products thereof having been
received by appellee Reyes even after her daughter’s marriage to appellant. This unrebutted testimony of appellee
Reyes could not have been evaluated except by weighing it against the documentary evidence of appellant. But with
appellant giving no testimony to rebut that of appellee Reyes, the lower court cannot be said to be in error, as claimed
by appellant (2nd assignment of error), in finding that ‘plaintiff failed to substantiate his complaint and did not even
bother to contradict defendant Faustino Reyes’ testimony.’

The observation of the lower court that appellant failed to substantiate his complaint is glaringly true with respect to
the allegation that the baby of Virginia T. Reyes died after the mother died of coronary embolism on the same date
she gave delivery (sic) to the baby girl. This allegation was specifically denied in the answer of appellee Reyes, who
repeated his averment therein in his testimony in court that the baby was born dead because its head was crushed
when extracted from the mother’s womb with forceps. Yet, appellant did not take the witness stand to deny this fact.
None of his documentary evidence on the sole reliance of which he rested his case relates to how the baby was born
— alive or dead. This point is precisely the most decisive factor in determining the merit of his claim to have inherited
the property in question from the child, because the latter inherited it from its mother. It was incumbent upon him to
prove that the child was born alive and died after the mother has (sic) died earlier, as required by Art. 43 of the Civil
Code which provides:chanrob1es virtual 1aw library

‘ARTICLE 43. If there is a doubt, as between two or more persons who are called to succeed each other, as to which
of them died first, whoever alleges the death of one prior to the other, shall prove the same in the absence of proof, It
is presumed that they died at the same time and there shall be no transmission of rights from one to the other.’

Not only did appellant failed (sic) to discharge the duty imposed upon him for having alleged the death of his wife
prior to that of his child, but also failed to contradict the positive and categorical testimony of appellee Reyes that the
child was born dead. The alleged admission in the answer of the appellees spouses to substantiate the allegation of
the appellant in his complaint is ineffective against the specific denial in appellee Reyes’ answer, repeated in his
testimony. With this particular matter in issue, it is Reyes who is directly concerned, and the supposed admission of
the appellee-spouses who are complete strangers to the family of appellant and Reyes, can have no binding force and
effect upon the latter. Hence, on the opposing claims as to who would inherit the property in question, that of appellee
must be sustained as the lower court ruled correctly. With this finding alone, the dismissal of the complaint would be
in order and fully justified.

Moreover, as allegedly intimated, the lower court’s finding that the land was actually owned by Faustino B. Reyes,
notwithstanding that the title was in the name of Virginia T. Reyes, pursuant to the deed of sale where the latter was
made to appear as the buyer, finds convincing support from the evidence of record. It was clearly explained why both
the deed of sale and the certificate of title mentioned Virginia T. Reyes as the owner. The explanation was fully
supported by the agreement (kasunduan) duly notarized on June 15, 1955 (Exh. 1) which shows that Faustino Reyes
was the buyer of three lots with a total consideration of P14,000.00. At the time of the execution of this agreement,
he paid P11,000.00, leaving only a balance of P3,000.00 which he paid later. Virginia, then only 18 years of age, could
not paid (sic) the price of the lot in question. By no stretch of the imagination can it be asserted that she bought the
land herself as the deed of sale purports to show. The extrajudicial adjudication affidavit of appellee Reyes (Exh. C)
can not, under the circumstances just noted, be read as an admission of Reyes that her daughter, Virginia, was the
owner of the land, as appellant contends. It is evident that the execution of this document was resorted to only as the
most practical and expeditious way to transfer the land from the name of Virginia T. Reyes to that of appellee Reyes.
It cannot have a greater probative value than the deed of sale (Exh. A) and the certificate of title (Exh. B) relied upon
by appellant, which have already been shown to be of no avail against the clear and convincing evidence of appellee.

There is no question of trust involved under the proven facts of the case, as appellant raises in his third assignment of
error. The court a quo made no finding as to the existence or non-existence of one. As cited by appellant himself,
Article 1448, New Civil Code, provides:chanrob1es virtual 1aw library

‘There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is
the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale; no trust is implied by law, it being disputably presumed that there is a gift in favor of the
child. (Emphasis supplied).’

The disputable presumption of a gift as created in the aforequoted provision has been amply overcome by the
evidence of appellee Reyes, as already demonstrated. If it was a gift, the land should have been taken possession of
by appellant at least after he married his wife as the supposed beneficiary. They then should have enjoyed also the
fruits, and also paid for the tax. No evidence, however, of such payment was presented. To all appearances, appellant
knew as a fact that his wife never was the owner of the land, not even as a gift under the legal provision he cited.
Otherwise, it should not have taken him almost seven long years to assert ownership with the filing of the present
action. That this action is a mere afterthought, stirred by a legal mind with a gambling instinct is not just a mild
surmise, considering how long it took the appellant to file it in court and its contingent nature. It may be well to
remember, however, that lawsuits are not won by chance, as by the turn of the dice, or how the cards fall on the
gambling table — not while the courts sit, anyway." 5

Petitioner could not accept the second defeat. Invoking this Court’s authority under Rule 45 of the Rules of Court, he
filed the instant petition on 27 December 1976. 6 Private respondents filed their Comment 7 in compliance with the
resolution of 26 January 1977. 8 Petitioner was directed to file a Reply thereto, which he complied with on 11 July
1977. 9

The Court gave due course to the petition. 10

In his Brief filed on 26 September 1977, 11 petitioner imputes upon the respondent court the commission of the
following "grave errors of law and/or abuse of discretion" by:chanrob1es virtual 1aw library
. . . misinterpreting and/or disregarding the probative value of the purely public documentary evidence adduced by
herein petitioners as against the oral testimony of private respondent Faustino B. Reyes, which, aside from being self-
serving, was impeached by his own solemn declaration contained in the affidavit of extrajudicial declaration, Exhibit
"C", executed prior to the instant controversy, contrary to the well established and long settled rule of jurisprudence
that public documents should be accorded the highest probative value and they can only be invalidated by beyond
preponderance (sic), clear, conclusive, convincing and strong evidence.
. . . declaring private respondent Faustino B. Reyes as the owner of the parcel of land in question notwithstanding the
undisputed facts that said parcel of land was registered under Act No. 496, as amended, under Transfer Certificate of
Title No. 59573, Registry of Rizal, in the name of the late Virginia T. Reyes, and declared for taxation purposes in the
name of the latter under Tax declaration No. 2323, Exhibits "B" and "K", respectively
. . . admitting the oral testimony of respondent Faustino B. Reyes tending to establish an alleged trust, either express
or implied, which oral testimony was vehemently objected to by the herein petitioners, in utter violations (sic) of
Articles 1431, 1443 and 1448, New Civil Code.

IV

. . . holding and concluding that the late Virginia T. Reyes and the baby girl died at the same time, overlooking the
clear admission in the pleading of disinterested respondents spouses Benjamin Diestro and Aida Legarejos,
represented by same (sic) counsel for respondent Faustino B. Reyes, that the baby girl was born alive; and, in
misinterpreting as well as in misapplying Article 43, New Civil Code, in the case at bar." 12

In their Brief filed on 23 December 1977, 13 respondents met squarely the issues raised by the petitioners.

The petition is not impressed with merit as nothing in the pleadings points to any reversible error which respondent
court committed.

However disguised, the assigned errors are a repetition of what petitioner raised before the respondent court, which,
with the exception of the third assigned error, involve questions of fact.

Well-settled is the general rule that the jurisdiction of this Court in cases brought before it from the Court of Appeals
is limited to reviewing or revising errors of law; findings of fact of the latter are conclusive. 14 It is not the function of
this Court to analyze or weigh such evidence all over again. It is only in exceptional cases where this Court may
review findings of fact of the Court of Appeals. In Medina v. Asistio, Jr., 15 this Court took occasion to enumerate such
exceptional circumstances, to wit:jgc:chanrobles.com.ph

"It is a well-settled rule in this jurisdiction that only questions of law may be raised in a petition for certiorari under
Rule 45 of the Rules of Court, this Court being bound by the findings of fact made by the Court of Appeals. The rule,
however, is not without exception. Thus, findings of fact by the Court of Appeals may be passed upon and reviewed
by this Court in the following instances, none of which obtain in the instant petition:chanrob1es virtual 1aw library

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin v. Navarro,
93 Phil. 257 [19531); (2) When the inference made is manifestly mistaken, absurd or impossible (Luna v. Linatok, 74
Phil. 15 [1942]); (3) When there is a grave abuse of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the
judgment is based on a misapprehension of facts (Cruz v. Sosing, L-4875, Nov. 27, 1953); (5) When the findings of
fact are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.); (6) When the Court of Appeals, in making its
findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and
appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401 [1958]); (7) The findings of the Court of
Appeals are contrary to those of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v.
Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact are conclusions without citation of specific
evidence on which they are based (Ibid.,); (9) When the facts set forth in the petition as well as in the petitioners’
main and reply briefs are not disputed by the respondents (Ibid.,) and (10) The finding of fact of the Court of Appeals
is premised on the supposed absence of evidence and is contradicted by the evidence on record (Salazar v. Gutierrez,
33 SCRA 242 [1970])."cralaw virtua1aw library

The third assigned error raises a question of law. Unfortunately, however, petitioner miserably failed to demonstrate
that respondent court committed any error which warrants reversal. In the first place, estoppel was not raised by him
in the Brief he submitted to the respondent Court. He cannot raise it for the first time in this petition. In the second
place, petitioner assumes that an express trust over an immovable was created when it was made to appear that the
land in question was sold to and registered in the name of Faustino Reyes’ daughter, Virginia — wife of petitioner — to
conform with the limitation imposed by the vendor that no vendee could purchase from the former more than two
lots. Consequently, pursuant to Article 1444 of the Civil Code, such a trust cannot be proved by parol evidence. If his
assumption is correct, Article 1444 is applicable and both the trial court and the respondent Court then erred in
admitting the oral testimony of Faustino Reyes concerning the facts surrounding the "sale" of the lot in favor of
Virginia. Unfortunately, the assumption is wrong. There is neither an express nor implied trust in this case. The
applicable provision of the Civil Code, as correctly pointed out by respondent Court, is Article 1448 which provides as
follows:jgc:chanrobles.com.ph

"There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is
the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is implied by law, it being disputably presumed that there us a gift in favor of the
child." (Emphasis supplied for emphasis).

Accordingly, testimonial evidence, such as that offered by Faustino Reyes, that the land was not given as a gift to
Virginia, was properly allowed to rebut the disputable presumption established in the foregoing article.

WHEREFORE, for lack of merit, the instant petition is hereby DISMISSED with costs against petitioner.

IT IS SO ORDERED.
5. Morales v CA

RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES, Petitioners, v. COURT OF APPEALS

(Former Seventeenth Division), RANULFO ORTIZ, JR., and ERLINDA ORTIZ, Respondents.

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners urge this Court to reverse the
20 April 1994 decision of the Court of Appeals (Seventeenth Division) in CA-G.R. CV No. 34936, 1 which affirmed in
toto the 26 August 1991 decision of the Regional Trial Court of Calbayog City in Civil Case No. 265.

Civil Case No. 265 was an action for recovery of possession of land and damages with a prayer for a writ of
preliminary mandatory injunction filed by private respondents herein, spouses Ranulfo Ortiz, Jr. and Erlinda Ortiz,
against Rodolfo Morales. The complaint prayed that private respondents be declared the lawful owners of a parcel of
land and the two-storey residential building standing thereon, and that Morales be ordered to remove whatever
improvements he constructed thereon, vacate the premises, and pay actual and moral damages, litigation expenses,
attorney's fees and costs of the suit.

On 2 February 1988, Priscila Morales, one of the daughters of late Rosendo Avelino and Juana Ricaforte, filed a motion
to intervene in Case No. 265. No opposition thereto having been filed, the motion was granted on 4 March
1988.2chanroblesvirtuallawlibrary

On 30 November 1988 Rodolfo Morales passed away. In its order of 9 February 1989 3 the trial court allowed his
substitution by his heirs, Roda, Rosalia, Cesar and Priscila, all surnamed Morales. Thereafter, pre-trial and trial on the
merits were had and the case was submitted for decision on 16 November 1990.

On 26 August 1991 the Trial Court rendered its decision 4 in favor of plaintiffs, private respondents herein, the
dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered in favor of the Plaintiffs and against Defendants-Intervenor:

1. Declaring the Plaintiffs the absolute and rightful owners of the premises in question;2. Ordering the Defendants-
Intervenor to:a. vacate from the premises in question;b. remove the beauty shop thereat;c. jointly and severally, pay
the Plaintiffs, a monthly rental of P1,500.00 of the premises starting from March 1987, and the amounts
of P75,000.00 for moral damages, P5,000.00 for litigation expenses, and P10,000.00 for Attorneys fees; andd. to pay
the costs.The injunction issued in this case is hereby made permanent.SO ORDERED. 5chanroblesvirtuallawlibrary

The following is trial courts summary of the evidence for the plaintiffs:

The evidence adduced by the Plaintiffs discloses that the Plaintiffs are the absolute and exclusive owners of the
premises in question having purchased the same from Celso Avelino, evidenced by a Deed of Absolute Sale (Exh. C),
a public instrument. They later caused the transfer of its tax declaration in the name of the female plaintiff (Exh. I)
and paid the realty taxes thereon (Exh. K & series).

Celso Avelino (Plaintiffs predecessor in interest) purchased the land in question consisting of two adjoining parcels
while he was still a bachelor and the City Fiscal of Calbayog City from Alejandra Mendiola and Celita Bartolome,
through a Escritura de Venta (Exh. B). After the purchase, he caused the transfer of the tax declarations of the two
parcels in his name (Exhs. D & E to G & H) as well as consolidated into one the two tax declarations in his name (Exh.
F). With the knowledge of the Intervenor and the defendant, (Cross-examination of Morales, t.s.n. pp. 13-14) Celso
Avelino caused the survey of the premises in question, in his name, by the Bureau of Lands (Exh. J). He also built his
residential house therein with Marcial Aragon (now dead) as his master carpenter who was even scolded by him for
constructing the ceiling too low.
When the two-storey residential house was finished, he took his parents, Rosendo Avelino and Juana Ricaforte, and
his sister, Aurea, who took care of the couple, to live there until their deaths. He also declared this residential house in
his tax declaration to the premises in question (Exh. F) and paid the corresponding realty taxes, keeping intact the
receipts which he comes to get or Aurea would go to Cebu to give it to him (t.s.n. Morales, pp. 4-6).

After being the City Fiscal of Calbayog, Celso Avelino became an Immigration Officer and later as Judge of the Court
of First Instance in Cebu with his sister, Aurea, taking care of the premises in question. While he was already in Cebu,
the defendant, without the knowledge and consent of the former, constructed a small beauty shop in the premises in
question.

Inasmuch as the Plaintiffs are the purchasers of the other real properties of Celso Avelino, one of which is at Acedillo
(now Sen. J.D. Avelino) street, after they were offered by Celso Avelino to buy the premises in question, they
examined the premises in question and talked with the defendant about that fact, the latter encouraged them to
purchase the premises in question rather than the property going to somebody else they do not know and that he will
vacate the premises as soon as his uncle will notify him to do so. Thus, they paid the purchase price and Exh. C was
executed in their favor.

However, despite due notice from his uncle to vacate the premises in question (Exh. N), the defendant refused to
vacate or demolish the beauty shop unless he is reimbursed P35,000.00 for it although it was valued at less
than P5,000.00. So, the Plaintiffs demanded, orally and in writing (Exhs. L & M) to vacate the premises. The
defendant refused.

As the plaintiffs were about to undertake urgent repairs on the dilapidated residential building, the defendant had
already occupied the same, taking in paying boarders and claiming already ownership of the premises in question,
thus they filed this case.

Plaintiffs, being the neighbors of Celso Avelino, of their own knowledge are certain that the premises in question is
indeed owned by their predecessor-in-interest because the male plaintiff used to play in the premises when he was
still in his teens while the female plaintiff resided with the late Judge Avelino. Besides, their inquiries and documentary
evidence shown to them by Celso Avelino confirm this fact. Likewise, the defendant and Intervenor did not reside in
the premises in question because they reside respectively in Brgy. Tarobucan and Brgy. Trinidad (Sabang), both of
Calbayog City with their own residential houses there.

Due to the damages they sustained as a result of the filing of this case, the plaintiffs are claiming P50,000.00 for
mental anguish; monthly rental of the premises in question of P1,500.00 starting from March 1987; litigation
expenses of P5,000.00 and P10,000.00 for Attorney's fees.6chanroblesvirtuallawlibrary

The trial courts summary of the evidence for the defendants and intervenor is as follows:

Defendants-Intervenors testimonial evidence tend to show that the premises is question (land and two-storey
building) is originally owned by the spouses, Rosendo Avelino and Juana Ricaforte, who, through their son, Celso
Avelino, through an Escritura de Venta (Exh. 2) bought it from the Mendiolas on July 8, 1948. After the purchase the
couple occupied it as owners until they died. Juana died on May 31, 1965 while Rosendo died on June 4, 1980. Upon
their demise, their children: Trinidad A. Cruz, Concepcion A. Peralta, Priscila A. Morales and Aurea Avelino (who died
single) succeeded as owners thereof, except Celso Avelino who did not reside in the premises because he was out of
Calbayog for more than 30 years until his death in Cebu City.

The premises in question was acquired by Celso Avelino who was entrusted by Rosendo with the money to buy it.
Rosendo let Celso buy it being the only son. The property is in the name of Celso Avelino and Rosendo told his
children about it (TSN, Morales, p. 21). In 1950 Rosendo secured gratuitous license (Exh. 1) and constructed the two-
storey house, having retired as Operator of the Bureau of Telecommunications, buying lumber from the father of
Simplicia Darotel and paying the wages of Antonio Nartea as a laborer.

In 1979, defendant Rodolfo Morales constructed beside the two-storey house and beauty shop for his wife with the
consent of Celso and the latters sisters.

Priscila Morales was aware that the premises in question was surveyed in the name of Celso but she did not make any
attempt, not even her father, to change the muniment of title to Rosendo Avelino. Despite the fact that Intervenor has
two sons who are lawyers, no extra-judicial settlement was filed over the premises in question since the death of
Rosendo Avelino up to the present.

Celso Avelino kept the receipts for the realty tax payments of the premises. Sometimes Aurea would go to Cebu to
deliver these receipts to Celso or the latter will come to get them. Rodolfo also gave some of the receipts to Celso.

The sale of the subject premises to the Plaintiffs is fraudulent because it included her (Intervenors) share and the
beauty shop of her son, the defendant.

As a result of this case she is worried and suffered moral damages, lost her health, lacks sleep and appetite and
should be compensated for P80,000.00 and the expenses for litigation in the amount of P30,000.00 until the case is
finished.

The Intervenor would not claim ownership of the premises if her son, the defendant is not being made to vacate
therefrom by the Plaintiffs.7chanroblesvirtuallawlibrary

The trial court reached the aforementioned disposition on the basis of its findings of facts and conclusions, which we
quote:

During the ocular inspection of the premises in question on April 4, 1988, conducted by the Court upon motion of the
parties, the Court found that the two-storey residential building urgently needed major general repairs and although
the bedrooms seemed occupied by lodgers, neither the defendant nor the Intervenor informed the Court where or in
which of the rooms they occupied.
Observing the questioned premises from the outside, it is easily deducible that it has not been inhabited by a true or
genuine owner for a long time because the two-story building itself has been left to deteriorate or ruin steadily, the
paint peeling off, the window shutters to be replaced, the lumber of the eaves about to fall and the hollow-block fence
to be straightened out, a portion along Umbria street (West) cut in the middle with the other half to the south is tilting
while the premises inside the fence farther from the beauty shop to be cleaned.

From the evidence adduced by the parties, the following facts are undisputed:

1. The identity of the premises in question which is a parcel of land together with the two residential
building standing thereon, located at corner Umbria St. (on the West) and Rosales Blvd. (on the
North), Brgy. Central, Calbayog City, with an area of 318 sq. meters, presently covered by Tax
Declaration No. 47606 in the name of the female Plaintiff and also bounded on the East by lot 03-002
(1946) and on the South by lot 03-006 (1950);

2. The Deeds of Conveyance of the questioned premises -- the Escritura de Venta (Exh. B) from the
Mendiolas to Celso Avelino and the Deed of Sale (Exh. C) from Celso Avelino to the Plaintiffs- are both
public instruments;

3. The couple, Rosendo and Juana Avelino as well as their daughter, Aurea, resided and even died in the
disputed premises;

4. The defendant, Rodolfo Morales, constructed the beauty parlor in the said premises and later occupied
the two-storey residential house;

5. Not one of the children or grandchildren of Rosendo Avelino ever contested the ownership of Celso
Avelino of the disputed premises;

6. There has no extra-judicial partition effected on the subject property since the death of Rosendo Avelino
although two of the Intervenor's children are full-pledged lawyers;

7. Since the premises in question had been acquired by Celso Avelino, it has been declared in his name for
taxation purposes and the receipts of the realty taxes thereon were kept by him, some were either
delivered to him by Aurea or by defendant; and

8. Ever since the Plaintiffs acquired the disputed premises, its tax declaration is now in the name of the
female Plaintiff with the current realty taxes thereon paid by her.

A very careful study and meticulous appraisal of the evidence adduced by both parties and the applicable laws and
jurisprudence show a preponderance of evidence conclusively in favor of the Plaintiffs, due to the following facts and
circumstances, all borne of the record.

One. While Plaintiff's claim of ownership over the premises in question is duly supported by documentary evidences,
such as the Deed of Conveyance (Exhs. B and C), Tax declarations and payments of the realty taxes on the disputed
property, both as to the land and the two-storey building (Exhs. D, E, F, G, H, and I and K and series) and the survey
plan of the land (Exh. J), Defendants-Intervenors claim of ownership is based merely on testimonial evidence which is
self-serving and cannot prevail over documentary evidence because it is a settled rule in this jurisdiction that
testimonial evidence cannot prevail over documentary evidence.

Two. While Plaintiffs evidence of ownership of the disputed premises is clear, positive, categorical and credible,
Intervenors testimony that the disputed premises was acquired by his brother (p. 16); that the document of
conveyance of the land and the building (p. 14) is in the name of her brother; that it was surveyed in her brothers
name with her knowledge (pp. 13-14); that during the lifetime of her father the muniments of title of the premises
was never transferred in her fathers name (pp. 10-11 & 20); that not one of the heirs of Rosendo Avelino ever
contested Celso Avelinos ownership thereof, despite their knowledge (p.21); that no extra-judicial partition or
settlement was instituted by all the female children of Rosendo Avelino, especially by the Intervenor herself even
though two of her children are full-pledge lawyers (p.15); and the fact that the Intervenor is not even interested to
see the document of the disputed premises (19), very clearly show that her claim is neither positive nor categorical
but is rather unconvincing.

Three. The foregoing testimony of the Intervenor also show that she is already in laches.

Four. The present condition of the premises, especially the two-storey building which has been left to deteriorate or
ruin steadily clearly betrays or belies Intervenor's pretense of ownership of the disputed premises.

Five. If the premises in question is really owned in common by the children of Rosendo and Juana Avelino, why is it
that the surviving sisters of the Intervenor did not join her in this case and intervene to protect their respective
interests?

Six. On the witness chair, Intervenors demeanor and manner of testifying show that she was evasive and shifty and
not direct in her answers to simple questions that she was admonished by the Court not be evasive and be direct or
categorical in her answers; and which rendered her testimony unworthy of full faith and credit.

Seven. That Plaintiffs predecessor-in-interest is the true and absolute owner of the disputed premises having
purchased it from the Mendiolas while he was the City Fiscal of Calbayog and still a bachelor and later became an
Immigration Officer and later became a CFI (now RTC) Judge when the two-storey building was constructed by Marcial
Aragon, thus he declared both the land and the residential building in his name, had it surveyed in his name and
continuously paid the realty taxes thereon, is more in conformity with common knowledge, experience and belief
because it would be unnatural for a man to continuously pay realty taxes for a property that does not belong to him.
Thus, our Supreme Court, ruled: Tax receipts are not true evidence of ownership, but no person in his right mind
would continue paying taxes for land which he thinks does not belong to him. (Ramos vs. Court of Appeals, 112 SCRA
543).
Eight. Intervenors claim of implied trust is untenable because even from the different cases mentioned in her
Memorandum, it is very apparent that in order for implied trust to exist there must be evidence of an equitable
obligation of the trustee to convey, which circumstance or requisite is absent in this case. What is instead clear from
the evidence is Celso Avelino's absolute ownership of the disputed property, both as to the land and the residential
house (Exh. F) which was sold to the Plaintiffs (Exh. C) while Intervenors self-serving and unconvincing testimony of
co-ownership is not supported by any piece of credible documentary evidence.

On the contrary, the last part of Art. 1448 of Our New Civil Code bolsters Plaintiffs ownership over the disputed
premises. It expressly provides: x x x. However, if the person to whom the title is conveyed is a  child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there
is a gift in favor of the child.(underscoring supplied)

Finally, from the testimony of the Intervenor (p.22) the truth is out in that the Intervenor is putting up her pretense
of ownership over the disputed premises only when the defendant was being advised to vacate and only to shield him
from vacating therefrom. Thus, on question of the Court, she declared:

Q When your father died, as a co-owner were you not interested to look at the document so that you can lawfully
claim, act as owner of that land?

A We just claim only when my son, Rodolfo was driven by the Plaintiff.

Q In other words what you are saying is that if your son was not dispossessed of the property in question, you would
not claim ownership?

A No, sir.

In her Memorandum, Intervenor raises the issue whether or not the plaintiffs are entitled to the damages being
claimed which were duly supported or proven by direct evidence.

On this particular issue, the Plaintiffs evidence has established that before the Plaintiffs paid the purchase price of the
premises in question, they talked with the defendant about the intended sale and the latter even encouraged them to
purchase it and that he will vacate the premises as soon as the payment is made therefore (TSN, Ortiz, Jr., p. 20,
April 4, 1988). Hence, they paid the purchase price and Exh. C was duly executed by the owner in their favor. The
defendant, however, despite his encouragement and notice from his uncle to vacate the subject premises (Exh. N)
reneged on his words and refused to vacate or demolish his beauty shop inside the premises in question unless he is
paid P35,000.00 for it although it is valued at less than P5,000.00.

With that unreasonable demand of the defendant, the plaintiffs demanded, orally and in writing (Exhs. L and M) to
vacate the premises. The defendant refused.Later, as the plaintiffs were about to undertake urgent repairs on the
dilapidated residential building and make it as their residence, they found out that the defendant rather than vacate
the premises, had already occupied the said residential building and admitted lodgers to it (id., p. 24) and claimed
ownership thereof, to the damage, prejudice and injury and mental anguish of the plaintiffs. So, the plaintiffs, as the
true and lawful owners of the premises in question, filed the instant case incurring expenses in the process as they
hired the services of a lawyer to protect their interests from the willful and wrongful acts or omissions of the
defendant.8chanroblesvirtuallawlibraryDissatisfied with the trial courts decision, defendants heirs of Rodolfo Morales
and intervenor Priscila Morales, petitioners herein, appealed to the Court of Appeals, which docketed the appeal as
CA-G.R. CV No. 34936, and in their Appellants Brief they assigned the following errors:

1. The RTC erred in ruling that Celso Avelino, appellees predecessor-in- interest, was the true and lawful owner of the
house and lot in question.

2. xxx in not ruling that Celso Avelino purchased the house and lot in question as a mere trustee, under an implied
trust, for the benefit of the trustor, his father, Rosendo Avelino, and the latters heirs.

3. xxx in ruling that the Intervenor is barred by laches from asserting her status as a beneficiary of the aforesaid
implied trust.

4. xxx in ruling that Celso Avelino validly sold the house and lot in question to appellees without the consent of the
other heirs of Rosendo Avelino and Juana Ricaforte Avelino.

5. xxx in declaring appellees the absolute and rightful owners of the house and lot in question by virtue of the sale of
those properties to them by Celso Avelino.

6. xxx in not ruling that appellants are rightful co-owners and possessors of the house and lot in question in their
capacities as heirs of Rosendo Avelino and Juana Ricaforte Avelino, the true owners of those properties.

7. xxx in ordering defendants to remove the beauty shop on the disputed land instead of declaring Rodolfo Morales a
builder in good faith and providing for the protection of his rights as such.

8. xxx in ordering appellants to vacate the disputed premises and to pay appellees a monthly rental, moral damages,
litigation expenses, and attorney's fees.

9. xxx in not awarding appellants the damages and costs prayed for in answer with counterclaim and answer in
intervention, considering that the action to dispossess them of the house and land in question is clearly without legal
foundation.9chanroblesvirtuallawlibrary

In its decision of 20 April 199410 the Court of Appeals affirmed the decision of the trial court.

Their motion to reconsider the decision having been denied in the resolution 11 of 14 September 1994 for lack of merit,
petitioners filed the instant petition wherein they claim that:
1. Respondent CA erred in adopting the trial courts reasoning that it would be unnatural for a man to continuously pay
realty taxes for a property that does not belong to him on the basis of a misreading and misapplication of Ramos v.
Court of Appeals, 112 SCRA 543 (1982). Respondent CA also erred in concluding that the payment of realty taxes is
conclusive evidence of ownership, which conclusion ignores this Honorable Court's rulings in Ferrer-Lopez v. Court of
Appeals, 150 SCRA 393 (1987), De Guzman v. Court of Appeals, 148 SCRA 75 (1987), and heirs of Celso Amarante v.
Court of Appeals, 185 SCRA 585 (1990).

2. xxx in relying on Conception Peralta's alleged Confirmation (Exhibit O) in ruling that Celso Avelino (and later the
respondents) had exclusive and absolute ownership of the disputed property. Exhibit O was not identified by the
purported affiant at the trial, and was therefore plainly hearsay. Respondent CA erred in admitting Exhibit O in
evidence over the objection of the petitioner's counsel.

3. xxx in inferring and surmising that Celso Avelinos alleged exclusive ownership of the disputed property was
affirmed by the inaction of his four sisters.

4. xxx in ruling that the petitioners' testimonial evidence could not prevail over the respondent's evidence for the
purpose of establishing the existence of an implied trust. This ruling ignores this Honorable Court's decision in De Los
Santos v. Reyes, 205 SCRA 437 (1992).

5. xxx in ignoring unrebutted evidence on record that Celso Avelino held title to the disputed property merely as a
trustee for his father, mother, and siblings. In so doing, respondent CA: (i) ignored decided cases where this
Honorable Court found the existence of trusts on the bases of similar evidence, including the cases of Valdez v.
Olorga, 51 SCRA 71 (1973), De Buencamino, et al. v. De Matias, 16 SCRA 849 (1966), Gayos v. Gayos, 67 SCRA 146
(1975), and Custodio v. Casiano, 9 SCRA 841 (1963); and (ii) refused to apply the clear language of Article 1448 of
the Civil Code.

6. xxx in not ruling that Rodolfo Morales should have at least been regarded as a builder in good faith who could not
be compelled to vacate the disputed property or to pay a monthly rental unless he was first indemnified for the cost of
what he had built. In so doing, respondent CA: (i) refused to apply the clear language of Articles 448 and 453 of the
Civil Code; and (ii) ignored this Honorable Court's rulings in Municipality of Oas v Roa, 7 Phil. 20 (1906) Merchant v.
City of Manila, 11 Phil. 116 (1908), Martinez v. Baganus, 28 Phil. 500 (1914), Grana v. Court of Appeals, 109 Phil.
260 (1960), and Miranda v. Fadullon, 97 Phil. 810 (1955).

7. xxx in affirming the Trial Court's award of damages in favor of the respondents. In so doing, respondent CA: (i)
misapplied Articles 2199, 2208, 2219, and 2220 of the Civil Code; and (ii) ignored this Honorable Courts ruling in San
Miguel Brewery, Inc. v. Magno, 21 SCRA 292 (1967).

8. xxx in refusing to rule that the respondents are liable to petitioners for moral damages, and attorney's fees and
costs of litigation. In so doing, respondent CA ignored unrebutted evidence on record and Articles 2208, 2217, and
2219 of the Civil Code.

On 13 September 1995, after the filing of private respondents comment on the petition and petitioners reply thereto,
we resolved to deny the petition for failure of petitioners to sufficiently show that the respondent Court of Appeals
committed reversible error.

Undaunted, petitioners on 17 October 1995 filed a motion for reconsideration of our resolution of 13 September 1995
based on the following grounds:

1. The Honorable Court erred in not ruling that at the very least, Rodolfo Morales should have been considered a
builder in good faith who could not be compelled to vacate the disputed property or to pay monthly rental unless he
was first indemnified for the cost of what he had built.

2. xxx in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in ruling that there was no
implied trust over the premises.

3. xxx in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in awarding damages to
the respondents.

We required respondents to comment on the motion for reconsideration; however it was not until 1 July 1996 and
after we required their counsel to show cause why he should not be disciplinarily dealt with for failure to file comment
when said counsel filed the comment by mail. Upon prior leave of court, petitioners filed a reply to the comment.

On 19 August 1996 we granted petitioners motion for reconsideration and required the parties to submit their
respective memoranda. Petitioners and private respondents submitted their memoranda on 4 and 28 October 1996,
respectively.

The grant of the motion for reconsideration necessarily limits the issues to the three grounds postulated in the motion
for reconsideration, which we restate as follows:

1. Did Celso Avelino purchase the land in question from the Mendiolas on 8 July 1948 as a mere trustee for his
parents and siblings or, simply put, is the property the former acquired a trust property?

2. Was Rodolfo Morales a builder in good faith?

3. Was there basis for the award of damages, attorneys fees and litigation expenses to the private respondents?

We shall discuss these issues in seriatim.

I
A trust is the legal relationship between one person having an equitable ownership in property and another person
owning the legal title to such property, the equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter. 12 The characteristics of a trust are:

1. It is a relationship;2. it is a relationship of fiduciary character;3. it is a relationship with respect to property, not

one involving merely personal duties;4. it involves the existence of equitable duties imposed upon the holder of the
title to the property to deal with it for the benefit of another; and5. it arises as a result of a manifestation of intention
to create the relationship. 13chanroblesvirtuallawlibraryTrusts are either express or implied. Express trusts are created
by the intention of the trustor or of the parties, while implied trusts come into being by operation of law, 14 either
through implication of an intention to create a trust as a matter of law or through the imposition of the trust
irrespective of, and even contrary to, any such intention. 15 In turn, implied trusts are either resulting or constructive
trusts. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines
the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the
nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested
with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand,
constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent
unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains
or holds the legal right to property which he ought not, in equity and good conscience, to
hold.16chanroblesvirtuallawlibrary

A resulting trust is exemplified by Article 1448 of the Civil Code, which reads:

Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is
paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the
latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of
the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in
favor of the child.

The trust created under the first sentence of Article 1448 is sometimes referred to as a  purchase money resulting
trust.17 The trust is created in order to effectuate what the law presumes to have been the intention of the parties in
the circumstances that the person to whom the land was conveyed holds it as trustee for the person who supplied the
purchase money.18chanroblesvirtuallawlibrary

To give rise to a purchase money resulting trust, it is essential that there be:1. an actual payment of money, property
or services, or an equivalent, constituting valuable consideration;2. and such consideration must be furnished by the
alleged beneficiary of a resulting trust. 19chanroblesvirtuallawlibraryThere are recognized exceptions to the
establishment of an implied resulting trust. The first is stated in the last part of Article 1448 itself. Thus, where A pays
the purchase money and title is conveyed by absolute deed to As child or to a person to whom A stands  in loco
parentis and who makes no express promise, a trust does not result, the presumption being that a gift was intended.
Another exception is, of course, that in which an actual contrary intention is proved. Also where the purchase is made
in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who
is guilty of the fraud.20chanroblesvirtuallawlibrary

As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must
be clear and satisfactorily show the existence of the trust and its elements. 21 While implied trusts may be proved by
oral evidence,22 the evidence must be trustworthy and received by the courts with extreme caution, and should not be
made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence
can easily be fabricated.23chanroblesvirtuallawlibrary

In the instant case, petitioners theory is that Rosendo Avelino owned the money for the purchase of the property and
he requested Celso, his son, to buy the property allegedly in trust for the former. The fact remains, however, that title
to the property was conveyed to Celso. Accordingly, the situation is governed by or falls within the exception under
the third sentence of Article 1448, which for convenience we quote:

... However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the
price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.
(Underscoring supplied).

On this basis alone, the case for petitioners must fall. The preponderance of evidence, as found by the trial court and
affirmed by the Court of Appeals, established positive acts of Celso Avelino indicating, without doubt, that he
considered the property he purchased from the Mendiolas as his exclusive property. He had its tax declaration
transferred in his name, caused the property surveyed for him by the Bureau of Lands, and faithfully paid the realty
taxes. Finally, he sold the property to private respondents.

The theory of implied trust with Celso Avelino as the trustor and his parents Rosendo Avelino and Juan Ricaforte as
trustees is not even alleged, expressly or impliedly, in the verified Answer of Rodolfo Morales 24 nor in the Answer in
Intervention of Priscila A. Morales.25 In the former, Rodolfo alleged that:

A. [T]he lot and the two-storey building in question... which are actually possessed by Rodolfo Morales, defendant
herein, and by his parents -- Priscila A. Morales and Cesar Morales -- and consequently, the ones now in litigation in
the above-entitled case, were originally and exclusively owned and possessed by his grandparents-Rosendo Avelino
and Juana Ricaforte;

B. [S]aid lot, together with an old house then thereon, were (sic) acquired by said couple -- Rosendo Avelino and
Juana Ricaforte -- on July 8, 1948, which they right away possessed exclusively in the concept of
owner;26chanroblesvirtuallawlibrary

Priscila, on her part, merely reiterated the foregoing allegations in subparagraphs A and B of paragraph 2 of her
Answer in Intervention.27chanroblesvirtuallawlibrary

Rodolfo and Priscila likewise even failed to suggest in their respective Special and Affirmative Defenses that Celso
Avelino held the property in trust despite Rodolfos claim that:
 4. [T]he alleged sale by Celso Avelino alone of the properties in question in favor of plaintiff Erlinda Ortiz and
the alleged TD-47606 in the name of Erlinda Ortiz, were clandestine, fraudulent, null and void
because, first, said documents cover the entire properties in question of the late Rosendo Avelino and
Juana Ricaforte; second, only Celso Avelino sold the entire properties, without the knowledge and
consent of said Priscila A. Morales, Trinidad A. Cruz and Concepcion E. Peralta - children and heirs of
said Rosendo Avelino and Juana Ricaforte; and, third, said documents were also made without the
knowledge and consent of defendant Rodolfo Morales who has prior and legal possession over the
properties in question and who is a builder in good faith of the shop building
thereon.28chanroblesvirtuallawlibrary

Not surprisingly, Priscila merely restated these allegations in paragraph 2 of her Special and Affirmative Defenses. If
truly they were convinced that Celso Avelino acquired the property in trust for his parents, it would have been far
easier for them to explicitly state such fact.29chanroblesvirtuallawlibrary

The separate Answers of Rodolfo and Priscila do not likewise allege that Celso Avelino committed any breach of the
trust by having the property declared in his name and paying the realty taxes thereon and by having the lot surveyed
by the Bureau of Lands which gave it a lot number: Lot 1949. 30 Even more telling is that in the Pre-Trial Order 31 of the
trial court, petitioners did not claim the existence of an implied trust; the parties merely agreed that the main issues
were:a. Who is the owner of the premises in question?b. Who is entitled to the possession thereof?Yet, petitioners
now want us to reverse the rulings of the courts below that Celso Avelino was the absolute and exclusive owner of the
property in question, on strength of, primarily, their implied trust theory. The problem with petitioners is that they
entirely forgot that the trial court and the Court of Appeals did not base their rulings on this alone. As shown earlier,
the trial court pointed out numerous other flaws in petitioners theory, such as laches. Then, too, the rule is settled
that the burden of proving the existence of a trust is on the party asserting its existence and that such proof must be
clear and satisfactory.32 As to that, petitioners relied principally on testimonial evidence. It is, of course, doctrinally
entrenched that the evaluation of the testimony of witnesses by the trial court is received on appeal with the highest
respect, because it is the trial court that has the direct opportunity to observe them on the stand and detect if they
are telling the truth or lying through their teeth. The assessment is accepted as correct by the appellate court and
binds it, absent a clear showing that it was reached arbitrarily. 33 In this case, petitioners failed to assail, much less
overcome, the following observation of the trial court:

Six. On the witness chair, Intervenors demeanor and manner of testifying show that she was evasive and shifty and
not direct in her answers to simple questions that she was admonished by the Court not to be evasive and direct and
categorical in her answers; and which rendered her testimony unworthy of full faith and
credit.34chanroblesvirtuallawlibraryLikewise fatal to petitioners cause is that Concepcion Peraltas sworn Confirmation
dated 14 May 1987 cannot be considered hearsay evidence due to Concepcions failure to testify. On the contrary, it is
an exception to the hearsay rule under Section 38 of Rule 130 of the Rules of Court, it having been offered as
evidence of an act or declaration against interest. As declarant Concepcion was a daughter of Rosendo Avelino and
Juana Ricaforte, and a sister of Celso Avelino and intervenor Priscila Morales, Concepcion was thus a co-heir of her
siblings, and would have had a share, equal to that of each of her co-heirs, in the estate of Rosendo and Juana.
However, Concepcion explicitly declared therein thus:That my aforenamed brother [Celso Avelino], during the time
when he was City Fiscal of Calbayog City and still a bachelor, out of his own money, bought the parcels of land located
at corner Umbria Street and Rosales Blvd., Brgy. Central, Calbayog City, from Culets Mendiola de Bartolome and
Alejandra Fua Mendiola by virtue of a Deed of Sale entered as Doc. No. 37; Page No. 20; Book No. XI; Series of 1948
in the Notarial Book of Atty. Celedonio Alcazar, Notary Public of Calbayog, Samar; Likewise, out of his own money, he
constructed a residential building on the lot which building is made of strong materials.

If indeed the property was merely held in trust by Celso for his parents, Concepcion would have been entitled to a
proportionate part thereof as co-heir. However, by her Confirmation, Concepcion made a solemn declaration against
interest. Petitioners, realizing that the Confirmation was admissible, attempted to cushion its impact by offering in
evidence as Exhibit 435 Concepcions affidavit, dated 16 June 1987, wherein Concepcion stated:3. The property in
question (particularly the house), however forms part of the state of our deceased parents, and, therefore, full and
complete conveyance of the right, title and interest in and to such property can only be effected with the agreement
of the other heirs, namely, my sisters Trinidad A. Cruz and Priscila A. Morales, and myself.

Note that Concepcion seemed to be certain that only the house formed part of the estate of her deceased parents. In
light of the equivocal nature of Concepcions later affidavit, the trial court and the Court of Appeals did not then err in
giving more weight to Concepcions earlier Confirmation.

At bottom, the crux of the matter is whether petitioners discharged their burden to prove the existence of an implied
trust. We rule in the negative. Priscilas justification for her and her sisters failure to assert co-ownership of the
property based on the theory of implied trust is, to say the least, flimsy. In light of their assertion that Celso Avelino
did not have actual possession of the property because he was away from Calbayog continuously for more than 30
years until he died on October 31, 1987, 36 and the established fact that the tax declarations of the property were in
Celsos name and the latter paid the realty taxes thereon, there existed no valid and cogent reason why Priscila and
her sisters did not do anything to have their respective shares in the property conveyed to them after the death of
Rosendo Avelino in 1980. Neither is there any evidence that during his lifetime Rosendo demanded from Celso that
the latter convey the land to the former, which Rosendo could have done after Juanas death on 31 May 1965. This
omission was mute and eloquent proof of Rosendos recognition that Celso was the real buyer of the property in 1948
and the absolute and exclusive owner thereof.Was Rodolfo Morales a builder in good faith? Petitioners urge us to so
rule and apply Article 448 of the Civil Code, which provides:The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.Clearly, Article
448 applies only when the builder, planter or sower believes he has the right to so build, plant or sow because he
thinks he owns the land or believes himself to have a claim of title. 37 In the instant case Rodolfo Morales knew from
the very beginning that he was not the owner of the land. He alleged in his answer that the land was acquired by his
grandparents Rosendo Avelino and Juana Ricaforte and he constructed the shop building in 1979 upon due permission
and financial assistance from his mother, Priscila A. Morales and from his aunts Trinidad A. Cruz and Concepcion A.
Peralta..., with the knowledge and consent of his uncle Celso Avelino. 38chanroblesvirtuallawlibrary
Petitioners, however, contend that:Even assuming the argument that Rodolfo Morales was a builder in bad faith
because he was aware of Celso Avelinos supposed exclusive ownership of the land, still, however,
the unrebutted evidence shows that Celso Avelino consented to Rodolfo Morales construction of the beauty shop on
the land. TSN, April 4, 1988, p. 40; TSN, April 4, 1988, p. 40; TSN, October 19, 1990, p. 21. Under Article 453 of the
Civil Code, such consent is considered bad faith on the part of the landowner. In such a case, the rights of the
landowner and the builder shall be considered as though both acted in good faith. 39chanroblesvirtuallawlibraryThis so-
called unrebutted testimony was rejected by the courts below, and with good reason. First, it was clearly self-serving
and inconsistent with petitioners vigorous insistence that Celso Avelino was away from Calbayog City continuously for
more than 30 years until he died on October 31, 1987. 40 The circumstances of when and where allegedly the consent
was given are unclear. Second, only Celso Avelino could have rebutted it; but the testimony was given after Avelinos
death, thus forever sealing his lips. Reason and fairness demand that the attribution of an act to a dead man must be
viewed with utmost caution. Finally, having insisted with all vigor that the land was acquired by Rosendo Avelino and
Juanita Ricaforte, it would be most unlikely that Rodolfo would have taken the trouble of securing Celsos consent, who
had been continuously away from Calbayog City for more than 30 years, for the construction of the shop building.

We cannot however give our affirmance to the awards of moral damages, attorneys fees and litigation expenses.

Pursuant to Article 2217 of the Civil Code, moral damages, which include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury may be
recovered in the cases enumerated in Article 2219 and 2220 of the same Code. 41 For moral damages to be recovered,
it must be shown that they are the proximate resultof the defendant's wrongful act or omission in the cases provided
for in Articles 2219 and 2220, i.e., it must be shown that an injury was suffered by the claimant and that such injury
sprang from any of the cases stated in Articles 2219 and 2220. 42 Moral damages are emphatically not intended to
enrich a plaintiff at the expense of the defendant. They are awarded only to enable the injured party to obtain means,
diversion, or amusements that will serve to alleviate the moral sufferings he underwent, by reason of the defendant's
culpable action and must, perforce, be proportionate to the suffering inplicted. 43 In the same vein, moral damages
must be understood to be in concept of grants, not punitive or corrective in nature, calculated to compensate the
claimant for the injury suffered.44chanroblesvirtuallawlibrary

In the instant case, the private respondents have not convincingly shown that they suffered "mental anguish" for
certain acts of herein petitioner which fell under any of the cases enumerated in Articles 2219 and 2220 of the Civil
Code. However, the trial court invoked Articles 19, 20, 21, 2217, 2219, 2220 to support the award for moral
damages. Article 2220 is definitely inapplicable since this is not a case of willful injury to property or breach of
contract.The attendant circumstances in this case also reject the application of Articles 19, 20 and 21 of the Chapter
on Human Relations of the Civil Code.Accordingly, for lack of factual and legal basis, the award of moral damages
must be set aside.For the same reason the award of attorney's fees and litigation expenses must suffer the same fate.
The award of attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every time
a party wins a suit. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands
factual, legal and equitable justification; its basis cannot be left to speculation and conjecture. 45 The general rule is
that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed
on the right to litigate.46chanroblesvirtuallawlibrary

WHEREFORE, premises considered, except as to the award of moral damages, attorneys fees and litigation expenses
which are hereby DELETED, the judgment of the respondent Court of Appeals is AFFIRMED.

Costs against petitioners.

6. Reyes v CA

GUADALUPE S. REYES, petitioner,
vs.
COURT OF APPEALS and JUANITA L. RAYMUNDO, respondents.

 Petitioner Guadalupe S. Reyes sold to respondent Juanita L. Raymundo on 21 June 1967 one-half (1/2) of a 300 — square meter lot
located at No. 4-F Calderon St., Project 4, Quezon City, denominated as Lot 8-B, for P10,000.00. Consequently, a new title, TCT No.
119205, was issued for the whole lot in the name of original owner Guadalupe S. Reyes and vendee Juanita L. Raymundo in equal
shares.1âwphi1.nêt

Thereafter respondent was granted a P17,000.00 loan by the Government Service Insurance System (GSIS), where she was employed
as records processor, with her one-half (1/2) share of the property as collateral. On 24 September 1969 petitioner sold her remaining
interest in the property to respondent for P15,000.00 as evidenced by a deed of absolute sale, Exh. "E," 1 and TCT No. 149036 was
issued in the name of respondent in lieu of TCT No. 119205.

Since 1967 the house standing on the property subject of the second sale was being leased by the spouses Mario Palacios and
Zenaida Palacios from petitioner. In December 1984 petitioner allegedly refused to receive the rentals thus prompting the Palacios
spouses to file on 13 March 1985 a petition for consignation before the Metropolitan Trial Court of Quezon City. Later, the parties
entered into a compromise agreement principally stating that the Palacios spouses would pay to petitioner the accrued rentals and that
the leased period would be extended to 24 November 1986. On 28 May 1985 the compromise agreement was approved and judgment
was rendered in accordance therewith.

It appears however that the Palacios spouses were subsequently ejected from the premises but managed somehow to return. When a
contempt case was filed by petitioner against her lessees, respondent intervened and claimed ownership of the entire 300 — square
meter property as well as the existence of a lease contract between her and the Palacios spouses supposedly dated 17 March 1987
but retroactive to 1 January 1987. On 12 August 1987 the trial court dismissed the case and from then on, the Palacioses paid rentals
to respondent.

On 23 August 1987 petitioner filed a complaint against respondent before the Regional Trial Court of Quezon City for cancellation of
TCT No. 149036 and reconveyance with damages. Petitioner alleged that the sale of 24 September 1969 was simulated since she was
merely constrained to execute the deed without any material consideration pursuant to an agreement with respondent that they would
construct an apartment on the property through the proceeds of an additional loan respondent would secure from the GSIS with the
entire 300 — square meter property as collateral. But should the loan fail to materialize, respondent would reconvey the property
subject of the second sale to petitioner. After petitioner learned that the loan was disapproved she repeatedly asked respondent for
reconveyance but to no avail. Their true agreement was embodied in a private writing dated 10 January 1970. 2
The trial court found that the second deed of sale was indeed simulated as it held that since the date of its execution respondent
allowed petitioner to exercise ownership over the property by collecting rentals from the lessees until December 1986. It was only in
1987 when respondent intervened in the contempt case that she asserted ownership thereof. Likewise, the trial court sustained
petitioner's claim that she was only prevailed upon to transfer the title to the whole lot to respondent in order to obtain a loan from the
GSIS which, after all, did not materialize. Thus, on 29 May 1992 the trial court cancelled and declared null and void TCT No. 149036 as
well as the second deed of sale. It ordered respondent to reconvey subject property to petitioner and to pay P25,000.00 as actual and
exemplary damages, P10,000.00 as attorney's fees, and to pay the costs. 3

Respondent Court of Appeals however held otherwise. It ruled that as between a notarized deed of sale earlier executed and the
agreement of 10 January 1970 contained in a private writing, the former prevailed. It also found that petitioner's cause of action had
prescribed since the complaint should have been filed either within ten (10) years from 1969 as an action to recover title to real
property, or within ten (10) years from 1970 as an action based on a written contract. The appellate court further found that petitioner's
cause of action was barred by laches having allowed respondent to stay in possession of the lot in question for eighteen (18) years
after the execution of the second deed of sale. On 19 July 1996 the Court of Appeals set aside the ruling of the trial court and
dismissed petitioner's complaint. 4 On 22 October 1996 it denied the motion to reconsider its decision. 5

Petitioner posits that it was only in 1987 — when respondent intervened in the contempt case alleging to be the owner and lessor — did
her cause of action accrue; hence, her complaint filed on 23 August 1987 has not yet prescribed. Petitioner asserts that the 10 January
1970 agreement is more credible and probable than the second deed of sale because such document contains their real intention.

In Heirs of Jose Olviga v. Court of Appeals 6 we restated the rule that an action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the
issuance of the certificate of title over the property. However, we emphasized that this rule applies only when the plaintiff or the person
enforcing the trust is not in possession of the property since if a 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 . The reason is that the
one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title
is attacked before taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid of a court
of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be
claimed only by one who is in possession.

Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as those a party would naturally
exercise over his own property. 7 It is not necessary that the owner of a parcel of land should himself occupy the property as someone
in his name may perform the act. In other words, the owner of real estate has possession, either when he himself is physically in
occupation of the property, or when another person who recognizes his rights as owner is in such occupancy. 8 This declaration is
conformably with Art. 524 of the Civil Code providing that possession may be exercised in one's own name or in the name another.

An example of actual possession of real property by an owner through another is a lease agreement whereby the lessor transfers
merely the temporary use and enjoyment of the thing leased. 9 The Palacios spouses have been the lessees of petitioner since 1967
occupying the house erected on the property subject of the second sale. Petitioner was in actual possession of the property through the
Palacioses and remained so even after the execution of the second deed of sale. It was only in 1987 — when respondent asserted
ownership over the property and showed a lease contract between her and the Palacioses dated 17 March 1987 but effective 1
January 1987 — that petitioner's possession was disturbed. Consequently, the action for reconveyance filed on 23 August 1987 based
on circumstances obtaining herein and contrary to the finding of respondent court has not prescribed. To be accurate, the action does
not prescribe. Under Art. 1144, par. (1), of the Civil Code, an action upon a written contract must be brought within ten (10) years from
the time the right of action accrues. And so respondent court also relied on this provision in ruling that petitioner's cause of action had
prescribed. This is error. What is applicable is Art. 1410 of the same Code which explicitly states that the action or defense for the
declaration of the inexistence of a contract, such as the second deed of sale, does not prescribe.

Respondent court declared petitioner guilty of laches anchored on the finding that for eighteen (18) years after the execution of the
contract, respondent was in possession of the lot in question. But this finding is utterly unsupported by the evidence. On the contrary,
the Palacioses alleged in their petition for consignation filed 13 March 1985 that they were "renting the apartment of the respondent
(petitioner herein) located at No. 4-F Calderon Street, Project 4, Quezon City, since 1967 up to the present." 10 Even respondent herself
admitted in her lease contract of 17 March 1987 with the Palacios spouses that "the LESSEES have been staying in the premises since
1967 under a previous lease contract with Guadalupe S. Reyes which, however, already expired." 11 Having thus corrected the finding
of respondent court, our concern now is to determine whether laches should be appreciated against petitioner. The essence of laches
is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or
should have been done earlier; it is 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. 12

To be sure, there is no absolute rule as to what constitutes staleness of demand; each case is to be determined according to its
particular circumstances. The question of laches is addressed to the sound discretion of the court and since laches is an equitable
doctrine, its application is controlled by equitable considerations. It cannot be applied to defeat justice or to perpetrate fraud. In the case
under consideration, it would be the height of injustice and inequity to apply laches against petitioner and vest ownership over a
valuable piece of real property in favor of respondent by virtue of an absolutely simulated deed of sale never intended to convey any
right over the subject property. It is the better rule that courts, under the principle of equity, be not guided or bound strictly by the
doctrine of laches when to do so, manifest wrong of injustice would result.

Suntay v. Court of Appeals 13 and Santiago v. Court of Appeals 14 are binding precedents. In Suntay, Federico Suntay applied as a
miller-contractor with the then National Rice and Corn Corporation but his application was disapproved due to several unpaid loans. He
then told his nephew Rafael to apply instead. To obtain an approval, Rafael prepared a notarized absolute deed of sale whereby
Federico, for and in consideration of P20,000.00, conveyed to Rafael a parcel of land with all its existing structures. Federico's title to
the property was thereafter cancelled and another one issued to Rafael. Subsequently, Federico requested Rafael to reconvey to him
the property for he intended to use it as collateral. Rafael however refused to do so, clinging to the deed of sale in his favor. We upheld
the claim of Federico as we found that the deed of sale was absolutely simulated and therefore void. We observed that —

Indeed the most protuberant index of simulation is the complete absence of an attempt in any manner on the part of the late Rafael to
assert his rights of ownership over the land and rice mill in question. After the sale, he should have entered the land and occupied the
premises thereof. He did not even attempt to. If he stood as owner, he would have collected rentals from Federico for the use and
occupation of the land and its improvements. All that the late Rafael had was a title in his name. . . .

. . . . The fact that, notwithstanding the title transfer, Federico remained in actual possession, cultivation and occupation of the disputed
lot from the time the deed of sale was executed until the present, is a circumstance which is unmistakably added proof of the
fictitiousness of the said transfer, the same being contrary to the principle of ownership.

In Santiago, Paula Arcega executed a deed of absolute sale of her parcel of land in favor of Josefina Arcega and spouses Regalado
Santiago and Rosita Palabyab for P20,000.00. A new title was issued in the name of the vendees cancelling that of Paula. Later, a four
(4) — bedroom house was built on the property. The master's bedroom, with toilet and bath, was occupied by Paula until her death
despite the execution of the deed of sale. The three (3) other bedrooms, smaller than the master's bedroom, were occupied by the
vendees. Then, an heir of Paula filed an action seeking to declare the nullity of the deed of sale on the ground of absence of
consideration and that it was merely designed as an accommodation for the purpose of obtaining a loan from the Social Security
System. Guided by Suntay, we annulled the deed of sale and the title of the vendees and ordered reconveyance of the property. We
ratiocinated that —

. . . . while petitioners were able to occupy the property in question, they were relegated to a small bedroom without bath and toilet,
while Paula Arcega remained virtually in full possession of the completed house and lot using the big master's bedroom with bath and
toilet up to the time of her death on April 10, 1985. If, indeed, the transaction entered into by the petitioners and the late Paula Arcega
on July 8, 1971 was a veritable deed of absolute sale, as it was purported to be, then Mrs. Arcega had no business whatsoever
remaining in the property and, worse, to still occupy the big master's bedroom with all its amenities until her death . . . . Definitely, any
legitimate vendee of real property who paid for the property with good money will not accede to an arrangement whereby the vendor
continues occupying the most favored room in the house while he or she, as the new owner, endures the disgrace and absurdity of
having to sleep in a small bedroom without bath and toilet as if he or she is a guest or a tenant in the house. In any case, if petitioners
really stood as legitimate owners of the property, they would have collected rentals from Paula Arcega for the use and occupation of the
master's bedroom as she would then be a mere lessee of the property in question. However, not a single piece of evidence was
presented to show that this was the case. All told, the failure of petitioners to take exclusive possession of the property allegedly sold to
them, or in the alternative, to collect rentals from the alleged vendee Paula Arcega, is contrary to the principle of ownership and a clear
badge of simulation that renders the whole transaction void and without force and effect . . . . 15

Squarely with Suntay and Santiago, petitioner remained in actual possession of subject property through the Palacioses even after the
execution of the second deed of sale in 1969. The lessees paid rentals to petitioner since 1967. We note likewise that petitioner was
the defendant in the consignation case. Respondent disdained to explain that she allowed petitioner to collect the rentals because she
"did not mind" the nominal amount involved.

We are unconvinced simply because the supposed "unmindfulness" involved, not a short period, but a span of seventeen (17) years, or
from 1969 up to 1986. Besides, it defies logic and borders more on absurdity that respondent bought the disputed property only to allow
petitioner to continue exercising dominion over it by leasing it to the Palacioses at the same time benefiting therefrom in the form of
rentals collected. The only change effected by the purported second deed of sale was the transfer of title to respondent. Respondent's
"generosity" is too good to be true, in a manner of speaking. Rather, we agree with the trial court that the second deed of sale was
simulated. Petitioner was constrained to transfer title over the property to respondent to enable the latter to mortgage it to the GSIS, the
proceeds of which would be used to construct an apartment on the property.

True it is that as between a public document and a private document, the former prevails. But Santiago went further. We said therein
that although the notarization of the deed of sale in question vests in its favor the presumption of regularity, it is not the intention or the
function of the notary public to validate and make binding an instrument that did not intend to have any binding legal effect upon the
parties thereto. The intention of the parties still is and always will be the primary consideration in determining the true nature of a
contract which in the present case was contained in the agreement of 10 January 1970.

Then, too, a comparison between respondent's signature on the 10 January 1970 agreement, on one hand, and her signatures on the
application for the reconstitution of TCT No. 149036 16 and the lease contract between her and the Palacios spouses, 17 on the other
hand, discloses a striking similarity. No amount of denial by respondent will render ineffectual the 10 January 1970 agreement.

Moreover, the fact that respondent was able to secure a title in her name did not operate to vest ownership upon her of the
property. Santiago cannot be any less unequivocal —

. . . . That act has never been recognized as a mode of acquiring ownership. As a matter of fact, even the original registration of
immovable property does not vest title thereto. The Torrens system does not create or vest title. It only confirms and records title
already existing and vested. It does not protect a usurper from the true owner. It cannot be a shield for the commission of fraud. It does
not permit one to enrich himself at the expense of another. Where one does not have any rightful claim over a real property, the Torrens
system of registration can confirm or record nothing. 18

WHEREFORE, the petition is GRANTED. The Decision of respondent Court of Appeals of 19 July 1996 ordering the dismissal of the
complaint of petitioner Guadalupe S. Reyes and the Resolution of 22 October 1996 denying reconsideration are SET ASIDE. The
Decision of the Regional Trial Court of Quezon City, Branch 106, of 29 May 1992 cancelling and declaring null and void TCT No.
149036, as well as the second deed of sale dated 24 September 1969 between petitioner and private respondent Juanita L. Raymundo
ordering the latter to reconvey the property subject of the second deed of sale to petitioner, and further ordering private respondent to
pay petitioner P25,000.00 as actual and exemplary damages, P10,000.00 as attorney's fees, and to pay the costs, is REINSTATED
and ADOPTED as the Decision in this case.1âwphi1.nêt

7. Lopez v CA 574 SCRA 26(2008)

RICHARD B. LOPEZ, in his capacity as Trustee of the Trust Estate of the Late JULIANA LOPEZ-MANZANO, petitioner,
vs.
COURT OF APPEALS, CORAZON LOPEZ, FERNANDO LOPEZ, ROBERTO LOPEZ, represented by LUZVIMINDA LOPEZ,
MARIA ROLINDA MANZANO, MARIA ROSARIO MANZANO SANTOS, JOSE MANZANO, JR., NARCISO MANZANO (all
represented by Attorney-in-fact, MODESTO RUBIO), MARIA CRISTINA MANZANO RUBIO, IRENE MONZON and ELENA
MANZANO, respondents.

This is a petition for review on certiorari 1under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision 2 and Resolution3 of
the Court of Appeals in CA-G.R. CV No. 34086. The Court of Appeals' decision affirmed the summary judgment of the Regional Trial
Court (RTC), Branch 10, Balayan, Batangas, dismissing petitioner's action for reconveyance on the ground of prescription.The instant
petition stemmed from an action for reconveyance instituted by petitioner Richard B. Lopez in his capacity as trustee of the estate of the
late Juliana Lopez Manzano (Juliana) to recover from respondents several large tracts of lands allegedly belonging to the trust estate of
Juliana.The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union did not bear any children. Juliana was the
owner of several properties, among them, the properties subject of this dispute. The disputed properties totaling more than 1,500
hectares consist of six parcels of land, which are all located in Batangas. They were the exclusive paraphernal properties of Juliana
together with a parcel of land situated in Mindoro known as Abra de Ilog and a fractional interest in a residential land on Antorcha St.,
Balayan, Batangas.On 23 March 1968, Juliana executed a notarial will,4 whereby she expressed that she wished to constitute a trust
fund for her paraphernal properties, denominated as Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to be administered by her
husband. If her husband were to die or renounce the obligation, her nephew, Enrique Lopez, was to become administrator and
executor of the Fideicomiso. Two-thirds (2/3) of the income from rentals over these properties were to answer for the education of
deserving but needy honor students, while one-third 1/3 was to shoulder the expenses and fees of the administrator. As to her conjugal
properties, Juliana bequeathed the portion that she could legally dispose to her husband, and after his death, said properties were to
pass to her biznietos or great grandchildren.
Juliana initiated the probate of her will five (5) days after its execution, but she died on 12 August 1968, before the petition for probate
could be heard. The petition was pursued instead in Special Proceedings (S.P.) No. 706 by her husband, Jose, who was the
designated executor in the will. On 7 October 1968, the Court of First Instance, Branch 3, Balayan, Batangas, acting as probate court,
admitted the will to probate and issued the letters testamentary to Jose. Jose then submitted an inventory of Juliana's real and personal
properties with their appraised values, which was approved by the probate court.Thereafter, Jose filed a Report dated 16 August 1969,
which included a proposed project of partition. In the report, Jose explained that as the only compulsory heir of Juliana, he was entitled
by operation of law to one-half (1/2) of Juliana's paraphernal properties as his legitime, while the other one-half (1/2) was to be
constituted into the Fideicomiso. At the same time, Jose alleged that he and Juliana had outstanding debts totaling P816,000.00
excluding interests, and that these debts were secured by real estate mortgages. He noted that if these debts were liquidated, the
"residuary estate available for distribution would, value-wise, be very small."

From these premises, Jose proceeded to offer a project of partition. The relevant portion pertaining to the Fideicomiso stated, thus:

PROJECT OF PARTITION

14. Pursuant to the terms of the Will, one-half (1/2) of the following properties, which are not burdened with any obligation, shall be
constituted into the "Fidei-comiso de Juliana Lopez Manzano" and delivered to Jose Lopez Manzano as trustee thereof:

Location Title No. Area (Sq. M.) Improvements

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

Antorcha St. Balayan, Batangas TCT - 1217-A 13,040 Residential

(1/6 thereof)

and all those properties to be inherited by the decedent, by intestacy, from her sister, Clemencia Lopez y Castelo.

15. The other half (1/2) of the aforesaid properties is adjudicated to Jose Lopez Manzano as heir.

Then, Jose listed those properties which he alleged were registered in both his and Juliana's names, totaling 13 parcels in all. The
disputed properties consisting of six (6) parcels, all located in Balayan, Batangas, were included in said list. These properties, as
described in the project of partition, are as follows:

Location Title No. Area (Sq. M.) Improvements

Pantay, Calaca, 91,283 coconuts

Batangas

Mataywanak, Tuy, OCT-29[6]94 485,486 sugar

Batangas

Patugo, Balayan, OCT-2807 16,757,615 coconut, sugar,

Batangas citrus, pasteur

Cagayan, Balayan, TCT-1220 411,331 sugar

Batangas

Pook, Baayan TCT-1281 135,922 sugar

Batangas

Bolbok, Balayan, TCT-18845 444,998 sugar

Batangas

Calzada, Balayan, TCT 1978 2,312 sugar

Batangas

Gumamela, Balayan, TCT-2575 829

Batangas

Bombon, Balayan, 4,532

Batangas

Parañaque, Rizal TCT-282340 800 residential

Parañaque, Rizal TCT-11577 800 residential

Modesto St., Manila TCT-52212 137.8 residential

and the existing sugar quota in the name of the deceased with the Central Azucarera Don Pedro at Nasugbo.

16. The remaining ¼ shall likewise go to Jose Lopez Manzano, with the condition to be annotated on the titles thereof, that upon his
death, the same shall pass on to Corazon Lopez, Ferdinand Lopez, and Roberto Lopez:

Location Title No. Area (Sq. M.) Improvements

Dalig, Balayan, TCT-10080 482,872 sugar

Batangas

San Juan, Rizal TCT-53690 523 residential

On 25 August 1969, the probate court issued an order approving the project of partition. As to the properties to be constituted into
the Fideicomiso, the probate court ordered that the certificates of title thereto be cancelled, and, in lieu thereof, new certificates be
issued in favor of Jose as trustee of the Fideicomiso covering one-half (1/2) of the properties listed under paragraph 14 of the project of
partition; and regarding the other half, to be registered in the name of Jose as heir of Juliana. The properties which Jose had alleged as
registered in his and Juliana's names, including the disputed lots, were adjudicated to Jose as heir, subject to the condition that Jose
would settle the obligations charged on these properties. The probate court, thus, directed that new certificates of title be issued in favor
of Jose as the registered owner thereof in its Order dated 15 September 1969. On even date, the certificates of title of the disputed
properties were issued in the name of Jose.

The Fideicomiso was constituted in S.P No. 706 encompassing one-half (1/2) of the Abra de Ilog lot on Mindoro, the 1/6 portion of the
lot in Antorcha St. in Balayan, Batangas and all other properties inherited ab intestato by Juliana from her sister, Clemencia, in
accordance with the order of the probate court in S.P. No. 706. The disputed lands were excluded from the trust.

Jose died on 22 July 1980, leaving a holographic will disposing of the disputed properties to respondents. The will was allowed probate
on 20 December 1983 in S.P. No. 2675 before the RTC of Pasay City. Pursuant to Jose's will, the RTC ordered on 20 December 1983
the transfer of the disputed properties to the respondents as the heirs of Jose. Consequently, the certificates of title of the disputed
properties were cancelled and new ones issued in the names of respondents.

Petitioner's father, Enrique Lopez, also assumed the trusteeship of Juliana's estate. On 30 August 1984, the RTC of Batangas, Branch
9 appointed petitioner as trustee of Juliana's estate in S.P. No. 706. On 11 December 1984, petitioner instituted an action for
reconveyance of parcels of land with sum of money before the RTC of Balayan, Batangas against respondents. The
complaint5 essentially alleged that Jose was able to register in his name the disputed properties, which were the paraphernal properties
of Juliana, either during their conjugal union or in the course of the performance of his duties as executor of the testate estate of Juliana
and that upon the death of Jose, the disputed properties were included in the inventory as if they formed part of Jose's estate when in
fact Jose was holding them only in trust for the trust estate of Juliana.

Respondents Maria Rolinda Manzano, Maria Rosario Santos, Jose Manzano, Jr., Narciso Manzano, Maria Cristina Manzano Rubio and
Irene Monzon filed a joint answer6 with counterclaim for damages. Respondents Corazon, Fernando and Roberto, all surnamed Lopez,
who were minors at that time and represented by their mother, filed a motion to dismiss, 7 the resolution of which was deferred until trial
on the merits. The RTC scheduled several pre-trial conferences and ordered the parties to submit pre-trial briefs and copies of the
exhibits.

On 10 September 1990, the RTC rendered a summary judgment,8 dismissing the action on the ground of prescription of action. The
RTC also denied respondents' motion to set date of hearing on the counterclaim.

Both petitioner and respondents elevated the matter to the Court of Appeals. On 18 October 2002, the Court of Appeals rendered the
assailed decision denying the appeals filed by both petitioner and respondents. The Court of Appeals also denied petitioner's motion for
reconsideration for lack of merit in its Resolution dated 3 April 2003.

Hence, the instant petition attributing the following errors to the Court of Appeals:

I. THE COURT OF APPEAL'S CONCLUSION THAT PETITIONER'S ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING
AS BASIS SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE TRANSFERRED TO THE NAME OF THE LATE
JOSE LOPEZ MANZANO IN RELATION TO DECEMBER 12, 1984 WHEN THE ACTION FOR RECONVEYANCE WAS FILED IS
ERRONEOUS.

II. THE RESPONDENT COURT OF APPEALS CONCLUSION IN FINDING THAT THE FIDUCIARY RELATION ASSUMED BY THE
LATE JOSE LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE LAST WILL AND TESTAMENT OF JULIANA LOPEZ
MANZANO WAS IMPLIED TRUST, INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.

None of the respondents filed a comment on the petition. The counsel for respondents Corazon, Fernando and Roberto, all surnamed
Lopez, explained that he learned that respondents had migrated to the United States only when the case was pending before the Court
of Appeals.9 Counsel for the rest of the respondents likewise manifested that the failure by said respondents to contact or communicate
with him possibly signified their lack of interest in the case. 10 In a Resolution dated 19 September 2005, the Court dispensed with the
filing of a comment and considered the case submitted for decision.11

The core issue of the instant petition hinges on whether petitioner's action for reconveyance has prescribed. The resolution of this issue
calls for a determination of whether an implied trust was constituted over the disputed properties when Jose, the trustee, registered
them in his name.

Petitioner insists that an express trust was constituted over the disputed properties; thus the registration of the disputed properties in
the name of Jose as trustee cannot give rise to prescription of action to prevent the recovery of the disputed properties by the
beneficiary against the trustee.

Evidently, Juliana's testamentary intent was to constitute an express trust over her paraphernal properties which was carried out when
the Fideicomiso was established in S.P. No. 706.12 However, the disputed properties were expressly excluded from the Fideicomiso.
The probate court adjudicated the disputed properties to Jose as the sole heir of Juliana. If a mistake was made in excluding the
disputed properties from the Fideicomiso and adjudicating the same to Jose as sole heir, the mistake was not rectified as no party
appeared to oppose or appeal the exclusion of the disputed properties from the Fideicomiso. Moreover, the exclusion of the disputed
properties from the Fideicomiso bore the approval of the probate court. The issuance of the probate court's order adjudicating the
disputed properties to Jose as the sole heir of Juliana enjoys the presumption of regularity.13

On the premise that the disputed properties were the paraphernal properties of Juliana which should have been included in
the Fideicomiso, their registration in the name of Jose would be erroneous and Jose's possession would be that of a trustee in an
implied trust. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of
intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of
the parties.14

The provision on implied trust governing the factual milieu of this case is provided in Article 1456 of the Civil Code, which states:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.

In Aznar Brothers Realty Company v. Aying,15 the Court differentiated two kinds of implied trusts, to wit:

x x x In turn, implied trusts are either resulting or constructive trusts. These two are differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or
interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the
consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold
his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy
the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 16A resulting trust is
presumed to have been contemplated by the parties, the intention as to which is to be found in the nature of their transaction but not
expressed in the deed itself.17 Specific examples of resulting trusts may be found in the Civil Code, particularly Arts.
1448,18 1449,19 1451,20 145221 and 1453.22A constructive trust is created, not by any word evincing a direct intention to create a trust,
but by operation of law in order to satisfy the demands of justice and to prevent unjust enrichment. 23 It is raised by equity in respect of
property, which has been acquired by fraud, or where although acquired originally without fraud, it is against equity that it should be
retained by the person holding it.24 Constructive trusts are illustrated in Arts. 1450,25 1454,26 145527 and 1456.28The disputed properties
were excluded from the Fideicomiso at the outset. Jose registered the disputed properties in his name partly as his conjugal share and
partly as his inheritance from his wife Juliana, which is the complete reverse of the claim of the petitioner, as the new trustee, that the
properties are intended for the beneficiaries of the Fideicomiso. Furthermore, the exclusion of the disputed properties from
the Fideicomiso was approved by the probate court and, subsequently, by the trial court having jurisdiction over the Fideicomiso. The
registration of the disputed properties in the name of Jose was actually pursuant to a court order. The apparent mistake in the
adjudication of the disputed properties to Jose created a mere implied trust of the constructive variety in favor of the beneficiaries of
the Fideicomiso.

Now that it is established that only a constructive trust was constituted over the disputed properties, may prescription for the recovery of
the properties supervene?Petitioner asserts that, if at all, prescription should be reckoned only when respondents caused the
registration of the disputed properties in their names on 13 April 1984 and not on 15 September 1969, when Jose registered the same
in his name pursuant to the probate court's order adjudicating the disputed properties to him as the sole heir of Juliana. Petitioner adds,
proceeding on the premise that the prescriptive period should be counted from the repudiation of the trust, Jose had not performed any
act indicative of his repudiation of the trust or otherwise declared an adverse claim over the disputed properties.

The argument is tenuous.The right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to
extinctive prescription.29 An action for reconveyance based on implied or constructive trust prescribes in 10 years. This period is
reckoned from the date of the issuance of the original certificate of title or transfer certificate of title. Since such issuance operates as a
constructive notice to the whole world, the discovery of the fraud is deemed to have taken place at that time. 30In the instant case, the
ten-year prescriptive period to recover the disputed property must be counted from its registration in the name of Jose on 15 September
1969, when petitioner was charged with constructive notice that Jose adjudicated the disputed properties to himself as the sole heir of
Juana and not as trustee of the Fideicomiso.

It should be pointed out also that Jose had already indicated at the outset that the disputed properties did not form part of
the Fideicomiso contrary to petitioner's claim that no overt acts of repudiation may be attributed to Jose.It may not be amiss to state that
in the project of partition submitted to the probate court, Jose had indicated that the disputed properties were conjugal in nature and,
thus, excluded from Juliana's Fideicomiso. This act is clearly tantamount to repudiating the trust, at which point the period for
prescription is reckoned.In any case, the rule that a trustee cannot acquire by prescription ownership over property entrusted to him
until and unless he repudiates the trust applies only to express trusts and resulting implied trusts. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of said trust is not a
condition precedent to the running of the prescriptive period.31 Thus, for the purpose of counting the ten-year prescriptive period for the
action to enforce the constructive trust, the reckoning point is deemed to be on 15 September 1969 when Jose registered the disputed
properties in his name.

WHEREFORE, the instant petition for review on certiorari is DENIED and the decision and resolution of the Court of Appeals in CA-
G.R. CV No. 34086 are AFFIRMED. Costs against petitioner.

SO ORDERED.

18
 Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another
for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by
law, it being disputably presumed that there is a gift in favor of the child.

19
 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.

20
Art. 1451. When land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is
established by implication of law for the benefit of the true owner.

21
Art. 1452. If two or more persons agree to purchase property and by common the consent legal title is taken in the name of one of
them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.

22
 Art. 1453. When property is conveyed to a person in reliance upon his declared intention to hold for it, or transfer it to another or the
grantor, there is an implied trust in favor of the person whose benefit is contemplated. O'Lao v. Co Cho Chit, G.R. No. 58010, 31 March

25
 Art. 1450. If the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to
the lender or payor to secure the payment of the debt, a trust arises by operation of law in favor of the person to whom the money is
loaned or for whom it is paid. The latter may redeem the property and compel a conveyance thereof to him.

 Art. 1454. If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the
26

grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may
demand the reconveyance of the property to him.

27
 Art. 1455. When any trustee, guardian or other person holding a fiduciary relationship uses trust funds for the purchase of property
and causes the conveyance to be made to him or to a third person, a trust is established by operation of law in favor of the person to
whom the funds belong.

28
 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.

8. Mendezabel v Apao
NESTOR MENDIZABEL, ELIZABETH MENDIZABEL, IGNACIO MENDIZABEL, and ADELINA VILLAMOR, Petitioners,
vs.
FERNANDO APAO and TEOPISTA PARIDELA-APAO, Respondents.

This is a petition for review 1 to set aside the Decision2 dated 30 July 1999 and the Resolution3 dated 5 April 2000 of the Court of
Appeals in CA-G.R. CV No. 52803. The Court of Appeals affirmed the Decision 4 dated 25 August 1995 of the Regional Trial Court of
Pagadian City, Branch 18 ("trial court") in Civil Case No. 2737.

The Facts

On 21 March 1955, Fernando Apao ("Fernando") purchased from spouses Alejandro5 and Teofila Magbanua ("vendors") a parcel of
land with an area of 61,616 square meters ("property") situated in Malangas, Zamboanga del Sur. Fernando bought the property for
₱400. The vendors executed a deed of sale which stated inter alia that they could purchase back the property within six months for
₱400, failing which, the sale would become absolute. The vendors failed to repurchase the property. Fernando thus took possession of
the same.6

On 1 April 1958, Fernando had the property surveyed by Engr. Ernesto Nuval together with the piece of land adjacent to it, which he
had previously purchased from one Leopoldo Carloto. The Bureau of Lands approved the survey on 2 July 1959 resulting in the
issuance of Survey Plan Psu-173083 covering both lots. 7 Upon receipt of the approved survey plan, Fernando immediately filed an
application with the Bureau of Lands for a free patent over the entirety of Psu-173083. 8 His application was docketed as F.P.A. No. 18-
1481.9

After the survey of Fernando’s land, the Survey Party of the Bureau of Lands surveyed the same area. This latter survey resulted in a
subdivision of the land into two separate and distinct lots identified as Lot Nos. 407 and 1080.10 Fernando learned that Ignacio
Mendizabel ("Ignacio") had filed prior to the Bureau of Lands’ survey a homestead application over Lot No. 1080. Fernando became the
claimant-protestant in Ignacio’s application, docketed as H.A. No. 18-8905 (E-18-8521).11

On 11 May 1962, the Bureau of Lands Regional Office in Zamboanga City rendered a decision awarding Lot No. 1080 to Ignacio. 12On
appeal,13 the Secretary of Agriculture and Natural Resources modified the decision of the Bureau of Lands. The dispositive portion of
the decision of the Secretary of Agriculture and Natural Resources reads:Wherefore, the decision of the Director of Lands dated May
11, 1962, should be, as hereby it is set aside. The free patent application No. 18-1481 of Fernando Apao shall be given due course for
Lot No. 407 and Homestead Application No. 18-8905 of Ignacio Mendizabel for Lot No. 1080. 14Dissatisfied with the decision of the
Secretary of Agriculture and Natural Resources, Fernando appealed to the Office of the President. 15 Fernando did not receive any
notice of the decision on his appeal. Barely 10 days after he filed his appeal, Fernando found out from the Office of the Register of
Deeds of Pagadian City that Lot No. 1080 had been partitioned between Ignacio and his son Nestor Mendizabel ("Nestor"). Fernando
learned that Lot No. 1080 was already titled separately as Lot No. 1080-A covered by Original Certificate of Title No. P-29,822 in the
name of Nestor, and Lot No. 1080-B covered by Original Certificate of Title No. P-29,823 in the name of Ignacio. The Register of Deeds
issued the certificates of title on 14 December 1982.16Fernando talked to Nestor and Ignacio, pleading with them to reconvey the
property to him. Nestor and Ignacio rejected Fernando’s request.On 6 August 1987, Fernando and his wife Teopista Paridela-
Apao17 ("respondents") filed before the trial court a complaint 18 for Annulment of Titles, Reconveyance and Damages against spouses
Nestor and Elizabeth Mendizabel and spouses Ignacio Mendizabel and Adelina Villamor ("petitioners"). Respondents alleged in their
complaint that they were the "true and actual possessors" of a parcel of agricultural land more particularly described as follows:

Certain parcel of land actually devoted to corn and rice cultivation, root crops, bananas and about one hundred (100) punos of coconut
fruit bearing trees and with four (4) residential houses occupied by produce-sharing tenants and with all other existing improvements
thereon, located at Kilometer 4, Barangay Mabini, Malangas, Zamboanga del Sur. Bounded on the NORTH by the lot of Ricardo Conwi;
on the SOUTH by the lot of the herein plaintiffs; on the EAST by the National Highway; and on the WEST by the lot of Leonardo Aban,
containing an area of sixty-one thousand six hundred-sixteen (61,616) sq.m., more or less. 19Respondents also alleged that petitioners
secured the titles to the property "fraudulently." Respondents asserted that –x x x Assuming, arguendo, that the issuance thereof, could
have been based and predicated upon the resolution of the aforesaid land conflict by and between herein plaintiffs and defendant,
Nestor Mendizabel, which has been raised on appeal to the Office of [the] President, nonetheless, such administrative decision/order
and/or resolution, if any there be, did not since then ripen into or attain its finality and enforceability, for the basic and fundamental
reason that plaintiffs who, are directly affected thereby, has [sic] not been furnished with a copy thereof.20

In their answer,21 petitioners claimed that Ignacio, whose wife Adelina Villamor ("Adelina") had since died, purchased the property,
identified as Lot No. 1080, from Alejandro Magbanua on 24 May 1955. Petitioners claimed that Ignacio took possession of the property
and introduced improvements on it. Petitioners also asserted that the issuance of Original Certificate of Title No. P-29,822 covering Lot
No. 1080-A in the name of Nestor, and Original Certificate of Title No. P-29,823 covering Lot No. 1080-B in the name of Ignacio was
based on a homestead patent granted by then President Ferdinand Marcos on 6 April 1971.

As affirmative defenses, petitioners claimed that respondents had no cause of action against them as respondents had no personality
to institute the present case "seeking the nullity of a patent issued by order of the President of the Philippines."As counterclaim,
petitioners alleged that the present case was filed merely to harass them because respondents knew that the Bureau of Lands,
Secretary of Agriculture and Natural Resources, and the Office of the President had already adjudged petitioners the owners of the
property. Petitioners sought the dismissal of the complaint and asked for damages.

On 25 March 1988, respondents filed their Answer to Counterclaims and Petition for Issuance of an Ancillary Restraining
Writ.22 Respondents alleged that on 21 March 1988, petitioners, through Lorenzo Brañanula ("Brañanula"), 23 respondents’ tenant for 25
years, surreptitiously harvested coconuts from the coconut trees on the property. Respondents claimed that when they confronted
Brañanula, he told them that Oscar Guevarra, the INP Station Commander of the Buug Police Force in Pagadian City and who was
petitioners’ administrator of the property, directed him to harvest the coconuts.Respondents asked the trial court to issue "an injunctive,
prohibitory, mandatory restraining writ" ordering petitioners to desist and refrain from disturbing the peaceful enjoyment and possession
of respondents of the property during the pendency of the proceedings, lest respondents suffer more damages.

On 30 March 1988, the trial court issued an Order granting respondents’ petition for issuance of a restraining order. 24On 29 April 1988,
petitioners filed a Motion for Leave to Amend Answer.25On 16 May 1988, respondents filed an Opposition to Defendants’ Motion for
Leave to Amend Answer and Motion to Declare Co-Defendants Ignacio Mendizabel and Wife in Default. 26 Respondents claimed that
petitioners’ Amended Answer had substantially altered petitioners’ defenses. Respondents asserted that allowance of petitioners’
Amended Answer would only cause undue delay in deciding the present case. Respondents further asserted that Ignacio and his wife
Adelina should be declared in default considering that from the time petitioners were served with summons and copies of the complaint
on 21 October 1987, only Nestor had filed his Answer.

The trial court denied respondents’ Motion to Declare Ignacio and Wife in Default in its Order dated 15 June 1988. The trial court
allowed petitioners’ Amended Answer.27
In their Amended Answer,28 petitioners included the defenses of prescription, estoppel and laches, and the indefeasibility and
incontrovertibility of their titles.On 12 January 1989, respondents filed an Urgent Motion to Declare Defendants and Hired Hands in
Contempt of Court.29 Respondents asserted that despite the restraining order issued by the trial court, petitioners, through their hired
hands, namely, Brañanula, Francisco Briones, and Oscar Guevarra, harvested palay, corn, and coconuts from the property in October
1988 and on 2 December 1988. Respondents asserted that unless petitioners and their agents are enjoined from disturbing
respondents’ peaceful possession of the property, respondents would continue to suffer irreparable damages.On 13 January 1989, the
trial court issued an Order citing petitioners and their hired hands in contempt of court.30 Upon petitioners’ Motion for Reconsideration,
the trial court set aside the order.31On 9 November 1989, petitioners filed a Notice of Death32 stating that Adelina died on 8 April 1983.
The Notice stated that Adelina was survived by her six children. In its Order 33 dated 28 November 1989, the trial court directed
petitioners to submit the names of Adelina’s children. The trial court stated that Adelina’s children would substitute her in the
proceedings.Respondents presented three witnesses: Brañanula, Justiniano Lizardo ("Lizardo"), both of whom were residents of
Malangas, Zamboanga del Sur, and Fernando himself. Respondents also offered documentary evidence consisting of a Sketch Plan
and the blue print of the approved subdivision plan of respondents’ land identified as Psu-173083.

On the other hand, petitioners repeatedly failed to present evidence at the scheduled hearings.34On 13 September 1994, the trial court
issued the following Order:When the above-entitled case was called for continuation of trial today, counsel for the plaintiffs appeared
and manifested that he is ready for today’s continuation of hearing. On the other hand, counsel for the defendants had requested that
this case be reset to another date. Counsel for the plaintiffs manifested that he is not interposing to the postponement of this case today
but requested that this will be the last postponement with the warning that should the defendants fail to present any evidence in the
next hearing of this case, the case shall be deemed submitted for decision.Finding the manifestation of counsel for the plaintiffs to be
proper and in order, the same is hereby granted.WHEREFORE, let the continuation of trial of the above-entitled case be set again on
October 18, 1994, at 8:30 in the morning, with the warning that should defendants fail to present their evidence in the next hearing, the
case is deemed submitted for decision.

Petitioners’ counsel failed to present evidence at the scheduled hearing of 18 October 1994. Thus, the trial court issued an Order
stating that the case was deemed submitted for decision.36 Petitioners filed a motion for reconsideration of the order.37

On 25 October 1994, the trial court issued the following Order:Acting on the Motion for Reconsideration filed by counsel for the
defendants, the court resolves to DENY the same.As borne out by the record of the instant case, as of March 24, 1992, defendants per
Court’s Order were considered to have waived their right to present their evidences for failure to appear on the hearing set on the said
date. Upon Motion by counsel for the defendants, said Order was set aside and defendants were allowed to present their
evidences.Despite the indulgence of the Court, defendants choose to delay the proceedings of this case thus, in an Order dated
September 13, 1994, the defendants were warned that should they fail to present their evidences in the next hearing, the case will be
deemed submitted for decision.However, on October 18, 1994, still defendants failed to present their evidences, thus the Court
considered the case submitted for decision.WHEREFORE, considering that this case has logged for a long time already, the instant
Motion for Reconsideration is hereby DENIED and this case is deemed submitted for resolution. Stenographers who took the
proceedings of this case are hereby ordered to submit their transcripts of their stenographic notes within 15 days from the date of this
order.

SO ORDERED.38

On 28 October 1994, petitioners filed a Motion to Offer Documentary Exhibits with Prayer to Submit Memorandum. 39 The trial court
granted the motion in its Order40 dated 3 November 1994.The Ruling of the Trial CourtOn 25 August 1995, the trial court rendered
judgment, the dispositive portion of which reads:WHEREFORE, in view of the foregoing and premises considered, judgment is hereby
rendered:1avvphil.neta. Declaring Original Certificate of Title No. P-29,822 for Lot No. 1080-A and Original Certificate of Title No. P-
29,823 for Lot No. 1080-B issued in the name of Nestor Mendizabel and Ignacio Mendizabel, respectively their rights as NULL AND
VOID AB INITIO and held said property as trustees for the benefit of plaintiffs;b. Ordering the Register of Deeds of Pagadian City to
require defendants Nestor Mendizabel and Ignacio Mendizabel to surrender the above named titles immediately;c. Ordering the
Provincial Sheriff through the Clerk of Court, Regional Trial Court, Pagadian City, to execute the necessary Deed of Reconveyance of
the above-specified titles in favor of plaintiffs; andd. Pronouncing exemplary and incidental damages against defendants, in favor of
plaintiffs to include cost of suit and attorney’s fees in the amount of seventy five (₱75,000.00) pesos, Philippine Currency.

SO ORDERED.41

The trial court explained its decision in this wise:From the documents presented and from the oral testimonies given by the witnesses, it
is very clear that defendants never acquired actual possession of the land in question. In fact, after they were issued the titles, they had
to employ the services of an INP Station Commander in the person of Oscar Guevarra to be able to enjoy the harvest and fruits of the
plants in the litigated area.There is also no showing that defendants acted to eject plaintiff if the latter forcibly entered and took
possession of the land.Although it is true that the Deed of Sale in Cebuano (Exhibit "A" for plaintiff) remains a private document being
devoid of notarial registration, it stands as plain proof of plaintiffs prior acquisition and right of possession which defendants have not
demolished, except by their having secured titles thereon.The tenants who testified affirmed plaintiffs[’] claim of ownership. Under the
land reform law, they have all the right to have the land they are tenanting acquired by opting to avail of the benefits provided by law,
but not one of them ventured, perhaps, out of respect or goodwill with the landholders.How plaintiff failed to secure title over the land in
question is explained by the fact that some other persons were applying for it. It is clear, however, that the battle or contest to secure
the title was not waged in the venue itself, meaning, while one party applying for title over the land was in actual possession, the other
parties applying for title over the same area was in a better position to facilitate the documents, as shown by the fact that defendant
Nestor Mendizabel was working with the Bureau of Lands as a skilled employee.This Court would like to believe defendants as the true
and lawful owners of Lot No. 1080, which was subdivided and apportioned among father and son as Lot Nos. 1080-A and 1080-B,
because of the titles they have thereon. But ownership of real property is better recognized by actual possession thereof and not by
mere possession of documents relative thereto.Nowhere in the records of this case was there any evidence to show from whom
defendants acquired and how they acquired the land they succeeded to have titles to, except the allegation that they bought the
property from Alejandro Magbanua, on May 24, 1955, as pointed out in their answer. Besides there is no showing that the alleged
vendor, Alejandro Magbanua from whom defendants acquired said property has been in possession of the subject property, either
constructive in the form of a Tax Declaration or other monuments of title or physically.It is obvious that the authorities, namely, the
DENR, the Secretary of Agriculture and the [O]ffice of the President were made to believe that defendants, at the time they applied for
homestead title, were in actual possession of and occupying the land in question, when the contrary was true.

Ironically, the Decision of the Secretary of Agriculture which was accordingly affirmed in toto by the [O]ffice of the President placed
defendants in an awkward situation, because the "free patent" application of Fernando Apao was given due course for Lot No. 407 and
the "homestead" application of Ignacio Mendizabel was similarly given due course for Lot No. 1080. If it was the other way around, that
would have saved defendants from an awkward situation. "Homestead" presupposes actual occupation and possession of the land and
enjoyment of its fruits, but, unfortunately, plaintiffs were the ones in actual possession and enjoying the fruits thereof who were
disturbed only by the issuance of Original Certificate of Title No. P-29,822 and Original Certificate No. P-29,823 to defendants twenty
seven (27) years after and entitling plaintiffs to have acquired the property by acquisitive prescription bearing in mind that defendants or
their predecessors had never taken any legal steps or remedy to demolish plaintiffs[’] possession.The documentary evidences and the
oral testimonies have conjured a very clear picture sufficient to convince this Court that the original certificate of titles issued in the
name of defendants Ignacio Mendizabel and Nestor Mendizabel, namely Original Certificate of Title No. P-29,822 and Original
Certificate of Title No. P-29,823, could have been obtained through fraud, manipulation, and stratagem to the disadvantage of
plaintiffs.Accordingly, under these circumstances an implied trust is created by operation of law for the benefit of the
plaintiffs.42 (Emphasis supplied)

On 25 October 1995, the trial court issued the following Order:The Court in the exercise of its inherent power hereby corrects its
Decision dated August 25, 1995, issued in the above-entitled case particularly in the dispositive portion of page 8, paragraph d of said
decision which should read as follows:d. Pronouncing exemplary and incidental damages against defendants, in favor of plaintiffs to
include cost of suit and attorney’s fees in the amount of seventy five thousand (₱75,000.00) pesos, Philippine Currency.Petitioners
appealed to the Court of Appeals.

The Court of Appeals’ Ruling On 30 July 1999, the Court of Appeals rendered judgment as follows:

WHEREFORE, prescinding from the foregoing disquisitions, the decision appealed from is hereby AFFIRMED in toto. Costs against
defendants-appellants.The Court of Appeals held that there is no cogent reason for it to deviate from the rule that factual findings of the
trial court shall not be disturbed on appeal unless the trial court has overlooked or ignored some fact or circumstance of sufficient
weight or significance, which, if considered, would alter the situation. The Court of Appeals held that while factual findings of
administrative agencies must be respected, the same holds true only if the findings are supported by substantial evidence. The Court of
Appeals held that the evidence presented by respondents "tend to disprove the factual findings of the administrative bodies."The Court
of Appeals further held that respondents have adequately proven by the testimonies of their witnesses that Fernando actually
possessed and cultivated the property at the time of the homestead application and was then enjoying its fruits.The Court of Appeals
noted that the only instance when petitioners "voiced out" their title to the property was in 1988 when Oscar Guevarra vehemently told
respondents’ tenants to vacate Lot No. 1080. Since prior to that time, respondents were undisturbed in their possession of the property,
the Court of Appeals ruled that the possessor has a better right.The Court of Appeals, moreover, held that reliance by petitioners on the
fact that respondents never appealed the 1971 decision of the Office of the President could not be given credence because the
decision was not properly identified. The Court of Appeals held that petitioners’ failure to prove that respondents received the decision
or that petitioners enforced the decision against respondents was fatal to petitioners’ defense.The Court of Appeals also ruled that the
doctrine of implied trust as enunciated in Article 1456 of the Civil Code operates in favor of Respondents. The Court of Appeals stated
that under Article 1456, when a person through fraud succeeds in registering a property in his name, the law creates what is called a
"constructive or implied trust" in favor of the defrauded party and grants the latter the right to recover the property fraudulently
registered.The Court of Appeals also ruled that the action for reconveyance that respondents availed of in the present case is proper.
The Court of Appeals held that while it is doctrinal that a decree of registration is no longer open to review or attack after the lapse of
one year, although its issuance is attended with fraud, it does not necessarily mean that the aggrieved party is without remedy at law.
An action for reconveyance is still available to the aggrieved party if the property has not passed to an innocent purchaser for value.The
Court of Appeals held that in the present case prescription has not set in. The Court of Appeals held that considering that respondents
are in possession of the property in the concept of an owner, the action for reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The Court of Appeals held that an action for reconveyance based on implied trust prescribes in 10 years
only if the claimant is not in actual possession.45The Court of Appeals denied petitioners’ motion for reconsideration in its
Resolution46 dated 5 April 2000.

Hence, this petition.Petitioners raise the following issues:

1. Whether the petition lacks cause of action considering that the alleged circumstances constituting fraud or mistake were not stated
with particularity in the complaint.

2. Whether the action for reconveyance has already prescribed.

3. Whether respondents have acquired ownership of the lands covered by the homestead titles granted to petitioners.

4. Whether the Court of Appeals erred in not giving weight to the factual findings of the Department of Agriculture and Natural
Resources.

5. Whether implied trust exists in this case.47

The Ruling of the Court

The petition must fail.

Action for Reconveyance Based on Implied Trust

Petitioners claim that while respondents’ complaint alleged "fraud or mistake," it did not state with particularity the circumstances
constituting fraud or mistake, pursuant to Section 5, Rule 8 of the Rules of Court. Petitioners claim that on this score alone, both the trial
court and the Court of Appeals should have decided the case in their favor.

Petitioners’ argument is untenable.

In an action for reconveyance, all that must be alleged in the complaint are two facts which, admitting them to be true, would entitle the
plaintiff to recover title to the disputed land, namely, (1) that the plaintiff was the owner of the land or possessed the land in the concept
of owner,48 and (2) that the defendant had illegally dispossessed him of the land.49

In their complaint, respondents clearly asserted that: (1) they were the "true and actual possessors" of the property; (2) they purchased
the property from spouses Alejandro and Teofila Magbanua on 21 March 1955 as evidenced by a deed of sale pacto de retro which
spouses Magbanua executed in their favor; (3) their ownership of the property became absolute when the vendors failed to repurchase
it within the period stipulated in their contract; and (4) they were fraudulently deprived of ownership of the property when petitioners
obtained homestead patents and certificates of title in their names. 50 These allegations certainly measure up to the requisite statement
of facts to constitute an action for reconveyance based on an implied trust.

Indubitably, the act of petitioners in misrepresenting that they were in actual possession and occupation of the property, obtaining
patents and original certificates of title in their names, 51 created an implied trust in favor of the actual possessors of the property. The
Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.

In other words, if the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee,
and the real owner is entitled to file an action for reconveyance of the property.52
Petitioners would nonetheless insist that respondents failed to present any proof of fiduciary relation between them and respondents
and "breach of such trust by petitioners."

Whether there is fiduciary relation between petitioners and respondents is of no moment. Construing the provision of Article 1456, the
Court in Aznar Brothers Realty Company v. Aying53 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.

x x x x 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. x x xx x x 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.54 (Emphasis supplied)The records show that respondents bought the property from spouses Alejandro and Teofila Magbanua on
21 March 1955 as evidenced by a deed of sale.55 Fernando testified that he was in actual, open, peaceful, and continuous possession
of the property at the time he filed his application for a free patent and was then enjoying its fruits. These facts were corroborated by the
testimonies of Brañanula and Lizardo, residents of Barangay Mabini, Malangas, Zamboanga del Sur.56 Petitioners, however, assert that
the deed of sale, "although Annex A of respondents’ complaint," should not be given weight for it was not offered in
evidence.57Petitioners’ assertion has no merit. All documents attached to a complaint, the due execution and genuineness of which are
not denied under oath by the defendant, must be considered as part of the complaint without need of introducing evidence.58 In
petitioners’ answer, there was no denial under oath of the due execution and genuineness of the deed of sale. Thus, the deed of sale is
not only incorporated into respondents’ complaint, it is also deemed admitted by petitioners.59 This has the effect of relieving
respondents from the duty of expressly presenting such document as evidence. The court, for the proper resolution of the case, may
and should consider without the introduction of evidence the facts admitted by the parties. 60Moreover, despite the opportunities given
them by the trial court, petitioners still failed to prove that they were the owners of the property or that they had been in possession of
the same.61 In fact, it was only on 21 March 1988, or after respondents had filed their complaint, that petitioners tried to occupy the
property by attempting to eject respondents’ tenants.62 Hence, petitioners never exercised any right of ownership over the land.In a
number of cases, the Court has ordered reconveyance of property to the true owner or to one with a better right, where the property
had been erroneously or fraudulently titled in another person’s name.63 In Bustarga v. Navo II,64 the Court held that "reconveyance is
just and proper in order to terminate the intolerable anomaly that the patentees should have a Torrens title for the land which they and
their predecessors never possessed and which has been possessed by [another person] in the concept of owner." After all, the Torrens
system was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad
faith.65Considering the circumstances in the present case, therefore, we hold that respondents have a better right to the property since
they had long been in possession of the property in the concept of owners. In contrast, petitioners were never in possession of the
property. Despite the irrevocability of the Torrens titles issued in their names, petitioners, even if they are already the registered owners
under the Torrens system, may still be compelled under the law to reconvey the property to Respondents.

Prescriptive Period of an Action for Reconveyance

The essence of an action for reconveyance is that the free patent and certificate of title are respected as incontrovertible. What is
sought is the transfer of the property, in this case its title, which has been wrongfully or erroneously registered in another person’s
name, to its rightful owner or to one with a better right.66

It is of no moment that respondents filed this action for reconveyance more than four years after the property was registered in favor of
petitioners. An action for reconveyance of registered land based on implied trust prescribes in 10 years, the point of reference being the
date of registration of the deed or the date of the issuance of the certificate of title over the property. 67 Besides, respondents were in
possession of the property at the time they filed their complaint in the present case. 68 The Court has ruled that the 10-year prescriptive
period applies only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner 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.
The reason is that the one who is in actual possession of the land claiming to be its owner may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid of a
court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can
be claimed only by one who is in possession.69

Factual Findings of Administrative Agencies

The decision70 of the Office of the President affirming the decision of the Secretary of Agriculture and Natural Resources in DANR Case
No. 2481, which petitioners offered in evidence, could hardly carry the day for them. Factual findings of administrative agencies such as
the Department of Agriculture and Natural Resources ("DANR") are accorded not only respect but also even finality if they are
supported by substantial evidence. However, deviation from this rule must be made when the administrative agency itself clearly
misappreciated the facts.71 In the present case, the factual findings of the Court of Appeals are at variance with those of the DANR. We
have carefully reviewed the records and found that petitioners have not sufficiently proved that the findings of fact of the Court of
Appeals are totally devoid of support in the records, or that they are so glaringly erroneous as to constitute serious abuse of discretion.
Wherefore, we hold that the findings of fact made by the Court of Appeals are conclusive and binding on this Court even if contrary to
those of the DANR, so long as such findings are supported by the records or based on substantial evidence.72

Besides, there is no showing that respondents received a copy of the decision of the Office of the President.73 No judgment or order,
whether final or interlocutory, has juridical existence unless it is set down in writing, signed, promulgated, and released to the parties.
Even after its promulgation, a decision does not bind the parties until notice of the decision is duly served on them by any of the modes
prescribed by law.74WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. CV No.
52803.

9. Gabutan v Nacalaban

TRIFONIA D. GABUTAN, DECEASED, HEREIN REPRESENTED BY HER HEIRS, NAMELY: ERLINDA LLAMES,
ELISA ASOK, PRIMITIVO GABUTAN, VALENTINA YANE; BUNA D. ACTUB, FELISIA TROCIO, CRISANTA D.
UBAUB, AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS HEIRS, NAMELY: MADELYN
D. REPOSAR AND JERRY DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES NICOLAS &
EVELYN DAILO, Petitioners, v. DANTE D. NACALABAN, HELEN N. MAANDIG, SUSAN N. SIAO, AND CAGAYAN
CAPITOL COLLEGE, Respondents.

G.R. NOS. 194314-15

 DANTE D. NACALABAN, HELEN N. MAANDIG, AND SUSAN N. SIAO, AS HEIRS OF BALDOMERA D. VDA. DE
NACALABAN, Petitioners, v. TRIFONIA D. GABUTAN, BUNA D. ACTUB, FELISIA D. TROCIO, CRISANTA D.
UBAUB, AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS HEIRS, NAMELY: MADELYN
D. REPOSAR AND JERRY DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES NICOLAS &
EVELYN DAILO, CAGAYAN CAPITOL COLLEGE, REPRESENTED BY ITS PRESIDENT, ATTY. CASIMIRO B.
SUAREZ, JR., PRIVATE Respondent;

HON. LEONCIA R. DIMAGIBA (ASSOCIATE JUSTICE), HON. PAUL L. HERNANDO (ASSOCIATE JUSTICE),
HON. NINA G. ANTONIO-VALENZUELA (ASSOCIATE JUSTICE), HON. EDGARDO T. LLOREN (ASSOCIATE
JUSTICE), HON. MICHAEL P. ELBINIAS (ASSOCIATE JUSTICE), AND HON. JANE AURORA C. LANTION
(ASSOCIATE JUSTICE, ACTING CHAIRMAN), COURT OF APPEALS, CAGAYAN DE ORO CITY (FORMER
SPECIAL TWENTY-SECOND DIVISION), PUBLIC Respondents.

Before us are consolidated petitions questioning the Court of Appeals' (CA) Decision 1 dated December 11, 2008 and
Resolution2 dated August 17, 2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No. 53598-MIN. 3 In G.R. Nos.
185857-58, the heirs of Trifonia D. Gabutan and Tirso Dalondonan, Buna D. Actub, Felisia Trocio and Crisanta D.
Ubaub (Gabutan, et al.) filed a partial appeal by way of a petition for review on certiorari,4 seeking to reverse the
portion of the CA Decision declaring Cagayan Capital College (the College) as a buyer in good faith. The other petition,
G.R. Nos. 194314-15, is one for certiorari5 filed by Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao as heirs
of Baldomera D. Vda. De Nacalaban (Nacalaban, et al.). It seeks to annul the CA Decision and Resolution which
sustained the action for reconveyance filed by Gabutan, et al.

The Antecedents

On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an 800-square meter parcel of prime land
(property) in Poblacion, Cagayan de Oro City from Petra, Fortunata, Francisco and Dolores, all surnamed
Daamo.6 Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-2259 7 covering the property was issued in the
name of Godofredo. He thereafter built a house on it. 8chanrobleslaw

Godofredo died on January 7, 1974. 9 ITe was survived by his wife, Baldomera, and their children, Dante, Helen, and
Susan. On March 19, 1979, Baldomera issued a Certification 10 in favor of her mother, Melecia. It provided, in effect,
that Baldomera was allowing her mother to build and occupy a house on the portion of the property. 11 Accordingly, the
house was declared for taxation purposes. The tax declaration 12 presented in evidence showed that Melecia owned the
building on the land owned by Godofredo.13chanrobleslaw

Baldomera died on September 11, 1994. 14 On July 3, 1996, her children executed an Extrajudicial Settlement of
Estate of Deceased Person with Sale 15 (Extrajudicial Settlement with Sale) where they adjudicated unto themselves
the property and sold it to the College. On August 22, 1996, TCT No. T-2259 was cancelled and TCT No. T-
11184616 covering the property was issued in the name of the College. 17chanrobleslaw

Melecia died on April 20, 199718 and was survived by her children, Trifonia, Buna, Felisia, Crisanta, and Tirso.

In a letter19 dated May 5, 1997, the College demanded Trifonia D. Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn
Dailo, the heirs of Melecia who were occupying the house on the property, to vacate the premises. 20chanrobleslaw

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real Property, Declaration of Nullity of
Contracts, Partition and Damages with Writ of Preliminary Attachment and Injunction 21 against Nacalaban, et al. and
the College. They alleged that: (1) Melecia bought the property using her own money but Godofredo had the Deed of
Absolute Sale executed in his name instead of his mother-in-law; 22 (2) Godofredo and Baldomera were only trustees
of the property in favor of the real owner and beneficiary, Melecia; 23 (3) they only knew about the Extrajudicial
Settlement with Sale upon verification with the Registry of Deeds; 24 and (4) the College was a buyer in bad faith,
being aware they were co-owners of the property. 25cralawredchanrobleslaw

In its Answer with Affirmative Defenses, 26 the College claimed that it is a buyer in good faith and for value, having
"made exhaustive investigations and verifications from all reliable sources" that Melecia and her heirs were staying in
the property by mere tolerance. 27 It alleged that: (1) in the tax declaration 28 of the residential house, Melecia admitted
that the lot owner is Godofredo; 29 (2) the occupancy permit of Melecia was issued only after Godofredo issued a
certification30 to the effect that Melecia was allowed to occupy a portion of the property; 31 and (3) the Extrajudicial
Settlement with Sale was published in three consecutive issues of Mindanao Post, a newspaper of general
circulation.32chanrobleslaw

In their Answer with Counterclaim,33 Nacalaban, et al. denied the allegations of Gabutan, et al. They claimed to have
acquired the property by intestate succession from their parents, who in their lifetime, exercised unequivocal and
absolute ownership over the property. 34 Nacalaban, et al. also set up the defenses of laches and prescription, and
asserted that the action for reconveyance was improper because the property had already been sold to an innocent
purchaser for value.35chanrobleslaw

On September 10, 1997, the College filed a separate Complaint for Unlawful Detainer and Damages 36 with the
Municipal Trial Court in Cities (MTCC) against Trifonia, Mary Jane, Allan, Evelyn and Nicolas Dailo (Heirs of Melecia). In
their Answer with Affirmative and/or Negative Defenses with Compulsory Counterclaim, 37 the Heirs of Melecia claimed
that they own and possess the property in co-ownership with Nacalaban, et al. and Gabutan, et al. because it was
purchased by Melecia, their common predecessor. 38 They also claimed that the house in which they reside was
constructed at her expense. 39 The College had prior knowledge of this co-ownership, and hence, was a purchaser in
bad faith.40 The Heirs of Melecia also raised the defense of forum-shopping in view of the pendency of the action for
reconveyance.41 They then concluded that in view of the issues and the value of the property, as well, the MTCC had
no jurisdiction over the case.42chanrobleslaw

The MTCC found it had jurisdiction to hear the case and ruled in favor of the College: 43chanrobleslaw

WHEREFORE, JUDGMENT is hereby rendered ordering each of the defendants to:

chanRoblesvirtualLawlibrarya.) Immediately vacate the property of the plaintiff;

b.) Pay the plaintiff the monthly use compensation for the continued use of the property at the rate of
P500.00 per month from MAY 5, 1997 until the property is actually vacated;
c.) Pay the plaintiff Attorney's fees amounting to P5,000.00 per defendant;
d.) Pay for litigation expenses at the rate of P1,000.00 per defendant.
 SO ORDERED.44chanroblesvirtuallawlibrary
On appeal, the Regional Trial Court (RTC) affirmed the MTCC's Decision 46 in all respects, except that the Heirs of
Melecia were given 30 days from notice to vacate the property. 47 They filed a motion for reconsideration, but it was
denied.49 Thus, the Heirs of Melecia filed a petition for review 50 before the CA, docketed as CA-G.R. SP No.
53598.51chanrobleslaw

Meanwhile, in the reconveyance case, the RTC rendered a Decision 52 in favor of Gabutan, et al. The RTC found the
testimonies of their witnesses credible, in that the money of Melecia was used in buying the property but the name of
Godofredo was used when the title was obtained because Godofredo lived in Cagayan de Oro City while Melecia lived
in Bornay, Gitagum, Misamis Oriental.53 Thus, the RTC held that a trust was established by operation of law pursuant
to Article 1448 of the Civil Code.54 The dispositive portion of the RTC's Decision reads:

chanRoblesvirtualLawlibrary
WHEREFORE, judgment is hereby rendered, and this Court hereby:

1. Declares that the Spouses Godofredo and Baldomera Nacalaban held the land covered by Transfer
Certificate of Title No. T-2259 issued in the name of Godofredo Nacalaban married to Baldomera
Dalondonan issued on January 13, 1959 in trust for Melecia Vda. de Dalondonan with the Spouses
as the trustees and Melecia Vda. de Dalondonan as the cestui que trust;
2. Declares that upon the death of Melecia Vda. de Dalondonan on August 20, 1997, the ownership and
beneficial interest of the foregoing Land passed to the plaintiffs and individual defendants by
operation of law as legal heirs of Melecia Vda. de Dalondonan;
3. Nullifies the Extrajudicial Settlement of Estate of Deceased Person with Sale executed by the
individual defendants on July 30, 1996 and known as Doc. No. 326; Page No. 67; Book No. XX;
Series of 1996 in the Notarial Register of Notary Public Victoriano M. Jacot with respect to the
Extrajudicial settlement by the individual defendants of the land referred to above;
4. Declares that defendant Cagayan Capitol College was a buyer in good faith and for value of the
land referred to above, and, accordingly, declares that said defendant now owns the land;
5. Orders defendant Cagayan Capitol College to inform this Court in writing within thirty (30) days
from receipt of this decision the amount of the purchase price of the land referred to above
bought by it from the individual defendants the amount of which should approximate the
prevailing market value of the land at the time of the purchase;
6. Orders the individual defendants namely, Dante D. Nacalaban, Helen N. Maandig, and Susan N.
Siao, jointly and severally, to deliver and turn over to the plaintiffs, within thirty (30) days
from receipt of this decision, plaintiffs' shares of the proceeds of the sale of the land
referred to above the amount of which is equivalent to live-sixth (5/6) of said proceeds with
the remaining one-sixth (1/6) to be retained by the individual defendants as their share by
virtue of their being the legal heirs of Baldomera D. Nacalaban;

SO ORDERED.55chanroblesvirtuallawlibrary

Both parties filed separate appeals from this Decision before the CA. 57 In a Resolution58 dated October 7, 2004, the CA
consolidated both appeals.

The C A rendered its Decision59 on December 11, 2008 dismissing the consolidated appeals and affirming in toto the
RTC Decisions in the unlawful detainer case and the action for reconveyance. The CA held that: (1) the defense of co-
ownership based on an implied trust by a defendant in an unlawful detainer case shall not divest the MTCC of
jurisdiction over the case;60 (2) the dead man's statute does not apply because Gabutan, et al.'s counsel did not
interpose any objection when the testimony of Crisanta Ubaub was offered and Gabutan, et al.'s counsel even
examined her;61 (3) Nacalaban, et al.'s claim that Gabutan, et al.'s witnesses are not competent to testify on matters
which took place before the death of Godofredo and Melecia is without merit because Gabutan, et al. have not
specified these witnesses and such hearsay evidence alluded to; 62 (4) the parole evidence rule does not apply because
Melecia and Nacalaban, et al. were not parties to the Deed of Conditional Sale;63 (5) the action for reconveyance has
not yet prescribed because Gabutan, et al. are in possession of the property; 64 and (6) the College is a buyer in good
faith.65chanrobleslaw

Nacalaban, et al. filed their motion for reconsideration of the CA Decision, but it was denied in a Resolution 66 dated
August 17, 2010. Hence, they filed the present petition for certiorari67 under Rule 65, where they allege that: (1) the
action for reconveyance already expired;68 (2) for an action for reconveyance to prosper, the property should not have
passed into the hands of another who bought the property in good faith and for value; 69 and (3) the title of Godofredo
under TCT No. T-2259 which was issued on January 13, 1959 could not be attacked collaterally. 70chanrobleslaw

On the other hand, Gabutan, et al. filed the present petition for review on certiorari 71 under Rule 45, seeking a partial
appeal of the CA Decision. In their petition, Gabutan, et al. allege that the College is not a buyer in good faith because
it did not buy the property from the registered owner. 72 Since Godofredo was the registered owner of the property and
not Nacalaban, et al., the College should have exercised a higher degree of prudence in establishing their capacity to
sell it.73 Further, despite knowing that other persons possessed the property, the College did not inquire with
Gabutan, et al. the nature of their stay on the property. 74 Under Section 1, paragraph 2, Rule 74 of the Rules of Court,
the publication of the Extrajudicial Settlement with Sale was also without prejudice to claims of other persons who had
no notice or participation thereof.75 Finally, Gabutan, et al. argue that they cannot be ejected from the property
because there is no evidence to show that their stay was by mere tolerance, and that Melecia was a builder in good
faith.76chanrobleslaw

Considering that the petitions assail the same CA Decision and involve the same parties, we issued a
Resolution77 dated December 13, 2010 consolidating them.

The Issues

The issues for resolution are:

chanRoblesvirtualLawlibrary
 1. Whether the petition for certiorari of Nacalaban, et al. shall prosper;
2. Whether the action for reconveyance was proper; and
3. Whether the College is a buyer in good faith.

Our Ruling

I. The petition for certiorari of

Nacalaban, et al. is a wrong
remedy

Pursuant to Section 1, Rule 45 of the Rules of Court, 78 the proper remedy to obtain a reversal of judgment on the
merits, final order or resolution is an appeal. The Resolution dated August 17, 2010 of the CA, which affirmed its
Decision dated December 11, 2008, was a final resolution that disposed of the appeal by Nacalaban, et al. and left
nothing more to be done by the CA in respect to the said case. Thus, Nacalaban, et al. should have filed an appeal in
the form of a petition for review on certiorari and not a petition for certiorari under Rule 65, which is a special civil
action.

Rule 65 is a limited form of review and is a remedy of last recourse. This extraordinary action lies only where there is
no appeal nor plain, speedy and adequate remedy in the ordinary course of law. 79 In Malayang Manggagawa ng
Stayfast Phils., Inc. v. National Labor Relations Comission,80 we held that appeal would still be the proper remedy
from a judgment on the merits, final order or resolution even if the error ascribed to the court rendering the judgment
is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse of
discretion in the findings of fact or of law set out in the decision, order or resolution. The existence and availability of
the right of appeal prohibits the resort to certiorari because one of the requirements for the latter remedy is that there
should be no appeal.81 We have always declared that a petition for certiorari is not a substitute for an appeal where
the latter remedy is available but was lost through fault or negligence. 82chanrobleslaw

Here, Nacalaban, et al. received the assailed Resolution dated August 17, 2010 on September 7, 2010. 83 Under the
Rules of Court, they had 15 days or until September 22, 2010 to file an appeal before us. Nacalaban, et al. allowed
this period to lapse without doing so and, instead, filed a petition for certiorari on November 5, 2010. 84 Being the
wrong remedy, the petition of Nacalaban, et al. is, therefore, dismissible. Although there are exceptions 85 to this
general rule, none applies in this case.

In spite of the consolidation we have ordered, we cannot treat the petition of Nacalaban, et al. as one under Rule 45.
We have the discretion to treat a Rule 65 petition for certiorari as a Rule 45 petition for review on certiorari if (1) the
petition is filed within the reglementary period for filing a petition for review; (2) when errors of judgment are
averred; and (3) when there is sufficient reason to justify the relaxation of the rules. 86 The first and third requisites
are absent in this case. To reiterate, the petition was filed beyond the 15-day reglementary period of filing a petition
for review on certiorari. As will be discussed, we also find no compelling reason to relax the rules.

II. The action for reconveyance

filed by Gabutan, et al.
is proper

1. An implied resulting trust was

created between Melecia and
Godofredo

We stress at the outset that the question of existence of an implied trust is factual, hence, ordinarily outside the
purview of Rule 45.87 The resolution of factual issues is the function of the lower courts whose findings, when aptly
supported by evidence, bind us. This is especially true when the CA affirms the lower court's findings, as in this case.
While we, under established exceptional circumstances, had deviated from this rule, we do not find this case to be
under any of the exceptions.88 Even if we were to disregard these established doctrinal rules, we would still affirm the
assailed CA rulings.

Article 1448 of the Civil Code provides in part that there is an implied trust when property is sold, and the legal estate
is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary. The trust created here, which is also referred to
as a purchase money resulting trust, 89 occurs when there is (1) an actual payment of money, property or services, or
an equivalent, constituting valuable consideration; (2) and such consideration must be furnished by the alleged
beneficiary of a resulting trust. 90 These two elements are present here.
Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia, established that Melecia's money was used
in buying the property, but its title was placed in Godofredo's name. She purchased the property because Felisia
wanted to build a pharmacy on it.91 On one occasion in Melecia's house, and when the entire family was present,
Melecia gave Godofredo the money to purchase the property. 92 Melecia entrusted the money to Godofredo because he
was in Cagayan de Oro, and per Melecia's instruction, the deed of sale covering the property was placed in his
name.93 It was allegedly her practice to buy properties and place them in her children's name, but it was understood
that she and her children co-own the properties. 94chanrobleslaw
Melecia built a residential building on the property, where her daughter Crisanta and some of her grandchildren
resided.95 Godofredo also thereafter built a house on the property. Twice, he also mortgaged the property to secure
loans. Melecia allowed him to do so because she trusted him. 96 After Godofredo's death, and when Baldomera fell ill,
there were family discussions to transfer the title in Melecia's name so Melecia's children can divide it together with
the rest of Melecia's properties. The plans, however, always fell through. 97chanrobleslaw

Both the RTC and CA found credence on these pieces of testimonial evidence that an implied resulting trust exists.
Reliance on these testimonies will not violate the parol evidence rule, as Nacalaban, et al. once raised. In Tong v. Go
Tiat Kun,98 we ruled that since an implied trust is neither dependent upon an express agreement nor required to be
evidenced by writing, Article 1457 of our Civil Code authorizes the admission of parol evidence to prove their
existence. What is crucial is the intention to create a trust. 99 We cautioned, however, that the parol evidence that is
required to establish the existence of an implied trust necessarily has to be trustworthy and it cannot rest on loose,
equivocal or indefinite declarations.100 The testimonies of Felisia, Crisanta, and Trifonia satisfy these requirements.
They are consistent and agree in all material points in reference to the circumstances behind the arrangement
between Melecia and Godofredo. We agree with the RTC when it said that this arrangement among family members is
not unusual, especially in the 1950s.101chanrobleslaw
Nacalaban, et al., on the other hand, denied the arrangement between Melecia and Godofredo, and maintained that it
was really the latter who purchased the property from its original owners, as evidenced by their possession of the
Deed of Conditional Sale and the title being in Godofredo's name. 102 It is telling, however, that Nacalaban, et al. failed
to provide the details of the sale, specifically with regard to how Godofredo could have been able to afford the
purchase price himself, which would have directly refuted the allegation that Melecia's money was used in the
purchase. As the RTC aptly observed, if Godofredo really bought the property with his own money, it was surprising
that Baldomera did not transfer the title of the property to her name when Godofredo died in 1974. Baldomera did not
do so until her death in 1994 despite being pressed by her siblings to partition the property. The RTC correctly
deduced that this only meant that Baldomera acknowledged that the property belongs to Melecia. 103chanrobleslaw
Having established the creation of an implied resulting trust, the action for reconveyance filed by Gabutan, et al., the
heirs of Melecia in whose benefit the trust was created, is proper. An action for reconveyance is a legal and equitable
remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of
another, to compel the registered owner to transfer or reconvey the land to him. 104 It will not amount to a collateral
attack on the title, contrary to the allegation of Nacalaban, et al.105 We explained in Hortiznela v.
Tagufa:106chanrobleslaw

x x x As a matter of fact, an action for reconveyance is a recognized remedy, an action  in

personam, available to a person whose property has been wrongfully registered under the Torrens system
in another's name. In an action for reconveyance, the decree is not sought to be set aside. It does not
seek to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks
to transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always
available as long as the property has not passed to an innocent third person for value.

There is no quibble that a certificate of title, like in the case at bench, can only be questioned
through a direct proceeding. The MCTC and the CA, however, failed to take into account that in a
complaint for reconveyance, the decree of registration is respected as incontrovertible and is not being
questioned. What is being sought is the transfer of the property wrongfully or erroneously registered in
another's name to its rightful owner or to the one with a better right. If the registration of the land
is fraudulent, the person in whose name the land is registered holds it as a mere trustee, and the real
owner is entitled to file an action for reconveyance of the property.107chanroblesvirtuallawlibrary

The fact that the property was already titled in Godofredo's name, and later transferred to the College, is not a
hindrance to an action for reconveyance based on an implied trust. The title did not operate to vest ownership upon
the property in favor of the College. As held in Naval v. Court of Appeals:108chanrobleslaw

xxx Registration of a piece of land under the Torrens System does not create or vest title, because it
is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title
over the particular property described therein. It cannot be used to protect a usurper from the true
owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich
himself at the expense of others. Its issuance in favor of a particular person does not foreclose the
possibility that the real property may be co-owned with persons not named in the certificate, or that it
may be held in trust for another person by the registered owner.109

Moreover, the body of the Complaint filed by Gabutan, et al. shows that it is not only for the reconveyance of the
property but also for the annulment of TCT No. T-111846 issued in the name of the College. 110 Gabutan, et
al. questioned the validity of the sale to the College and claimed co-ownership over the property. Thus, we can rule on
the validity of TCT No. T-111846 since the Complaint is a direct attack on the title of the College.

1. The action for reconveyance is imprescriptible

because the plaintiffs are in possession of
the property

An action for reconveyance based on an implied or a constructive trust prescribes 10 years from the alleged
fraudulent registration or date of issuance of the certificate of title over the property. However, an action for
reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the person enforcing the trust
is in possession of the property. In effect, the action for reconveyance is an action to quiet the property title, which
does not prescribe.111 The reason is that the one who is in actual possession of the land claiming to be its owner may
wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. His undisturbed
possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of
the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in
possession.112chanrobleslaw

The fact of actual possession of Gabutan, et al. of the property, during the lifetime of Melecia and even after her
death, is an undisputed and established fact. The College has even filed an ejectment case against the Heirs of
Melecia for this reason.113 Thus, their complaint for reconveyance is imprescriptible. It follows, with more reason, that
Gabutan, et al. cannot be held guilty of laches as the said doctrine, which is one in equity, cannot be set up to resist
the enforcement of an imprescriptible legal right. 114chanrobleslaw

III.The property shall be reconveyed to the estate of Melecia

The Extrajudicial Settlement with Sale executed
between Nacalaban, et al. and the College is void
Having established the creation of an implied resulting trust between Melecia and Godofredo, the law thereby creates
the obligation of the trustee to reconvey the property and its title in favor of the true owner. 115 The true owner,
Melecia, died in 1997 and was succeeded by her children and grandchildren. The property, therefore, must be
reconveyed to her estate.

The execution of the Extrajudicial Settlement with Sale between Godofredo's heirs and the College will not defeat the
legal obligation to reconvey the property because at the time of its execution in 1996, Melecia was still alive. Hence,
Nacalaban, et al. did not have the right or authority to sell the property. Nemo dat quod non habet. One can sell only
what one owns or is authorized to sell, and the buyer can acquire no more right than what the seller can transfer
legally.116 Nacalaban, et al. cannot find refuge in their argument that the property was registered in their father's
name and that after his death, his rights passed to them as his legal heirs. To repeat, title to property does not vest
ownership but is a mere proof that such property has been registered. 117chanrobleslaw
The College is a buyer in bad faith

Despite the finding that the property was owned by Melecia and upon her death, by her heirs, the lower courts still
sustained the ownership of the College of the property on the ground that it is an innocent purchaser for value. 118 The
lower courts' findings are grounded on the following: (i) Gabutan, et al.'s claim was never annotated on Godofredo's
title; (ii) the Extrajudicial Settlement with Sale was duly published and the College was able to effect the transfer of
the title in its name; (iii) Baldomera issued a certification in favor of Melecia allowing her to occupy a portion of the
lot; and (iv) the tax declaration showed that Melecia owned only the building on the land owned by
Godofredo.119chanrobleslaw

The RTC reiterated the rule that the buyer of a land registered under the Torrens System may rely upon the face of
the certificate of title and does not have to look beyond it. 120 The CA, on the other hand, held that when taken
together, these facts would reasonably constitute enough reason for the College or any buyer to conclude that the
property is free from any adverse claim, thereby making any further investigation unnecessary. Absent any showing
that the College knew of the actual arrangement between Godofredo and Melecia, it must be deemed a buyer in good
faith.121chanrobleslaw

Gabutan, et al. alleged that the lower courts erred in ruling that the College is a buyer in good faith, raising the
following: (1) Nacalaban, et al. are not the registered owners of the property; Godofredo is the registered owner who
died on January 7, 1974;122 (2) not being the registered owners, the College, as buyer, is expected to examine not
only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the
title of the transferor, or in his capacity to transfer the property; 123 and (3) the College knew that other persons
possessed the property so it should have first established the capacity of the Nacalaban children to sell the
property.124chanrobleslaw

Whether one is a buyer in good faith and whether due diligence and prudence were exercised are questions of
fact.125 As we have already mentioned, only questions of law may be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court. We see an exception, however, to this general rule relative to the finding that the
College is a buyer in good faith. We hold that the RTC's finding that the College is a buyer in good faith, which finding
was upheld by the CA, was based on an obvious misapprehension of facts and was clearly not supported by law and
jurisprudence.

In Bautista v. Silva,126 we reiterated the requisites for one to be considered a purchaser in good faith:

chanRoblesvirtualLawlibrary
A buyer for value in good Faith is one who buys property of another, without notice that some other
person has a right to, or interest in, such property and pays full and fair price for the same, at the
time of such purchase, or before he has notice of the claim or interest of some other persons in the
property. He buys the property with the welt-founded belief that the person from whom he receives the
thing had title to the property and capacity to convey it.

To prove good faith, a buyer of registered and titled land need only show that he relied on the face of
the title to the property. He need not prove that he made further inquiry for he is not obliged to
explore beyond the four corners of the title. Such degree of proof of good faith, however, is
sufficient only when the following
conditions concur: first, the seller is the registered owner of the land; second, the latter is in
possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or
interest of some other person in the property, or of any defect or restriction in the title of the
seller or in his capacity to convey title to the property.

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges
the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and
examining all factual circumstances in order to determine the seller's title and capacity to transfer
any interest in the property. Under such circumstance, it is no longer sufficient for said buyer to
merely show that he relied on the face of the title; he must now also show that he exercised reasonable
precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a
buyer in bad faith.127 (Emphasis supplied.)

Thus, the College, which has the burden to prove the status of being a purchaser in good faith, is required to prove
the concurrence of the above conditions. This onus probandi cannot be discharged by mere invocation of the legal
presumption of good faith.128 We find that the College failed to discharge this burden.

Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al. are not the registered owners of the property, but
Godofredo. In Bautista v. Court of Appeals,129 we held:

chanRoblesvirtualLawlibrary
However, it is important to note that petitioners did not buy the land from the registered owner,
Dionisio Santiago. They bought it from his heirs, Maria dcla Cruz and Jose Santiago.

Where a purchaser buys from one who is not the registered owner himself, the law requires a higher
degree of prudence even if the land object of the transaction is registered. One who buys from one who
is not the registered owner is expected to examine not only the certificate of title but all factual
circumstances necessary for him to determine if there are any flaws in the title of the transferor, or
in his capacity to transfer the land.130

Secondly, the College was aware that aside from Nacalaban, et al., the Heirs of Melecia, were also in possession of the
property. The College cited the tax declaration which bore an annotation that Melecia owned a residential building and
Godofredo owned the lot.131 Also, apart from filing an ejectment case against the Heirs of Melecia, the College retained
part of the purchase price for the demolition of Melecia's building as well. 132chanrobleslaw

In Occeña v. Esponilla,133 we held that petitioner-spouses were not purchasers in good faith when they merely relied
on the representation of the seller regarding the nature of possession of the occupants of the land:

chanRoblesvirtualLawlibrary
In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and
registration of the land, x x x At the trial, Tomas Occena admitted that he found houses built on the
land during its ocular inspection prior to his purchase. He relied on the representation of vendor
 Arnold that these houses were owned by squatters and that he was merely tolerating their presence on the
land. Tomas should have verified from the occupants of the land the nature and authority of their
possession instead of merely relying on the representation of the vendor that they were squatters,
having seen for himself that the land was occupied by persons other than the vendor who was not in
possession of the land at that time, x x x134 (Emphasis supplied.)

Although the College in its Answer alleged that it made an exhaustive investigation and verification from all reliable
sources and found that the possession of Melecia and her heirs was merely tolerated, 135 it failed to specify who or
what these sources were. There is no evidence that the College did inquire from Melecia or her heirs themselves, who
were occupying the property, the nature and authority of their possession. It is not far-fetched to conclude, therefore,
that the College merely relied on the representations of the sellers and the documents they presented. In this regard,
the College is not a buyer in good faith.

The "honesty of intention" which constitutes good faith implies a freedom from knowledge of circumstances
which ought to put a person on inquiry.136 If the land purchased is in the possession of a person other than the
vendor, the purchaser must be wary and must investigate the rights of the actual possessor. 137 Without such inquiry,
the purchaser cannot be said to be in good faith and cannot have any right over the property. 138chanrobleslaw

We are aware that in the ejectment case, the MTCC and RTC ruled in favor of the College. We emphasize, though,
that the ruling on the College's better right of possession was without prejudice to the eventual outcome of the
reconveyance case where the issue of ownership was fully threshed out. We have held that the sole issue for
resolution in an unlawful detainer case is physical or material possession of the property involved, independent of any
claim of ownership by any of the parties. When the defendant, however, raises the defense of ownership in his
pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of
ownership shall be resolved only to determine the issue of possession. 139 Thus, the ruling on the ejectment case is not
conclusive as to the issue of ownership. 140chanrobleslaw

WHEREFORE, in view of the foregoing, the petition for certiorari in G.R. Nos. 194314-14 is DENIED and the petition
for review on certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the Court of Appeals dated December
11, 2008 and its Resolution dated August 17, 2010 are AFFIRMED with the following MODIFICATIONS:

1. Cagayan Capitol College is hereby declared a buyer in bad faith, who has no right to possession and ownership
of the property;
2. Nacalaban, et al. are ordered to return the purchase price paid on the property to the College, plus interest at
the rate of six percent (6%) per annum computed from July 23, 1997141 until the date of finality of this
judgment. The total amount shall thereafter earn interest at the rate of six percent (6%) per annum from the
finality of judgment until its satisfaction;142 and
3. The Register of Deeds is ordered to cancel TCT No. T-l 11846 in the name of the College.
4. The property should be reconveyed to the Estate of the late Melecia Dalondonan with the institution of the
proper proceedings for its partition and titling.

SO ORDERED.
10. Andrino v Tope Services Inc
FIRST DIVISION: [G.R. No. 237028, June 18, 2018] MARCELINO S. ANDRINO, REPRESENTED BY ILUMINADA C.
RESTIFICAR V. TOP SERVICES, INC., AND THE REGISTER OF DEEDS FOR THE PROVINCE OF RIZAL.

The motion for extension of time to file a petition for review on certiorari dated February 13, 2018 is GRANTED. Nonetheless, after
review of the records, the Court (resolves to DENY the petition and AFFIRM the Court of Appeals' (CA) Decision
dated August 25, 2017 and Resolution dated January 23, 2018 in CA-G.R. CV No. 105984 for failure to sufficiently show that the CA
committed any reversible error in affirming the Decision of the Regional Trial Court (RTC), Branch 255, Las Piñas City.

The CA correctly upheld the findings of the RTC that the action of petitioner had long prescribed. It is now well-settled that
the prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust under Article 1456 of
the Civil Code, is 10 years pursuant to Article 1144. This 10-year prescriptive period begins to run from the date the adverse party
repudiates the implied trust. The registration of an instrument in the Office of the Register of Deeds constitutes constructive notice to
the whole world, and, therefore, discovery of the fraud is deemed to have taken place at the time of registration. Such
registration is deemed to be a constructive notice that the alleged fiduciary or trust relationship has been repudiated.[1]

Notably, an action for reconveyance and annulment of title does not seek to question the contract which allowed the adverse party to
obtain the title to the property. What is put on issue in an action for reconveyance and cancellation of title is the ownership of the
property and its registration. It does not question any fraudulent contract. Should that be the case, the applicable provisions are Articles
1390 and 1391 of the Civil Code.[2]
All the other issues raised by petitioner are factual in nature and we find that they have already duly passed upon by the trial court and
the CA. These questions of fact are generally not within the scope of a review on certiorari under Rule 45 of the Rules of Court.
Petitioner failed to raise any compelling and exceptional reasons for us to depart from this general rule. Thus, the factual findings of the
trial court and the CA must be accorded respect.

WHEREFORE, the petition is DENIED. The Decision dated August 25, 2017 and Resolution dated January 23, 2018 in CA-G.R. CV
No. 105984 are AFFIRMED.
11. Juanito Gonzales v IAC
JUANITO GONZALES and CORONACION GONZALES, Petitioners,

v. IAC, ROSITA LOPEZ, GAVINO CAYABYAB, AGUEDA UBANDO, FELIPA UBANDO, PEDRO SORIANO,
TEODISIA LOPEZ and FEDERICO BALLESTEROS, Respondents.al 1aw library

On April 14, 1965, private respondents, as plaintiffs, instituted a complaint for partition against Fausto Soy. They
alleged that they had a pro-indiviso share (to the extent of three-fourths) in a parcel of residential land identified as
Lot No. 6870-B, located in Dagupan City, with an area of 480 square meters and covered by Torrens Certificate of
Title No. 9144. Their claim was anchored on the fact that Fausto Soy was the brother of Emilia Soy, the deceased
mother of Rosita Lopez; of Cornelia Soy, the deceased mother of Agueda Ubando, Amado Ubando and Felipe Ubando;
and of Anastacia Soy, the deceased mother of Teodosia Lopez. 1

As a consequence of the filing of the complaint, a notice of lis pendens was annotated on the same day on TCT No.
9144. 2
In his answer, Fausto Soy contested the claims of the plaintiffs and asserted exclusive title in his name. He countered
that the land in question was never registered in the names of his parents Eugenio Soy and Ambrosia Marcella, that
he had been the registered owner of the premises since 1932 in consequence of which Original Certificate of Title No.
49661 of the Register of Deeds of Pangasinan was issued in his favor, and that spouses Eugenio Soy and Ambrosia
Marcella from whom the property allegedly came died more than 24 years ago. 3
During the pendency of the action for partition, Fausto Soy died and was substituted by his children named Jose,
Antonio, Teofilo, Amparo and Walter, all surnamed Soy. Walter later died and was substituted by his wife Susing
Cornel and minor children Myrna, Linda and Linly, all surnamed Soy. 4

On March 22, 1974, the trial court rendered its decision holding that private respondents and Fausto Soy were co-
owners of Lot No. 6870-B and ordering the partition thereof Significantly, the parties were enjoined to make the
project of partition among themselves and to submit the same to the lower court for confirmation. If they could not
agree, then the court would appoint commissioners who would undertake the partition on behalf of the co-owners. 5

On execution, the sheriff was unable to effect the apportionment of the property due to the filing by petitioners
Juanito and Coronacion Gonzales of their third party claim stating that they were the registered owners of 480 square
meters of Lot No. 6870-B. In his report submitted to the trial court on October 10, 1974, the sheriff likewise noted the
various improvements petitioners had introduced on the residential land, specifically a 2-door apartment, a residential
house and a piggery. 6

Petitioners Juanito and Coronacion Gonzales subsequently filed their motion for intervention on April 11, 1975,
stating, inter alia:chanrobles.com.ph : virtual law library

"1. That at the time the instant case was commenced, they were already the registered owners of 480 square meters
as shown by Transfer Certificate of Title No. 16922, dated January 29, 1960, pursuant to deeds of sale executed at an
earlier date by the late Fausto Soy;

"2. That at the time this suit was instituted, the said Fausto Soy was no longer the owner in fee simple, which fact
plaintiffs already knew being residents of Bonuan where the property in question is situated and where herein spouses
likewise reside;

"3. That inspite of the foregoing, plaintiffs deliberately concealed this suit from the herein-named spouses by not
including them as indispensable parties-defendants pursuant to Sections 2 and 7 of Rule 3 of the New Rules of Court,
and likewise failed and omitted to inform the Honorable Court pursuant to Section 9, Rule 3 of the Rules of Court, of
such fact which, had it been conveyed would have been a compulsory basis for the Honorable Court to summon their
appearance, for without their presence, no valid judgment could ever be rendered.

"x       x       x" 7

Petitioners then prayed that the decision of March 22, 1974 be set aside or reconsidered; that Civil Case No. D-1724
be reopened, and that they be allowed to intervene and present their evidence.

On July 23, 1975, there being no opposition, the trial court allowed the Gonzales to intervene as indispensable parties
in the case, vacated the judgment of March 22, 1974 and granted a new trial. The lower court reasoned that the
intervention even at that stage was proper since the judgment was not complete for want of a final project of partition
supposed to be submitted to the court for confirmation. Being incomplete, the judgment had not become final and
executory. Moreover, without the Gonzales spouses as indispensable parties, no valid decision could ever be rendered.
8

The parties then agreed to submit the case for adjudication on a stipulation of facts which states as
follows:jgc:chanrobles.com.ph

"A. Stipulation of Facts as proposed by the Intervenors (Gonzales spouses) and admitted by the plaintiffs, to
wit:jgc:chanrobles.com.ph

"1. That the land is originally covered by Original Certificate of Title No. 49661 (now Transfer Certificate of Title No.
3904, Dagupan city), Record No. 916, Case No. 35 in the name of Fausto Soy;

"2. That on January 22, 1941, Fausto Soy sold 253 square meters of the land to Francisco Landingin, . . .cralawnad

"3. That on July 22, 1954, Antonio Soy and Gregoria Miranda sold 240 square meters of the said land to Juanito
Gonzales and Coronacion Ganaden as intervenors herein xxx. The basis of the vendors’ right was pursuant to a deed
of donation executed by Fausto Soy in their favor, described as Doc. No. 201, Page No. 4, Bk. III, Series of 1952,
notarial register of Maximo Landingin;

"4. That on September 22, 1954, TCT No. 9141 was issued. Therein was indicated the following as registered owners:
Fausto Soy with an area of 480 sq. meters, Pio Siapno, 253 sq. m. and Juanito Gonzales and Coronacion Ganaden,
240 sq. m.;

"5. That on March 3, 1968 said co-owners subdivided the land pursuant to a deed of confirmation and subdivision,
registered March 4, 1958;

"6. That on January 27, 1960, Fausto Soy sold 240 sq. m. of the land to Juanito Gonzales and Coronacion Ganaden by
means of Doc. No. 15, Page 23, Bk. VII, Series of 1960, notarial register of Maximino Landingin, registered on
January 29, 1960;

"7. That on January 29, 1960, Transfer Certificate of Title No. 16922 was issued to Juanito Gonzales, wherein was
indicated his share as co-owner of 480 square meters; and Fausto Soy, 240 square meters;

"8. That on March 11, 1966, Fausto Soy sold 140 square meters of the land to intervenors herein by means of Doc.
No. 112, Page 63 Bk. XI, Series of 1966 of the Notarial Register of Maximino Landingin registered on October 31,
1967;

"9. That on April 14, 1966, plaintiffs filed the instant complaint for partition against Fausto Soy;
"10. That on April 14, 1965, plaintiffs filed a notice of lis pendens annotated in the certificate of title of the said land;

"11. That on May 16, 1966, Fausto Soy filed his answer;

"12. That on December 8, 1967, the case was dismissed for failure of the parties to appear;

"13. That on December 15, 1967 the court issued an order in Cadastral Case No. 36, Record No. 916, cancelling the
annotation of lis pendens (upon petition of the intervenors);

"14. That on November 28, 1967, plaintiff filed a motion to reconsider order dismissing the complaint;

"15. That on January 18, 1968, plaintiffs filed a notice of death of defendant Fausto Soy;

"16. That on March 18, 1968, the Court reopened the case;

"17. That on October 31, 1968 plaintiffs filed an amended complaint;

"18. That on November 16, 1973, the case was again dismissed for non-appearance of the parties;

"19. That on November 16, the order of dismissal was set aside;

"20. That on January 9, 1974 defendants did not appear and plaintiffs were allowed to present their evidence ex-
parte;chanrobles law library

"21. That on March 22, 1974, the case was decided on the basis of the evidence adduced ex-parte;

"22. That a writ of execution was issued for execution but could not be enforced because of the third party claim of
the herein intervenors;

"23. That herein intervenors filed a motion for intervention on April 15, 1976 which was granted pursuant to the order
of the Court dated July 23, 1975;

"24. That intervenors filed an Answer in Intervention on September 17, 1976;

"25. That on May 24, 1976, plaintiffs filed a re-amended complaint, and on June 14, 1976, intervenors filed an
amended answer in intervention;

"26. That intervenors had been in possession of the area of 620 sq. meters on the various dates of acquisition stated
in the foregoing up to the present;

"27. That intervenors had been paying the real estate taxes and had declared the same for taxation purposes in their
names as owner;

"28. That the possession of the foregoing properties including the land in question is open and public.

"B. Stipulation of Facts proposed by plaintiffs and admitted by intervenors as follows:jgc:chanrobles.com.ph

"1. That the original complaint was filed on April 14, 1965 by plaintiffs Rosita Lopez, . . . against Fausto Soy;

"2. That upon the death of Fausto Soy, the complaint was reamended to implead his heirs . . .;

"3. That the original plaintiffs and original defendant are brother and sisters;

"4. That the disputed property is Cadastral Lot No. 6870, TCT No. 9144 and particularly described in paragraph 3 of
the original complaint;

"5. That due to the failure of the defendants to appear in the hearing, the plaintiffs were allowed to adduce their
evidence and on March 22, 1974, the Honorable Court rendered a decision in favor of plaintiffs;

"6. That when the said decision became final and executory, the same cannot be implemented in view of the third
party claim on the intervention;

"7. That the intervenors intervened and filed their Answer to the complaint;

"8. That on April 14, 1965, the plaintiffs filed with the Register of Deeds a Notice of Lis Pendens which is duly
annotated as Entry No. 30414 in TCT No. 9144;

"9. That on January 27, 1960, the spouses intervenors bought a portion of 240 sq. meters for the sum of P900.00
from Fausto Soy, as per Entry 19356 of TCT No. 9144;chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"10. That as a consequence of such purchase . . ., TCT No. 9144 was cancelled by TCT Nos. 9178 and 16922, the
latter in the name of intervenors and Fausto Soy, in the portion of 480 sq. meters for Fausto Soy;

"11. That said intervenors purchased their remaining portion of 140 sq. meters in the name of Fausto Soy, all of which
purchase were subsequently to the annotation of the lis pendens;

"12. That the intervenors were able to obtain new title TCT NO. 19848 in their names over the entire property, by
filing a petition for cancellation of lis pendens, when the case was dismissed (but was reconsidered) and which
cancellation was entered as Entry No. 39511." 9

Accordingly, the trial court rendered its decision on September 30, 1977 and ruled thus:jgc:chanrobles.com.ph

"In this instant case, the Court finds out that there is no iota of proof to show that the plaintiffs are co-owners of the
property in question. The case has no leg to stand on because the land has long been covered by O.C.T. as far back
as 1932 in the name of their predecessor in interest Fausto Soy.
"WHEREFORE, judgment is hereby rendered as follows:jgc:chanrobles.com.ph

"(a) Ordering the case filed by the herein plaintiffs dismissed;

"(b) Declaring and sustaining the ownership of the INTERVENORS over the portions of the property purchased by
them from Fausto Soy;

"(c) Ordering the cancellation of the notice of lis pendens annotated at the back of their title.

"(d) Ordering the plaintiffs jointly and severally to pay attorney’s fees to the Intervenors in the amount of P2,000.00
and to pay the costs. . . ." 10

On appeal to the Appellate Court, private respondents argued that the trial court erred in finding that the appellants
(private respondents) had not established co-ownership of the property in question; in not declaring as invalid the
sale of 140 square meters of the disputed realty even after the annotation of lis pendens in the title thereof; and in
not ordering the appellees (petitioners) to reconvey to appellants the 140 square meters covered by the lis pendens.

On the bases of the above-assigned errors and on the alleged failure of the appellees to file their appellees’ brief, the
Appellate Court resolved the appeal in favor of the appellants, declaring that the sale to the intervenors-appellees
(petitioners) by Fausto Soy did not terminate the trust relationship between the appellants and the appellees. The
decision of the Appellate Court dated July 29, 1983, now under review, states:jgc:chanrobles.com.ph

"WHEREFORE, We reverse and set aside the appealed judgment and render another one reviving and reinstating the
lower court’s decision of March 22, 1974 with the modification that the sales deeds executed by Fausto Soy in favor of
intervenors-appellees shall be enforced against the one-fourth (1/4) share of defendants, as heirs of said Fausto
Soy. . . ." 11

The crucial issue to be resolved in the instant case is whether Lot 6870-B was held in trust by Fausto Soy for his
sisters Emilia, Cornelia and Anastacia.

According to the Appellate Court:jgc:chanrobles.com.ph

"From the time the subject property (Lot 6870) was brought under the operation of the Land Registration Act in the
name alone of Fausto Soy, who had recognized the proprietary rights of plaintiffs-appellants as co-owners, the land
was impressed with a trust relationship in favor of Fausto’s sisters or their children. when Fausto sold a portion of 140
square meters to intervenors, the relationship of trust included said intervenors. Upon the death of Fausto Soy, the
trust relationship subsisted between Fausto’s heirs and his living sisters or the latters’ children, as well as the
Intervenors-appellees. . . .

"In other words, the sales in favor of intervenors-appellees did not terminate the trust relationship between plaintiffs-
appellants and intervenors-appellees." 12

We hold that after Fausto Soy, the predecessor-in-interest of herein petitioners, had appeared to be the registered
owner of the lot for more than thirty years, his title had become indefeasible and his dominical rights over it could no
longer be challenged. Any insinuation as to the existence of an implied or constructive trust should not be
allowed.chanrobles.com.ph : virtual law library

Private respondent have invoked Article 1456 of the Civil Code which states that "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."cralaw virtua1aw library

The trust alluded to in this case is a constructive trust arising by operation of law. It is not a trust in the technical
sense. 13

Even assuming that there was an implied trust, private respondents’ attempt at reconveyance (functionally, an action
for partition is both an action for declaration of co-ownership, and for segregation and conveyance of a determinate
portion of the subject property. See Roque v. IAC, G.R. No. 75886, August 30, 1988, 165 SCRA 118) was clearly
barred by prescription.

Prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent and stale claims from
springing up at great distances of time and surprising the parties or their representatives when the facts have become
obscure from the lapse of time or the defective memory or death or removal of witnesses. 14

It is well-settled that an action for reconveyance of real property to enforce an implied trust prescribes in ten years,
the period reckoned from the issuance of the adverse title to the property which operates as a constructive notice. 15

In the case at bar, that assertion of adverse title, which was in explicit indication of repudiation of the trust for the
purpose of the statute of limitations, took place when OCT No. 49661 was issued in the name of Fausto Soy in 1932,
to the exclusion of his three sisters. 16

But even if there were no repudiation — as private respondent Rosita Lopez would have us believe when she testified
in court that while Fausto Soy might have succeeded in securing title in his sole name, he nonetheless recognized the
co-ownership between him and his sisters — the rule in this jurisdiction is that an action to enforce an implied trust
may be circumscribed not only by prescription but also by laches, in which case repudiation is not even required.

From 1932 to 1965, or a period of thirty-three years, private respondents had literally slept on their rights, presuming
they had any. They can no longer dispute the conclusive and incontrovertible character of Fausto Soy’s title as they
are deemed, by their unreasonably long inaction, to have acquiesced therein. Moreover, the law protects those who
are vigilant of their rights. Undue delay in the enforcement of a right is strongly indicative of a lack of merit in the
claim, since it is human nature for persons to assert their rights most vigorously when threatened or invaded. 17

WHEREFORE, the judgment of the Appellate Court dated July 29, 1983 is REVERSED and the complaint for partition is
hereby ordered DISMISSED. No costs.

SO ORDERED.