G.R. No.

148788

November 23, 2007

plaintiff the true and lawful owner of the land more particularly described under paragraph 5 of the complaint and hereby orders defendant Concepcion Rojas: a) To vacate and surrender possession of the land to plaintiff; b) To pay plaintiff the sum of P34,000.00 actual damages, P10,000.00 for attorneys fees and litigation expenses; and c) To pay the costs.

SOLEDAD CAEZO, substituted by WILLIAM CAEZO and VICTORIANO CAEZO Petitioners, vs. CONCEPCION ROJAS, Respondent. DECISION NACHURA, J.:

SO ORDERED.7 This is a petition for review on certiorari from the Decision 1 of the Court of Appeals, dated September 7, 2000, in CA-G.R. SP No. 53236, and Resolution dated May 9, 2001. On January 29, 1997, petitioner Soledad Caezo filed a Complaint2 for the recovery of real property plus damages with the Municipal Trial Court (MTC) of Naval, Biliran, against her fathers second wife, respondent Concepcion Rojas. The subject property is an unregistered land with an area of 4,169 square meters, situated at Higatangan, Naval, Biliran. Caezo attached to the complaint a Joint Affidavit3 executed on May 10, 1979 by Isidro Catandijan and Maximina Caezo attesting to her acquisition of the property. In her complaint, the petitioner alleged that she bought the parcel of land in 1939 from Crisogono Limpiado, although the transaction was not reduced into writing. Thereafter, she immediately took possession of the property. When she and her husband left for Mindanao in 1948, she entrusted the said land to her father, Crispulo 4 Rojas, who took possession of, and cultivated, the property. In 1980, she found out that the respondent, her stepmother, was in possession of the property and was cultivating the same. She also discovered that the tax declaration over the property was already in the name of Crispulo Rojas.5 In her Answer, the respondent asserted that, contrary to the petitioners claim, it was her husband, Crispulo Rojas, who bought the property from Crisogono Limpiado in 1948, which accounts for the tax declaration being in Crispulos name. From then on, until his death in 1978, Crispulo possessed and cultivated the property. Upon his death, the property was included in his estate, which was administered by a special administrator, Bienvenido Ricafort. The petitioner, as heir, even received her share in the produce of the estate. The respondent further contended that the petitioner ought to have impleaded all of the heirs as defendants. She also argued that the fact that petitioner filed the complaint only in 1997 means that she had already abandoned her right over the property. 6 On July 3, 1998, after hearing, the MTC rendered a Decision in favor of the petitioner, thus: WHEREFORE, premises considered, the Court finds a preponderance of evidence in favor of plaintiff Soledad Caezo and against defendant Concepcion Rojas by declaring Despite the respondents objection that the verbal sale cannot be proven without infringing the Statute of Frauds, the MTC gave credence to the testimony of the petitioners two witnesses attesting to the fact that Crisogono Limpiado sold the property to the petitioner in 1939. The MTC also found no evidence to show that Crispulo Rojas bought the property from Crisogono Limpiado in 1948. It held that the 1948 tax declaration in Crispulos name had little significance on respondents claim, considering that in 1948, the "country was then rehabilitating itself from the ravages of the Second World War" and "the government was more interested in the increase in tax collection than the observance of the niceties of law."8 The respondent appealed the case to the Regional Trial Court (RTC) of Naval, Biliran. On October 12, 1998, the RTC reversed the MTC decision on the ground that the action had already prescribed and acquisitive prescription had set in. The dispositive portion of the Decision reads: WHEREFORE, premises considered, the decision of the Municipal Trial Court of Naval, Biliran awarding ownership of the disputed land to the plaintiff and further allowing recovery of damages is hereby REVERSED in toto. There is no award of damages. The said property remains as the legitime of the defendant Concepcion Rojas and her children. SO ORDERED.9 However, acting on petitioners motion for reconsideration, the RTC amended its original decision on December 14, 1998.10 This time, it held that the action had not yet prescribed considering that the petitioner merely entrusted the property to her father. The ten-year prescriptive period for the recovery of a property held in trust would commence to run only from the time the trustee repudiates the trust. The RTC found no evidence on record showing that Crispulo Rojas ever ousted the petitioner from the property. The dispositive portion of the amended decision reads as follows:

WHEREFORE, in view of the foregoing considerations, the decision of this Court dated October 12, 1998 is hereby set aside and another is hereby entered modifying the decision of the Court a quo and declaring Soledad Rojas Vda. De Caezo as the true and lawful owner of a parcel of land, more particularly described and bounded as follows: A parcel of land situated at Higatangan, Naval, Biliran, bounded on the North by Policarpio Limpiado; on the South by Fidel Limpiado; on the East by Seashore; and on the West by Crispolo (sic) Limpiado with an approximate area of 4,169 square meters per Tax Declaration No. 2258, later under Tax Declaration No. 4073 in the name of Crispolo Rojas and later in the name of the Heirs of Crispolo Rojas. Further, ordering defendant-appellant Concepcion Rojas and all persons claiming rights or interest under her to vacate and surrender possession of the land aforecited to the plaintiff or any of her authorized representatives, Ordering the Provincial and/or Municipal Assessors Office to cancel the present existing Tax Declaration in the name of Heirs of Crispolo Rojas referring to the above-described property in favor of the name of Soledad Rojas Vda. De Caezo, Ordering the defendant-appellant Concepcion Rojas to pay the plaintiff-appellee the sum of P34,000.00 in actual damages, and to pay for the loss of her share in money value of the products of the coconuts of said land from 1979 to 1997 and to pay further until the case is terminated at the rate of P200.00 per quarter based on the regular remittances of the late Crispolo Rojas to the plaintiff-appellee, and to pay the costs. SO ORDERED.11 The respondent filed a motion to reconsider the Amended Decision but the RTC denied the same in an Order dated April 25, 1999. She then filed a petition for review with the Court of Appeals (CA), which reversed the Amended Decision of the RTC on September 7, 2000, thus: WHEREFORE, the amended decision dated December 14, 1998 rendered in Civil Case No. B-1041 is hereby REVERSED and SET ASIDE. The complaint filed by Soledad Caezo before the Municipal Trial Court of Naval, Biliran is hereby DISMISSED on grounds of laches and prescription and for lack of merit. SO ORDERED.12 The CA held that the petitioners inaction for several years casts a serious doubt on her claim of ownership over the parcel of land. It noted that 17 years lapsed since she discovered that respondent was in adverse possession of the property before she instituted an action to recover the same. And during the probate proceedings, the petitioner did not even contest the inclusion of the property in the estate of Crispulo Rojas. 13

The CA was convinced that Crispulo Rojas owned the property, having bought the same from Crisogono Limpiado in 1948. Supporting this conclusion, the appellate court cited the following circumstances: (1) the property was declared for taxation purposes in Crispulos name and he had been paying the taxes thereon from 1948 until his death in 1978; (2) Crispulo adversely possessed the same property from 1948 until his death in 1978; and (3) upon his death in 1978, the property was included in his estate, the proceeds of which were distributed among his heirs.14 The CA further held that, assuming that there was an implied trust between the petitioner and her father over the property, her right of action to recover the same would still be barred by prescription since 49 years had already lapsed since Crispulo adversely possessed the contested property in 1948.15 On May 9, 2001, the CA denied the petitioners motion for reconsideration for lack of merit.16 In this petition for review, the petitioner, substituted by her heirs, assigns the following errors: That the Court of Appeals committed grave abuse of discretion in setting aside petitioners contention that the Petition for Review filed by respondent CONCEPCION ROJAS before the Court of Appeals was FILED OUT OF TIME; That the Court of Appeals erred and committed grave abuse of discretion amounting to lack or excess of jurisdiction when it decided that the filing of the case by SOLEDAD CAEZO for Recovery of Real Property was already barred by PRESCRIPTION AND LACHES.17 The petitioner insists that the respondents petition for review before the CA was filed out of time. The petitioner posits that the CA may not grant an additional extension of time to file the petition except for the most compelling reason. She contends that the fact that respondents counsel needed additional time to secure the certified copy of his annexes cannot be considered as a compelling reason that would justify an additional period of extension. She admits, though, that this issue was raised for the first time in their motion for reconsideration, but insists that it can be raised at any time since it concerns the jurisdiction of the CA over the petition. The petitioner further posits that prescription and laches are unavailing because there was an express trust relationship between the petitioner and Crispulo Rojas and his heirs, and express trusts do not prescribe. Even assuming that it was not an express trust, there was a resulting trust which generally does not prescribe unless there is repudiation by the trustee.

For her part, the respondent argues that the petitioners are now estopped from questioning the CA Resolution granting her second motion for extension to file the petition for review. She notes that the petitioner did not raise this issue in the comment that she filed in the CA. In any case, the grant of the second extension of time was warranted considering that the certified true copy of the assailed RTC orders did not arrive at the office of respondents counsel in Cebu City in time for the filing of the petition. On the merits, the respondent asserts that the complaint is barred by prescription, laches and estoppel. From 1948 until his death in 1978, Crispulo cultivated the property and was in adverse, peaceful and continuous possession thereof in the concept of owner. It took the petitioner 49 years from 1948 before she filed the complaint for recovery of the property in 1997. Granting that it was only in 1980 that she found out that the respondent adversely possessed the property, still petitioner allowed 17 years to elapse before she asserted her alleged right over the property. Finally, the respondent maintains that the other co-owners are indispensable parties to the case; and because they were not impleaded, the case should be dismissed. The petition has no merit. On the procedural issue raised by the petitioner, we find no reversible error in the grant by the CA of the second motion for extension of time to file the respondents petition. The grant or denial of a motion for extension of time is addressed to the sound discretion of the court.18 The CA obviously considered the difficulty in securing a certified true copy of the assailed decision because of the distance between the office of respondents counsel and the trial court as a compelling reason for the request. In the absence of any showing that the CA granted the motion for extension capriciously, such exercise of discretion will not be disturbed by this Court. On the second issue, the petitioner insists that her right of action to recover the property cannot be barred by prescription or laches even with the respondents uninterrupted possession of the property for 49 years because there existed between her and her father an express trust or a resulting trust. Indeed, if no trust relations existed, the possession of the property by the respondent, through her predecessor, which dates back to 1948, would already have given rise to acquisitive prescription in accordance with Act No. 190 (Code of Civil Procedure).19 Under Section 40 of Act No. 190, an action for recovery of real property, or of an interest therein, can be brought only within ten years after the cause of action accrues. This period coincides with the ten-year period for acquisitive prescription provided under Section 4120 of the same Act. Thus, the resolution of the second issue hinges on our determination of the existence of a trust over the property --- express or implied --- between the petitioner and her father. A trust is the legal relationship between one person having an equitable ownership of property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the

exercise of certain powers by the latter.21 Trusts are either express or implied.22 Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust.23 Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or, independently, of the particular intention of the parties, as being superinduced on the transaction by operation of law basically by reason of equity.24 An implied trust may either be a resulting trust or a constructive trust. It is true that in express trusts and resulting trusts, a trustee cannot acquire by prescription a property entrusted to him unless he repudiates the trust.25 The following discussion is instructive: There is a rule that a trustee cannot acquire by prescription the ownership of property entrusted to him, or that an action to compel a trustee to convey property registered in his name in trust for the benefit of the cestui que trust does not prescribe, or that the defense of prescription cannot be set up in an action to recover property held by a person in trust for the benefit of another, or that property held in trust can be recovered by the beneficiary regardless of the lapse of time. That rule applies squarely to express trusts. The basis of the rule is that the possession of a trustee is not adverse. Not being adverse, he does not acquire by prescription the property held in trust. Thus, Section 38 of Act 190 provides that the law of prescription does not apply "in the case of a continuing and subsisting trust." The rule of imprescriptibility of the action to recover property held in trust may possibly apply to resulting trusts as long as the trustee has not repudiated the trust. xxxx Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive.26 As a rule, however, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements.27 The presence of the following elements must be proved: (1) a trustor or settlor who executes the instrument creating the trust; (2) a trustee, who is the person expressly designated to carry out the trust; (3) the trust res, consisting of duly identified and definite real properties; and (4) the cestui que trust, or beneficiaries whose identity must be clear.28 Accordingly, it was incumbent upon petitioner to prove the existence of the trust relationship. And petitioner sadly failed to discharge that burden.

The existence of express trusts concerning real property may not be established by parol evidence.29 It must be proven by some writing or deed. In this case, the only evidence to support the claim that an express trust existed between the petitioner and her father was the self-serving testimony of the petitioner. Bare allegations do not constitute evidence adequate to support a conclusion. They are not equivalent to proof under the Rules of Court.30 In one case, the Court allowed oral testimony to prove the existence of a trust, which had been partially performed. It was stressed therein that what is important is that there should be an intention to create a trust, thus: What is crucial is the intention to create a trust. While oftentimes the intention is manifested by the trustor in express or explicit language, such intention may be manifested by inference from what the trustor has said or done, from the nature of the transaction, or from the circumstances surrounding the creation of the purported trust. However, an inference of the intention to create a trust, made from language, conduct or circumstances, must be made with reasonable certainty. It cannot rest on vague, uncertain or indefinite declarations. An inference of intention to create a trust, predicated only on circumstances, can be made only where they admit of no other interpretation. 31 Although no particular words are required for the creation of an express trust, a clear intention to create a trust must be shown; and the proof of fiduciary relationship must be clear and convincing. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations.32 In the case at bench, an intention to create a trust cannot be inferred from the petitioners testimony and the attendant facts and circumstances. The petitioner testified only to the effect that her agreement with her father was that she will be given a share in the produce of the property, thus: Q: What was your agreement with your father Crispulo Rojas when you left this property to him? A: Every time that they will make copra, they will give a share. Q: In what particular part in Mindanao [did] you stay with your husband? A: Bansalan, Davao del Sur. Q: And while you were in Bansalan, Davao del Sur, did Crispolo Rojas comply with his obligation of giving your share the proceeds of the land?

A: When he was still alive, he gave us every three months sometimes P200.00 and sometimes P300.00.33 This allegation, standing alone as it does, is inadequate to establish the existence of a trust because profit-sharing per se, does not necessarily translate to a trust relation. It could also be present in other relations, such as in deposit. What distinguishes a trust from other relations is the separation of the legal title and equitable ownership of the property. In a trust relation, legal title is vested in the fiduciary while equitable ownership is vested in a cestui que trust. Such is not true in this case. The petitioner alleged in her complaint that the tax declaration of the land was transferred to the name of Crispulo without her consent. Had it been her intention to create a trust and make Crispulo her trustee, she would not have made an issue out of this because in a trust agreement, legal title is vested in the trustee. The trustee would necessarily have the right to transfer the tax declaration in his name and to pay the taxes on the property. These acts would be treated as beneficial to the cestui que trust and would not amount to an adverse possession.34 Neither can it be deduced from the circumstances of the case that a resulting trust was created.1wphi1 A resulting trust is a species of implied trust that is presumed always to have been contemplated by the parties, the intention as to which can be found in the nature of their transaction although not expressed in a deed or instrument of conveyance. A resulting trust is based on the equitable doctrine that it is the more valuable consideration than the legal title that determines the equitable interest in property. 35 While implied trusts may be proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated.36 In order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation are proven by an authentic document. An implied trust, in fine, cannot be established upon vague and inconclusive proof.37 In the present case, there was no evidence of any transaction between the petitioner and her father from which it can be inferred that a resulting trust was intended. In light of the disquisitions, we hold that there was no express trust or resulting trust established between the petitioner and her father. Thus, in the absence of a trust relation, we can only conclude that Crispulos uninterrupted possession of the subject property for 49 years, coupled with the performance of acts of ownership, such as payment of real estate taxes, ripened into ownership. The statutory period of prescription commences when a person who has neither title nor good faith, secures a tax declaration in his name and may, therefore, be said to have adversely claimed ownership of the lot. 38 While tax declarations and receipts are not conclusive evidence of ownership and do not prove title to the land, nevertheless, when coupled with actual possession, they constitute evidence of great weight and can be the basis of a claim of ownership through prescription.39 Moreover, Section 41 of Act No. 190 allows adverse possession in any character to ripen

into ownership after the lapse of ten years. There could be prescription under the said section even in the absence of good faith and just title.40 All the foregoing notwithstanding, even if we sustain petitioners claim that she was the owner of the property and that she constituted a trust over the property with her father as the trustee, such a finding still would not advance her case. Assuming that such a relation existed, it terminated upon Crispulos death in 1978. A trust terminates upon the death of the trustee where the trust is personal to the trustee in the sense that the trustor intended no other person to administer it. 41 If Crispulo was indeed appointed as trustee of the property, it cannot be said that such appointment was intended to be conveyed to the respondent or any of Crispulos other heirs. Hence, after Crispulos death, the respondent had no right to retain possession of the property. At such point, a constructive trust would be created over the property by operation of law. Where one mistakenly retains property which rightfully belongs to another, a constructive trust is the proper remedial device to correct the situation.42 A constructive trust is one created not by any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the demands of justice. It does not come about by agreement or intention but in the main by operation of law, construed against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold.43 As previously stated, the rule that a trustee cannot, by prescription, acquire ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of the said trust is not a condition precedent to the running of the prescriptive period.44 A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.45 The relation of trustee and cestui que trust does not in fact exist, and the holding of a constructive trust is for the trustee himself, and therefore, at all times adverse. In addition, a number of other factors militate against the petitioners case. First, the petitioner is estopped from asserting ownership over the subject property by her failure to protest its inclusion in the estate of Crispulo. The CA, thus, correctly observed that: Even in the probate proceedings instituted by the heirs of Crispulo Rojas, which included her as a daughter of the first marriage, Caezo never contested the inclusion of the contested property in the estate of her father. She even participated in the project of partition of her fathers estate which was approved by the probate court in 1984. After

personally receiving her share in the proceeds of the estate for 12 years, she suddenly claims ownership of part of her fathers estate in 1997. The principle of estoppel in pais applies when -- by ones acts, representations, admissions, or silence when there is a need to speak out -- one, intentionally or through culpable negligence, induces another to believe certain facts to exist; and the latter rightfully relies and acts on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.46 Such a situation obtains in the instant case. Second, the action is barred by laches. The petitioner allegedly discovered that the property was being possessed by the respondent in 1980.47 However, it was only in 1997 that she filed the action to recover the property. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to it has either abandoned or declined to assert it.48 Finally, the respondent asserts that the court a quo ought to have dismissed the complaint for failure to implead the other heirs who are indispensable parties. We agree. We note that the complaint filed by the petitioner sought to recover ownership, not just possession of the property; thus, the suit is in the nature of an action for reconveyance. It is axiomatic that owners of property over which reconveyance is asserted are indispensable parties. Without them being impleaded, no relief is available, for the court cannot render valid judgment. Being indispensable parties, their absence in the suit renders all subsequent actions of the trial court null and void for want of authority to act, not only as to the absent parties but even as to those present. Thus, when indispensable parties are not before the court, the action should be dismissed.49 At any rate, a resolution of this issue is now purely academic in light of our finding that the complaint is already barred by prescription, estoppel and laches. WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated September 7, 2000, and Resolution dated May 9, 2001, are AFFIRMED. SO ORDERED. G.R. No. 162033 May 8, 2009

HEIRS OF TRANQUILINO LABISTE (also known as Tranquilino Laviste) vs. HEIRS OF JOSE LABISTE DECISION TINGA, J.:

This is a petition for review1 under Rule 45 of the Rules of Court of the Court of Appeals Decision dated 30 June 20032 in CA-G.R. CV No. 65829. reversing the decision of the Regional Trial Court (RTC) of Cebu City, Branch 9. The appellate court denied petitioners3 motion for reconsideration in a Resolution dated 15 January 2004. The factual antecedents are as follows: On 29 September 1919, the late Epifanio Labiste (Epifanio), on his own and on behalf of his brothers and sisters who were the heirs of Jose Labiste (Jose), purchased from the Bureau of Lands Lot No. 1054 of the Banilad Friar Lands Estate, with an area of 13,308 square meters, located at Guadalupe, Cebu City for P36.00.4 Subsequently, on 9 June 1924, then Bureau of Lands Director Jorge B. Vargas executed Deed of Conveyance No. 12536 selling and ceding Lot No. 1054 to Epifanio and his brothers and sisters who were the heirs of Jose.5 After full payment of the purchase price but prior to the issuance of the deed of conveyance, Epifanio executed an Affidavit6 (Affidavit of Epifanio) in Spanish on 10 July 1923 affirming that he, as one of the heirs of Jose, and his uncle and petitioners predecessor-in-interest, Tranquilino Labiste (Tranquilino), then co-owned Lot No. 1054 because the money that was paid to the government came from the two of them. Tranquilino and the heirs of Jose continued to hold the property jointly. Sometime in 1928, the Register of Deeds of Cebu City issued Original Certificate of Title No. 3878 for Lot No. 1054. On 2 May 1928, Engineer Espiritu Bunagan (Engr. Bunagan), Deputy Public Land Surveyor, subdivided Lot No. 1054 into two lots: Lot No. 1054-A with an area of 6,664 square meters for Tranquilino and Lot No. 1054-B with an area of 6,664 square meters for Epifanio. The subdivision plan prepared by Engr. Bunagan was approved by Jose P. Dans, Acting Director of Lands on 28 October 1928.7 Subsequently, on 18 October 1939, the heirs of Tranquilino 8 purchased the one-half (1/2) interest of the heirs of Jose9 over Lot No. 1054 for P300.00, as evidenced by the Caligonan sa Panagpalit10 executed by the parties in the Visayan dialect. The heirs of Tranquilino immediately took possession of the entire lot. When World War II broke out, the heirs of Tranquilino fled Cebu City and when they came back they found their homes and possessions destroyed. The records in the Office of the Register of Deeds, Office of the City Assessor and other government offices were also destroyed during the war. Squatters have practically overrun the entire property, such that neither petitioners nor respondents possess it. In October 1993, petitioners learned that one of the respondents, 11 Asuncion Labiste, had filed on 17 September 1993 a petition for reconstitution of title over Lot No. 1054. Petitioners opposed the petition at first but by a compromise agreement between the parties dated 25 March 1994, petitioners withdrew their opposition to expedite the reconstitution process. Under the compromise agreement, petitioners were to be given time to file a complaint so that the issues could be litigated in an ordinary action and the

reconstituted title was to be deposited with the Clerk of Court for a period of sixty (60) days to allow petitioners to file an action for reconveyance and to annotate a notice of lis pendens. The Register of Deeds of Cebu City issued the reconstituted title, TCT No. RT7853,12 in the name of "Epifanio Labiste, married to Tomasa Mabitad, his brothers and sisters, heirs of Jose Labiste" on 14 December 1994. However, respondents did not honor the compromise agreement. Petitioners filed a complaint13 for annulment of title seeking the reconveyance of property and damages on 13 January 1995, docketed as Civil Case No. CEB-16943, with the RTC of Cebu City. Respondents claimed that the Affidavit of Epifanio and the Calig-onan sa Panagpalit were forgeries and that petitioners action had long prescribed or barred by laches.14 The RTC in a Decision dated 23 August 199915 ruled in favor of petitioners. After evaluating the documents presented by petitioners, the RTC found that they are genuine and authentic as ancient documents and that they are valid and enforceable. 16 Moreover, it held that the action had not prescribed as the complaint was filed about a year after the reconstitution of the title by respondents. The judicial reconstitution was even opposed by petitioners until a compromise agreement was reached by the parties and approved by the RTC which ordered the reconstitution. The RTC further held that the reconstituted title did not give any more right to respondents than what their predecessors-in-interest actually had as it is limited to the reconstitution of the certificate as it stood at the time of its loss or destruction.17 On appeal, the Court of Appeals, while affirming petitioners right to the property, nevertheless reversed the RTCs decision on the ground of prescription and laches. It affirmed the RTCs findings that the Affidavit and the Calig-onan sa Panagpalit are genuine and authentic, and that the same are valid and enforceable documents. 18 Citing Article 1144 of the Civil Code, it held that petitioners cause of action had prescribed for the action must be brought within ten (10) years from the time the right of action accrues upon the written contract which in this case was when petitioners predecessors-ininterest lost possession over the property after World War II. Also, the lapse of time to file the action constitutes neglect on petitioners part so the principle of laches is applicable.19 Hence, the present petition. The genuineness and authenticity of the Affidavit of Epifanio and the Calig-onan sa Panagpalit are beyond cavil. As we have ruled in a litany of cases, resort to judicial review of the decisions of the Court of Appeals under Rule 45 is confined only to errors of law.20 The findings of fact by the lower court are conclusive absent any palpable error or arbitrariness.21 The Court finds no reason to depart from this principle. Moreover, it is a long settled doctrine that findings of fact of the trial court, when affirmed by the Court of Appeals, are binding upon the Court. It is not the function of the Supreme Court to weigh anew the evidence already passed upon by the Court of Appeals for these are deemed final and conclusive and may not be reviewed on appeal. 22

The sole issue that the Court has to resolve is whether or not petitioners cause of action has prescribed. The Court of Appeals erred in applying the rules on prescription and the principle of laches because what is involved in the present case is an express trust. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary.23 Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operation of law.24 Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust.25 Under Article 1444 of the Civil Code, "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." The Affidavit of Epifanio is in the nature of a trust agreement. Epifanio affirmed that the lot brought in his name was co-owned by him, as one of the heirs of Jose, and his uncle Tranquilino. And by agreement, each of them has been in possession of half of the property. Their arrangement was corroborated by the subdivision plan prepared by Engr. Bunagan and approved by Jose P. Dans, Acting Director of Lands. As such, prescription and laches will run only from the time the express trust is repudiated. The Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive.26 http://sc.judiciary.gov.ph/jurisprudence/2007/november2007/148788.htm _ftn Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration.27 The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them. It is hornbook doctrine that laches is a creation of equity and its application is controlled by equitable considerations. Laches cannot be used to defeat justice or perpetrate fraud and injustice.28 Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another.http://sc.judiciary.gov.ph/jurisprudence/2006/mar2006/G.R. No. 157954.htm _ftn29 The equitable remedy of laches is, therefore, unavailing in this case.

However, to recover the other half of the property covered by the private Calig-onan sa Panagpalit and to have it registered on the title of the property, petitioners should have filed an action to compel30 respondents, as heirs of the sellers in the contract,31 to execute a public deed of sale. A conveyance of land made in a private document does not affect its validity. Article 1358,like its forerunner Article 1280 of the Civil Code of Spain, does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only to insure its efficacy,32 so that after the existence of said contract has been admitted, the party bound may be compelled to execute the proper document.33 But even assuming that such action was filed by petitioners, the same had already prescribed.1avvphi1 It is settled that only laws existing at the time of the execution of a contract are applicable thereto and not later statutes, unless the latter are specifically intended to have retroactive effect.34 Consequently, it is the Old Code of Civil Procedure (Act No. 190) which applies in this case since the Calig-onan sa Panagpalit was executed on 18 October 1939 while the New Civil Code took effect only on 30 August 1950. And section 43 of Act No. 190, like its counterpart Article 1144 of the New Civil Code, provides that action upon a written contract must be filed within ten years.35 WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of Appeals dated 30 June 2003 in CA-G.R. CV No. 65829 is REVERSED and SET ASIDE and the Decision of the Regional Trial Court of Cebu City, Branch 9 dated 23 August 1999 is REINSTATED with MODIFICATION in petitioners are hereby DECLARED the absolute owners of one-half of Lot No. 1054 or Lot No. 1054-A under TCT No. RT7853. The Register of Deeds of Cebu City is hereby ORDERED to CANCEL TCT No. RT-7853 in part and issue a new Transfer Certificate of Title to petitioners, heirs of Tranquilino Labiste, covering Lot No. 1054-A. No costs. SO ORDERED. G.R. No. 58010. March 31, 1993. EMILIA O'LACO and HUCO LUNA, petitioners, vs. VALENTIN CO CHO CHIT, O LAY KIA and COURT OF APPEALS, respondents. Sergio L. Guadiz for petitioners. Norberto J . Quisumbing & Associates for private respondents. SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; CONDITION PRECEDENT TO FILING OF SUIT BETWEEN MEMBERS OF THE SAME FAMILY; EFFECT OF FAILURE TO COMPLY WITH CONDITION. Admittedly, the present action is between members of the same family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters. Consequently, there should be an averment in the compliant that earnest efforts toward a compromise have been made, pursuant to Art. 222 of the New Civil Code, or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16 of the Rules of Court. For, it is well-settled that the attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between members of the same family. Hence, the defect in the complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause of action. 2. ID.; ID.; AMENDMENT TO COMPLAINT; WHEN PROPER; AMENDMENT TO CONFORM TO EVIDENCE. Plaintiff may be allowed to amend his complaint to correct the defect if the amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of action was originally within that court's jurisdiction. In such case, the amendment is only to cure the perceived defect in the complaint, thus may be allowed. In the case before Us, while respondent-spouses did not formally amend their complaint, they were nonetheless allowed to introduce evidence purporting to show that earnest efforts toward a compromise had been made, that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for the transfer of the title of the Oroquieta property in the name of spouses O Lay Kia and Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. But, instead of transferring the title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila. This testimony was not objected to by petitioner-spouses. Hence, the complaint was deemed accordingly amended to conform to the evidence, pursuant to Sec. 5, Rule 10 of the Rules of Court which reads "Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings . . ." Indeed, if the defendant permits evidence to be introduced without objection and which supplies the necessary allegations of a defective complaint, then the evidence is deemed to have the effect of curing the defects of the complaint. The insufficiency of the allegations in the complaint is deemed ipso facto rectified. 3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS TRUST; DEFINED; IMPLIED TRUST; DEFINED. By definition, trust relations between parties may either be express or implied. Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. Implied trusts are those which, without being express, 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. 4. ID.; ID.; ID.; IMPLIED TRUSTS; RESULTING TRUST; BASIS THEREOF; CONSTRUCTIVE TRUST; BASIS THEREOF. Implied trust may either be resulting or constructive trusts, both coming into being by operation of law. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines

the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 5. ID.; ID.; ID.; EXPRESS TRUSTS CONCERNING IMMOVABLES NOT PROVED BY PAROL EVIDENCE; IMPLIED TRUST IN REAL PROPERTY ESTABLISHED BY PAROL EVIDENCE; PROOF REQUIRED; CASE AT BAR. Unlike express trusts concerning immovables or any interest therein which cannot be proved by parol evidence, implied trusts may be established by oral evidence. However, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. It cannot be established upon vague and inconclusive proof. After a thorough review of the evidence on record, We hold that a resulting trust was indeed intended by the parties under Art. 1448 of the New Civil Code which states "Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary . . ." As stipulated by the parties, the document of sale, the owner's duplicate copy of the certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate tax receipts were all in the possession of respondent-spouses which they offered in evidence. As emphatically asserted by respondent O Lay Kia, the reason why these documents of ownership remained with her is that the land in question belonged to her. Indeed, there can be no persuasive rationalization for the possession of these documents of ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was purchased in 1943 than that of precluding its possible sale, alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This continued possession of the documents, together with other corroborating evidence spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta property in trust for respondentspouses. 6. ID.; ID.; ID.; CONSTRUCTIVE TRUST SUBJECT TO PRESCRIPTION; RESULTING TRUST IMPRESCRIPTIBLE; RESULTING TRUST CONVERTED TO CONSTRUCTIVE TRUST BY REPUDIATION; REQUISITES; PRESCRIPTIVE PERIOD FOR ACTION FOR RECONVEYANCE BASED ON CONSTRUCTIVE TRUST. As differentiated from constructive trusts, where the settled rule is that prescription may supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. Once the resulting trust is repudiated, however, it is converted into a constructive trust and is subject to prescription. A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust; and, (c) the evidence thereon is clear and convincing. In Tale v. Court of Appeals the Court

categorically ruled that an action for reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions holding that the prescriptive period was four (4) years. So long as the trustee recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his rights. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action therefore has not yet prescribed. DECISION BELLOSILLO, J p:

Petitioner-spouses deny the existence of any form of trust relation. They aver that Emilia O'Laco actually bought the property with her own money; that she left the Deed of Absolute Sale and the corresponding title with respondent-spouses merely for safekeeping; that when she asked for the return of the documents evidencing her ownership, respondent-spouses told her that these were misplaced or lost; and, that in view of the loss, she filed a petition for issuance of a new title, and on 18 August 1944 the then Court of First Instance of Manila granted her petition. On 20 September 1976, finding no trust relation between the parties, the trial court dismissed the complaint together with the counterclaim. Petitioners and respondents appealed. On 9 April 1981, the Court of Appeals set aside the decision of the trial court thus

History is replete with cases of erstwhile close family relations put asunder by property disputes. This is one of them. It involves half-sisters each claiming ownership over a parcel of land. While petitioner Emilia O'Laco asserts that she merely left the certificate of title covering the property with private respondent O Lay Kia for safekeeping, the latter who is the former's older sister insists that the title was in her possession because she and her husband bought the property from their conjugal funds. To be resolved therefore is the issue of whether a resulting trust was intended by them in the acquisition of the property. The trial court declared that there was no trust relation of any sort between the sisters. 1 The Court of Appeals ruled otherwise. 2 Hence, the instant petition for review on certiorari of the decision of the appellate court together with its resolution denying reconsideration. 3 It appears that on 31 May 1943, the Philippine Sugar Estate Development Company, Ltd., sold a parcel of land, Lot No. 5, Block No. 10, Plan Psu-10038, situated at Oroquieta St., Sta. Cruz, Manila, with the Deed of Absolute Sale naming Emilia O'Laco as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued in her name. On 17 May 1960, private respondent-spouses Valentin Co Cho Chit and O Lay Wa learned from the newspapers that Emilia O'Laco sold the same property to the Roman Catholic Archbishop of Manila for P230,000.00, with assumption of the real estate mortgage constituted thereon. 4 On 22 June 1960, respondent-spouses Valentin Co Cho Chit and O Lay Kia sued petitioner-spouses Emilia O'Laco and Hugo Luna to recover the purchase price of the land before the then Court of First Instance of Rizal, respondent-spouses asserting that petitioner Emilia O'Laco knew that they were the real vendees of the Oroquieta property sold in 1943 by Philippine Sugar Estate Development Company, Ltd., and that the legal title thereto was merely placed in her name. They contend that Emilia O'Laco breached the trust when she sold the land to the Roman Catholic Archbishop of Manila. Meanwhile, they asked the trial court to garnish all the amounts still due and payable to petitioner-spouses arising from the sale, which was granted on 30 June 1960. 5

". . . We set aside the decision of the lower court dated September 20, 1976 and the order of January 5, 1977 and another one is hereby entered ordering the defendants-appellees to pay plaintiffs-appellants jointly and severally the sum of P230,000.00 representing the value of the property subject of the sale with assumption of mortgage to the Roman Catholic Archbishop of Manila with legal interest from the filing of the complaint until fully paid, the sum of P10,000.00 as attorney's fees, plus costs." On 7 August 1981, the Court of Appeals denied reconsideration of its decision, prompting petitioners to come to this Court for relief. Petitioners contend that the present action should have been dismissed. They argue that the complaint fails to allege that earnest efforts toward a compromise were exerted considering that the suit is between members of the same family, and no trust relation exists between them. Even assuming ex argumenti that there is such a relation, petitioners further argue, respondents are already barred by laches. We are not persuaded. Admittedly, the present action is between members of the same family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters. Consequently, there should be an averment in the complaint that earnest efforts toward a compromise have been made, pursuant to Art. 222 of the New Civil Code, 6 or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16, of the Rules of Court. 7 For, it is well-settled that the attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between members of the same family. 8 Hence, the defect in the complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause of action. 9 But, plaintiff may be allowed to amend his complaint to correct the defect if the amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of action was originally within that court's jurisdiction. 10 In such case, the amendment is only to cure the perceived defect in the complaint, thus may be allowed.

In the case before Us, while respondent-spouses did not formally amend their complaint, they were nonetheless allowed to introduce evidence purporting to show that earnest efforts toward a compromise had been made, that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for the transfer of the title of the Oroquieta property in the name of spouses O Lay Kia and Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. 11 But, instead of transferring the title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila. This testimony was not objected to by petitioner-spouses. Hence, the complaint was deemed accordingly amended to conform to the evidence, 12 pursuant to Sec. 5, Rule 10 of the Rules of Court which reads "SECTION 5. Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as, if they had been raised in the pleadings . . ." (emphasis supplied). Indeed, if the defendant permits evidence to be introduced without objection and which supplies the necessary allegations of a defective complaint, then the evidence is deemed to have the effect of curing the defects of the complaint. 13 The insufficiency of the allegations in the complaint is deemed ipso facto rectified. 14 But the more crucial issue before Us is whether there is a trust relation between the parties in contemplation of law. We find that there is. By definition, trust relations between parties may either be express or implied. 15 Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. 16 Implied trusts are those which, without being express, 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.17 Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law. 18 Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest 19 and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. 20 On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice 21 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. 22 Specific examples of resulting trusts may be found in the Civil Code, particularly Arts. 1448, 1449, 1451,1452 and 1453, 23 while constructive trusts are illustrated in Arts. 1450, 1454, 1455 and 1456. 24

Unlike express trusts concerning immovables or any interest therein which cannot be proved by parol evidence, 25 implied trusts may be established by oral evidence. 26 However, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. 27 It cannot be established upon vague and inconclusive proof. 28 After a thorough review of the evidence on record, We hold that a resulting trust was indeed intended by the parties under Art. 1448 of the New Civil Code which states "ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary . . ." (emphasis supplied). First. As stipulated by the parties, the document of sale, the owner's duplicate copy of the certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate tax receipts ware all in the possession of respondent spouses which they offered in evidence. As emphatically asserted by respondent O Lay Kia, the reason why these documents of ownership remained with her is that the land in question belonged to her. 29 Indeed, there can be no persuasive rationalization for the possession of these documents of ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was purchased in 1943 than that of precluding its possible sale, alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This continued possession of the documents, together with other corroborating evidence spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta property in trust for respondentspouses. Second. It may be worth to mention that before buying the Oroquieta property, respondent-spouses purchased another property situated in Kusang-Loob, Sta. Cruz, Manila, where the certificate of title was placed in the name of Ambrosio O'Laco, older brother of Emilia, under similar or identical circumstances. The testimony of former counsel for respondent-spouses, then Associate Justice Antonio G. Lucero of the Court of Appeals, is enlightening "Q In the same conversation he told you how he would buy the property (referring to the Oroquieta property), he and his wife? "A Yes, Sir, he did. "Q What did he say? xxx xxx xxx

"A He said he and his wife has (sic) already acquired by purchase a certain property located at Kusang-Loob, Sta. Cruz, Manila. He told me he would like to place the Oroquieta Maternity Hospital in case the negotiation materialize(s) in the name of a sister of his wife (O'Laco)" (emphasis supplied). 30 On the part of respondent-spouses, they explained that the reason why they did not place these Oroquieta and Kusang-Loob properties in their name was that being Chinese nationals at the time of the purchase they did not want to execute the required affidavit to the effect that they were allies of the Japanese. 31 Since O Lay Kia took care of Emilia who was still young when her mother died, 32 respondent-spouses did not hesitate to place the title of the Oroquieta property in Emilia's name. Quite significantly, respondent-spouses also instituted an action for reconveyance against Ambrosio O'Laco when the latter claimed the Kusang-Loob property as his own. A similar stipulation of facts was likewise entered, i.e., respondent-spouses had in their possession documents showing ownership of the Kusang-Loob property which they offered in evidence. In that case, the decision of the trial court, now final and executory, declared respondent-spouses as owners of the Kusang-Loob property and ordered Ambrosio O'Laco to reconvey it to them. 33 Incidentally, Ambrosio O'Laco thus charged respondent spouses Valentin Co Cho Cit and O Lay Kia before the Anti-Dummy Board, docketed as Case No. 2424, for their acquisition of the Kusang-Loob and Oroquieta properties. 34 He claimed that respondentspouses utilized his name in buying the Kusang-Loob property while that of petitioner O'Laco was used in the purchase of the Oroquieta property. In effect, there was an implied admission by Ambrosio that his sister Emilia, like him, was merely used as a dummy. However, the Anti-Dummy Board exonerated respondent-spouses since the purchases were made in 1943, or during World War II, when the Anti-Dummy Law was not enforceable. Third. The circumstances by which Emilia O'Laco obtained a new title by reason of the alleged loss of the old title then in the possession of respondent-spouses cast serious doubt on the veracity of her ownership. The petitions respectively filed by Emilia O'Laco and Ambrosio O'Laco for the Oroquieta and the Kusang-Loob properties were both granted on the same day, 18 August 1944, by the then Court of First Instance of Manila. These orders were recorded in the Primary Entry Book of the Register of Deeds of Manila at the same time, 2:35 o'clock in the afternoon of 1 September 1944, in consecutive entries, Entries Nos. 246117-18. 35 This coincidence lends credence to the position of respondent-spouses that there was in fact a conspiracy between the siblings Ambrosio and Emilia to defraud and deprive respondents of their title to the Oroquieta and Kusang-Loob properties. Fourth. Until the sale of the Oroquieta property to the Roman Catholic Archbishop of Manila, petitioner Emilia O'Laco actually recognized the trust. Specifically, when respondent spouses learned that Emilia was getting married to Hugo, O Lay Kia asked her to have the title to the property already transferred to her and her husband Valentin,

and Emilia assured her that "would be arranged (maaayos na)" after her wedding. 36 Her answer was an express recognition of the trust, otherwise, she would have refused the request outright. Petitioners never objected to this evidence; nor did they attempt to controvert it. Fifth. The trial court itself determined that "Valentin Co Cho Chit and O Lay Kia had some money with which they could buy the property." 37 In fact, Valentin was the Chief Mechanic of the Paniqui Sugar Mills, was engaged in the buy and sell business, operated a gasoline station, and owned an auto supply store as well as a ten-door apartment in Caloocan City. 38 In contrast, Emilia O'Laco failed to convince the Court that she was financially capable of purchasing the Oroquieta property. In fact, she opened a bank account only in 1946 and likewise began filing income tax returns that same year, 39 while the property in question was bought in 1943. Respondent-spouses even helped Emilia and her brothers in their expenses and livelihood. Emilia could only give a vague account on how she raised the money for the purchase of the property. Her narration of the transaction of sale abounds with "I don't know" and "I don't remember." 40 Having established a resulting trust between the parties, the next question is whether prescription has set in. As differentiated from constructive trusts, where the settled rule is that prescription may supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. 41 Once the resulting trust is repudiated, however, it is converted into a constructive trust and is subject to prescription. A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust; and, (c) the evidence thereon is clear and convincing. 42 In Tale v. Court of Appeals 43 the Court categorically ruled that an action for reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions holding that the prescriptive period was four (4) years. Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of the original may be made the basis for the commencement of the prescriptive period. For, the issuance of the Torrens title in the name of Emilia O'Laco could not be considered adverse, much less fraudulent. Precisely, although the property was bought by respondent-spouses, the legal title was placed in the name of Emilia O'Laco. The transfer of the Torrens title in her name was only in consonance with the deed of sale in her favor. Consequently, there was no cause for any alarm on the part of respondent-spouses. As late as 1959, or just before she got married, Emilia continued to recognize the ownership of respondent-spouses over the Oroquieta property. Thus, until that point, respondentspouses were not aware of any act of Emilia which would convey to them the idea that

she was repudiating the resulting trust. The second requisite is therefore absent. Hence, prescription did not begin to run until the sale of the Oroquieta property, which was clearly an act of repudiation. But immediately after Emilia sold the Oroquieta property which is obviously a disavowal of the resulting trust, respondent-spouses instituted the present suit for breach of trust. Correspondingly, laches cannot lie against them. After all, so long as the trustee recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his rights. 44 There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. 45 Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action therefore has not yet prescribed. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals of 9 April 1981, which reversed the trial court, is AFFIRMED. Costs against petitioners. SO ORDERED. G.R. No. 145849. July 22, 2005 SPOUSES JOSE BEJOC and JOVITA CAPUTOL BEJOC, Petitioners, vs. PRIMA CALDERON CABREROS and COURT OF APPEALS, Respondents. DECISION CORONA, J.: Assailed in this petition for review under Rule 45 of the Rules of Court 1 are the decision2 and resolution3 of the Court of Appeals4 which affirmed the trial courts judgment5 declaring respondent the lawful owner of two parcels of agricultural land, the subject of this petition. The original owner of the disputed parcels of land was Maura Caputol, the mother-in-law of respondent. On November 7, 1975, Maura Caputol executed a deed of donation inter vivos in favor of her son, Domingo Cabreros. The latter accepted the donation in the same instrument. Domingo and his wife, respondent Prima Cabreros, took physical possession of the lots. In 1976, they had the tax declarations in the name of Maura Caputol cancelled and transferred to them.6

When the new owners and Maura Caputol migrated to Hawaii, they left the charge and administration of the land to petitioner spouses. Aside from being the uncle and aunt of Domingo, they were chosen as caretakers because they had been the overseers of the properties even before the donation to Domingo. As caretakers, the petitioners were tasked to deliver the harvest to Lucinda Calderon, 7 the mother of respondent Prima Calderon Cabreros. They were also responsible for paying the taxes due thereon, to be taken from the proceeds of the sale of the crops. When Domingo died in Hawaii in 1979, his forced heirs, respondent Prima and a minor daughter, succeeded to his estate.8 Sometime in October 1989, respondent Prima made a visit to the Philippines and went to Danao City, Cebu. She heard rumors that petitioner spouses were exercising acts of ownership over the disputed land. With her mother-in law Maura Caputol, she confronted petitioners about the rumors but the latter initially denied the accusations. Later on, however, they claimed that Maura Caputol gave the properties to them, an allegation disclaimed by Maura who said it was no longer possible for her to give the properties to her younger sister, petitioner Jovita, because she had already donated them to her son Domingo in 1975. Respondent also found out that petitioners stopped delivering the harvest to her mother since 1984. Moreover, she discovered that in 1981, Tax Declaration (TD) No. 19470 in the name of Domingo Cabreros issued in 1980 for the first parcel of land (parcel 1) was mysteriously cancelled and changed by TD No. 25472. This new tax declaration was issued in the name of Maura Caputol on the basis of a quitclaim allegedly executed before notary public Leonardo Garcillano in 1971, annotated therein. The same thing happened to the second parcel of land (parcel 2). The property was declared in the name of Domingo Cabreros in 1980 under TD No. 19471. Yet, in 1983, this TD was cancelled and changed by TD No. 25473 issued in the name of Maura Caputol, based on the same quitclaim. In 1984, TD No. 25472 for parcel 1 and TD No. 25473 for parcel 2, both in the name of Maura Caputol, were cancelled by TD No. 24007 and 15-26009, respectively. These new declarations were now in the name of petitioner Jovita Caputol, based on a deed of confirmation of sale dated May 18, 1984 annotated therein. This document was allegedly executed by Maura Caputol in favor of petitioner Jovita. Respondent further found that the petitioner spouses applied for a free patent on the properties. On October 17, 1984, Original Certificate of Title (OCT) No. 26947 was issued to petitioner Jose Bejoc by virtue of free patent no. (VII-5)17844 which he was able to obtain. Earnest efforts to have the controversy settled out of court were unsuccessful as petitioners even dared respondent to sue them in court. Consequently, the respondent

filed an action for reconveyance against the petitioner spouses on February 1, 1990 before Branch 17, Regional Trial Court (RTC) of Cebu. In their answer, petitioners alleged that they had been in possession of the parcels of land as administrators since 1974 and as absolute owners since 1978. They claimed that Maura Caputol never donated the parcels of land to her son Domingo. On December 24, 1978, Maura Caputol allegedly sold the subject properties to petitioners for P5,000 in a deed of sale. This sale was later on confirmed in another document dated May 18, 1984. From then on, they exercised their rights as owners of the land and paid the taxes due beginning 1979. They also successfully applied for a free patent on the properties. In 1984, they were issued an original certificate of title. Lastly, they contended that, even assuming the truth of respondents allegations, the action for reconveyance was already barred by prescription. From the evidence adduced, the trial court ruled: WHEREFORE, premises considered, judgment is rendered for the plaintiff and against the defendants hereby declaring the plaintiff as the true, absolute and lawful owner of the two parcels of land in question; ordering the defendants to reconvey the aforesaid properties in favor of the plaintiff; ordering the defendants to jointly and severally pay plaintiff the sum of Three Thousand (P3,000.00) Pesos a year from 1978 with legal rate of interest until the two parcels of land shall have been reconveyed and delivered to the plaintiff plus costs of this action.9 The Court of Appeals affirmed the trial courts judgment in a decision dated September 20, 1999.10 The motion for reconsideration was likewise denied on October 13, 2000. 11 Hence, petitioner spouses are now before us via a petition for review under Rule 45 of the Revised Rules of Court. The sole issue raised in this petition is whether or not respondents action for reconveyance has prescribed. Petitioner spouses contend that respondents action for reconveyance was based on fraud, not implied trust, as found by the trial and appellate courts. Respondents allegation was that petitioner spouses conspired to transfer the tax declarations in their names and obtained title for the parcels of land by fabricating the quitclaim, contract of sale and deed of confirmation of sale. Since the fraud committed by petitioners not implied trust was the basis of the action, the prescriptive period was 4 years and not 10 years as enunciated in Millena v. Court of Appeals.12 This period should be reckoned either from the time that petitioners committed unequivocal acts of repudiation in 1978 or from the time the OCT was issued in their names in 1984. Considering that more than four

years had passed in either case, it was clear error for the Court of Appeals to hold that respondents action for reconveyance had not yet prescribed when it was filed in 1990. We find no merit in the petition. An implied trust is one that, without being express, is deducible from the nature of the transaction as a matter of intent or which is superinduced on the transaction by operation of law as a matter of equity, independently of the particular intention of the parties. 13 It may either be resulting or constructive trust. A resulting trust is presumed to have been contemplated by the parties, the intention as to which is to be found in the nature of their transaction but not expressed in the deed itself.14 It is based on the equitable doctrine that valuable consideration, not legal title, determines the equitable title or interest.15 A constructive trust is created, not by any word evincing a direct intention to create a trust, but by operation of law in order to satisfy the demands of justice and to prevent unjust enrichment. It arises contrary to an agreement or 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.16 A constructive trust is illustrated in Article 1456 of the Civil Code: ARTICLE 1456. If the property is acquired through mistake or fraud, the person obtaining it is by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. It is on this ground that we find no error in the trial and appellate courts findings that an implied trust was created in favor of respondent when petitioners transferred the properties to their names in violation of the trust placed in them as overseers. Records show that, while the properties were under their administration, they transferred the tax declarations in the name of Domingo Cabreros to Maura Caputol on the basis of a fake quitclaim purportedly executed in 1971. These tax declarations were in turn transferred to petitioner Jovita Caputol on the strength of a fraudulent deed of confirmation of sale supposedly executed by Maura Caputol on May 18, 1984. All these documents, including a deed of sale allegedly executed in 1978, were denounced as spurious by Maura Caputol. She explained that she had donated the properties to her only son Domingo Cabreros on November 7, 1975. There was no way she could have sold these properties thereafter, considering that she no longer owned them. Also, at the time of the alleged confirmation of sale, Maura Caputol was already 78 years old and living alone. At that age, she could have been easily manipulated by her sister, petitioner Jovita, into signing just about any document. Telling is her testimony regarding the deed of confirmation of sale:

Q: Now Mrs. Caputol, I will show to you this document evidencing the confirmation of sale from you to your sister. In fact they have the signature of Maura Caputol marked on their exhibit. Can you identify that signature? A: I signed the document just to confirm that they are the one staying [in] the house and over-seeing the property and I did not sell the property and in fact I even wanted to buy some more.17 (emphasis ours) Moreover, the quitclaim and the deed of sale, upon which petitioners based their claim, were never presented. Considering that they were the ones who had been asserting the existence of these documents, it was incumbent upon them to present said documents to prove that the properties had indeed been sold to them by Maura Caputol. The fundamental rule is that he who alleges must prove.18 Petitioners failure to do so was therefore fatal to their cause. More telling is the fact that OCT No. 26947 was issued in the name of petitioner Jose Bejoc on October 17, 1984 by virtue of Free Patent No. (VII-5) 17844. Undoubtedly, the patent and title were obtained by the petitioner spouses in flagrant breach of the confidence reposed in them by Maura Caputol, and Domingo Cabreros and his wife, respondent Prima. The evidence was that petitioners knew all along that the properties were not theirs. They, in fact, admitted that they were mere overseers thereof. We have already held that simple possession of a certificate of title is not necessarily conclusive of a holders true ownership of property. If a person obtains title that includes land to which he has no legal right, that person does not, by virtue of said certificate alone, become the owner of the land illegally or erroneously included. 19 It has been held time and again that the rule on indefeasibility of title cannot be used for the perpetration of fraud against the real owner.20 In Viral v. Anore, et al. 21 we ruled that: While under ordinary circumstances the statute of limitations may bar an action to cancel a Torrens title issued upon a free patent, yet where the registered owner x x x knew that the parcel of land described in the patent and in the Torrens title actually belonged to another person, such statute barring action will not apply. It may be the better procedure, however, that the true owner bring an action to have the ownership or title to the land judicially settled, and the court in the exercise of its equity jurisdiction, without ordering the cancellation of the Torrens title issued upon the patent, may direct the registered owner to reconvey the land to the rightful owner. (emphasis ours) The right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to extinctive prescription.22 On this point, petitioners insist that the action prescribed in 4 years as held in the case of Millena v. Court of Appeals.23 Petitioners insistence is, however, misplaced. The 4-year prescriptive period is not applicable in the present case because the action was not based exclusively on fraud but on implied trust.

Significantly, petitioners overlooked the well-settled rule, reiterated in the same case, that an action for reconveyance based on implied or constructive trust prescribes in 10 years. This period is reckoned from the date of the issuance of the original certificate of title or transfer certificate of title. Since such issuance operates as a constructive notice to the whole world,24 the discovery of the fraud is deemed to have taken place at that time. Here, the title was issued on October 17, 1984. The action for reconveyance was, on the other hand, filed 6 years later, on February 1, 1990. Clearly, prescription had not yet attached. The suit was brought well within the 10-year prescriptive period for implied trusts. WHEREFORE, the petition is hereby DENIED. The assailed decision and resolution of the Court of Appeals are hereby AFFIRMED in toto. Costs against petitioners. SO ORDERED. G.R. No. 157784 December 16, 2008

RICHARD B. LOPEZ, in his capacity as Trustee of the Trust Estate of the Late JULIANA LOPEZ-MANZANO, petitioner, vs. COURT OF APPEALS, CORAZON LOPEZ, FERNANDO LOPEZ, ROBERTO LOPEZ, represented by LUZVIMINDA LOPEZ, MARIA ROLINDA MANZANO, MARIA ROSARIO MANZANO SANTOS, JOSE MANZANO, JR., NARCISO MANZANO (all represented by Attorney-in-fact, MODESTO RUBIO), MARIA CRISTINA MANZANO RUBIO, IRENE MONZON and ELENA MANZANO, respondents. DECISION TINGA, J.: This is a petition for review on certiorari 1under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision2 and Resolution3 of the Court of Appeals in CA-G.R. CV No. 34086. The Court of Appeals' decision affirmed the summary judgment of the Regional Trial Court (RTC), Branch 10, Balayan, Batangas, dismissing petitioner's action for reconveyance on the ground of prescription. The instant petition stemmed from an action for reconveyance instituted by petitioner Richard B. Lopez in his capacity as trustee of the estate of the late Juliana Lopez Manzano (Juliana) to recover from respondents several large tracts of lands allegedly belonging to the trust estate of Juliana.

The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union did not bear any children. Juliana was the owner of several properties, among them, the properties subject of this dispute. The disputed properties totaling more than 1,500 hectares consist of six parcels of land, which are all located in Batangas. They were the exclusive paraphernal properties of Juliana together with a parcel of land situated in Mindoro known as Abra de Ilog and a fractional interest in a residential land on Antorcha St., Balayan, Batangas. On 23 March 1968, Juliana executed a notarial will, 4 whereby she expressed that she wished to constitute a trust fund for her paraphernal properties, denominated as Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to be administered by her husband. If her husband were to die or renounce the obligation, her nephew, Enrique Lopez, was to become administrator and executor of the Fideicomiso. Two-thirds (2/3) of the income from rentals over these properties were to answer for the education of deserving but needy honor students, while one-third 1/3 was to shoulder the expenses and fees of the administrator. As to her conjugal properties, Juliana bequeathed the portion that she could legally dispose to her husband, and after his death, said properties were to pass to her biznietos or great grandchildren. Juliana initiated the probate of her will five (5) days after its execution, but she died on 12 August 1968, before the petition for probate could be heard. The petition was pursued instead in Special Proceedings (S.P.) No. 706 by her husband, Jose, who was the designated executor in the will. On 7 October 1968, the Court of First Instance, Branch 3, Balayan, Batangas, acting as probate court, admitted the will to probate and issued the letters testamentary to Jose. Jose then submitted an inventory of Juliana's real and personal properties with their appraised values, which was approved by the probate court. Thereafter, Jose filed a Report dated 16 August 1969, which included a proposed project of partition. In the report, Jose explained that as the only compulsory heir of Juliana, he was entitled by operation of law to one-half (1/2) of Juliana's paraphernal properties as his legitime, while the other one-half (1/2) was to be constituted into the Fideicomiso. At the same time, Jose alleged that he and Juliana had outstanding debts totaling P816,000.00 excluding interests, and that these debts were secured by real estate mortgages. He noted that if these debts were liquidated, the "residuary estate available for distribution would, value-wise, be very small." From these premises, Jose proceeded to offer a project of partition. The relevant portion pertaining to the Fideicomiso stated, thus: PROJECT OF PARTITION 14. Pursuant to the terms of the Will, one-half (1/2) of the following properties, which are not burdened with any obligation, shall be constituted into the "Fideicomiso de Juliana Lopez Manzano" and delivered to Jose Lopez Manzano as trustee thereof:

Location Abra de Ilog, Mindoro Antorcha St. Balayan, Batangas

Title No. TCT - 540 TCT - 1217-A

Area (Sq. M

2,94

and all those properties to be inherited by the decedent, by intestacy, from her sister, Clemencia Lopez y Castelo. 15. The other half (1/2) of the aforesaid properties is adjudicated to Jose Lopez Manzano as heir. Then, Jose listed those properties which he alleged were registered in both his and Juliana's names, totaling 13 parcels in all. The disputed properties consisting of six (6) parcels, all located in Balayan, Batangas, were included in said list. These properties, as described in the project of partition, are as follows: Location Pantay, Calaca, Batangas Mataywanak, Tuy, Batangas Patugo, Balayan, Batangas Cagayan, Balayan, Batangas Pook, Baayan Batangas Bolbok, Balayan, Batangas Calzada, Balayan, Batangas Gumamela, Balayan, Batangas Bombon, Balayan, Batangas OCT-29[6]94 Title No. Area (Sq. M.) 91,283 Improvements coconuts

485,486

sugar

OCT-2807

16,757,615

coconut, sugar, citrus, pasteur sugar

TCT-1220

411,331

TCT-1281 TCT-18845

135,922 444,998

sugar sugar

TCT 1978

2,312

sugar

TCT-2575

829

4,532

Paraaque, Rizal Paraaque, Rizal Modesto St., Manila

TCT-282340 TCT-11577 TCT-52212

800 800 137.8

residential residential residential

Consequently, the certificates of title of the disputed properties were cancelled and new ones issued in the names of respondents. Petitioner's father, Enrique Lopez, also assumed the trusteeship of Juliana's estate. On 30 August 1984, the RTC of Batangas, Branch 9 appointed petitioner as trustee of Juliana's estate in S.P. No. 706. On 11 December 1984, petitioner instituted an action for reconveyance of parcels of land with sum of money before the RTC of Balayan, Batangas against respondents. The complaint5 essentially alleged that Jose was able to register in his name the disputed properties, which were the paraphernal properties of Juliana, either during their conjugal union or in the course of the performance of his duties as executor of the testate estate of Juliana and that upon the death of Jose, the disputed properties were included in the inventory as if they formed part of Jose's estate when in fact Jose was holding them only in trust for the trust estate of Juliana. Respondents Maria Rolinda Manzano, Maria Rosario Santos, Jose Manzano, Jr., Narciso Manzano, Maria Cristina Manzano Rubio and Irene Monzon filed a joint answer 6 with counterclaim for damages. Respondents Corazon, Fernando and Roberto, all surnamed Lopez, who were minors at that time and represented by their mother, filed a motion to dismiss,7 the resolution of which was deferred until trial on the merits. The RTC scheduled several pre-trial conferences and ordered the parties to submit pre-trial briefs and copies of the exhibits. On 10 September 1990, the RTC rendered a summary judgment, 8 dismissing the action on the ground of prescription of action. The RTC also denied respondents' motion to set date of hearing on the counterclaim. Both petitioner and respondents elevated the matter to the Court of Appeals. On 18 October 2002, the Court of Appeals rendered the assailed decision denying the appeals filed by both petitioner and respondents. The Court of Appeals also denied petitioner's motion for reconsideration for lack of merit in its Resolution dated 3 April 2003. Hence, the instant petition attributing the following errors to the Court of Appeals: I. THE COURT OF APPEAL'S CONCLUSION THAT PETITIONER'S ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING AS BASIS SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE TRANSFERRED TO THE NAME OF THE LATE JOSE LOPEZ MANZANO IN RELATION TO DECEMBER 12, 1984 WHEN THE ACTION FOR RECONVEYANCE WAS FILED IS ERRONEOUS. II. THE RESPONDENT COURT OF APPEALS CONCLUSION IN FINDING THAT THE FIDUCIARY RELATION ASSUMED BY THE LATE JOSE LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE LAST WILL AND TESTAMENT OF JULIANA LOPEZ MANZANO WAS IMPLIED TRUST, INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.

and the existing sugar quota in the name of the deceased with the Central Azucarera Don Pedro at Nasugbo. 16. The remaining shall likewise go to Jose Lopez Manzano, with the condition to be annotated on the titles thereof, that upon his death, the same shall pass on to Corazon Lopez, Ferdinand Lopez, and Roberto Lopez: Location Dalig, Balayan, Batangas San Juan, Rizal Title No. TCT-10080 Area (Sq. M.) 482,872 Improvements sugar

TCT-53690

523

residential

On 25 August 1969, the probate court issued an order approving the project of partition. As to the properties to be constituted into the Fideicomiso, the probate court ordered that the certificates of title thereto be cancelled, and, in lieu thereof, new certificates be issued in favor of Jose as trustee of the Fideicomiso covering one-half (1/2) of the properties listed under paragraph 14 of the project of partition; and regarding the other half, to be registered in the name of Jose as heir of Juliana. The properties which Jose had alleged as registered in his and Juliana's names, including the disputed lots, were adjudicated to Jose as heir, subject to the condition that Jose would settle the obligations charged on these properties. The probate court, thus, directed that new certificates of title be issued in favor of Jose as the registered owner thereof in its Order dated 15 September 1969. On even date, the certificates of title of the disputed properties were issued in the name of Jose. The Fideicomiso was constituted in S.P No. 706 encompassing one-half (1/2) of the Abra de Ilog lot on Mindoro, the 1/6 portion of the lot in Antorcha St. in Balayan, Batangas and all other properties inherited ab intestato by Juliana from her sister, Clemencia, in accordance with the order of the probate court in S.P. No. 706. The disputed lands were excluded from the trust. Jose died on 22 July 1980, leaving a holographic will disposing of the disputed properties to respondents. The will was allowed probate on 20 December 1983 in S.P. No. 2675 before the RTC of Pasay City. Pursuant to Jose's will, the RTC ordered on 20 December 1983 the transfer of the disputed properties to the respondents as the heirs of Jose.

None of the respondents filed a comment on the petition. The counsel for respondents Corazon, Fernando and Roberto, all surnamed Lopez, explained that he learned that respondents had migrated to the United States only when the case was pending before the Court of Appeals.9 Counsel for the rest of the respondents likewise manifested that the failure by said respondents to contact or communicate with him possibly signified their lack of interest in the case.10 In a Resolution dated 19 September 2005, the Court dispensed with the filing of a comment and considered the case submitted for decision. 11 The core issue of the instant petition hinges on whether petitioner's action for reconveyance has prescribed. The resolution of this issue calls for a determination of whether an implied trust was constituted over the disputed properties when Jose, the trustee, registered them in his name. Petitioner insists that an express trust was constituted over the disputed properties; thus the registration of the disputed properties in the name of Jose as trustee cannot give rise to prescription of action to prevent the recovery of the disputed properties by the beneficiary against the trustee. Evidently, Juliana's testamentary intent was to constitute an express trust over her paraphernal properties which was carried out when the Fideicomiso was established in S.P. No. 706.12 However, the disputed properties were expressly excluded from the Fideicomiso. The probate court adjudicated the disputed properties to Jose as the sole heir of Juliana. If a mistake was made in excluding the disputed properties from the Fideicomiso and adjudicating the same to Jose as sole heir, the mistake was not rectified as no party appeared to oppose or appeal the exclusion of the disputed properties from the Fideicomiso. Moreover, the exclusion of the disputed properties from the Fideicomiso bore the approval of the probate court. The issuance of the probate court's order adjudicating the disputed properties to Jose as the sole heir of Juliana enjoys the presumption of regularity.13 On the premise that the disputed properties were the paraphernal properties of Juliana which should have been included in the Fideicomiso, their registration in the name of Jose would be erroneous and Jose's possession would be that of a trustee in an implied trust. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.14 The provision on implied trust governing the factual milieu of this case is provided in Article 1456 of the Civil Code, which states: ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

In Aznar Brothers Realty Company v. Aying,15 the Court differentiated two kinds of implied trusts, to wit: x x x In turn, implied trusts are either resulting or constructive trusts. These two are differentiated from each other as follows: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold.16 A resulting trust is presumed to have been contemplated by the parties, the intention as to which is to be found in the nature of their transaction but not expressed in the deed itself.17 Specific examples of resulting trusts may be found in the Civil Code, particularly Arts. 1448,18 1449,19 1451,20 145221 and 1453.22 A constructive trust is created, not by any word evincing a direct intention to create a trust, but by operation of law in order to satisfy the demands of justice and to prevent unjust enrichment.23 It is raised by equity in respect of property, which has been acquired by fraud, or where although acquired originally without fraud, it is against equity that it should be retained by the person holding it.24 Constructive trusts are illustrated in Arts. 1450,25 1454,26 145527 and 1456.28 The disputed properties were excluded from the Fideicomiso at the outset. Jose registered the disputed properties in his name partly as his conjugal share and partly as his inheritance from his wife Juliana, which is the complete reverse of the claim of the petitioner, as the new trustee, that the properties are intended for the beneficiaries of the Fideicomiso. Furthermore, the exclusion of the disputed properties from the Fideicomiso was approved by the probate court and, subsequently, by the trial court having jurisdiction over the Fideicomiso. The registration of the disputed properties in the name of Jose was actually pursuant to a court order. The apparent mistake in the adjudication of the disputed properties to Jose created a mere implied trust of the constructive variety in favor of the beneficiaries of the Fideicomiso. Now that it is established that only a constructive trust was constituted over the disputed properties, may prescription for the recovery of the properties supervene? Petitioner asserts that, if at all, prescription should be reckoned only when respondents caused the registration of the disputed properties in their names on 13 April 1984 and not

on 15 September 1969, when Jose registered the same in his name pursuant to the probate court's order adjudicating the disputed properties to him as the sole heir of Juliana. Petitioner adds, proceeding on the premise that the prescriptive period should be counted from the repudiation of the trust, Jose had not performed any act indicative of his repudiation of the trust or otherwise declared an adverse claim over the disputed properties. The argument is tenuous. The right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to extinctive prescription.29 An action for reconveyance based on implied or constructive trust prescribes in 10 years. This period is reckoned from the date of the issuance of the original certificate of title or transfer certificate of title. Since such issuance operates as a constructive notice to the whole world, the discovery of the fraud is deemed to have taken place at that time.30 In the instant case, the ten-year prescriptive period to recover the disputed property must be counted from its registration in the name of Jose on 15 September 1969, when petitioner was charged with constructive notice that Jose adjudicated the disputed properties to himself as the sole heir of Juana and not as trustee of the Fideicomiso. It should be pointed out also that Jose had already indicated at the outset that the disputed properties did not form part of the Fideicomiso contrary to petitioner's claim that no overt acts of repudiation may be attributed to Jose.It may not be amiss to state that in the project of partition submitted to the probate court, Jose had indicated that the disputed properties were conjugal in nature and, thus, excluded from Juliana's Fideicomiso. This act is clearly tantamount to repudiating the trust, at which point the period for prescription is reckoned. In any case, the rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust applies only to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of said trust is not a condition precedent to the running of the prescriptive period. 31 Thus, for the purpose of counting the ten-year prescriptive period for the action to enforce the constructive trust, the reckoning point is deemed to be on 15 September 1969 when Jose registered the disputed properties in his name. WHEREFORE, the instant petition for review on certiorari is DENIED and the decision and resolution of the Court of Appeals in CA-G.R. CV No. 34086 are AFFIRMED. Costs against petitioner. SO ORDERED.