NUMBER #86

G.R. No. 171717               December 15, 2010

RAMON B. BRITO, SR., Petitioner,

vs.
SEVERINO D. DIANALA, VIOLETA DIANALA SALES, JOVITA DIANALA DEQUINTO, ROSITA
DIANALA, CONCHITA DIANALA and JOEL DEQUINTO, Respondents.

FACTS

Subject of the present petition is a parcel of land located at Barrio Sicaba, Cadiz City, Negros Occidental. Which was
originally owned by a certain Esteban Dichimo and his wife, Eufemia Dianala, both of whom are already deceased.
Petitioner’s wife, Margarita, together with Bienvenido and Francisco, filed a Complaint for Recovery of Possession and
Damages and alleged that they are the heirs of a certain Vicente Dichimo, who is the only heirs of Eusebio and Eufemia,
and as compulsory heirs, inherited Lot No. 1536-B while Edito, Maria, Herminia, Leonora, Felicito and Merlinda claimed
to be the heirs of one Eusebio Dichimo

On July 29, 1983, herein respondents filed an Answer-in-Intervention claiming that prior to his marriage to Eufemia,
Esteban was married to a certain Francisca Dumalagan; that Esteban and Francisca bore five children, all of whom are
already deceased; that herein respondents are the heirs of Esteban and Francisca’s children; that they are in open,
actual, public and uninterrupted possession of a portion of Lot No. 1536-B for more than 30 years; that their legal
interests over the subject lot prevails over those of petitioner and his coheirs. On November 26, 1986, the trial court
issued an Order dismissing without prejudice respondents’ Answer-in-Intervention. Subsequently, the parties agreed to
enter into a Compromise Agreement wherein Lot No. 1536-B was divided between Jose Maria Golez, on one hand, and
the heirs of Vicente, namely: Margarita, Bienvenido, and Francisco, on the other. It was stated in the said agreement that
the heirs of Eusebio had sold their share in the said lot to the mother of Golez.

Thus, the RTC of Bacolod City rendered a decision approving the said Compromise Agreement. Thereafter, TCT No. T-
12561 was issued by the Register of Deeds of Cadiz City in the name of Margarita, Bienvenido and Francisco. On January
18, 1999, herein petitioner and his co-heirs filed another Complaint for Recovery of Possession and Damages, this time
against herein respondents. Herein respondents, on the other hand, filed with the same court, on August 18, 1999, a
Complaint for Reconveyance and Damages against petitioner and his co-heirs. RTC dismissed both cases. Herein
respondents then appealed the case to the CA praying that the portion of the RTC Joint Orders dismissing their
complaint be declared null and void and that the case be decided on the merits. CA granted the respondents’ appeal.
ISSUE

W/N respondents are barred by prescription for having filed their complaint for reconveyance only after more than
eight years from the discovery of the fraud allegedly committed by petitioner and his co-heirs
HELD

No. There is no dispute that respondents are in possession of the subject property as evidenced by the fact that
petitioner and his co-heirs filed a separate action against respondents for recovery of possession thereof. Thus, owing to
respondents’ possession of the disputed property, it follows that their complaint for reconveyance is, in fact,
imprescriptible. As such, with more reason should respondents not 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. In their complaint for
reconveyance and damages, respondents alleged that petitioner and his co-heirs acquired the subject property by means
of fraud. Article 1456 of the Civil Code provides that a person acquiring property through fraud becomes, by operation
of law, a trustee of an implied trust for the benefit of the real owner of the property. An action for reconveyance based
on an implied trust prescribes in ten years, the reckoning point of which is the date of registration of the deed or the
date of issuance of the certificate of title over the property. In contrast, under the present Civil Code, we find that just as
an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to
reconvey the property and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription, Article
1144 of the Civil Code is applicable. Article 1144. The following actions must be brought within ten years from the time
the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment. An
action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not
otherwise.

In the instant case, TCT No. T-12561 was obtained by petitioner and his co-heirs on September 28, 1990, while
respondents filed their complaint for reconveyance on August 18, 1999. Hence, it is clear that the ten-year prescriptive
period has not yet expired. Respondents are not guilty of laches simply because they are no longer parties to the case
and, as such, have no personality to assail the said judgment. Respondents’ act of filing their action for reconveyance
within the ten-year prescriptive period does not constitute an unreasonable delay in asserting their right. Laches is
recourse in equity. Equity, however, is applied only in the absence, never in contravention, of statutory law. Moreover,
the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in
possession thereof. Otherwise, if the plaintiff is in possession of the property, prescription does not commence to run
against him.

NUMBER #87

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO,
DOMINGO ASEJO, JOSEFA ASEJO and SANTIAGO ASEJO, respondents.

FACTS

The property in dispute was originally owned by Felisa Alzul who got married twice. Her child in the first
marriage was petitioner Rustico Adille and her children in the second marriage were respondents Emeteria
Asejo et al. During her lifetime, Felisa Alzul sold the property in pacto de retro with a three-year repurchase
period, however, Felisa died before she could repurchase the property.

During the redemption period, Rustico Adille repurchased the property by himself alone at his own
expense, and after that, he executed a deed of extra-judicial partition representing himself to be the only
heir and child of his mother Felisa. Consequently, he was able to secure the title in his name alone.

His half-siblings, herein respondents, filed a case for partition and accounting claiming that Rustico was
only a trustee on an implied trust when he redeemed the property, and thus, he cannot claim exclusive
ownership of the entire property. The lower court sustaining defendant in his position that he was and
became absolute owner, he was not a trustee, dismissed case and ordered Emeteria to vacate the premises.
CA reversed the ruling of the trial court.

ISSUE
WON prescription had set in
HELD

The court held in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have
been preceded by repudiation (of the co-ownership). The act of repudiation, in turn, is subject to certain
conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made
known to the other co-owners; (3) the evidence thereon is clear and conclusive, and (4) he has been in
possession through open, continuous, exclusive, and notorious possession of the property for the period
required by law. 

The instant case shows that the petitioner had not complied with these requisites. He had deliberately kept
the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot,
therefore, be said to have "made known" his efforts to deny the co-ownership. Moreover, one of the private
respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet the petitioner has not
taken pains to eject her therefrom. As a matter of fact, he sought to recover possession of that portion
Emeteria is occupying only as a counterclaim, and only after the private respondents had first sought
judicial relief.

It is true that registration under the Torrens system is constructive notice of title,   but likewise, the Torrens
title does not furnish a shield for fraud.  It is therefore no argument to say that the act of registration is
equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that
registration operates as a universal notice of title.

Note that the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with
his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only
heir and child of his mother Feliza with the consequence that he was able to secure title in his name
also." Accordingly, the court hold that the right of the private respondents commenced from the time they
actually discovered the petitioner's act of defraudation. According to the respondent Court of Appeals, they
 "came to know [of it] apparently only during the progress of the litigation." Hence, prescription is not a bar.

Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to
dismiss or in the answer otherwise it is deemed waived, and here, the petitioner never raised that defense. 

NUMBER #88

G.R. No. L-66479 November 21, 1991

JUANITO GONZALES and CORONACION GONZALES, petitioners,

vs.
THE INTERMEDIATE APPELLATE COURT, ROSITA LOPEZ, GAVINO CAYABYAB,
AGUEDA UBANDO, FELIPA UBANDO, PEDRO SORIANO, TEODISIA LOPEZ and
FEDERICO BALLESTEROS, respondents.

FACTS

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.

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.

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.

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.

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. Petitioners Juanito and Coronacion Gonzales subsequently filed their motion for intervention.
ISSUE

WON Lot 6870-B was held in trust by Fausto Soy for his sisters Emilia, Cornelia and Anastacia.
HELD

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.

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

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 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.

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 constructive notice. Here, that
assertion of adverse title, which was an 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.

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 the 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.

 
 NUMBER #89

[G.R. NO. 159666 : December 4, 2007]

EULOGIO M. PEDRANO, Petitioner, v. HEIRS OF BENEDICTO PEDRANO,

namely: ROMANA PEDRANO, ANTONIO PEDRANO, ROSENDA PEDRANO
RAAGAS, LEONIDA PEDRANO VILLAMOR, and ZENAIDA P. DAGOHOY;
and HEIRS OF NORBERTO M. PEDRANO, namely: NORBERTO C.
PEDRANO, JR., MARILYN C. PEDRANO, and BENEDICTO C. PEDRANO,
represented by NORMIE P. ALCORIN, Respondents.

FACTS

Lot No. 6416 was previously owned by Dr. Isidro Hynson who sold it on March 15, 1965 to Romana
Monteal Pedrano, for PHP 315.02. Romana was married to Benedicto Pedrano who passed away on
August 19, 1967. Fourteen years later, petitioner Eulogio M. Pedrano, a son of Romana, alleged that he
had bought the land himself for PhP 30,000 from Romana, payable on or before December 31, 1982, as
shown in the Deed of Sale dated December 22, 1981. Since Lot No. 6416 and another lot, Lot No. 6409,
were yet untitled, these became the subject of Cadastral Case No. N-4, LRC Cad. Rec. No. N-64, for
titling. Alleging that the petitioner had not paid the PHP 30,000 consideration for Lot No. 6416 until the
December 31, 1982 deadline, as stipulated in the December 22, 1981 Deed of Sale, respondents filed a
case asking for the annulment of the December 22, 1981 Deed of Sale, and the recovery of the
possession and ownership of Lot No. 6416, with prayer for a writ of preliminary injunction and
restraining order and damages.

According to the respondents, Romana informed the petitioner that the former was canceling the sale
and petitioner should have Dr. Hynson’s name in the title replaced with her name. Respondents added
that despite the cancellation of the deed of sale, Romana allowed the petitioner to occupy the house on
Lot No. 6416. Further, respondents averred they were unaware that petitioner instituted a cadastral
case to have the land titled to himself. They discovered his machinations only in 1994. Thus,
respondents instituted the instant case to have the December 22, 1981 Deed of Sale voided for want of
consideration and for fraud. The Trial Court ruled that prescription of the cause of action to annul the
questioned Deed of Absolute Sale has already set in, the complaint in the above-entitled case is ordered
dismissed.

The RTC said that it could no longer annul the sale reasoning that Article1144 [6] of the Civil Code
provided for 10 years within which to bring action from the time the right of action accrues upon a
written contract. Hence, it concluded that since the deed of sale was executed on December 22, 1981,
and the instant action was filed only on September 5, 1996, after more than 14 years, prescription
had set in. The CA reversed the ruling of RTC and stated that Art. 1144 of the Civil Code was
erroneously applied by the RTC. The CA explained that the instant case involves an implied trust, and
that Art. 1456 of the Civil Code was the applicable law.

ISSUE

W/O prescription had set in

HELD

An action for the reconveyance of a parcel of land based on implied or constructive trust, as we have
already explained in this case, 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 of the property; however,
where no OCT has yet been issued despite an order from the court to title the lots, the date from
 whence the prescriptive period could be reckoned is unknown and it could not be determined if indeed
the period had already lapsed or not. Thus, we agree with the CA that prescription has not yet set in.

NUMBER #90

G.R. No. 161237               January 14, 2009

PERFECTO MACABABBAD, Jr.,* deceased, substituted by his heirs Sophia Macababbad,

Glenn M. Macababbad, Perfecto Vener M. Macababbad III and Mary Grace Macababbad,
and SPS. CHUA SENG LIN AND SAY UN AY, petitioners
vs.
FERNANDO G. MASIRAG, FAUSTINA G. MASIRAG, CORAZON G. MASIRAG,
LEONOR G. MASIRAG, and LEONCIO M. GOYAGOY, respondent

FRANCISCA MASIRAG BACCAY, PURA MASIRAG FERRER-MELAD, AND SANTIAGO

MASIRAG, Intervenors- Respondents.

FACTS

The deceased spouses Pedro Masirag and Pantaleona Tulauan were the original registered owners of Lot No. 4144 of the
Cadastral Survey of Tuguegarao, as evidenced by Original Certificate of Title No. 1946. Lot No.4144 contained an area of
6,423 square meters. They had eight (8) children, Respondents Fernando, Faustina, Corazon and Leonor Masirag are the
children of Valeriano and Alfora Goyagoy, while Leoncio is the son of Vicenta and Braulio Goyagoy.

The respondents allegedly did not know of the demise of their respective parents; they only learned of the inheritance
due from their parents in the first week of March 1999 when their relative, Pilar Quinto, informed respondent Fernando
and his wife Barbara Balisi about it. The investigation disclosed that the petitioners falsified a document entitled “Extra-
judicial Settlement with Simultaneous Sale of Portion of Registered Land (Lot 4144) so that the respondents were
deprived of their shares in Lot No. 4144. The document ostensibly conveyed the subject  property to Macababbad
for the sum of P1,800.00. Subsequently, OCT No.1946 was canceled and Lot No. 4144 was registered in the names of its
new owners under Transfer Certificate of Title (TCT) No. 13408, presumably after the death of Pedro and Pantaleona.

Despite his exclusion from TCT No.13408, his “Petition for another owner’s duplicate copy of TCT No. 13408,” filed in
the Court of First Instance of Cagayan, was granted on July 27, 1982. Subsequently, Macababbad registered portions of
Lot No. 4144 in his name and sold other portions to third parties. A case was filed against Macababbad but he was able
to file a motion to dismiss the amended complaint while Chua and Say filed an “Appearance with Motion to Dismiss. RTC
granted the motion of Francisca Masirag Baccay, Pura Masirag Ferrer-Melad, and Santiago Masirag for leave to intervene
and to admit their complaint-in-intervention.

ISSUE

Whether an action for the nullity of an instrument prescribes in four(4) years from the discovery of the fraud that the
action had not yet been barred by prescription.
HELD

A ruling on prescription necessarily requires an analysis of the plaintiff’s cause of action based on the allegations

of the complaint and the documents attached as its integral parts. A motion to dismiss based
on prescription hypothetically admits the allegations relevant and material to the resolution of this issue, but not
the other facts of the case. Unfortunately, both the respondents’ complaints and amended complaints are poorly worded,
verbose, and prone to misunderstanding. In addition, therefore, to the complaint, we deem it appropriate to consider the
clarifications made in their appeal brief by the petitioners relating to the intent of their complaint. We deem this step
appropriate since there were no matters raised for the first time on appeal and their restatement was aptly supported
by the allegations of the RTC complaint dismissal based on laches cannot also apply in this case, as it has never reached
the presentation of evidence stage and what the RTC had for its consideration was merely the parties’ pleadings.
Laches is evidentiary in nature and cannot be established by mere allegations in the pleadings. Without a solid
evidentiary basis, laches cannot be a valid ground to dismiss the respondents’ complaint.
 
In actions for reconveyance of the property predicated on the fact that the conveyance complained of was null and
void ab initio, a claim of prescription of action would be unavailing. The action or defense for the declaration of the
inexistence of a contract does not prescribe. Neither could laches be invoked in the case at bar. Laches is a doctrine in
equity and our courts are basically courts of law and not courts of equity. Equity, which has been aptly described as
"justice outside legality," should be applied only in the absence of, and never against, statutory law. Aequetas nunguam
contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring imprescriptibility to actions for
declaration of the inexistence of a contract should preempt and prevail over all abstract arguments based only on equity.
Certainly, laches cannot be set up to resist the enforcement of an imprescriptible legal right, and petitioners can validly
vindicate their inheritance despite the lapse of time.

NUMBER #91

G.R. No. 58010. March 31, 1993.

EMILIA O'LACO and HUCO LUNA, petitioners, vs. VALENTIN CO CHO CHIT, O LAY KIA and
COURT OF APPEALS, respondents.

FACTS

The case involves half-sisters each claiming ownership over a parcel of land. While petitioner Emilia O'Laco asserts that she merely
left the certificate of title covering the property with private respondent O Lay Kia for safekeeping, the latter who is the former's older
sister insists that the title was in her possession because she and her husband bought the property from their conjugal funds.

On 31 May 1943, the Philippine Sugar Estate Development Company, Ltd., sold a parcel of land, situated at Oroquieta St., Sta. Cruz,
Manila, with the Deed of Absolute Sale naming Emilia O'Laco as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued
in her name. On 17 May 1960, private respondent-spouses Valentin Co Cho Chit and O Lay Wa learned from the newspapers that
Emilia O'Laco sold the same property to the Roman Catholic Archbishop of Manila for P230,000.00, with assumption of the real estate
mortgage constituted thereon.

Respondent-spouses Valentin Co Cho Chit and O Lay Kia sued petitioner-spouses Emilia O'Laco and Hugo Luna to recover the
purchase price of the land before the then Court of First Instance of Rizal, respondent-spouses asserting that petitioner Emilia O'Laco
knew that they were the real vendees of the Oroquieta property sold in 1943 by Philippine Sugar Estate Development Company, Ltd.,
and that the legal title thereto was merely placed in her name. They contend that Emilia O'Laco breached the trust when she sold the
land to the Roman Catholic Archbishop of Manila. Meanwhile, they asked the trial court to garnish all the amounts still due and
payable to petitioner-spouses arising from the sale, which was granted on 30 June 1960.

Petitioner-spouses deny the existence of any form of trust relation. They aver that Emilia O'Laco actually bought the property with
her own money; that she left the Deed of Absolute Sale and the corresponding title with respondent-spouses merely for safekeeping;
that when she asked for the return of the documents evidencing her ownership, respondent-spouses told her that these were
misplaced or lost; and, that in view of the loss, she filed a petition for issuance of a new title, and on 18 August 1944 the then Court of
First Instance of Manila granted her petition.

On 20 September 1976, finding no trust relation between the parties, the trial court dismissed the complaint together with the
counterclaim. Petitioners and respondents appealed. Petitioners contend that the present action should have been dismissed. They
argue that the complaint fails to allege that earnest efforts toward a compromise were exerted considering that the suit is between
members of the same family, and no trust relation exists between them. Even assuming ex argumenti that there is such a relation,
petitioners further argue, respondents are already barred by laches.
ISSUE

WON prescription has set in

HELD

As differentiated from constructive trusts, where the settled rule is that prescription may supervene, in resulting trust, the rule of
imprescriptibility may apply for as long as the trustee has not repudiated the trust. Once the resulting trust is repudiated, however, it
is converted into a constructive trust and is subject to prescription.

A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust; and,
(c) the evidence thereon is clear and convincing.

Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco nor the issuance of a new Torrens title in
1944 in her name in lieu of the alleged loss of the original may be made the basis for the commencement of the prescriptive period.
For, the issuance of the Torrens title in the name of Emilia O'Laco could not be considered adverse, much less fraudulent. Precisely,
although the property was bought by respondent-spouses, the legal title was placed in the name of Emilia O'Laco. The transfer of the
Torrens title in her name was only in consonance with the deed of sale in her favor. Consequently, there was no cause for any alarm
on the part of respondent-spouses. As late as 1959, or just before she got married, Emilia continued to recognize the ownership of
respondent-spouses over the Oroquieta property. Thus, until that point, respondent-spouses were not aware of any act of Emilia
which would convey to them the idea that she was repudiating the resulting trust. The second requisite is therefore absent. Hence,
prescription did not begin to run until the sale of the Oroquieta property, which was clearly an act of repudiation.

But immediately after Emilia sold the Oroquieta property which is obviously a disavowal of the resulting trust, respondent-spouses
instituted the present suit for breach of trust. Correspondingly, laches cannot lie against them. After all, so long as the trustee
recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be at fault for omitting to bring an action to
enforce his rights. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. Since the
complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action
therefore has not yet prescribed.

NUMBER #92

G.R. No. 147340             December 13, 2007

CYNTHIA CRUZ KHEMANI and SHANKER N. KHEMANI, petitioners,

vs.
THE HEIRS OF ANASTACIO TRINIDAD, represented by NAPOLEON and ROLANDO
TRINIDAD, respondents.

FACTS

Petitioner Cynthia Cruz Khemani is the registered owner of Lot No. 107, Ts-1032 (Lot No. 107), which is covered by
Transfer Certificate of Title (TCT) No. 58976 issued on March 10, 1994. Khemani purchased the lot from the heirs of
Jose B. Peñ a. The subject of the instant case is a 340 square meter portion (the Disputed Property) of Lot No. 107 over
which respondents Heirs of Anastacio Trinidad, represented by Napoleon and Rolando Trinidad, are claiming
ownership. Respondents allege that they and their predecessors-in-interest, Spouses Anastacio and Francisca
Trinidad, have openly, peacefully, publicly, and adversely possessed the Disputed Property in the concept of the owner
since 1950.

Lot No. 107 and Lot Nos. 108 and 109, constitute Lot No. 355 which was part of the public domain. On July 10, 1950,
Lot No. 355 with an original area of 1,500 square meters was awarded to Jesus M. Larrabaster by the National Land
Settlement Administration (NLSA) who subsequently sold his rights and interests over the said property to Jose B.
Peñ a (Peñ a) on June 29, 1956. Thereafter, the original area of Lot No. 355 which was 1,500 square meters increased to
3,616.93 square meters due to accretion. Peñ a then requested the Bureau of Lands (BOL) to adjust the area of the lot
awarded to him but the BOL denied the request on the ground that the accretion belonged to the government.

Aggrieved, Peñ a appealed to the Office of the President. The BOL recommended that Lot No. 355 be subdivided into
three parts, to wit, Lot Nos. 107, 108 and 109, and that Lot No. 108 with an area of 1,500 square meters, be awarded to
Peñ a, instead of the whole of Lot No. 355. Meanwhile, Lot Nos. 107 and 109 would be allocated to Basilio Mendoza
(Mendoza) and Arturo Roxas, respectively.

The Office of the President initially adopted the recommendation of the BOL. Upon reconsideration, however, it
modified its decision and held that the entire area of Lot No. 355, including the accretion, belonged to Peñ a and not to
the government. Thus, Lot Nos. 107, 108, and 109 were awarded to him.

On September 20, 1993, the Peña Heirs were awarded a patent by the Department of Environment and Natural
Resources (DENR), and on September 21, 1993, Original Certificate of Title No. P-33658 7 covering Lot No. 107
was issued in their name. On January 27, 1994, respondents filed with the Regional Trial Court, Branch 24,
Koronadal, South Cotabato a verified complaint 8 against the Peña Heirs,9 the DENR Region IX Office, and the BOL
for "Review of Decree of Registration and/or Reconveyance with Prayer for Issuance of Writ of Preliminary
Prohibitory Injunction and Temporary Restraining Order," which was docketed as Civil Case No. 1122.
Respondents filed the complaint on the strength of their own and their predecessors’ open, peaceful, public, and
adverse possession of the Disputed Property in the concept of owner since 1950.

ISSUE

WON respondents are entitled to file an action based on implied or constructive trust
HELD

In this case, the patent was issued in favor of the Peñ a Heirs on September 20, 1993. Respondents filed Civil Case No.
1122 for "Review of Decree of Registration and/or Reconveyance with Prayer for Issuance of Writ of Preliminary
Prohibitory Injunction and Temporary Restraining Order" on January 27, 1994, or well within the prescribed one-year
period. Likewise, records show that TCT No. 58976 under petitioner’s name bears a Notice of Lis Pendens. 30 Thus, it
cannot be said that petitioner is an innocent purchaser for value as she was well aware of respondents’ claim over the
Disputed Property.

Further, even assuming arguendo  that respondents filed their action after one year, they may still be entitled to relief.
An aggrieved party may file an action for reconveyance based on implied or constructive trust, which prescribes in ten
years from the date of the issuance of the certificate of title over the property provided that the property has not been
acquired by an innocent purchaser for value.

Respondents clearly asserted in their complaint that they and their predecessors-in-interest have long been the
owners of the Disputed Property and that they were fraudulently deprived of ownership thereof when the Peñ a Heirs
obtained a patent and certificate of title in their favor. These allegations certainly measure up to the requisite
statement of facts to constitute an action for reconveyance.

The BOL issued a Patent on September 20, 1993 in favor of the Peñ a Heirs which became the basis for the issuance of
OCT No. P-33658 covering Lot No. 107. However, as held in the Assistant Executive Secretary case, Lot No. 107 – as
accretions to the original lot (Lot No. 355) awarded to Larrabaster on July 10, 1950 – " no longer belonged to the
Government[,] the subdivision thereof by the Bureau of Lands into three lots (Lot No. 107, Lot No. 108 and Lot No. 109), as
well as the allocation of said lots to two other individuals, was beyond the scope of its authority."33 As a result, while Lot
No. 107 may no longer be acquired under the provisions of the Public Land Act, it does not absolutely foreclose the
possibility that, as a private property, a portion thereof (the Disputed Property) may have been acquired by
respondents through acquisitive prescription under the Civil Code. These matters, however, are the proper subject of a
separate action should one be filed subject, of course, to such claims and defenses that either party may have under
relevant laws.

All told, it would be premature to order the dismissal of respondents’ complaint as they have yet to be given an
opportunity to substantiate their claims. We note that respondents are in actual physical possession of the Disputed
Property up to this date, and the fact of their physical possession over many years is not disputed by petitioner.   Under
the circumstances, it would be more in keeping with the standards of fairness to have a full-blown trial where the
evidentiary matters are threshed out.