Aznar Brothers Realty co. vs. Aying g.r.no.144773, may16, 2005

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari seeking the modification of the Decision[1] of the Court of Appeals (CA) dated March 7, 2000 which affirmed with modification the Decision of the Regional Trial Court (RTC) of Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution dated August 2, 2000 denying petitioner’s motion for reconsideration of the aforementioned decision.

The antecedent facts are as follows:

The disputed property is Lot No. 4399 with an area of 34,325 square meters located at Dapdap, Lapu-Lapu City.  Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her favor over said parcel of land.  After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in the name of Crisanta Maloloy-on’s eight children, namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.  The certificate of title was, however, lost during the war.

Subsequently, all the heirs of the Aying siblings executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964, conveying the subject parcel of land to herein petitioner Aznar Brothers Realty Company.  Said deed was registered with the Register of Deeds of Lapu-Lapu City on March 6, 1964 under Act No. 3344 (the law governing registration for unregistered land), and since then, petitioner had been religiously paying real property taxes on said property.

In 1988, herein petitioner filed a Petition for Reconstitution of the Original Title as the original title over the subject property had been lost during the war.  On April 12, 1988, the court granted said petition, thereby directing the Register of Deeds of Lapu-Lapu City to issue a reconstituted title in the name of the abovementioned Aying siblings.  Thus, Original Certificate of Title (OCT) No. RO-2856 was issued.

In 1991, petitioner, claiming to be the rightful owner of the subject property, sent out notices to vacate, addressed to persons occupying the property.   Unheeded, petitioner then filed a complaint for ejectment against the occupants before the Metropolitan Trial Court (MTC), Lapu-Lapu City.

On February 1, 1994, the MTC ordered the occupants to vacate the property.  The case eventually reached this Court, docketed as G.R. No. 128102, entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis Aying, Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto.[2] On March 7, 2000, a Decision was promulgated in favor of herein petitioner, declaring it as the rightful possessor of the parcel of land in question.

Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying siblings, all in all numbering around 220 persons, had filed a complaint for cancellation of the Extra-Judicial Partition with Absolute Sale, recovery of ownership, injunction and damages with the RTC of Lapu-Lapu City.  The complaint was dismissed twice without prejudice.  Said complaint was re-filed on August 19, 1993, docketed as Civil Case No. 2930-L.

In their amended complaint, herein respondents (plaintiffs before the RTC) alleged that: they are co-owners of subject property, being descendants of the registered owners thereof under OCT No. RO-2856; they had been in actual, peaceful, physical, open, adverse, continuous and uninterrupted possession in concept of owner of subject parcel of land since time immemorial; their possession was disturbed only in the last quarter of 1991 when some of them received notices to vacate from petitioner and several weeks thereafter, earthmoving equipment entered the disputed land, bulldozing the same and destroying plants, trees and concrete monuments (“mohon”); respondents discovered that such activities were being undertaken by petitioner together with Sta. Lucia Realty and Development, Inc.; petitioner claimed to be the owner of subject property by virtue of an extra-judicial partition of real estate with deed of absolute sale executed in petitioner’s favor by the alleged heirs of Crisanta Maloloy-on; the aforementioned extra-judicial partition of real estate with deed of absolute sale is a fraud and is null and void ab initio because not all the co-owners of subject property affixed their signature on said document and some of the co-owners who supposedly signed said document had been dead at the time of the execution thereof; petitioner entered subject land in bad faith, knowing fully well that it did not have any right to the land and used force, threat and intimidation against respondents; and they suffered moral damages.[3]

Petitioner (defendant before the RTC) filed its Answer, denying that respondents are the lawful owners of subject parcel of land by virtue of their being descendants or heirs of the

registered owners of subject property.  Instead, petitioner alleged that it had been in actual possession of subject land as owner thereof by virtue of the extra-judicial partition of real property and deed of absolute sale executed in its favor; that in fact, it had been paying taxes thereon religiously; that it tolerated about 6 persons to live on said land but said persons were eventually ejected by court order.  Petitioner then raised the affirmative defenses of failure to state cause of action and prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover subject property, when an action to recover property based on an implied trust should be instituted within 4 years from discovery of the fraud.[4]

In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were narrowed down to the following:

1.            Whether or not the plaintiffs [herein respondents] are the heirs of the registered owners of Lot No. 4399.

2.            Whether or not plaintiffs are the owners of Lot No. 4399.

3.            Whether or not the defendant Aznar [herein petitioner] is estopped to make any claim on Lot No. 4399.

4.            Whether or not the defendant Aznar is a builder in bad faith.

5.            Whether or not the defendants are liable for damages and attorney’s fees in favor of the plaintiffs.

6.            Whether or not the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and had, in effect, validly conveyed to defendant Aznar Lot No. 4399.

7.            Whether or not the plaintiffs’ action has prescribed.[5]

After trial, the RTC rendered a Decision dated July 4, 1997, ruling that respondents’ evidence failed to prove that the extra-judicial partition with deed of absolute sale was a totally simulated or fictitious contract and concluded that said document is valid, thus, effectively conveying to petitioner the property in question.  It further held that respondents’ action had prescribed in that the action is considered as one for reconveyance based on implied or constructive trust, it prescribed in 10 years from the registration of the deed on March 6, 1964; and if the action is considered as one for annulment of contract on the ground of fraud, it should have been filed within 4 years from discovery of the fraud.  The trial court also ruled that respondents failed to present any admissible proof of filiation, hence, they were not able to prove that they are indeed heirs of the eight Aying siblings who appear as the registered owners under OCT No. RO-2856.

The dispositive portion of the RTC Decision  reads as follows:

WHEREFORE, judgment is hereby rendered dismissing the amended complaint on the ground of prescription, and declaring the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964 as valid and binding, adjudging that Lot 4399 with an area of 34,325 square meters located at Dapdap, Mactan, Lapu-Lapu City had been validly conveyed to and in favor of Aznar Brothers Realty Company, and directing the Register of Deeds of Lapu-Lapu City to register the above-mentioned deed in accordance with law and to cancel Original Certificate of Title No. RO-2856, and to issue a  transfer  certificate of title in the name of Aznar Brothers Realty Company upon payment of the necessary registration fees pursuant thereto.

The Writ of Preliminary Injunction issued in this case is hereby ordered dissolved.

The Motion for Contempt filed by the plaintiffs against defendants is dismissed for want of factual and legal basis.

Costs against the plaintiffs.

SO ORDERED.[6]

Herein respondents appealed the foregoing decision to the CA and on March 7, 2000, said court promulgated its Decision, the dispositive portion of which is reproduced hereunder:

THE FOREGOING CONSIDERED, the contested Decision while AFFIRMED is hereby MODIFIED.  The heirs of Emiliano Aying, Simeon Aying and Roberta Aying are hereby declared as the lawful owners of the contested property but equivalent only to 3/8.

SO ORDERED.

In modifying the RTC judgment, the CA ratiocinated that “an action for recovery of possession of registered land never prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that no title to registered land in derogation to that of a registered owner shall be acquired by prescription.”  The CA further ruled that even if the action is deemed to be based on implied trust, prescription did not begin to run since there is no evidence that positive acts of repudiation were made known to the heirs who did not participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.  Thus, striking down the RTC’s ruling that the respondents’ complaint is dismissible on the ground of prescription, the CA held instead that herein respondents’ action had not prescribed but upheld the validity of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in the execution of said document.

Herein petitioner’s motion for reconsideration of the CA decision was denied per Resolution dated August 2, 2000.

Hence, the present petition for review on certiorari assailing the CA decision on the following grounds:

I

THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT AN HEIR OF THE ORIGINAL REGISTERED OWNER MAY LOSE HIS RIGHT TO RECOVER A TITLED PROPERTY BY REASON OF LACHES;

II

THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT THE ACT OF REGISTRATION OF THE DEED OF PARTITION WITH SALE MAY BE CONSIDERED AN UNEQUIVOCAL REPUDIATION OF THE TRUST GIVING RISE TO PRESCRIPTION;

III

THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE PROVISIONS OF ARTICLE 1104 OF THE CIVIL CODE TO THE EFFECT THAT IN THE ABSENCE OF BAD FAITH OR FRAUD, THE PARTITION WITH PRETERITION OF ANY COMPULSORY HEIR SHALL NOT BE RESCINDED.[7]

In their Comment, respondents argue that this case is an action to declare as null and void the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, hence, under Article 1410 of the Civil Code, an action for declaration of an inexistent contract does not prescribe.  Respondents further posit that the principle of laches should be applied against petitioner and not against them, as they (respondents) had been in actual possession of the subject property, while petitioner merely brought action to eject them more than 29 years after the alleged execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.  They also refuted petitioner’s arguments regarding the application of the principles of implied and constructive trusts in this case.

At the outset, it should be stressed that not all the plaintiffs who filed the amended complaint before the trial court had been impleaded as respondents in the present petition.  The only parties impleaded are the heirs of Emiliano, Simeon and Roberta Aying, whom the CA adjudged as owners of a 3/8 portion of the land in dispute for not having participated in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.

It is significant to note that herein petitioner does not question the CA conclusion that respondents are heirs of the aforementioned three Aying siblings.  Hence, the trial court and appellate court’s findings that the Extra- Judicial Partition of Real Estate with Deed of Absolute Sale was not forged nor simulated and that the heirs of Emiliano, Simeon and Roberta Aying did not participate in the execution thereof, are now beyond cavil.

The issues raised by petitioner for the Court’s resolution are (1) whether or not respondents’ cause of action is imprescriptible; and (2) if their right to bring action is indeed imprescriptible, may the principle of laches apply.

Respondents alleged in their amended complaint that not all the co-owners of the land in question signed or executed the document conveying ownership thereof to petitioner and made the conclusion that said document is null and void.  We agree with the ruling of the RTC and the CA that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and binding only as to the heirs who participated in the execution thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not participate therein, cannot be bound by said document.

However, the facts on record show that petitioner acquired the entire parcel of land with the mistaken belief that all the heirs have executed the subject document.   Thus, the trial court is correct that the provision of law applicable to this case is Article 1456 of the Civil Code which states:

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

In Vda. De Esconde vs. Court of Appeals,[8] the Court expounded thus:

Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals, the Court stated:

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust.  A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation.  While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.[9]

The concept of constructive trusts was further elucidated in the same case, as follows:

.  .  .  implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.  In turn, implied trusts are either resulting or constructive trusts.  These two are differentiated from each other as follows:

Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties.  They arise from the nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another.  On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.  They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. [10] (Emphasis supplied)

Based on such concept of constructive trusts, the Court ruled in said case that:

The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts.  However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship.  Necessarily, repudiation of said trust is not a condition precedent to the running of the prescriptive period.[11]

The next question is, what is the applicable prescriptive period?

In Amerol vs. Bagumbaran,[12] the Court expounded on the prescriptive period within which to bring an action for reconveyance of property based on implied or constructive trust, to wit:

.  .  .  under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner.  In this context, and vis-à-vis prescription, Article 1144 of the Civil Code is applicable.

Article 1144.  The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;(2) Upon an obligation created by law;(3) Upon a judgment.

xxx                xxx                   xxx

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise.  A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.  Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property.[13]

It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property, but if the person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.[14]

In the present case, respondents Wenceslao Sumalinog, an heir of Roberta Aying; Laurencio Aying, an heir of Emiliano Aying; and Paulino Aying, an heir of Simeon Aying, all testified that they had never occupied or been in possession of the land in dispute. [15] Hence, the prescriptive period of ten years would apply to herein respondents.

The question then arises as to the date from which the ten-year period should be reckoned, considering that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496 (Land Registration Act), despite the fact the land in dispute was already titled under Act No. 496 in the names of the Aying siblings at the time the subject document was executed.

In Spouses Abrigo vs. De Vera,[16] it was held that registration of instruments must be done in the proper registry, in order to affect and bind the land and, thus, operate as constructive notice to the world.[17] Therein, the Court ruled:

x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered REGISTERED x  x  x .[18]

In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496, said document is deemed not registered.  Accordingly, the ten-year prescriptive period cannot be reckoned from March 6, 1964, the date of registration of the subject document under Act No. 3344.  The prescriptive period only began to run from the time respondents had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.

The only evidence on record as to when such prescriptive period commenced as to each of the respondents are Wenceslao Sumalinog’s (heir of Roberta Aying) testimony that about three years after 1964, they already learned of the existence of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale;[19] and Laurencio Aying’s (heir of Emiliano Aying) admission that he found out about the sale of the land in dispute a long time ago and can only estimate that it must be after martial law.[20] Paulino Aying (heir of Simeon Aying) gave no testimony whatsoever as to when the children of Simeon Aying actually learned of the existence of the document of sale.  On the other hand, petitioner did not present any other evidence to prove the date when respondents were notified of the execution of the subject document.

In view of the lack of unambiguous evidence of when the heirs of Emiliano Aying and Simeon Aying discovered the existence of the document of sale, it must be determined which party had the burden of proof to establish such fact.

The test for determining where the burden of proof lies is to ask which party to an action or suit will fail if he offers no evidence competent to show the facts averred as the basis for the relief he seeks to obtain.[21] Moreover, one alleging a fact that is denied has the burden of proving it and unless the party asserting the affirmative of an issue sustains the burden of proof of that issue by a preponderance of the evidence, his cause will not succeed.[22] Thus, the defendant bears the burden of proof as to all affirmative defenses which he sets up in answer to the plaintiff’s claim or cause of action; he being the party who asserts the truth of the matter he has alleged, the burden is upon him to establish the facts on which that matter is predicated and if he fails to do so, the plaintiff is entitled to a verdict or decision in his favor.[23]

In the case at bar, it was petitioner, as the defendant before the RTC, which set up in its Answer the affirmative defense of prescription.  It was, therefore, incumbent upon petitioner to prove the date from which the prescriptive period began to run.  Evidence as to the date when the ten-year prescriptive period began exists only as to the heirs of Roberta Aying, as Wenceslao Sumalinog admitted that they learned of the existence of the document of sale in the year 1967.  As to the heirs of Emiliano Aying and Simeon Aying, there is no clear evidence of the date when they discovered the document conveying the subject land to petitioner.  Petitioner miserably failed to adduce proof of when the heirs of Emiliano Aying and Simeon Aying were notified of the subject document.  Hence, with regard to said heirs, the Court may consider the admission in the amended complaint that they learned of the conveyance of the disputed land only in 1991 when petitioner sent notices to vacate to the occupants of the subject land, as the date from which the ten-year prescriptive period should be reckoned.

Respondents filed their Amended Complaint on December 6, 1993.[24] Thus, with regard to respondent heirs of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is already barred by prescription when said amended complaint was filed as they only had until 1977 within which to bring action.  As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property.

Evidently, laches cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took action to protect their interest well within the period accorded them by law.

With regard to petitioner’s argument that the provision of Article 1104 of the Civil Code, stating that a partition made with preterition of any of the compulsory heirs shall not be rescinded, should be applied, suffice it to say that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is not being rescinded.  In fact, its validity had been upheld but only as to the parties who participated in the execution of the same.  As discussed above, what was conveyed to petitioner was ownership over the shares of the heirs who executed the subject document.  Thus, the law, particularly, Article 1456 of the Civil Code, imposed the obligation upon petitioner to act as a trustee for the benefit of respondent heirs of Emiliano and Simeon Aying who, having brought their action within the prescriptive period, are now entitled to the reconveyance of their share in the land in dispute.

IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as follows:  The amended complaint of the heirs of Roberta Aying is DISMISSED on the ground of prescription.  However, the heirs of Emiliano Aying and Simeon Aying, having instituted the action for reconveyance within the prescriptive period, are hereby DECLARED as the LAWFUL OWNERS of a 2/8 portion of the parcel of land covered by Original Certificate of Title No. RO-2856.

SO ORDERED.

Caro vs. Sucaldito g.r.no.157536, May 16, 2005

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 45503, affirming the dismissal of Civil Case No. 15529 by the Regional Trial Court (RTC) of Iloilo City, Branch 39, as well as the resolution denying the motion for reconsideration thereof.

The antecedent facts are as follows:

Gregorio Caro bought a parcel of land known as Assessor’s Lot No. 160 from Ruperto Gepilano as evidenced by a Deed of Sale[2] dated October 21, 1953.  The said lot was situated inSitio Bangyan, Barrio Calaya, Municipality of Nueva Valencia, Iloilo City, consisting more or less of 17.9849 hectares.  Thereafter, Gregorio Caro sold a portion of the said lot to his son Melchor Caro, consisting of 70,124 square meters, and now identified as Lot No. 4512 of the Cadastral survey of Nueva Valencia, Pls-775. Father and son executed a Deed of Definite Sale[3] dated January 31, 1973 covering Lot No. 4512.

On August 1, 1974, Melchor Caro applied for a free patent before the Bureau of Lands, District Land Office No. 6-1, covering the said area of the property which he bought from his

father. The application was, however, opposed by Deogracias de la Cruz. On November 6, 1980, the Regional Director rendered a Decision[4] canceling the said application, thusly:

This is a claim of Deogracias de la Cruz to Lot No. 4512, Pls-775 of Calaya, Nueva Valencia, Guimaras, covered by the above-noted application of Melchor Caro.

In the investigation, respondent claims preferential rights over the land as he acquired it through sale from his father Gregorio Caro who had likewise bought the land from Ruperto Cepellano (sic) in 1953. On the other hand, protestant De la Cruz testified that the land in controversy was bought by him from Cipriano Gallego in 1965; that he thereafter occupied, possessed and improved the land by planting coconut trees; and that in 1968 he was forcibly driven out by Gregorio Caro from the land in question.

Verification of the records disclosed that the land which was actually sold to Gregorio Caro by Ruperto Gepellano (sic) is Assessor’s Lot No. 160. The description and physical identity of Lot No. 160 is basically different and distinct from Lot No. 4512, the land in question. This could be clearly seen in the Certified True Copy of the Sketch Plan from the Assessor’s Office of Assessor’s Lot No. 160 and the Sketch Plan marked as Exhibit 9 of the Respondent-Applicant. It has been established that Assessor’s Lot No. 160 corresponds to Lot No. 4511 and not Lot No. 4512 claimed by the protestant. Moreover, Ruperto Cepellano (sic) in his affidavit testified that what he sold to Gregorio Caro is a land distinct and different from the land in question.

IN VIEW OF THE FOREGOING FINDINGS, it is ordered that the F.P.A. No. (VI-1)8548 of applicant-respondent Melchor Caro be, as hereby it is, cancelled. Protestant Deogracias de la Cruz if qualified, is given one hundred twenty (120) days from the finality of this decision to file an appropriate public land application otherwise he shall lose his preferential right thereto.

SO ORDERED.[5]

Caro filed a notice of appeal before the Regional Land Office in Iloilo City, docketed as MNR Case No. 5207. However, the appeal was dismissed in an Order[6] dated June 29, 1982, on the ground of failure to file an appeal memorandum within the reglementary period therefor.

On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No. 4512, filed an Application for a Free Patent[7] covering the said lot, and was issued Free Patent No. 597599. Consequently, the Register of Deeds of Iloilo City issued Original Certificate of Title (OCT) No. F-27162 in her favor. Sucaldito then filed a Petition for Writ of Possession [8] before the RTC of Iloilo City, which was granted in an Order[9] dated May 7, 1984.

Thereafter, on February 20, 1984, Caro filed a Complaint[10] against Sucaldito for “Annulment of Title, Decision, Free Patent and/or Recovery of Ownership and/or Possession with Damages” before the RTC of Iloilo City.  He later filed an amended complaint,[11] alleging that he was the owner of the subject lot, and had been in possession of the same “since 1953 and/or even prior thereto in the concept of owner, adversely, openly, continuously and notoriously.” He further alleged that the said lot had been declared for tax purposes in his name and that of his predecessors-in-interest, and that the corresponding land taxes had been paid therefor. He claimed that Assessor’s Lot No. 160 had actually been divided into two lots, namely, Lot No. 4511 and Lot No. 4512; Sucaldito had actually been claiming Lot No. 989 (Lot No. 4512), which was located two kilometers away. He lamented that despite the overwhelming evidence proving his ownership and possession of the said property, the Bureau of Lands did not award it to him.

Caro further alleged that since the issuance of the free patent over the subject lot in favor of Sucaldito was wrongful and fraudulent, she had no right whatsoever over the subject lot.   Hence, as a “trustee of a constructive trust,” she was obliged to return the same to him as the lawful owner. The complaint contained the following prayer:

WHEREFORE, it is prayed that judgment be rendered:

1.       Ordering the annulment and voiding of the decision of the Bureau of Lands, the free patent and the Original Certificate of Title No. F-27162 or in the alternative;

2.       Ordering defendant to reconvey the ownership and in the event she wrests possession from plaintiff then, also the possession of Lot 4512 PLS-775 of Nueva Valencia, Guimaras Cadastre, back to plaintiff;

3.       Declaring plaintiff as the lawful owner and possessor of Lot 4512 PLS-775 of Nueva Valencia, Guimaras Cadastre and ordering the issuance of a free patent or a torrens title in favor of plaintiff;

4.       Ordering defendant to pay the plaintiff P50,000.00 as moral damages, P2,000.00 as attorney’s fees and P2,000.00 as expenses on litigation plus exemplary damages in an amount at the discretion of this Court.

Plaintiff further prays for such other relief just and equitable in the premises.[12]

In her answer with counterclaim, Sucaldito interposed, as a special affirmative defense, the fact that she intervened in the proceedings on Caro’s application for a free patent over Lot No. 4512 before the Bureau of Lands having bought the subject land from De la Cruz. Moreover, contrary to the allegations of the petitioner, Lot No. 989 and Lot No. 4512 were one and the same lot, as per the findings of the Bureau of Lands.

The parties thereafter presented evidence to prove their respective claims. In a Decision[13] dated December 7, 1993, the trial court ruled in favor of the respondent and dismissed the petitioner’s complaint. The dispositive portion reads:

WHEREFORE, premises considered, the complaint filed by plaintiff is dismissed. The counterclaim of defendant which is merely the result of the filing of the complaint, is likewise dismissed.

Costs against the plaintiff.

SO ORDERED.[14]

Citing the case of Maximo v. Court of First Instance of Capiz, Br.  III,[15] the trial court ruled that Caro had no personality to file the action for the annulment of the free patent issued in favor of Sucaldito, which could only be brought by the Solicitor General. It held that “an applicant for a free patent who is not the owner of a parcel of land cannot bring an action in court to recover the land, for the court may not usurp the authority of the Director of Lands and the Secretary of Agriculture to dispose lands of the public domain through administrative proceedings under the Public Land Act,”[16] or Commonwealth Act No. 141, as amended. The trial court further stressed that the remedy of a rival-applicant for a free patent over the same land was through administrative channels, not judicial, because even if the oppositor succeeds in annulling the title of the applicant, the former does not thereby become the owner of the land in dispute.[17]

The trial court also declared that contrary to Caro’s claims, the evidence clearly showed that Lot No. 4512, with an area of 70,677 square meters, was not included in Assessor’s Lot No. 160, thus:

Assessor’s Lot 160 is Cadastral Lot 4511, which has an original area of around 17 hectares, more or less, later on, increased to 21 hectares. If we add Lot 4512 to Lot 4511 following the contention of the plaintiff, then the area would be more than 28 hectares. Thus, belying the claim of plaintiff that Lot 4512 was formerly a part of Assessor’s Lot 160.

The contention of the plaintiff that the defendant is claiming Lot 989 which is owned by Felix Galabo and located at Brgy. Olacon, is not well taken, because the identification of the lot as stated in the tax declaration is not binding and conclusive. What is binding and conclusive is what is stated in the title of the land and its technical description. In the technical description as found in the title of the defendant [Sucaldito], it is clearly stated therein that the lot is Lot 4512 and is located at Brgy. Calaya and not Brgy. Olacon, Nueva Valencia, Guimaras.[18]

Aggrieved by the trial court’s ruling, Caro elevated the case to the CA on the following grounds:

I

THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO PERSONALITY TO BRING THE ACTION;

II

THE COURT A QUO ERRED IN RULING THAT EVEN IF THE PLANTIFF HAS THE PERSONALITY TO BRING THE ACTION STILL HE CANNOT RECOVER THE LOT IN QUESTION, CAD. LOT NO. 4512;

III

THE COURT ERRED IN NOT ORDERING THE DEFENDANT TO RECONVEY THE LAND IN QUESTION TO PLAINTIFF AND TO PAY DAMAGES.[19]

The CA dismissed the petition in its Decision [20] dated July 31, 2002. The appellate court agreed with the ruling of the RTC that the petitioner had no personality to file the action under Section 101 of Commonwealth Act No. 141, considering further that he was a mere applicant for a free patent. Citing several cases,[21] the appellate court ruled that the findings of fact made by administrative agencies which are supported by substantial evidence must be respected, particularly where the question demands the exercise of sound administrative discretion requiring special knowledge and experience.[22]

Caro filed a motion for reconsideration of the said decision, which the appellate court denied in a Resolution[23] dated February 7, 2003.

Caro, now the petitioner, assails the ruling of the appellate court on the following grounds:

THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR IN HOLDING THAT PETITIONER HAS NO LEGAL PERSONALITY TO FILE THIS ACTION;

THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE APPEAL INTERPOSED BY PETITIONER ON THE GROUND THAT ONLY THE SOLICITOR GENERAL CAN FILE AN ACTION FOR RECONVEYANCE OF PROPERTY ACQUIRED BY PATENT.[24]

The petitioner insists that contrary to the ruling of the CA, he has the legal personality to bring and institute the present action against the respondent, considering that title issued on the basis of a patent is annullable on the ground of fraud.  Furthermore, the one-year period within which to file an action to cancel a torrens title under Section 32 of Presidential Decree No. 1529 does not apply where the registered owner, or the successor-in-interest, knew that the property described in the title actually belongs to another, as in this case. The petitioner cites Vital v. Anore, et al.[25]to bolster his claim. The petitioner also cites Director of Lands v. Abanilla[26] where the Court stressed that any false statement in the application, which is an essential condition of the patent or title under Section 91 of Commonwealth Act No. 141, “shall ipso facto produce the cancellation of the concession, title or permit granted.”

In her comment, the respondent points out that the decision of the Bureau of Lands itself would show that the petitioner is not the true and lawful owner of the subject lot; as such, the argument that he has the legal personality to file the action for annulment of patent based on constructive trust is untenable. The respondent further contends that the CA did not err in upholding the ruling of the RTC.

The petitioner merely reiterated his previous arguments in his Reply dated December 30, 2003.

The Court agrees with the ruling of the RTC and the CA, and holds that the petitioner has no personality to file a suit for reconveyance of the subject property.

The Court notes that the petitioner’s complaint before the RTC prays for the annulment of the free patent issued in the respondent’s favor. Considering that the ultimate relief sought is for the respondent to “return” the subject property to him, it is in reality an action for reconveyance.  In De Guzman v. Court of Appeals,[27] the Court held that “[t]he essence of an action for reconveyance is that the decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property which has been wrongfully or erroneously registered in another person’s name, to its rightful owner or to one with a better right.” [28] Indeed, in an action for reconveyance filed by a private individual, the property does not go back to the State.[29]

Reversion, on the other hand, is an action where the ultimate relief sought is to revert the land back to the government under the Regalian doctrine. Considering that the land subject of the action originated from a grant by the government, its cancellation is a matter between the grantor and the grantee.[30]

Under Section 2, Rule 3 of the Rules of Court,[31] every action must be prosecuted or defended in the name of the real party-in-interest, or one “who stands to be benefited or injured by the judgment in the suit.” Corollarily, legal standing has been defined as a personal and substantial interest in the case, such that the party has sustained or will sustain direct injury as a result of the challenged act. Interest means a material interest in issue that is affected by the questioned act or instrument, as distinguished from a mere incidental interest in the question involved.[32]

Clearly then, a suit filed by one who is not a party-in-interest must be dismissed. In this case, the petitioner, not being the owner of the disputed property but a mere applicant for a free patent, cannot thus be considered as a party-in-interest with personality to file an action for reconveyance. The Court, citing several of its holdings, expounded on this doctrine in Tankiko v. Cezar [33]  as follows:

… Thus, in Lucas v. Durian  [102 Phil. 1157 (1957)], the Court affirmed the dismissal of a Complaint filed by a party who alleged that the patent was obtained by fraudulent means and, consequently, prayed for the annulment of said patent and the cancellation of a certificate of title. The Court declared that the proper party to bring the action was the government, to which the property would revert. Likewise affirming the dismissal of a Complaint for failure to state a cause of action, the Court in Nebrada v. Heirs of Alivio [104 Phil. 126 (1958)] noted that the plaintiff, being a mere homestead applicant, was not the real party-in-interest to institute an action for reconveyance. …

...

Verily, the Court stressed that “ … [i]f  the suit is not brought in the name of or against the real party-in-interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action [Travel Wide v. CA, 199 SCRA 205, 209 (1991), per Cruz, J. See also Suguister v. Tamayo, 176 SCRA 579, August 21, 1989].  In fact, a final judgment may be invalidated if the real parties-in-interest are not included. This was underscored by the Court in Arcelona v. CA [280 SCRA 20, October 2, 1997], in which a final judgment was nullified because indispensable parties were not impleaded.

In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore, not being the owners of the land but mere applicants for sales patents thereon, respondents have no personality to file the suit. Neither will they be directly affected by the judgment in such suit.[34]

In De la Peña v. Court of Appeals,[35] the Court, in dismissing the petitioner’s imputation of fraud in securing a free patent and title over a parcel of land, declared that reconveyance is a remedy granted only to the owner of the property alleged to be erroneously titled in another’s name.[36] The Court further expounded:

Persons who have not obtained title to public lands could not question the titles legally issued by the State [Reyes v. Rodriguez, 62 Phil. 771, 776 (1936)]. In such cases, the real party-in-interest is the Republic of the Philippines to whom the property would revert if it is ever established, after appropriate proceedings, that the free patent issued to the grantee is indeed vulnerable to annulment on the ground that the grantee failed to comply with the conditions imposed by the law. Not being an applicant, much less a grantee, petitioner cannot ask for reconveyance.[37]

In VSC Commercial Enterprises, Inc. v. Court of Appeals,[38] where the private respondents therein were mere lessees of the property in question, the Court ruled that as mere lessees, they had “no present substantial and personal interest with respect to issues involving ownership of the disputed property.” The Court went on to declare:

… The only interest they have, in the event the petitioner’s title over the subject property is cancelled and ownership reverts to the State, is the hope that they become qualified buyers of the subject parcel of land. Undoubtedly, such interest is a mere expectancy. Even the private respondents themselves claim that in case of reversion of ownership to the State, they only have “pre-emptive rights” to buy the subject property; that their real interest over the said property is contingent upon the government’s consideration of their application as buyers of the same. It is settled that a suit filed by a person who is not a party-in-interest must be dismissed.[39]

In fact, Section 101 of Commonwealth Act No. 141 states –

Section 101. All actions for the reversion to the government of lands of the public domain or improvements thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the name of the Commonwealth [now Republic] of the Philippines.

This provision was applied and discussed in Sumail v. Judge of the Court of First Instance of Cotabato, et al.,[40] a case on all fours with the present one, as follows:

Under Section 101 of the above reproduced, only the Solicitor General or the officer acting in his stead may bring the action for reversion. Consequently, Sumail may not bring such action or any action which would have the effect of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the result that the land covered thereby will again form part of the public domain. Furthermore, there is another reason for withholding legal personality from Sumail. He does not claim the land to be his private property. In fact, by his application for a free patent, he had formally acknowledged and recognized the land to be a part of the public domain; this, aside from the declaration made by the cadastral court that lot 3633 was public land. Consequently, even if the parcel were declared reverted to the public domain, Sumail does not automatically become the owner thereof. He is a mere public land applicant like others who may apply for the same.

To reiterate, the petitioner is not the proper party to file an action for reconveyance that would result in the reversion of the land to the government.[41] The petitioner has no personality to “recover” the property as he has not shown that he is the rightful owner thereof.[42]

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R. CV No. 45503 and the Resolution dated February 7, 2003 are AFFIRMED.

SO ORDERED.

Intestate estate of alexander T. Ty.vs CA g.r.no.112872 April 19, 2001

MELO, J.:

Before the Court are two separate petitions for certiorari, G.R. 112872 under Rule 65 alleging grave abuse of discretion amounting to lack or excess of jurisdiction, and G.R. No.114672 under Rule 45 on purely questions of law. As these two cases involved the same parties and basically the same issues, including the main question of jurisdiction, the Court resolved to consolidate them.

On February 27, 2001, the Court issued its resolution in A.M. 00-9-03 directing the re-distribution of old cases such as the ones on hand. Thus, the present ponencia.

The antecedent facts are as follows:lawphil.net

Petitioner Sylvia S. Ty was married to Alexander T. Ty, son of private respondent Alejandro B. Ty, on January 11, 1981. Alexander died of leukemia on May 19, 1988 and was survived by his wife, petitioner Sylvia, and only child, Krizia Katrina. In the settlement of his estate, petitioner was appointed administratrix of her late husband’s intestate estate.

On November 4, 1992, petitioner filed a motion for leave to sell or mortgage estate property in order to generate funds for the payment of deficiency estate taxes in the sum of P4,714,560.00. Included in the inventory of property were the following:

1) 142,285 shares of stock in ABT Enterprises valued at P14,228,500.00;itc-alf

2) 5,000 shares of stock in Intercontinental Paper Industries valued at P500,000.00;

3) 15,873 shares of stock in Philippine Crystal Manufacturing, Inc. valued at P1,587,300.00;

4) 800 shares of stock in Polymart Paper Industries, Inc. valued at P80,000.00;itc-alf

5) 1,800 shares of stock in A.T. Car Care Center, Inc. valued at P188,000.00;

6) 360 shares of stock in Union Emporium, Inc. valued at P36,000.00;lawphil.net

7) 380 shares of stock in Lexty, Inc. valued at P38,000.00; and

8) a parcel of land in Biak-na-Bato, Matalahib, Sta. Mesa, with an area of 823 square meters and covered by Transfer Certificate of Title Number 214087.

Private respondent Alejandro Ty then filed two complaints for the recovery of the above-mentioned property, which was docketed as Civil Case Q-91-10833 in Branch 105 Regional Trial Court of Quezon City (now herein G.R. No. 112872), praying for the declaration of nullity of the deed of absolute sale of the shares of stock executed by private respondent in favor of the deceased Alexander, and Civil Case Q-92-14352 in Branch 90 Regional Trial Court of Quezon City (now G.R. No. 114672), praying for the recovery of the pieces of property that were placed in the name of deceased Alexander by private respondent, the same property being sought to be sold out, mortgaged, or disposed of by petitioner. Private respondent claimed in both cases that even if said property were placed in the name of deceased Alexander, they were acquired through private respondent’s money, without any cause or consideration from deceased Alexander.

Motions to dismiss were filed by petitioner. Both motions alleged lack of jurisdiction of the trial court, claiming that the cases involved intra-corporate dispute cognizable by the Securities and Exchange Commission (SEC). Other grounds raised in G.R. No. 114672 were:

1) An express trust between private respondent Alejandro and his deceased son Alexander:itc-alf

2) Bar by the statute of limitations;

3) Private respondent’s violation of Supreme Court Circular 28-91 for failure to include a certification of non-forum shopping in his complaints; and

4) Bar by laches.lawphil.net

The motions to dismiss were denied. Petitioner then filed petitions for certiorari in the Court of Appeals, which were also dismissed for lack of merit. Thus, the present petitions now before the Court.

Petitioner raises the issue of jurisdiction of the trial court. She alleges that an intra-corporate dispute is involved. Hence, under Section 5(b) of Presidential Decree 902-A, the SEC has jurisdiction over the case. The Court cannot agree with petitioner.

Jurisdiction over the subject matter is conferred by law (Union Bank of the Philippines vs. Court of Appeals, 290 SCRA 198 [1998]). The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff (Serdoncillo vs. Benolirao, 297 SCRA 448 [1998]; Tamano vs. Ortiz, 291 SCRA 584 [1998]), irrespective of whether or not plaintiff is entitled to recover upon all or some of the claims asserted therein (Citibank, N.A. vs. Court of Appeals, 299 SCRA 390 [1998]). Jurisdiction cannot depend on the defenses set forth in the answer, in a motion to dismiss, or in a motion for reconsideration by the defendant (Dio vs. Conception, 296 SCRA 579 [1998]).

Petitioner argues that the present case involves a suit between two stockholders of the same corporation which thus places it beyond the jurisdictional periphery of regular trial courts and more within the exclusive competence of the SEC by reason of Section 5(b) of Presidential Decree 902-A, since repealed. However, it does not necessarily follow that when both parties of a dispute are stockholders of a corporation, the dispute is automatically considered intra-corporate in nature and jurisdiction consequently falls with the SEC. Presidential Decree 902-A did not confer upon the SEC absolute jurisdiction and control over all matters affecting corporations, regardless of the nature of the transaction which gave rise to such disputes (Jose Peneyra, et. al. vs. Intermediate Appellate Court, et. al., 181 SCRA 245 [1990] citing DMRC Enterprises vs. Este del Sol Mountain Reserve, Inc., 132 SCRA 293 [1984]). The better policy in determining which body has jurisdiction over this case would be to consider, not merely the status of the parties involved, but likewise the nature of the question that is the subject of the controversy (Viray vs. Court of Appeals, 191 SCRA 309 [1990]). When the nature of the controversy involves matters that are purely civil in character, it is beyond the ambit of the limited jurisdiction of the SEC (Saura vs. Saura, Jr., 313 SCRA 465 [1999]).

In the cases at bar, the relationship of private respondent when he sold his shares of stock to his son was one of vendor and vendee, nothing else. The question raised in the complaints is whether or not there was indeed a sale in the absence of cause or consideration. The proper forum for such a dispute is a regular trial court. The Court agrees with the ruling of the Court of Appeals that no special corporate skill is necessary in resolving the issue of the validity of the

transfer of shares from one stockholder to another of the same corporation. Both actions, although involving different property, sought to declare the nullity of the transfers of said property to the decedent on the ground that they were not supported by any cause or consideration, and thus, are considered void ab initiofor being absolutely simulated or fictitious. The determination whether a contract is simulated or not is an issue that could be resolved by applying pertinent provisions of the Civil Code, particularly those relative to obligations and contracts. Disputes concerning the application of the Civil Code are properly cognizable by courts of general jurisdiction. No special skill is necessary that would require the technical expertise of the SEC.

It should also be noted that under the newly enacted Securities Regulation Code (Republic Act No. 8799), this issue is now moot and academic because whether or not the issue is intra-corporate, it is the regional trial court and not longer the SEC that takes cognizance of the controversy. Under Section 5.2 of Republic Act No. 8799, original and exclusive jurisdiction to hear and decide cases involving intra-corporate controversies have been transferred to courts of general jurisdiction or the appropriate regional trial court.

Other issues raised by the petitioner in G.R. No. 114672 are equally not impressed with merit.

Petitioner contends that private respondent is attempting to enforce an unenforceable express trust over the disputed real property. Petitioner is in error when she contends that an express trust was created by private respondent when he transferred the property to his son. Judge Abraham P. Vera, in his order dated March 31, 1993 in Civil Case No. Q-92-14352, declared:

… [e]xpress trusts are those that are created by the direct and positive acts of the parties, by some writing or deed or will or by words evidencing an intention to create a trust. On the other hand, implied trusts are those which, without being expressed, are deducible from the nature of the transaction by operation of law as matters of equity, independently of the particular intention of the parties. Thus, if the intention to establish a trust is clear, the trust is express; if the intent to establish a trust is to be taken from circumstances or other matters indicative of such intent, then the trust is implied (Cuaycong vs. Cuaycong, 21 SCRA 1191 [1967].

In the cases at hand, private respondent contends that the pieces of property were transferred in the name of the deceased Alexander for the purpose of taking care of the property for him and his siblings. Such transfer having been effected without cause of consideration, a resulting trust was created.

A resulting trust arises in favor of one who pays the purchase money of an estate and places the title in the name of another, because of the presumption that he who pays for a thing intends a beneficial interest therein for himself. The trust is said to result in law from the acts of the parties. Such a trust is implied in fact (Tolentino, Civil Code of the Philippines, Vol. 4, p. 678).

If a trust was then created, it was an implied, not an express trust, which may be proven by oral evidence (Article 1457, Civil Code), and it matters not whether property is real or personal (Paras, Civil Code of the Philippines, Annotated, Vol. 4, p. 814).

Petitioner’s assertion that private respondent’s action is barred by the statute of limitations is erroneous. The statute of limitations cannot apply in this case. Resulting trusts generally do not prescribe (Caladiao vs. Vda. de Blas, 10 SCRA 691 [1964]), except when the trustee repudiates the trust. Further, an action to reconvey will not prescribe so long as the property stands in the name of the trustee (Manalang, et. al. vs. Canlas, et. al., 94 Phil. 776 [1954]). To allow prescription would be to permit a trustee to acquire title against his principal and the true owner.

Petitioner is also mistaken in her contention that private respondent violated Supreme Court Circular 28-91, dated September 17, 1991 and transfer having been effected without cause of consideration, a resulting trust was created.

A resulting trust arises in favor of one who pays the purchase money of an estate and places the title in the name of another, because of the presumption that he who pays for a thing intends a beneficial interest therein for himself. The trust is said to result in law from the acts of the parties. Such a trust is implied in fact (Tolentino, Civil Code of the Philippines, Vol. 4, p. 678).

If a trust was then created, it was an implied, not an express trust, which may be proven by oral evidence (Article 1457, Civil Code), and it matters not whether property is real or personal (Paras, Civil Code of the Philippines, Annotated, Vol. 4, p. 814).1âwphi1.nêt

Petitioner’s assertion that private respondent’s action is barred by the statute of limitations is erroneous. The statute of limitations cannot apply in this case. Resulting trusts generally do not prescribe (Caladiao vs. Vda. de Blas, 10 SCRA 691 [1964]), except when the trustee repudiates the trust. Further, an action to reconvey will not prescribe so long as the property stands in the name of the trustee (Manalang, et. al. vs. Canlas, et. al., 94 Phil. 776 [1954]). To allow prescription would be to permit a trustee to acquire title against his principal and the true owner.

Petitioner is also mistaken in her contention that private respondent violated Supreme Court Circular 28-91, dated September 17, 1991 and transfer having been affected without cause of consideration, a resulting trust was created.

A resulting trust arises in favor of one who pays the purchase money of an estate and places the title in the name of another, because of the presumption that he who pays for a thing intends a beneficial interest therein for himself. The trust is said to result in law from the acts of the parties. Such a trust is implied in fact (Tolentino, Civil Code of the Philippines, Vol. 4, p. 678).

If a trust was then created, it was an implied, not an express trust, which may be proven by oral evidence (Article 1457, Civil Code), and it matters not whether property is real or personal (Paras, Civil Code of the Philippines, Annotated, Vol. 4, p. 814).

Petitioner’s assertion that private respondent’s action is barred by the statute of limitations is erroneous. The statute of limitations cannot apply in this case. Resulting trusts generally do not prescribe (Caladiao vs. Vda. de Blas, 10 SCRA 691 [1964]), except when the trustee repudiates the trust. Further, an action to reconvey will not prescribe so long as the property stands in the name of the trustee (Manalang, et. al. vs. Canlas, et. al., 94 Phil. 776 [1954]). To allow prescription would be to permit a trustee to acquire title against his principal and the true owner.

Petitioner is also mistaken in her contention that private respondent violated Supreme Court Circular 28-91, dated September 17, 1991 and which took effect on January 1, 1992. Although Section 5, Rule 7 of the 1997 Rules on Civil Procedure makes the requirement of filing a verification and certificate of non-forum-shopping applicable to all courts, this cannot be applied in the case at bar. At the time the original complaint was first filed on December 10 (for G.R. 112872) and 28 (for G.R. 114672), 1992, such certification requirement only pertained to cases in the Court of Appeals and the Supreme Court. The Revised Circular 28-91, which covered the certification requirement against non-forum shopping in all courts, only took effect April 1, 1994. Further, the subject heading of the original circular alone informs us of its topic: that of additional requisites for petitions filed with the Supreme Court and the Court of Appeals to prevent forum shopping or multiple filing of petitions and complaints. Section 1 of the Circular makes it mandatory to include the docket number of the case in the lower court or quasi-judicial agency whose order or judgment is sought to be reviewed. Such a requirement clearly indicates that the Circular only applies to actions filed with the Court of Appeals and the Supreme Court.

Contrary to what petitioner contends, there could be no laches in this case. Private respondent filed his complaint in G.R. No. 112872 on December 10, 1992 (later amended on December 23, 1992) and in G.R. No. 114672 on December 28, 1992, only over a month after petitioner filed in the probate proceedings a petition to mortgage or sell the property in dispute. Private respondent’s actions were in fact very timely. As stated in the complaints, private respondent instituted the above actions as the property were in danger of being sold to a third party. If there were no pending cases to stop their sale, he would no longer be able to recover the same from an innocent purchaser for value.

Withal, the Court need not go into any further discussion on whether the trial court erred in issuing a writ of preliminary injunction.1âwphi1.nêt

WHEREFORE, the petition for certiorari in G.R. No. 112872 is DISMISSED, having failed to show that grave abuse of discretion was committed in declaring that the regional trial court had jurisdiction over the case. The petition for review on certiorari in G.R. 114672 is DENIED, having found no reversible error was committed.

SO ORDERED.

Sta.Ana vs. Panlasique g.r.no.152652, August 31, 2006

D E C I S I O N

CARPIO MORALES, J.:

Two parcels of land situated at Barrio Pineda, Pasig City, Lots 13-A and 13-B, each containing an area of 225 square meters, were registered in the Registry of Deeds for the Province of Rizal in the name of Petronilo Sta. Ana (Petronilo), married to Anatolia dela Rosa (Anatolia), under Transfer Certificate of Title No. 389002.

Petronilo died on March 22, 1980 leaving behind his widow Anatolia and ten children.

In 1984, Nicolas, one of the ten children of the Sta Ana couple, died leaving behind two children, Annaliza and Andrea.

On April 8, 1988, Anatolia, together with eight of her living children and Fe Sta Ana, the wife of her eldest child-herein petitioner Teodoro Sta. Ana (Teodoro) who was then abroad, executed a Deed of Sale covering Lot 13-A in favor of herein respondents Lourdes Panlasigue (Lourdes) and Julieta P. Santiago (Julieta). On even date, Anatolia, together with the same eight children and Teodoro’s wife Fe, donated Lot 13-B to Ireneo Sta. Ana (Ireneo), one of the Sta. Ana children, via a "Deed of Extrajudicial Partition and Donation" 1 stating, inter alia, as follows, quoted verbatim:

x x x x

That they are the only legitimate surviving spouses and children who survive the deceased Petronilo Sta. Ana.

That the said decedent [Petronilo Sta. Ana] died without leaving any will.

That the deceased left no debts;

x x x x

That the deceased left a certain residential lot [Lot 13-B] situated at Pasig Metro Manila and more particularly described and bounded as follows:

x x x x

That for and in consideration of the love and affection which the aforenamed parties hereinafter referred to as DONORS, hold for IRENEO, hereinafter referred to as DONEE, the DONORS do hereby transfers and conveys, by way of donation, into the DONEE Lot 13-B of TCT No. 389002.

That the DONORS do hereby state for the purpose of giving full effect to this donation, that they reserved unto themselves in full ownerships other properties sufficient to support them in a manner appropriate to their stations;

That the DONEE does hereby state that he accept this donation and at the same time expresses his profound gratitude for this demonstration of affection and act of liberality on the part of the DONORS who by these presents also take notice of this acceptance; 2

The two documents were annotated on Petronilo’s title on May 6, 1988.

On August 20, 1996, Teodoro filed a Complaint 3 before the Pasig Regional Trial Court (RTC) against herein respondents-vendees of Lot 13-A, Lourdes and Julieta, and his brother-donee Ireneo along with the latter’s wife Candida Jarmin, for recovery of ownership and damages, docketed as Civil Case No. 65860.

In his complaint, Teodoro alleged that, inter alia, his "purported signature" in the Deed of Absolute Sale covering Lot 13-A as well as in the Deed of Extrajudicial Partition and Donation covering Lot 13-B was unauthorized and a forgery. He thus prayed for the court to order:

1. defendants Panlasigue and Santiago to reconvey unto the plaintiff his one-eighteenth (1/18) share in Lot 13-A;

2. defendants Ireneo Sta. and Jasmin Jarmin to reconvey unto the plaintiff his one-eighteenth (1/18) share in Lot 13-B;

3. defendants Ireneo Sta. Ana and Jasmin Jarmin, jointly and severally, to indemnify the plaintiff for moral damages of at least P100,000.00; exemplary damages of at least P50,000.00 and for attorney’s fees ofP50,000.00. 4 (Underscoring supplied)

In their Answer 5 to the Complaint, the defendants claimed that the sale of Lot 13-A and the donation of Lot 13-B were the collective decision of Anatolia and the rest of her children-co-heirs including Teodoro; and that the proceeds of the sale were used to underwrite the hospitalization expenses of Anatolia and the expenses incurred by Ireneo who took care of Anatolia during her lifetime.

On May 30, 1997, 6 Annaliza Sta. Ana and Andrea Sta Ana, children of Nicolas Sta. Ana (who, as earlier stated, died in 1984), filed a Complaint-In-Intervention 7 along with their motion for leave to file the same which was granted, alleging that they, as co-heirs, did not participate in the execution of the Deed of Sale and Deed of Extrajudicial Partition and Donation nor were they informed about it. Hence, they prayed for judgment ordering

1. defendants Panlasigue and Santiago to convey unto plaintiffs-intervenors their rightful share   in the property now covered by Transfer Certificate of Title No. 66276 of the Register of Deeds in Pasig City, and

2. defendants Sps. Irineo and Candida Sta. Ana to convey unto plaintiffs-intervenors their rightful share   in the property now covered by Transfer Certificate of Title No. 66275 of the Register of Deeds in Pasig City. 8(Underscoring supplied)

Answering the Complaint-In-Intervention, 9 the defendants proffered that "[t]here was a lot allotted to the deceased [Nicolas-]father of the intervenors which the latter could inherit by right of representation." 10

It appears that during the hearing of the cases, the defendants claimed that the properties of Petronilo had, before the execution of the challenged documents, been distributed among all his heirs and that Lot 13-A and Lot 13-B were the conjugal share of his wife Anatolia.

Finding the extra-judicial partition a nullity for lack of conformity of other compulsory heirs Teodoro, Annaliza and Andrea, Branch 160 of the RTC Pasig, by Decision of October 15, 1999, 11 nullified the challenged documents. Thus it:

1) Declar[ed] the extrajudicial partition as null and void;

2) Declar[ed]the Deed of Absolute Sale between some of the heirs and defendants Panlasigue and Santiago as null and void and [ordered the latter] to reconvey the property subject of Deed of Absolute Sale in favor of "Estate of Deceased Petronilo Sta. Ana" without prejudice to defendants Panlasigue and Santiago pursuing their claims against the Estate;

3) Declar[ed]as null and void the Deed of Donation in favor of defendants Irineo Sta. Ana and Candida Jarmin-Sta. Ana and [ordered] them to reconvey the property likewise to the estate   without prejudice to their filing of claim for whatever they have incurred for the hospitalization expenses and death of deceased mother Anatolia as provided by law. 12 (Underscoring supplied)

Ireneo and his wife, Lourdes and Julieta, filed separate notices of appeal to the Court of Appeals.

Ireneo and his wife faulted the trial court:

. . . IN DECLARING THE EXTRAJUDICIAL PARTITION AS NULL AND VOID.

. . . IN DECLARING THE DEED OF DONATION IN FAVOR OF DEFENDANT-APPELLANTS IRENEO STA. ANA AND CANDIDA JARMIN-STA. ANA NULL AND VOID.

. . . IN NOT ORDERING THE PLAINTIFF-APPELLEE TO PAY THE DEFENDANTS-APPELLANTS MORAL AND EXEMPLARY DAMAGES. 13

On the other hand, Lourdes and Julieta ascribed to the trial court the following errors:

I. . . . DECLARING THAT THERE WAS NO VALID PARTITION BETWEEN THE PARTIES.

II. . . . DECLARING THE DEED OF SALE BETWEEN ANATOLIA STA. ANA AND DEFENDANT-APPELLANTS PANLASIGUE AND SANTIAGO NULL AND VOID.

III. . . . NOT FINDING THAT THE RIGHT OF PLAINTIFF-APPELLEE TO QUESTION THE TITLE OF DEFENDANT-APPELLANTS PANLASIGUE AND SANTIAGO OVER THE SUBJECT PROPERTY HAS ALREADY PRESCRIBED.

IV. . . . NOT DISMISSING THE COMPLAINT AND RENDERING JUDGMENT IN FAVOR OF DEFENDANT-APPELLANTS SANTIAGO AND PANLASIGUE AND AGAINST PLAINTIFF-APPELLEE UNDER THE FORMER’S COUNTERCLAIM. 14

The appellate court discredited the defendants’ claim "that after the death of Petronilo Sta Ana but before 1988 [when the challenged documents were executed], his heirs consisting of his surviving wife and their [living] nine (9) children agreed orally to extrajudicially partition his estate and adjudicate to the mother Anatolia Lots 13-A and 13-B," 15 in light of the fact that Anatolia’s children participated in the execution of the documents as owners and donors. It thus held that the two lots were co-owned by Anatolia and her children.

Applying Article 493 of the Civil Code which provides:

Each co-owner shall have the full ownership   of his part and of the fruits and benefits pertaining thereto, and hemay alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him   in the division upon the termination of the co-ownership. (Underscoring supplied),

the appellate court held that the trial court erred in nullifying the assailed documents as in fact it noted that Teodoro and the intervenors-children of Nicolas merely prayed for reconveyance of their respective shares of the lots, and not for the declaration of nullity of said documents.

The appellate court thus concluded:

The [two lots] belonged to the heirs in the following proportion: one-half ( 1 / 2) share to Anatolia as her share in the conjugal partnership; whereas all nine (9) [sic] children plus Anatolia shared in the other one-half (1/2) belonging to Petronilo in shares of 1/10 each (Art. 996, Civil Code). Otherwise stated, all the heirs were entitled to one-twentieth ( 1 / 20) share of the property except Anatolia who was entitled to eleven-twentieth ( 11 / 20)   share thereof. With regard to the intervenors, the 1/20 share of their deceased father shall be divided between them since they succeed by right of representation (Art. 974, Civil Code). And having affixed their signatures thereto, all the heirs are conclusively presumed to have admitted the regularity and validity of the deeds of sale and donation insofar as their respective portions were concerned. Needless to state, both the deed of sale and deed of partition with donation are valid. 16 (Underscoring supplied)

Respecting the complaint of the intervenors, the appellate court held that they, as heirs of their father Nicolas, were not bound by the deeds, they not having participated therein, hence, they were entitled to their father’s "1/20[sic] share."

Respecting Teodoro’s claim that he had no knowledge of the execution on his behalf by his wife of the two documents, the appellate court discredited the same, it noting that there was evidence that he had knowledge of the illness and treatment of his then sick mother, the expenses for which were shouldered by his brother Ireneo and his wife to thus necessitate the execution of the challenged documents.

In another vein, the appellate court found plaintiff to be guilty of laches.

Thus, applying Art. 1101 of the Civil Code which provides:

Art. 1101. The heir who is sued shall have the option of indemnifying the plaintiff for the loss, or consenting to a new partition.

Indemnity may be made by payment in cash or by the delivery of a thing of the same kind and quality as that awarded to the plaintiff.

x x x x ,

the appellate court disposed as follows:

WHEREFORE, the Decision appealed from is REVERSED and SET ASIDE. In lieu thereof, judgment is renderedordering   defendants   to reconvey to intervenors-appellees their   1 / 20  share   of the property or its equivalent in money . The case filed by plaintiff-appellee Teodoro Sta. Ana is DISMISSED. With costs against the plaintiff-appellee. 17 (Emphasis and underscoring supplied)

Hence, the present petition for review on certiorari filed by Teodoro (hereafter petitioner), raising the following arguments:

1. The extra-judicial partition is null and void.

2. The deed of sale between Anatolia Sta. Ana and Respondents Panlasigue and Santiago is null and void.

3. The right of Petitioner to question the title of Respondents Panlasigue and Santiago over the subject property has neither prescribed nor been barred by laches. 18

The first and second arguments of petitioner fail. The finding of the appellate court that the challenged deeds are not null and void is in accordance with law and evidence, as reflected in the discussion above. Indeed, that the living children of Petronilo joined Anatolia in the execution of the documents clearly shows that they were co-owners of the lots. As such, they were at liberty to alienate their respective shares of the lots.

Respecting the last argument on laches, petitioner maintains that he had "no knowledge of the execution on his behalf by his wife" of the challenged documents, he being then out of the country.

At the witness stand, however, petitioner declared on direct examination as follows:

Q. Mr. Sta. Ana, when you learned that lot 13-A was sold to defendant Lourdes Panlasique and Julieta Santiago, what did you do?

A. I was abroad at that time and when I arrived what I saw was the house was being constructed already. 19

And on cross examination, he admitted that his wife signed for him in the documents but that she was forced to do so. 20

In any event, petitioner contends that even assuming arguendo that he is guilty of laches, the case had not prescribed, he citing Mariategui v. Court of Appeals 21 which held:

x x x Corollarily, prescription does not run against private respondents with respect to the filing of the action for partition so long as the heirs for whose benefit prescription is invoked, have not expressly or impliedly repudiated the

co-ownership. In other words, prescription of an action for partition does not lie except when the co-ownership is properly repudiated by the co-owner .

Otherwise stated, a co-owner cannot acquire by prescription the share of the other co-owners absent a clear repudiation of co-ownership duly communicated to the other co-owners. Furthermore, an action to demand partition is imprescriptible and cannot be barred by laches. x x x 22 (Emphasis and underscoring by petitioner)

Petitioner’s citation of Mariategui  is misplaced. His complaint is not one for partition, but for reconveyance.

Jurisprudence of course dictates that the "[t]he doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions, 23 unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are proven." 24

From the annotation on May 6, 1988 of the challenged documents on Petronilo’s title up to the filing by petitioner on August 20, 1996 of the complaint subject of the present case, a period of more than 8 years had elapsed. Gratuitously assuming that the action for reconveyance is based on implied trust, it

prescribes in 10 years. Therefore, petitioner’s complaint had not prescribed when he filed his complaint. The facts and circumstances attendant to the case reflected above indicate,

however, that there was inexcusable delay on the part of Teodoro in asserting his right and acquiescence in existing conditions.

The same situation does not hold true with respect to Nicolas’ heirs-complainants-in-intervention. Hence, laches cannot be attributed to them and, therefore, they are entitled to a reconveyance of their father’s share.

The share of the father of complainants-in-intervention in each of the two lots   should be 1/11 of ½ representing the share of each of the 10 siblings who were co-owners of said ½, along with their mother Anatolia. A modification of the sharing indicated in the decision of the appellate court is thus in order.

A further modification of the decision would also have been called for. For respondents-vendees had already paid for Lot 13-A, hence, no obligation for them to reconvey anything to the complainants-in-intervention arises. They, however, did not appeal the appellate court’s decision ordering all the defendants, including them - respondents-vendees, "to reconvey to intervenors-appellees" their share of the lot sold or its equivalent. Hence, they are bound by said decision which constitutes the law of the case.

WHEREFORE, the decision of the Court of Appeals is, in light of the foregoing discussions, AFFIRMED with MODIFICATION in that respondent-spouses Ireneo Sta. Ana are

ORDERED to contribute to the 1/11 share to be reconveyed to complainants-in-intervention in each of the two lots subject of the case representing the share of Nicolas Sta. Ana.

Costs against petitioner.

SO ORDERED.

  Case digests

Sta. Ana v. P antasique.gr.no.152652 August 31, 2006  

The doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions, unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are proven. 

Facts: Two parcels of land situated in Pasig City were registered in the name of Petronilo Sta. Ana who died leaving behind his widow Anatolia and ten children. After sometime, Nicolas, one of the ten children of the Sta. Ana couple, died leaving behind two children, Annaliza and Andrea. 

In 1988, Anatolia, together with eight of her living children and Fe Sta Ana, the wife of her eldest child-herein petitioner Teodoro Sta. Ana, who was then abroad, executed a Deed of Sale covering the first of the aforementioned lots in favor of herein respondents Lourdes Panlasigue and Julieta P. Santiago. On even date, Anatolia, together with the same eight children and Teodoro‘s wife Fe, donated the second lot to Ireneo Sta. Ana, one of the Sta. Ana children, via a ―Deed of Extrajudicial Partition and Donation. 

Teodoro, upon coming home to the country in 1996, filed a complaint alleging among others that he did not participate in the extrajudicial partition and donations relative to the conveyance of land in favor of Lourdes, Julieta and Ireneo. He prayed that his share be reconveyed back to him. 

The Regional Trial Court of Pasig held that the sale and donations were null and void. On appeal, the Court of Appeals reversed the lower court‘s decision holding that the sale and donations were not null and void. The CA also held that the right of Teodoro to question the title of Lourdes and Julieta has been barred by laches. 

Issue: Whether or not Teodoro‘s right to question the title of Lourdes, Julieta and Ireneo has been barred by laches 

Ruling: Jurisprudence of course dictates that the "[t]he doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions, unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are proven." 

From the annotation on May 6, 1988 of the challenged documents on Petronilo's title up to the filing by Teodoro on August 20, 1996 of the complaint subject of the present case, a period of more than 8 years had elapsed. Gratuitously assuming that the action for reconveyance is based on implied trust, it prescribes in 10 years. Therefore, Teodoro's complaint had not prescribed when he filed his complaint. The facts and circumstances attendant to the case indicate, however, that there was inexcusable delay on the part of Teodoro in asserting his right and acquiescence in existing conditions. 

 Aznar vs. Aying g.r no. 144733, May 16, 2005

FACTS Disputed property: Lot No. 4399 with an area of 34,325 square meters located at Dapdap, Lapu-Lapu City Crisanta Mallory-on petitioned for the issuance of a cadastral decree in her favor over the lot. After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in the name of Crisanta Maloloy-on’s eight children, namely: Juan, Caledonian,Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying. The certificate of title was, however, lost during the war. March 3, 1964 - The heirs of the Aying siblings executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, conveying the lot to Aznar Brothers Realty Company. The deed was registered under Act No. 3344 (the law governing registration for unregistered land), and since then, petitioner had been religiously paying real property taxes on said property. 1988 –Aznar filed a Petition for Reconstitution of the Original Title because it was lost during the war. April 12, 1988 - the court granted said petition and directed the RD to issue are constituted title in the name of the Aying siblings. OCT was issued.1991 - Aznar, claiming to be the rightful owner, sent out notices to the persons occupying the lot to vacate. Unheeded, Aznar filed a complaint for ejectment against the occupants. MTC ordered the occupants to vacate the property. Meanwhile, Respondents, along with other persons claiming to be descendants of the eight Aying siblings (220 persons in total) filed a complaint for cancellation of the Extra-Judicial Partition with Absolute Sale, recovery of ownership, injunction and damages with the RTC. Dismissed twice then re-filed. Respondents alleged that they are co-owners of the lot xxx the extra-judicial partition of real estate with deed of absolute sale is a fraud and is null and void ab initio because not all the co-owners of subject property affixed their signature on said document and some of the co-owners who supposedly signed said document had been dead at the time of the execution xxx

Aznar denied the respondent’s claims and allege that it had actual been in possessionof the land as owner by virtue of the extra-judicial partition of real property and deed of absolute sale executed in its favor xxx prescription of action because it took them more than 27 years to file the case (implied trust=4 years) RTC: In favor of Aznar. Cancel OCT and issue TCT in favor of Aznar. CA: Affirmed RTC but modified that 3/8 of the land belonged to the heirs of Emiliano Aying, Simeon Aying and Roberta Aying.

CA’s RATIO:An action for recovery of possession of registered land never prescribes under PD1520 to the effect that no title to registered land in derogation to that of a registered owner shall be acquired by prescription.Further, even if the action based on implied trust, prescription did not begin to run since there is no evidence that positive acts of repudiation were made known to the heirs who did not participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. 

The CA upheld the validity of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in the execution of said document.

Issue:WON the act of registration of the deed of partition with sale may be considered an unequivocal repudiation of the trust giving rise to prescription (Simply put:WON the action to file the action has prescribed)Yes, as regards the heirs of Roberta Aying and No, as regards the heirs of Emiliano and Pauline Aying.

Ruling: SC affirmed the validity of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale and it is binding only as to the heirs who participated in the execution.

 Hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not participate, cannot be bound by said document.

 However, the facts on record show that petitioner acquired the entire parcel of land with the mistaken belief that all the heirs have executed the subject document. 

 Thus, the applicable provision to this case is Article 1456 of the Civil Code which states: 

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

 InVda. De Esconde vs. Court of Appeals Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are super induced 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. 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. 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.

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. So, what is the applicable prescriptive period? An action for reconveyance based on a constructive trust must prescribe in 10years.

The ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property, but if the person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. 

In the present case, the heirs of the 3 Aying siblings, all testified that they had never occupied or been in possession of the land in dispute. Hence, the prescriptive period of ten years would apply to herein respondents. When should the 10-year period be reckoned considering that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344and not under the LRA? Registration operates as a constructive notice to the world If the land is registered under the LRA and it is sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered REGISTERED Since theExtra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under the LRA, said document is deemed not registered.The prescriptive period only began to run from the time respondents had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.  Notably, with regard to respondent heirs of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is already barred by prescription. As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property (remember they had no knowledge of the extra-judicial partition and Deed of Sale).

DISPOSITIVE: IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as follows: The amended complaint of the heirs of Roberta Aying is DISMISSED on the ground of prescription. However, the heirs of Emiliano Aying andSimeon Aying, having instituted the action for reconveyance within the prescriptive period, are hereby DECLARED as the LAWFUL OWNERS of a 2/8 portion of the parcel of land covered by Original Certificate of Title No. RO-2856.

Ty vs. CA gr. No.112872, April 19, 2001

Facts: Petitioner Sylvia S. Ty was married to Alexander T. Ty, son of private respondent Alejandro b. ty, on January 11, 1981. Alexander died of leukemia on May 19, 1988 and was survived by his wife, petitioner Silvia, and only child, Krista Katrina. In the settlement of his estate, petitioner was appointed administratrix of her late husband’s intestate estate. 

On November 4, 1992, petitioner filed a motion for leave to sell or mortgage estate property in order to generate funds for the payment of deficiency estate taxes in the sum of P4,714,560.00. 

Private respondent Alejandro Ty then filed two complaints for the recovery of the above-mentioned property, praying for the declaration of nullity of the deed of absolute sale of the shares of stock executed by private respondent in favor of the deceased Alexander, praying for the recovery of the pieces of property that were placed in the name of deceased Alexander, they were acquired through private-respondent’s money, without any cause or consideration from deceased Alexander. 

The motions to dismiss were denied. Petitioner then filed petitions for certiorari in the Courts of Appeals, which were also dismissed for lack of merit. Thus, the present petitions now before the Court. 

Issue: Whether or not an express trust was created by private respondent when he transferred the property to his son. 

Ruling: Private respondent contends that the pieces of property were transferred in the name of the deceased Alexander for the purpose of taking care of the property for him and his siblings. Such transfer having been effected without cause of consideration, a resulting trust was created. 

WHEREFORE, the petition for certiorari in G.R. No. 112872 is DISMISSED, having failed to show that grave abuse of discretion was committed in declaring that the regional trial court had jurisdiction over the case. The petition for review on certiorari in G.R. 114672 is DENIED, having found no reversible error was committed.Caro vs. Sucaldito g.r no. 157536 May 16, 2005

Facts: Gregorio Caro bought a parcel of land known as Assessor’s Lot No. 160 from Ruperto Gepilano as evidenced by a Deed of Sale, dated October 21, 1953. The said lot was situated in Sitio Bangyan, Barrio Calaya, Municipality of Nueva Valencia, Iloilo City, consisting more or less of 17.9849 hectares. Thereafter, Gregorio Caro sold a portion of the said lot to his son Melchor Caro, consisting of 70,124 square meters, and now identified as Lot No. 4512 of the Cadastral survey of Nueva Valencia, Pls-775. Father and son executed a Deed of Definite Sale dated January 31, 1973 covering Lot No. 4512.

On August 1, 1974, Melchor Caro applied for a free patent before the Bureau of Lands, District Land Office No. 6-1, covering the said area of the property which he bought from his father. The application was, however, opposed by Deogracias de la Cruz. On November 6, 1980, the Regional Director rendered a Decision canceling the said application,

Caro filed a notice of appeal before the Regional Land Office in Iloilo City. However, the appeal was dismissed in an Order dated June 29, 1982, on the ground of failure to file an appeal memorandum within the reglementary period therefor.

On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No. 4512, filed an Application for a Free Patent covering the said lot, and was issued Free Patent No. 597599. Consequently, the Register of Deeds of Iloilo City issued Original Certificate of Title (OCT) No. F-27162 in her favor. Sucaldito then filed a Petition for Writ of Possession before the RTC of Iloilo City, which was granted in an Order dated May 7, 1984.

On February 20, 1984, Caro filed a Complaint against Sucaldito for "Annulment of Title, Decision, Free Patent and/or Recovery of Ownership and/or Possession with Damages" before the RTC of Iloilo City

Caro further alleged that since the issuance of the free patent over the subject lot in favor of Sucaldito was wrongful and fraudulent, she had no right whatsoever over the subject lot. Hence, as a "trustee of a constructive trust," she was obliged to return the same to him as the lawful owner.

Aggrieved by the trial court’s ruling, Caro elevated the case to the CA.

Issue:

Whether or not Caro has the legal personality to file the action for annulment of patent based on the constructive trust.

Ruling:

The trial court declared that contrary to Caro’s claims, the evidence clearly showed that Lot No. 4512, with an area of 70,677 square meters, was not included in Assessor’s Lot No. 160.

The CA dismissed the petition in its Decision dated July 31, 2002. The appellate court agreed with the ruling of the RTC that the petitioner had no personality to file the action under Section 101 of Commonwealth Act No. 141, considering further that he was a mere applicant for a free patent. Citing several cases, the appellate court ruled that the findings of fact made by administrative agencies which are supported by substantial evidence must be respected, particularly where the question demands the exercise of sound administrative discretion requiring special knowledge and experience.

The Court agrees with the ruling of the RTC and the CA, and holds that the petitioner has no personality to file a suit for reconveyance of the subject property.

The Court notes that the petitioner’s complaint before the RTC prays for the annulment of the free patent issued in the respondent’s favor. Considering that the ultimate relief sought is for the respondent to "return" the subject property to him, it is in reality an action for reconveyance. In De Guzman v. Court of Appeals, the Court held that "[t]he essence of an action for

reconveyance is that the decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property which has been wrongfully or erroneously registered in another person’s name, to its rightful owner or to one with a better right." Indeed, in an action for reconveyance filed by a private individual, the property does not go back to the State.

Reversion, on the other hand, is an action where the ultimate relief sought is to revert the land back to the government under the Regalian doctrine. Considering that the land subject of the action originated from a grant by the government, its cancellation is a matter between the grantor and the grantee.

Under Section 2, Rule 3 of the Rules of Court, every action must be prosecuted or defended in the name of the real party-in-interest, or one "who stands to be benefited or injured by the judgment in the suit." Corollary, legal standing has been defined as a personal and substantial interest in the case, such that the party has sustained or will sustain direct injury as a result of the challenged act. Interest means a material interest in issue that is affected by the questioned act or instrument, as distinguished from a mere incidental interest in the question involved.

Clearly then, a suit filed by one who is not a party-in-interest must be dismissed. In this case, the petitioner, not being the owner of the disputed property but a mere applicant for a free patent, cannot thus be considered as a party-in-interest with personality to file an action for reconveyance.

To reiterate, the petitioner is not the proper party to file an action for reconveyance that would result in the reversion of the land to the government. The petitioner has no personality to "recover" the property as he has not shown that he is the rightful owner thereof.