G.R. No. 175339
December 16, 2008
PREMIERE DEVELOPMENT BANK, petitioner, vs. ALFREDO C. FLORES, in
his Capacity as Presiding Judge of Regional Trial Court of Pasig
City, Branch 167, ARIZONA TRANSPORT CORPORATION and PANACOR
MARKETING CORPORATION, respondents.
This is a Rule 45 petition for review 1 of the Court of Appeals
decision2 in CA-G.R. SP No. 92908 which affirmed the Regional Trial
Courts (RTCs) orders3 granting respondent corporations motion for
execution of the Courts 14 April 2004 decision in G.R. No. 1593524
and denying5 petitioner Premiere Development Banks motion for
reconsideration, as well as the appellate courts resolution 6
denying Premiere Development Banks motion for reconsideration.
The factual antecedents of the case, as found by the Court in
G.R. No. 159352, are as follows: The undisputed facts show that on
or about October 1994, Panacor Marketing Corporation (Panacor for
brevity), a newlyformed corporation, acquired an exclusive
distributorship of products manufactured by Colgate Palmolive
Philippines, Inc. (Colgate for short). To meet the capital
requirements of the exclusive distributorship, which required an
initial inventory level of P7.5 million, Panacor applied for a loan
of P4.1 million with Premiere Development Bank. After an extensive
study of Panacors creditworthiness, Premiere Bank rejected the loan
application and suggested that its affiliate company, Arizona
Transport Corporation (Arizona for short), should instead apply for
the loan on condition that the proceeds thereof shall be made
available to Panacor. Eventually, Panacor was granted a P4.1
million credit line as evidenced by a Credit Line Agreement. As
suggested, Arizona, which was an existing loan client, applied for
and was granted a loan of P6.1 million, P3.4 million of which would
be used to pay-off its existing loan accounts and the remaining
P2.7 million as credit line of Panacor. As security for the P6.1
million loan, Arizona, represented by its Chief Executive Officer
Pedro Panaligan and spouses Pedro and Marietta Panaligan in their
personal capacities, executed a Real Estate Mortgage against a
parcel of land covered by TCT No. T-3475 as per Entry No. 49507
dated October 2, 1995. Since the P2.7 million released by Premiere
Bank fell short of the P4.1 million credit line which was
previously approved, Panacor negotiated for a take-out loan with
IBA-Finance Corporation (hereinafter referred to as IBA-Finance) in
the sum of P10 million, P7.5 million of which will be released
outright in order to take-out the loan from Premiere Bank and the
balance of P2.5 million (to complete the needed capital ofP4.1
million with Colgate) to be released after the cancellation by
Premiere of the collateral mortgage on the property covered by TCT
No. T-3475. Pursuant to the said take-out agreement, IBA-Finance
was authorized to pay Premiere Bank the prior existing loan
obligations of Arizona in an amount not to exceed P6 million. On
October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R.
Martillano, officer-in-charge of Premiere Banks San Juan Branch,
informing her of the approved loan in favor of Panacor and Arizona,
and requesting for the release of TCT No. T-3475. Martillano, after
reading the letter, affixed her signature of conformity thereto and
sent the original copy to Premiere Banks legal office. x x x On
October 12, 1995, Premiere Bank sent a letter-reply to
[IBA]-Finance, informing the latter of its refusal to turn over the
requested documents on the ground that Arizona had existing unpaid
loan obligations and that it was the banks policy to require full
payment of all outstanding loan obligations prior to the release of
mortgage documents. Thereafter, Premiere Bank issued to IBA-Finance
a Final Statement of Account showing Arizonas total loan
indebtedness. On October 19, 1995, Panacor and Arizona executed in
favor of IBA-Finance a promissory note in the amount of P7.5
million. Thereafter, IBA-Finance paid to Premiere Bank the amount
of P6,235,754.79, representing the full outstanding loan account of
Arizona. Despite such payment, Premiere Bank still refused to
release the requested mortgage documents specifically, the owners
duplicate copy of TCT No. T-3475. On November 2, 1995, Panacor
requested IBA-Finance for the immediate approval and release of the
remaining P2.5 million loan to meet the required monthly purchases
from Colgate. IBA-Finance explained however, that the processing of
the P2.5 million loan application was conditioned, among others, on
the submission of the owners duplicate copy of TCT No. 3475 and the
cancellation by Premiere Bank of Arizonas mortgage. Occasioned by
Premiere Banks adamant refusal to release the mortgage cancellation
document, Panacor failed to generate the required capital to meet
its distribution and sales targets. On December 7, 1995, Colgate
informed Panacor of its decision to terminate their distribution
agreement. On March 13, 1996, Panacor and Arizona filed a complaint
for specific performance and damages against Premiere Bank before
the Regional Trial Court of Pasig City, docketed as Civil Case No.
65577. On June 11, 1996, IBA-Finance filed a
complaint-in-intervention praying that judgment be rendered
ordering Premiere Bank to pay damages in its favor. On May 26,
1998, the trial court rendered a decision in favor of Panacor and
IBA-Finance, the decretal portion of which reads: xxx
1
Premiere Bank appealed to the Court of Appeals contending that
the trial court erred in finding, inter alia, that it had
maliciously downgraded the credit-line of Panacor from P4.1 million
to P2.7 million. In the meantime, a compromise agreement was
entered into between IBA-Finance and Premiere Bank whereby the
latter agreed to return without interest the amount of
P6,235,754.79 which IBA-Finance earlier remitted to Premiere Bank
to pay off the unpaid loans of Arizona. On March 11, 1999, the
compromise agreement was approved. On June 18, 2003, a decision was
rendered by the Court of Appeals which affirmed with modification
the decision of the trial court, the dispositive portion of which
reads:7 x x x Incidentally, respondent corporations received a
notice of sheriffs sale during the pendency of G.R. No. 159352.
Respondent corporations were able to secure an injunction from the
RTC but it was set aside by the Court of Appeals in a decision
dated 20 August 2004.8 The appellate court denied respondent
corporations motion for reconsideration in a resolution dated 5
November 2004.9 The Court, in a resolution dated 16 February 2005,
did not give due course to the petition for review of respondent
corporations as it did not find any reversible error in the
decision of the appellate court.10 After the Court had denied with
finality the motion for reconsideration,11 the mortgaged property
was purchased by Premiere Development Bank at the foreclosure sale
held on 19 September 2005 for P6,600,000.00.12 Respondent
corporations filed a motion for execution dated 25 August 200513
asking for the issuance of a writ of execution of our decision in
G.R. No. 159352 where we awarded P800,000.00 as damages in their
favor.14 The RTC granted the writ of execution sought. The Court of
Appeals affirmed the order. Hence, the present petition for review.
The only question before us is the propriety of the grant of the
writ of execution by the RTC. Premiere Development Bank argues that
the lower courts should have applied the principles of compensation
or set-off as the foreclosure of the mortgaged property does not
preclude it from filing an action to recover any deficiency from
respondent corporations loan. It allegedly did not file an action
to recover the loan deficiency from respondent corporations because
of the pending Civil Case No. MC03-2202 filed by respondent
corporations before the RTC of Mandaluyong City entitled Arizona
Transport Corp. v. Premiere Development Bank. That case puts into
issue the validity of Premiere Development Banks monetary claim
against respondent corporations and the subsequent foreclosure sale
of the mortgaged property. Premiere Development Bank allegedly had
wanted to wait for the resolution of the civil case before it would
file its deficiency claims against respondent corporations.
Moreover, the execution of our decision in G.R. No. 159352 would
allegedly be iniquitous and unfair since respondent corporations
are already in the process of winding up.15 The Court finds the
petition unmeritorious. A judgment becomes "final and executory" by
operation of law. In such a situation, the prevailing party is
entitled to a writ of execution, and issuance thereof is a
ministerial duty of the court.16 This policy is clearly and
emphatically embodied in Rule 39, Section 1 of the Rules of Court,
to wit: SECTION 1. Execution upon judgments or final orders.
Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding upon
the expiration of the period to appeal therefrom if no appeal has
been duly perfected. If the appeal has been duly perfected and
finally resolved, the execution may forthwith be applied for in the
court of origin, on motion of the judgment obligee, submitting
therewith certified true copies of the judgment or judgments or
final order or orders sought to be enforced and of the entry
thereof, with notice to the adverse party. The appellate court may,
on motion in the same case, when the interest of justice so
requires, direct the court of origin to issue the writ of
execution. (Emphasis supplied.) Jurisprudentially, the Court has
recognized certain exceptions to the rule as where in cases of
special and exceptional nature it becomes imperative in the higher
interest of justice to direct the suspension of its execution;
whenever it is necessary to accomplish the aims of justice; or when
certain facts and circumstances transpired after the judgment
became final which could render the execution of the judgment
unjust.17 None of these exceptions avails to stay the execution of
this Courts decision in G.R. No. 159352. Premiere Development Bank
has failed to show how injustice would exist in executing the
judgment other than the allegation that respondent corporations are
in the
2
process of winding up. Indeed, no new circumstance transpired
after our judgment had become final that would render the execution
unjust. The Court cannot give due course to Premiere Development
Banks claim of compensation or set-off on account of the pending
Civil Case No. MC03-2202 before the RTC of Mandaluyong City. For
compensation to apply, among other requisites, the two debts must
be liquidated and demandable already.18 A distinction must be made
between a debt and a mere claim. A debt is an amount actually
ascertained. It is a claim which has been formally passed upon by
the courts or quasi-judicial bodies to which it can in law be
submitted and has been declared to be a debt. A claim, on the other
hand, is a debt in embryo. It is mere evidence of a debt and must
pass thru the process prescribed by law before it develops into
what is properly called a debt.19 Absent, however, any such
categorical admission by an obligor or final adjudication, no legal
compensation or off-set can take place. Unless admitted by a debtor
himself, the conclusion that he is in truth indebted to another
cannot be definitely and finally pronounced, no matter how
convinced he may be from the examination of the pertinent records
of the validity of that conclusion the indebtedness must be one
that is admitted by the alleged debtor or pronounced by final
judgment of a competent court.20 At best, what Premiere Development
Bank has against respondent corporations is just a claim, not a
debt. At worst, it is a speculative claim. The alleged deficiency
claims of Premiere Development Bank should have been raised as a
compulsory counterclaim before the RTC of Mandaluyong City where
Civil Case No. MC03-2202 is pending. Under Section 7, Rule 6 of the
1997 Rules of Civil Procedure, a counterclaim is compulsory when
its object "arises out of or is necessarily connected with the
transaction or occurrence constituting the subject matter of the
opposing partys claim and does not require for its adjudication the
presence of third parties of whom the court cannot acquire
jurisdiction". In Quintanilla v. CA21 and reiterated in Alday v.
FGU Insurance Corporation,22 the "compelling test of
compulsoriness" characterizes a counterclaim as compulsory if there
should exist a "logical relationship" between the main claim and
the counterclaim. There exists such a relationship when conducting
separate trials of the respective claims of the parties would
entail substantial duplication of time and effort by the parties
and the court; when the multiple claims involve the same factual
and legal issues; or when the claims are offshoots of the same
basic controversy between the parties. Clearly, the recovery of
Premiere Development Banks alleged deficiency claims is contingent
upon the case filed by respondent corporations; thus, conducting
separate trials thereon will result in a substantial duplication of
the time and effort of the court and the parties. The fear of
Premiere Development Bank that they would have difficulty
collecting its alleged loan deficiencies from respondent
corporations since they were already involuntarily dissolved due to
their failure to file reportorial requirements with the Securities
and Exchange Commission is neither here nor there. In any event,
the law specifically allows a trustee to manage the affairs of the
corporation in liquidation, and the dissolution of the corporation
would not serve as an effective bar to the enforcement of rights
for or against it. As early as 1939,23 this Court held that,
although the time during which the corporation, through its own
officers, may conduct the liquidation of its assets and sue and be
sued as a corporation is limited to three years from the time the
period of dissolution commences, there is no time limit within
which the trustees must complete a liquidation placed in their
hands. What is provided in Section 12224 of the Corporation Code is
that the conveyance to the trustees must be made within the
three-year period. But it may be found impossible to complete the
work of liquidation within the three-year period or to reduce
disputed claims to judgment. The trustees to whom the corporate
assets have been conveyed pursuant to the authority of Section 122
may sue and be sued as such in all matters connected with the
liquidation. Furthermore, Section 145 of the Corporation Code
clearly provides that "no right or remedy in favor of or against
any corporation, its stockholders, members, directors, trustees, or
officers, nor any liability incurred by any such corporation,
stockholders, members, directors, trustees, or officers, shall be
removed or impaired either by the subsequent dissolution of said
corporation." Even if no trustee is appointed or designated during
the three-year period of the liquidation of the corporation, the
Court has held that the board of directors may be permitted to
complete the corporate liquidation by continuing as "trustees" by
legal implication.25 Therefore, no injustice would arise even if
the Court does not stay the execution of G.R. 159352. Although it
is commendable for Premiere Development Bank in offering to deposit
with the RTC the P800,000.00 as an alternative prayer, the Court
cannot allow it to defeat or subvert the right of respondent
corporations to have the final and executory decision in G.R. No.
159352 executed. The offer to deposit cannot suspend the execution
of this Courts decision for this cannot be deemed as consignation.
Consignation is the act of depositing the thing due with the court
or judicial authorities whenever the creditor cannot accept or
refuses to accept payment, and it generally requires a prior tender
of payment. In this case, it is Premiere Development Bank, the
judgment debtor, who refused to pay respondent corporations
P800,000.00 and not the other way around. Neither could such offer
to make a deposit with the RTC provide a ground for this Court to
issue an injunctive relief in this case. WHEREFORE, the petition
for review is DENIED. The decision of the Court of Appeals in
CA-G.R. SP No. 92908 isAFFIRMED. SO ORDERED.
3
DANTE O. TINGA Associate Justice
WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson
CONCHITA CARPIO MORALES Associate Justice PRESBITERO J. VELASCO,
JR. Associate Justice ARTURO D. BRION Associate Justice
ATTESTATION I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division. LEONARDO A.
QUISUMBING Associate Justice Chairperson, Second Division
CERTIFICATION Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division. REYNATO S. PUNO Chief
Justice
4
Republic of the Philippines SUPREME COURT Manila FIRST DIVISION
G.R. No. 159494 July 31, 2008
ROGELIO, GEORGE, LOLITA, ROSALINDA, and JOSEPHINE, all surnamed
PASIO, represented by their father and attorney-in-fact JOSE PASIO
Petitioners, vs. DR. TEOFILO EDUARDO F. MONTERROYO, ROMUALDO
MONTERROYO, MARIA TERESA MONTERROYO, and STEPHEN MONTERROYO,
Respondents. DECISION CARPIO, J.: The Case Before the Court is a
petition for review1 assailing the 31 January 2003 Decision2 and
the 5 August 2003 Resolution3 of the Court of Appeals in CA-G.R. CV
No. 63199. The Court of Appeals affirmed the Decision4 dated 2
February 1999 of the Regional Trial Court of Iligan City, Branch 6
(trial court), in Civil Case No. 06-3060. The Antecedent Facts This
case originated from an action for recovery of possession and
damages, with prayer for the issuance of a temporary restraining
order or writ of preliminary mandatory injunction, filed by
Rogelio, George, Lolita, Rosalinda and Josephine, all surnamed
Pasio, represented by their father and attorney-in-fact Jose Pasio
(petitioners) against Dr. Teofilo Eduardo F. Monterroyo (Dr.
Monterroyo), later substituted by his heirs Romualdo, Maria Teresa
and Stephen, all surnamed Monterroyo (respondents). Cad. Lot No.
2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of
19,979 square meters, located at Panul-iran, Abuno, Iligan City,
was part of a 24-hectare land occupied, cultivated and cleared by
Laureano Pasio (Laureano) in 1933. The 24-hectare land formed part
of the public domain which was later declared alienable and
disposable. On 18 February 1935, Laureano filed a homestead
application over the entire 24-hectare land under Homestead
Application No. 205845.5 On 22 April 1940, the Bureau of Forestry
wrote Laureano and informed him that the tract of land covered by
his application was not needed for forest purposes.6 On 11
September 1941, the Director of Lands issued an Order7 approving
Laureanos homestead application and stating that Homestead Entry
No. 154651 was recorded in his name for the land applied for by
him.
5
Laureano died on 24 March 1950. On 15 April 1952, the Director
of Lands issued an Order8 for the issuance of a homestead patent in
favor of Laureano, married to Graciana Herbito9 (Graciana).
Laureanos heirs did not receive the order and consequently, the
land was not registered under Laureanos name or under that of his
heirs. In 1953, the property was covered by Tax Declaration No.
1110210 in the name of Laureano with Graciana11 as administrator.
Between 1949 and 1954, a Cadastral Survey was conducted in Iligan
City. The surveyor found that a small creek divided the 24-hectare
parcel of land into two portions, identified as Lot No. 2138 and
Lot No. 2139. Petitioners claimed that Laureanos heirs, headed by
his son Jose, continuously possessed and cultivated both lots. On
16 October 1962, Joses co-heirs executed a Deed of Quitclaim
renouncing their rights and interest over the land in favor of
Jose. Jose secured a title in his name for Lot No. 2138. Later,
Jose alienated Lot No. 2139 in favor of his children (petitioners
in this case) who, on 8 January 1994, simultaneously filed
applications for grant of Free Patent Titles over their respective
shares of Lot No. 2139 before the Land Management Bureau of the
Department of Environment and Natural Resources (DENR). On 22
August 1994, the DENR granted petitioners applications and issued
Original Certificate of Title (OCT) No. P-1322 (a.f.) in favor of
Rogelio Pasio, OCT No. P-1318 (a.f.) in favor of George Pasio, OCT
No. P-1317 (a.f.) in favor of Lolita Pasio, OCT No. P-1321 (a.f.)
in favor of Josephine Pasio, and OCT No. P-1319 (a.f.) in favor of
Rosalinda Pasio. Petitioners alleged that their possession of Lot
No. 2139 was interrupted on 3 January 1993 when respondents
forcibly took possession of the property. Respondents alleged that
they had been in open, continuous, exclusive and notorious
possession of Lot No. 2139, by themselves and through their
predecessors-in-interest, since 10 July 1949. They alleged that on
10 July 1949, Rufo Larumbe (Larumbe) sold Lot No. 2139 to Petra
Teves (Petra). On 27 February 1984, Petra executed a deed of sale
over Lot No. 2139 in favor of Vicente Teves (Vicente). On 20
February 1985, Vicente executed a pacto de retro sale over the land
in favor of Arturo Teves (Arturo). In 1992, Arturo sold Lot No.
2139 in favor of respondents father, Dr. Monterroyo, by virtue of
an oral contract. On 5 January 1995, Arturo executed a Deed of
Confirmation of Absolute Sale of Unregistered Land in favor of Dr.
Monterroyos heirs. Respondents alleged that Jose was not the owner
of Lot No. 2139 and as such, he could not sell the land to his
children. They alleged that petitioners OCTs were null and void for
having been procured in violation of the Public Land Act. They
further alleged that the Land Management Bureau had no authority to
issue the free patent titles because Lot No. 2139 was a private
land. The Ruling of the Trial Court In its 2 February 1999
Decision, the trial court ruled, as follows: WHEREFORE, judgment is
rendered in favor of all the defendants and against the plaintiffs:
1. Dismissing the complaint; 2. Declaring Lot No. 2139, Iligan
Cadastre 292, located at Panul-iran, Abuno, Iligan City to have
acquired the character of a private land over which the Land
Management Bureau has been divested of jurisdiction; 3. Declaring
the defendants to be the owners and possessors of the said lot; 4.
Declaring OCT Nos. P-1322 (a.f.) of Rogelio Pasio, P-1318 (a.f.) of
George Pasio, P-1317 (a.f.) of Lolita Pasio, P-1321 (a.f.) of
Josephine Pasio and P-1319 (a.f.) of Rosalinda Pasio to be null and
void for having been procured by fraud and for having been issued
by the Land Management Bureau which has been divested of
jurisdiction over said lot; 5. Declaring the defendants to be
entitled to the sum of P6,000.00 deposited with the Office of the
Clerk of Court under O.R. No. 1487777; 6. Dismissing the defendants
counterclaim for attorneys fees.
6
Costs against the plaintiffs. SO ORDERED.12 The trial court
ruled that as of January 1994, Lot No. 2139 had already acquired
the character of a private land by operation of law. Since Lot No.
2139 had already ceased to be a public land, the Land Management
Bureau had no power or authority to dispose of it by issuing free
patent titles. The trial court ruled that respondents counterclaim
stands on the same footing as an independent action. Thus, it could
not be considered a collateral attack on petitioners titles. The
trial court further ruled that respondents filed their counterclaim
within one year from the grant of petitioners titles, which was the
reglementary period for impugning a title. The trial court ruled
that the order for the issuance of a patent in favor of Laureano
lapsed and became functus officio when it was not registered with
the Director of Deeds. The trial court ruled that while Laureano
was the original claimant of the entire 24 hectares, he ceded the
right to possession over half of the property, denominated as Lot
No. 2139, to Larumbe sometime in 1947. The trial court found that
Laureano offered to sell half of the land to his tenant Gavino
Quinaquin (Gavino) but he did not have money. Later, Gavino learned
from Larumbe that he (Larumbe) acquired half of the land from
Laureano. Gavino then started delivering the owners share of the
harvest to Larumbe. Laureano never contested Gavinos action nor did
he demand that Gavino deliver to him the owners share of the
harvest and not to Larumbe. When Lot No. 2139 was sold, Gavino and
his successors delivered the owners share of the harvest to Petra,
Vicente, Arturo, Dr. Monterroyo, and Dindo Monterroyo,
successively. The trial court also found that the other tenants had
never given any share of the harvest to Jose. The trial court ruled
that petitioners had failed to present convincing evidence that
they and their predecessors-in-interest were in possession of Lot
No. 2139 from 1947 to 1994 when they filed their application for
free patent. The trial court ruled that petitioners committed
actual fraud when they misrepresented in their free patent
applications that they were in possession of the property
continuously and publicly. Petitioners appealed from the trial
courts Decision. The Ruling of the Court of Appeals In its 31
January 2003 Decision, the Court of Appeals affirmed the trial
courts Decision. The Court of Appeals ruled that the trial court
did not err in allowing respondents counterclaim despite the
nonappearance of Dr. Monterroyo, the original defendant, at the
barangay conciliation proceedings. The Court of Appeals ruled that
petitioners themselves did not personally appear. They were
represented by their attorney-in-fact although they were all of
legal age, which was a violation of the Katarungang Pambarangay
proceedings requiring the personal appearance of the parties.
Hence, the Court of Appeals ruled that there was never a valid
conciliation proceeding. However, while this would have been a
ground for the dismissal of the complaint, the issue was deemed
waived because respondents did not raise it in their answer before
the trial court. The Court of Appeals ruled that the validity of
petitioners titles could be attacked in a counterclaim. The Court
of Appeals ruled that respondents counterclaim was a compulsory
counterclaim. The Court of Appeals sustained the trial courts
ruling that the Land Management Bureau had been divested of
jurisdiction to grant the patent because the land already acquired
the character of a private land. While the homestead patent was
issued in favor of Laureano, the issuance of patent order became
functus officio when it was not registered. The Court of Appeals
further sustained the trial courts finding that respondents were in
physical, open, public, adverse and continuous possession of Lot
No. 2139 in the concept of owner for at least 30 years prior to
petitioners application for free patent titles over the land.
Petitioners filed a motion for reconsideration.
7
In its 5 August 2003 Resolution, the Court of Appeals denied
petitioners motion for reconsideration. Hence, the petition before
this Court. The Issue Petitioners raised the sole issue of whether
the Court of Appeals erred in sustaining the trial courts Decision
declaring respondents as the rightful owners and possessors of Lot
No. 2139.13 The Ruling of this Court The petition has no merit.
Land Management Bureau Had No Jurisdiction To Issue Free Patent
Titles In Director of Lands v. IAC,14 the Court ruled: [A]lienable
public land held by a possessor, continuously or through his
predecessors-in-interest, openly, continuously and exclusively for
the prescribed statutory period (30 years under The Public Land
Act, as amended) is converted to private property by the mere lapse
or completion of the period, ipso jure.15 In Magistrado v.
Esplana,16 the Court ruled that so long as there is a clear showing
of open, continuous, exclusive and notorious possession, and hence,
a registrable possession, by present or previous occupants, by any
proof that would be competent and admissible, the property must be
considered to be private. In this case, the trial court found that
the preponderance of evidence favors respondents as the possessors
of Lot No. 2139 for over 30 years, by themselves and through their
predecessors-in-interest. The question of who between petitioners
and respondents had prior possession of the property is a factual
question whose resolution is the function of the lower courts.17
When the factual findings of both the trial court and the Court of
Appeals are supported by substantial evidence, they are conclusive
and binding on the parties and are not reviewable by this Court.18
While the rule is subject to exceptions, no exception exists in
this case. Respondents were able to present the original Deed of
Absolute Sale, dated 10 July 1949, executed by Larumbe in favor of
Petra.19 Respondents also presented the succeeding Deeds of Sale
showing the transfer of Lot No. 2139 from Petra to Vicente20 and
from Vicente to Arturo21 and the Deed of Confirmation of Absolute
Sale of Unregistered Real Property executed by Arturo in favor of
respondents.22 Respondents also presented a certification23
executed by P/Sr. Superintendent Julmunier Akbar Jubail, City
Director of Iligan City Police Command and verified from the Log
Book records by Senior Police Officer Betty Dalongenes Mab-Abo
confirming that Andres Quinaquin made a report that Jose, Rogelio
and Luciana Pasio, Lucino Pelarion and Nando Avilo forcibly took
his copra. This belied petitioners allegation that they were in
possession of Lot No. 2139 and respondents forcibly took possession
of the property only in January 1993. Considering that petitioners
application for free patent titles was filed only on 8 January
1994, when Lot No. 2139 had already become private land ipso jure,
the Land Management Bureau had no jurisdiction to entertain
petitioners application. Non-Registration of Homestead Patent
Rendered it Functus Officio Once a homestead patent granted in
accordance with law is registered, the certificate of title issued
by virtue of the patent has the force and effect of a Torrens title
issued under the land registration law.24 In this case, the
issuance of a homestead patent in 1952 in favor of Laureano was not
registered. Section 103 of Presidential Decree No.
8
152925 mandates the registration of patents, and registration is
the operative act to convey the land to the patentee, thus: Sec.
103. x x x x. The deed, grant, patent or instrument of conveyance
from the Government to the grantee shall not take effect as a
conveyance or bind the land but shall operate only as a contract
between the Government and the grantee and as evidence of authority
to the Register of Deeds to make registration. It is the act of
registration that shall be the operative act to affect and convey
the land, and in all cases under this Decree, registration shall be
made in the office of the Register of Deeds of the province or city
where the land lies. The fees for registration shall be paid by the
grantee. After due registration and issuance of the certificate of
title, such land shall be deemed to be registered land to all
intents and purposes under this Decree. (Emphasis
supplied)1avvphi1
Further, in this case, Laureano already conveyed Lot No. 2139 to
Larumbe in 1947 before the approval of his homestead application.
In fact, Larumbe already sold the land to Petra in 1949, three
years before the issuance of the homestead patent in favor of
Laureano. The trial court found that since 1947, the tenants of Lot
No. 2139 had been delivering the owners share of the harvest,
successively, to Larumbe, Petra, Vicente and Arturo Teves, Dr.
Monterroyo and Dindo Monterroyo. The trial court found no instance
when the owners share of the harvest was delivered to Jose Pasio.
Hence, we sustain the trial court that the non-registration of
Laureanos homestead patent had rendered it functus officio. A
Counterclaim is Not a Collateral Attack on the Title It is already
settled that a counterclaim is considered an original complaint and
as such, the attack on the title in a case originally for recovery
of possession cannot be considered as a collateral attack on the
title.26 Development Bank of the Philippines v. Court of Appeals27
is similar to the case before us insofar as petitioner in that case
filed an action for recovery of possession against respondent who,
in turn, filed a counterclaim claiming ownership of the land. In
that case, the Court ruled: Nor is there any obstacle to the
determination of the validity of TCT No. 10101. It is true that the
indefeasibility of torrens title cannot be collaterally attacked.
In the instant case, the original complaint is for recovery of
possession filed by petitioner against private respondent, not an
original action filed by the latter to question the validity of TCT
No. 10101 on which petitioner bases its right. To rule on the issue
of validity in a case for recovery of possession is tantamount to a
collateral attack. However, it should not [b]e overlooked that
private respondent filed a counterclaim against petitioner,
claiming ownership over the land and seeking damages. Hence, we
could rule on the question of the validity of TCT No. 10101 for the
counterclaim can be considered a direct attack on the same. A
counterclaim is considered a complaint, only this time, it is the
original defendant who becomes the plaintiff... It stands on the
same footing and is to be tested by the same rules as if it were an
independent action. x x x.28 As such, we sustain both the trial
court and the Court of Appeals on this issue. Principle of
Constructive Trust Applies Under the principle of constructive
trust, registration of property by one person in his name, whether
by mistake or fraud, the real owner being another person, impresses
upon the title so acquired the character of a constructive trust
for the real owner, which would justify an action for
reconveyance.29 In the action for reconveyance, the decree of
registration is respected as incontrovertible but what is sought
instead is the transfer of the property wrongfully or erroneously
registered in anothers name to its rightful owner or to one with a
better right. 30 If the registration of the land is fraudulent, the
person in whose name the land is registered holds it as a mere
trustee, and the real owner is entitled to file an action for
reconveyance of the property.31 In the case before us, respondents
were able to establish that they have a better right to Lot No.
2139 since they had long been in possession of the property in the
concept of owners, by themselves and through their
predecessors-in-interest. Hence, despite the irrevocability of the
Torrens titles issued in their names and even if they
9
are already the registered owners under the Torrens system,
petitioners may still be compelled under the law to reconvey the
property to respondents.32 WHEREFORE, we DENY the petition. We
AFFIRM the 31 January 2003 Decision and the 5 August 2003
Resolution of the Court of Appeals in CA-G.R. CV No. 63199. Costs
against petitioners. SO ORDERED. ANTONIO T. CARPIO Associate
Justice WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson MA.
ALICIA AUSTRIA-MARTINEZ* Associate Justice RENATO C. CORONA
Associate Justice
TERESITA J. LEONARDO-DE CASTRO Associate Justice CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I hereby
certify that the conclusions in the above Decision had been reached
in consultation before the case was assigned to the writer of the
opinion of the Courts Division. REYNATO S. PUNO Chief Justice
10
Republic of the Philippines SUPREME COURT Manila SECOND DIVISION
G.R. No. 154096 August 22, 2008
IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE
G. RESLIN,petitioners, vs. COURT OF APPEALS, JULITA C. BENEDICTO,
and FRANCISCA BENEDICTOPAULINO,respondents. DECISION VELASCO, JR.,
J.: The Case This Petition for Review on Certiorari under Rule 45
assails and seeks to nullify the Decision1 dated October 17, 2001
of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its
Resolution2 of June 20, 2002 denying petitioners' motion for
reconsideration. The assailed CA decision annulled and set aside
the Orders dated October 9, 2000, December 18, 2000, and March 15,
2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos
Norte which admitted petitioners' amended complaint in Civil Case
Nos. 3341-17 and 3342-17.11
The Facts Sometime in 1968 and 1972, Ambassador Roberto S.
Benedicto, now deceased, and his business associates (Benedicto
Group) organized Far East Managers and Investors, Inc. (FEMII) and
Universal Equity Corporation (UEC), respectively. As petitioner
Irene MarcosAraneta would later allege, both corporations were
organized pursuant to a contract or arrangement whereby Benedicto,
as trustor, placed in his name and in the name of his associates,
as trustees, the shares of stocks of FEMII and UEC with the
obligation to hold those shares and their fruits in trust and for
the benefit of Irene to the extent of 65% of such shares. Several
years after, Irene, through her trustee-husband, Gregorio Ma.
Araneta III, demanded the reconveyance of said 65% stockholdings,
but the Benedicto Group refused to oblige. In March 2000, Irene
thereupon instituted before the RTC two similar complaints for
conveyance of shares of stock, accounting and receivership against
the Benedicto Group with prayer for the issuance of a temporary
restraining order (TRO). The first, docketed as Civil Case No.
3341-17, covered the UEC shares and named Benedicto, his daughter,
and at least 20 other individuals as defendants. The second,
docketed as Civil Case No. 3342-17, sought the recovery to the
extent of 65% of FEMII shares held by Benedicto and the other
defendants named therein. Respondent Francisca Benedicto-Paulino,3
Benedicto's daughter, filed a Motion to Dismiss Civil Case No.
3341-17, followed later by an Amended Motion to Dismiss. Benedicto,
on the other hand, moved to dismiss4 Civil Case No. 3342-17,
adopting in toto the five (5) grounds raised by Francisca in her
amended motion to dismiss. Among these were: (1) the cases involved
an intra-corporate dispute over which the Securities and Exchange
Commission, not the RTC, has jurisdiction; (2) venue was improperly
laid; and (3) the complaint failed to state a cause of action, as
there was no allegation therein that plaintiff, as beneficiary of
the purported trust, has accepted the trust created in her favor.
To the motions to dismiss, Irene filed a Consolidated Opposition,
which Benedicto and Francisca countered with a Joint Reply to
Opposition. Upon Benedicto's motion, both cases were consolidated.
During the preliminary proceedings on their motions to dismiss,
Benedicto and Francisca, by way of bolstering their contentions on
improper venue, presented the Joint Affidavit5 of Gilmia B. Valdez,
Catalino A. Bactat, and Conchita R. Rasco who all attested being
employed as household staff at the Marcos' Mansion in Brgy. Lacub,
Batac, Ilocos Norte and that Irene did not maintain residence in
said place as she in fact only visited the mansion twice in 1999;
that she did not vote in Batac in the 1998 national elections; and
that she was staying at her husband's house in Makati City.12
Against the aforesaid unrebutted joint affidavit, Irene
presented her PhP 5 community tax certificate6(CTC) issued on
"11/07/99" in Curimao, Ilocos Norte to support her claimed
residency in Batac, Ilocos Norte. In the meantime, on May 15, 2000,
Benedicto died and was substituted by his wife, Julita C.
Benedicto, and Francisca. On June 29, 2000, the RTC dismissed both
complaints, stating that these partly constituted "real action,"
and that Irene did not actually reside in Ilocos Norte, and,
therefore, venue was improperly laid. In its dismissal order,7 the
court also declared "all the other issues raised in the different
Motions to Dismiss x x x moot and academic." From the above order,
Irene interposed a Motion for Reconsideration8 which Julita and
Francisca duly opposed. Pending resolution of her motion for
reconsideration, Irene filed on July 17, 2000 a Motion (to Admit
Amended Complaint),9 attaching therewith a copy of the Amended
Complaint10 dated July 14, 2000 in which the names of Daniel Rubio,
Orlando G. Reslin, and Jose G. Reslin appeared as additional
plaintiffs. As stated in the amended complaint, the added
plaintiffs, all from Ilocos Norte, were Irene's new trustees.
Parenthetically, the amended complaint stated practically the same
cause of action but, as couched, sought the reconveyance of the
FEMII shares only. During the August 25, 2000 hearing, the RTC
dictated in open court an order denying Irene's motion for
reconsideration aforementioned, but deferred action on her motion
to admit amended complaint and the opposition thereto.11 On October
9, 2000, the RTC issued an Order12 entertaining the amended
complaint, dispositively stating: WHEREFORE, the admission of the
Amended Complaint being tenable and legal, the same is GRANTED. Let
copies of the Amended Complaint be served to the defendants who are
ordered to answer within the reglementary period provided by the
rules. The RTC predicated its order on the following premises: (1)
Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may
opt to file, as a matter of right, an amended complaint. (2) The
inclusion of additional plaintiffs, one of whom was a Batac, an
Ilocos Norte resident, in the amended complaint setting out the
same cause of action cured the defect of improper venue.13
(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4
allow the filing of the amended complaint in question in the place
of residence of any of Irene's co-plaintiffs. In time, Julita and
Francisca moved to dismiss the amended complaint, but the RTC, by
Order14 dated December 18, 2000, denied the motion and reiterated
its directive for the two to answer the amended complaint. In said
order, the RTC stood pat on its holding on the rule on amendments
of pleadings. And scoffing at the argument about there being no
complaint to amend in the first place as of October 9, 2000 (when
the RTC granted the motion to amend) as the original complaints
were dismissed with finality earlier, i.e., on August 25, 2000 when
the court denied Irene's motion for reconsideration of the June 29,
2000 order dismissing the original complaints, the court stated
thusly: there was actually no need to act on Irene's motion to
admit, it being her right as plaintiff to amend her complaints
absent any responsive pleading thereto. Pushing its point, the RTC
added the observation that the filing of the amended complaint on
July 17, 2000 ipso facto superseded the original complaints, the
dismissal of which, per the June 29, 2000 Order, had not yet become
final at the time of the filing of the amended complaint. Following
the denial on March 15, 2001 of their motion for the RTC to
reconsider its December 18, 2000 order aforestated, Julita and
Francisca, in a bid to evade being declared in default, filed on
April 10, 2001 their Answer to the amended complaint.15 But on the
same day, they went to the CA via a petition for certiorari,
docketed as CA-G.R. SP No. 64246, seeking to nullify the following
RTC orders: the first, admitting the amended complaint; the second,
denying their motion to dismiss the amended complaint; and the
third, denying their motion for reconsideration of the second
issuance. Inasmuch as the verification portion of the joint
petition and the certification on non-forum shopping bore only
Francisca's signature, the CA required the joint petitioners "to
submit x x x either the written authority of Julita C. Benedicto to
Francisca B. Paulino authorizing the latter to represent her in
these proceedings, or a supplemental verification and certification
duly signed by x x x Julita C. Benedicto."16Records show the
submission of the corresponding authorizing Affidavit17 executed by
Julita in favor of Francisca. Later developments saw the CA issuing
a TRO18 and then a writ of preliminary injunction19 enjoining the
RTC from conducting further proceedings on the subject civil cases.
On October 17, 2001, the CA rendered a Decision, setting aside the
assailed RTC orders and dismissing the amended complaints in Civil
Case Nos. 3341-17 and 3342-17. The fallo of the CA decision
reads:
14
WHEREFORE, based on the foregoing premises, the petition is
hereby GRANTED. The assailed Orders admitting the amended
complaints are SET ASIDE for being null and void, and the amended
complaints a quo are, accordingly, DISMISSED.20 Irene and her new
trustees' motion for reconsideration of the assailed decision was
denied through the equally assailed June 20, 2002 CA Resolution.
Hence, this petition for review is before us. The Issues
Petitioners urge the setting aside and annulment of the assailed CA
decision and resolution on the following submissions that the
appellate court erred in: (1) allowing the submission of an
affidavit by Julita as sufficient compliance with the requirement
on verification and certification of non-forum shopping; (2) ruling
on the merits of the trust issue which involves factual and
evidentiary determination, processes not proper in a petition for
certiorari under Rule 65 of the Rules of Court; (3) ruling that the
amended complaints in the lower court should be dismissed because,
at the time it was filed, there was no more original complaint to
amend; (4) ruling that the respondents did not waive improper
venue; and (5) ruling that petitioner Irene was not a resident of
Batac, Ilocos Norte and that none of the principal parties are
residents of Ilocos Norte.21 The Court's Ruling We affirm, but not
for all the reasons set out in, the CA's decision. First Issue:
Substantial Compliance with the Rule on Verification and
Certification of Non-Forum Shopping Petitioners tag private
respondents' petition in CA-G.R. SP No. 64246 as defective for
non-compliance with the requirements of Secs. 422 and 523 of Rule 7
of the Rules of Court at least with regard to Julita, who failed to
sign the verification and certification of nonforum shopping.
Petitioners thus fault the appellate court for directing Julita's
counsel to submit a written authority for Francisca to represent
Julita in the certiorari proceedings. We are not persuaded.
Verification not Jurisdictional; May be Corrected Verification is,
under the Rules, not a jurisdictional but merely a formal
requirement which the court maymotu proprio direct a party to
comply with or correct, as the case may be. As the Court
articulated inKimberly Independent Labor Union for Solidarity,
Activism and Nationalism (KILUSAN)-Organized Labor Associations in
Line Industries and Agriculture (OLALIA) v. Court of Appeals:15
V]erification is a formal, not a jurisdictional requisite, as it
is mainly intended to secure an assurance that the allegations
therein made are done in good faith or are true and correct and not
mere speculation. The Court may order the correction of the
pleading, if not verified, or act on the unverified pleading if the
attending circumstances are such that a strict compliance with the
rule may be dispensed with in order that the ends of justice may be
served.24
Given this consideration, the CA acted within its sound
discretion in ordering the submission of proof of Francisca's
authority to sign on Julita's behalf and represent her in the
proceedings before the appellate court. Signature by Any of the
Principal Petitioners is Substantial Compliance Regarding the
certificate of non-forum shopping, the general rule is that all the
petitioners or plaintiffs in a case should sign it.25 However, the
Court has time and again stressed that the rules on forum shopping,
which were designed to promote the orderly administration of
justice, do not interdict substantial compliance with its
provisions under justifiable circumstances.26 As has been ruled by
the Court, the signature of any of the principal petitioners27 or
principal parties,28 as Francisca is in this case, would constitute
a substantial compliance with the rule on verification and
certification of non-forum shopping. It cannot be overemphasized
that Francisca herself was a principal party in Civil Case No.
3341-17 before the RTC and in the certiorari proceedings before the
CA. Besides being an heir of Benedicto, Francisca, with her mother,
Julita, was substituted for Benedicto in the instant case after his
demise. And should there exist a commonality of interest among the
parties, or where the parties filed the case as a "collective,"
raising only one common cause of action or presenting a common
defense, then the signature of one of the petitioners or
complainants, acting as representative, is sufficient compliance.
We said so in Cavile v. Heirs of Clarita Cavile.29 Like Thomas
Cavile, Sr. and the other petitioners in Cavile, Francisca and
Julita, as petitioners before the CA, had filed their petition as a
collective, sharing a common interest and having a common single
defense to protect their rights over the shares of stocks in
question. Second Issue: Merits of the Case cannot be Resolved on
Certiorari under Rule 65 Petitioners' posture on the second issue
is correct. As they aptly pointed out, the CA, in the exercise of
its certiorari jurisdiction under Rule 65, is limited to reviewing
and correcting errors of jurisdiction only. It cannot validly delve
into the issue of trust which, under the premises, cannot be
judiciously resolved without first establishing certain facts based
on evidence. Whether a determinative question is one of law or of
fact depends on the nature of the dispute. A question of law exists
when the doubt or controversy concerns the correct application of
law or jurisprudence to a certain given set of facts; or when the
issue does16
not call for an examination of the probative value of the
evidence presented, the truth or falsehood of facts being admitted.
A question of fact obtains when the doubt or difference arises as
to the truth or falsehood of facts or when the query invites the
calibration of the whole evidence considering mainly the
credibility of the witnesses, the existence and relevancy of
specific surrounding circumstances, as well as their relation to
each other and to the whole, and the probability of the
situation.30 Clearly then, the CA overstepped its boundaries when,
in disposing of private respondents' petition for certiorari, it
did not confine itself to determining whether or not lack of
jurisdiction or grave abuse of discretion tainted the issuance of
the assailed RTC orders, but proceeded to pass on the factual issue
of the existence and enforceability of the asserted trust. In the
process, the CA virtually resolved petitioner Irene's case for
reconveyance on its substantive merits even before evidence on the
matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in
fact have not even reached the pre-trial stage. To stress, the
nature of the trust allegedly constituted in Irene's favor and its
enforceability, being evidentiary in nature, are best determined by
the trial court. The original complaints and the amended complaint
certainly do not even clearly indicate whether the asserted trust
is implied or express. To be sure, an express trust differs from
the implied variety in terms of the manner of proving its
existence.31 Surely, the onus of factually determining whether the
trust allegedly established in favor of Irene, if one was indeed
established, was implied or express properly pertains, at the first
instance, to the trial court and not to the appellate court in a
special civil action for certiorari, as here. In the absence of
evidence to prove or disprove the constitution and necessarily the
existence of the trust agreement between Irene, on one hand, and
the Benedicto Group, on the other, the appellate court cannot
intelligently pass upon the issue of trust. A pronouncement on said
issue of trust rooted on speculation and conjecture, if properly
challenged, must be struck down. So it must be here. Third Issue:
Admission of Amended Complaint Proper As may be recalled, the CA
veritably declared as reversibly erroneous the admission of the
amended complaint. The flaw in the RTC's act of admitting the
amended complaint lies, so the CA held, in the fact that the filing
of the amended complaint on July 17, 2000 came after the RTC had
ordered with finality the dismissal of the original complaints.
According to petitioners, scoring the CA for its declaration
adverted to and debunking its posture on the finality of the said
RTC order, the CA failed to take stock of their motion for
reconsideration of the said dismissal order. We agree with
petitioners and turn to the governing Sec. 2 of Rule 10 of the
Rules of Court which provides: SEC. 2. Amendments as a matter of
right. -- A party may amend his pleading once as a matter of right
at any time before a responsive pleading is served or in the case
of a reply, at any time within ten (10) days after it is
served.17
As the aforequoted provision makes it abundantly clear that the
plaintiff may amend his complaint once as a matter of right, i.e.,
without leave of court, before any responsive pleading is filed or
served. Responsive pleadings are those which seek affirmative
relief and/or set up defenses,32 like an answer. A motion to
dismiss is not a responsive pleading for purposes of Sec. 2 of Rule
10.33 Assayed against the foregoing perspective, the RTC did not
err in admitting petitioners' amended complaint, Julita and
Francisca not having yet answered the original complaints when the
amended complaint was filed. At that precise moment, Irene, by
force of said Sec. 2 of Rule 10, had, as a matter of right, the
option of amending her underlying reconveyance complaints. As aptly
observed by the RTC, Irene's motion to admit amended complaint was
not even necessary. The Court notes though that the RTC has not
offered an explanation why it saw fit to grant the motion to admit
in the first place. In Alpine Lending Investors v. Corpuz, the
Court, expounding on the propriety of admitting an amended
complaint before a responsive pleading is filed, wrote:W]hat
petitioner Alpine filed in Civil Case No. C-20124 was a motion to
dismiss, not an answer. Settled is the rule that a motion to
dismiss is not a responsive pleading for purposes of Section 2,
Rule 10. As no responsive pleading had been filed, respondent could
amend her complaint in Civil Case No. C-20124 as a matter of right.
Following this Court's ruling in Breslin v. Luzon Stevedoring Co.
considering that respondent has the right to amend her complaint,
it is the correlative duty of the trial court to accept the amended
complaint; otherwise, mandamus would lie against it. In other
words, the trial court's duty to admit the amended complaint was
purely ministerial. In fact, respondent should not have filed a
motion to admit her amended complaint.34
It may be argued that the original complaints had been dismissed
through the June 29, 2000 RTC order. It should be pointed out,
however, that the finality of such dismissal order had not set in
when Irene filed the amended complaint on July 17, 2000, she having
meanwhile seasonably sought reconsideration thereof. Irene's motion
for reconsideration was only resolved on August 25, 2000. Thus,
when Irene filed the amended complaint on July 17, 2000, the order
of dismissal was not yet final, implying that there was strictly no
legal impediment to her amending her original complaints.35 Fourth
Issue: Private Respondents did not Waive Improper Venue Petitioners
maintain that Julita and Francisca were effectively precluded from
raising the matter of improper venue by their subsequent acts of
filing numerous pleadings. To petitioners, these pleadings, taken
together, signify a waiver of private respondents' initial
objection to improper venue. This contention is without basis and,
at best, tenuous. Venue essentially concerns a rule of procedure
which, in personal actions, is fixed for the greatest convenience
possible of the plaintiff and his witnesses. The ground of
improperly laid venue must be raised seasonably, else it is deemed
waived. Where the defendant failed to either file a motion to
dismiss on the ground of improper venue or include the same as an
affirmative defense, he is deemed to have waived his right to
object to improper venue.36In the case at bench,18
Benedicto and Francisca raised at the earliest time possible,
meaning "within the time for but before filing the answer to the
complaint,"37 the matter of improper venue. They would thereafter
reiterate and pursue their objection on venue, first, in their
answer to the amended complaints and then in their petition for
certiorari before the CA. Any suggestion, therefore, that Francisca
and Benedicto or his substitutes abandoned along the way improper
venue as ground to defeat Irene's claim before the RTC has to be
rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of
Improper Venue Subject Civil Cases are Personal Actions It is the
posture of Julita and Francisca that the venue was in this case
improperly laid since the suit in question partakes of a real
action involving real properties located outside the territorial
jurisdiction of the RTC in Batac. This contention is not
well-taken. In a personal action, the plaintiff seeks the recovery
of personal property, the enforcement of a contract, or the
recovery of damages.38 Real actions, on the other hand, are those
affecting title to or possession of real property, or interest
therein. In accordance with the wordings of Sec. 1 of Rule 4, the
venue of real actions shall be the proper court which has
territorial jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated. The venue of personal
actions is the court where the plaintiff or any of the principal
plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant
where he may be found, at the election of the plaintiff.39 In the
instant case, petitioners are basically asking Benedicto and his
Group, as defendants a quo, to acknowledge holding in trust Irene's
purported 65% stockownership of UEC and FEMII, inclusive of the
fruits of the trust, and to execute in Irene's favor the necessary
conveying deed over the said 65% shareholdings. In other words,
Irene seeks to compel recognition of the trust arrangement she has
with the Benedicto Group. The fact that FEMII's assets include real
properties does not materially change the nature of the action, for
the ownership interest of a stockholder over corporate assets is
only inchoate as the corporation, as a juridical person, solely
owns such assets. It is only upon the liquidation of the
corporation that the stockholders, depending on the type and nature
of their stockownership, may have a real inchoate right over the
corporate assets, but then only to the extent of their
stockownership. The amended complaint is an action in personam, it
being a suit against Francisca and the late Benedicto (now
represented by Julita and Francisca), on the basis of their alleged
personal liability to Irene upon an alleged trust constituted in
1968 and/or 1972. They are not actions in rem where the actions are
against the real properties instead of against persons.40 We
particularly note that possession or title to the real properties
of FEMII and19
UEC is not being disputed, albeit part of the assets of the
corporation happens to be real properties. Given the foregoing
perspective, we now tackle the determinative question of venue in
the light of the inclusion of additional plaintiffs in the amended
complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of
Rule 4 We point out at the outset that Irene, as categorically and
peremptorily found by the RTC after a hearing, is not a resident of
Batac, Ilocos Norte, as she claimed. The Court perceives no
compelling reason to disturb, in the confines of this case, the
factual determination of the trial court and the premises holding
it together. Accordingly, Irene cannot, in a personal action,
contextually opt for Batac as venue of her reconveyance complaint.
As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the
Rules of Court adverts to as the place "where the plaintiff or any
of the principal plaintiffs resides" at the time she filed her
amended complaint. That Irene holds CTC No. 1701945141 issued
sometime in June 2000 in Batac, Ilocos Norte and in which she
indicated her address as Brgy. Lacub, Batac, Ilocos is really of no
moment. Let alone the fact that one can easily secure a basic
residence certificate practically anytime in any Bureau of Internal
Revenue or treasurer's office and dictate whatever relevant data
one desires entered, Irene procured CTC No. 17019451 and appended
the same to her motion for reconsideration following the RTC's
pronouncement against her being a resident of Batac. Petitioners,
in an attempt to establish that the RTC in Batac, Ilocos Norte is
the proper court venue, asseverate that Batac, Ilocos Norte is
where the principal parties reside. Pivotal to the resolution of
the venue issue is a determination of the status of Irene's
coplaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation
to Sec. 2 of Rule 4, which pertinently provide as follows: Rule 3
PARTIES TO CIVIL ACTIONS SEC. 2. Parties in interest. -- A real
party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the
avails of the suit. Unless otherwise authorized by law or these
Rules, every action must be prosecuted or defended in the name of
the real party in interest. SEC. 3. Representatives as parties. --
Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be
deemed to be the real party in interest. A representative may be a
trustee of an express trust, a guardian, an executor or
administrator, or a party authorized by law or these Rules. An
agent acting in his own name and for the benefit of an undisclosed
principal may20
sue or be sued without joining the principal except when the
contract involves things belonging to the principal. Rule 4 VENUE
OF ACTIONS SEC. 2. Venue of personal actions. -- All other actions
may be commenced and tried where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a nonresident
defendant where he may be found, at the election of the plaintiff.
Venue is Improperly Laid There can be no serious dispute that the
real party-in-interest plaintiff is Irene. As selfstyled
beneficiary of the disputed trust, she stands to be benefited or
entitled to the avails of the present suit. It is undisputed too
that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G.
Reslin, all from Ilocos Norte, were included as co-plaintiffs in
the amended complaint as Irene's new designated trustees. As
trustees, they can only serve as mere representatives of Irene.
Upon the foregoing consideration, the resolution of the crucial
issue of whether or not venue had properly been laid should not be
difficult. Sec. 2 of Rule 4 indicates quite clearly that when there
is more than one plaintiff in a personal action case, the
residences of the principal parties should be the basis for
determining proper venue. According to the late Justice Jose Y.
Feria, "the word 'principal' has been added [in the uniform
procedure rule] in order to prevent the plaintiff from choosing the
residence of a minor plaintiff or defendant as the venue."42
Eliminate the qualifying term "principal" and the purpose of the
Rule would, to borrow from Justice Regalado, "be defeated where a
nominal or formal party is impleaded in the action since the latter
would not have the degree of interest in the subject of the action
which would warrant and entail the desirably active participation
expected of litigants in a case."43 Before the RTC in Batac, in
Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as
the principal plaintiff, the real party-in-interest. Following Sec.
2 of Rule 4, the subject civil cases ought to be commenced and
prosecuted at the place where Irene resides. Principal Plaintiff
not a Resident in Venue of Action As earlier stated, no less than
the RTC in Batac declared Irene as not a resident of Batac, Ilocos
Norte. Withal, that court was an improper venue for her conveyance
action.
21
The Court can concede that Irene's three co-plaintiffs are all
residents of Batac, Ilocos Norte. But it ought to be stressed in
this regard that not one of the three can be considered as
principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17,
included as they were in the amended complaint as trustees of the
principal plaintiff. As trustees, they may be accorded, by virtue
of Sec. 3 of Rule 3, the right to prosecute a suit, but only on
behalf of the beneficiary who must be included in the title of the
case and shall be deemed to be the real party-in-interest. In the
final analysis, the residences of Irene's coplaintiffs cannot be
made the basis in determining the venue of the subject suit. This
conclusion becomes all the more forceful considering that Irene
herself initiated and was actively prosecuting her claim against
Benedicto, his heirs, assigns, or associates, virtually rendering
the impleading of the trustees unnecessary. And this brings us to
the final point. Irene was a resident during the period material of
Forbes Park, Makati City. She was not a resident of Brgy. Lacub,
Batac, Ilocos Norte, although jurisprudence44 has it that one can
have several residences, if such were the established fact. The
Court will not speculate on the reason why petitioner Irene, for
all the inconvenience and expenses she and her adversaries would
have to endure by a Batac trial, preferred that her case be heard
and decided by the RTC in Batac. On the heels of the dismissal of
the original complaints on the ground of improper venue, three new
personalities were added to the complaint doubtless to insure, but
in vain as it turned out, that the case stays with the RTC in
Batac. Litigants ought to bank on the righteousness of their
causes, the superiority of their cases, and the persuasiveness of
arguments to secure a favorable verdict. It is high time that
courts, judges, and those who come to court for redress keep this
ideal in mind. WHEREFORE, the instant petition is hereby DISMISSED.
The Decision and Resolution dated October 17, 2001 and June 20,
2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as
they nullified the assailed orders of the RTC, Branch 17 in Batac,
Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground
of lack of jurisdiction due to improper venue, are hereby AFFIRMED.
The Orders dated October 9, 2000, December 18, 2000, and March 15,
2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are
accordingly ANNULLED and SET ASIDE and said civil cases are
DISMISSED. Costs against petitioners. SO ORDERED. PRESBITERO J.
VELASCO, JR. Associate Justice
WE CONCUR:22
LEONARDO A. QUISUMBING Associate Justice Chairperson CONCHITA
CARPIO MORALES Associate Justice ARTURO D. BRION Associate Justice
DANTE O. TINGA Associate Justice
ATTESTATION I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to
the writer of the opinion of the Court's Division. LEONARDO A.
QUISUMBING Associate Justice Chairperson
CERTIFICATION Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson's Attestation, it is
hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division. REYNATO S. PUNO Chief
Justice
23
SECOND DIVISIONRICHARD B. LOPEZ, in his Capacity as Trustee of
the Trust Estate of the late Juliana LopezManzano, Petitioner, G.R.
No. 157784 Present: QUISUMBING, J., Chairperson, CARPIO MORALES,
TINGA, VELASCO, JR., and BRION, JJ.
- versus -
COURT OF APPEALS, CORAZON LOPEZ, FERNANDO LOPEZ, ROBERTO LOPEZ,
represented by LUZVIMINDA LOPEZ, MARIA Promulgated: ROLINDA
MANZANO, MARIA ROSARIO MANZANO SANTOS, JOSE MANZANO, JR., NARCISO
MANZANO (all represented by December 16, 2008 Attorney-in-fact,
MODESTO RUBIO), MARIA CRISTINA MANZANO RUBIO, IRENE MONZON and
ELENA MANZANO, Respondents.
x--------------------------------------------------------------------------------x
DECISION24
TINGA, J.:This is a petition for review on certiorari [1]under
Rule 45 of the 1997 Rules of Civil Procedure, assailing the
Decision[2] and Resolution[3] 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 petitioners 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 then25
submitted an inventory of Julianas 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 Julianas
paraphernal properties as his legitime, while the other one-half
(1/2) was to be constituted into the Fideicomiso. At the same time,
Jose alleged that he and Juliana had outstanding debts totaling
P816,000.00 excluding interests, and that these debts were secured
by real estate mortgages. He noted that if these debts were
liquidated, the residuary estate available for distribution would,
value-wise, be very small. From these premises, Jose proceeded to
offer a project of partition. The relevant portion pertaining to
the Fideicomiso stated, thus:PROJECT OF PARTITION 14. Pursuant to
the terms of the Will, one-half (1/2) of the following properties,
which are not burdened with any obligation, shall be constituted
into the Fidei-comiso de Juliana LopezManzano 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.) 2,940,000 13,040 Improvements pasture, etc. residential
(1/6 thereof)
and all those properties to be inherited by the decedent, by
intestacy, from her sister, Clemencia Lopez y Castelo. 15. The
other half (1/2) of the aforesaid properties is adjudicated to Jose
Lopez Manzano as heir.
Then, Jose listed those properties which he alleged were
registered in both his and Julianas 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 Title No. Area (Sq. M.)
Improvements 91,28326
coconuts
Mataywanak, Tuy, Batangas Patugo, Balayan, Batangas Cagayan,
Balayan, Batangas Pook, Baayan Batangas Bolbok, Balayan, Batangas
Calzada, Balayan, Batangas Gumamela, Balayan, Batangas Bombon,
Balayan, Batangas Paraaque, Rizal Paraaque, Rizal Modesto St.,
Manila
OCT-29[6]94 OCT-2807
485,486 16,757,615
sugar coconut, sugar, citrus, pasteur sugar sugar sugar
sugar
TCT-1220 TCT-1281 TCT-18845 TCT 1978 TCT-2575
411,331 135,922 444,998 2,312 829 4,532
TCT-282340 TCT-11577 TCT-52212
800 800 137.8
residential residential residential
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 Title No. Area (Sq. M.) 482,872 523 Improvements sugar
residential
Dalig, Balayan, TCT-10080 Batangas San Juan, Rizal TCT-53690
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 Julianas
names, including the disputed lots, were adjudicated to Jose as
heir, subject to the27
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. inBalayan, 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 Joses will, the RTC ordered on 20 December 1983 the
transfer of the disputed properties to the respondents as the heirs
of Jose. Consequently, the certificates of title of the disputed
properties were cancelled and new ones issued in the names of
respondents. Petitioners father, Enrique Lopez, also assumed the
trusteeship of Julianas estate. On 30 August 1984, the RTC of
Batangas, Branch 9 appointed petitioner as trustee of Julianas
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
complaint[5] essentially alleged that Jose was able to register in
his name the disputed properties, which were theparaphernal
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
Joses 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.28
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
petitioners motion for reconsideration for lack of merit in its
Resolution dated3 April 2003. Hence, the instant petition
attributing the following errors to the Court of Appeals:I. THE
COURT OF APPEALS CONCLUSION THAT PETITIONERS 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, 1984WHEN THE
ACTION FOR RECONVEYANCE WAS FILED IS ERRONEOUS. II. THE RESPONDENT
COURT OF APPEALS CONCLUSION IN FINDING THAT THE FIDUCIARY RELATION
ASSUMED BY THE LATE JOSE LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE
LAST WILL AND TESTAMENT OF JULIANA LOPEZ MANZANO WAS IMPLIED TRUST,
INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.
None of the respondents filed a comment on the petition. The
counsel for respondents Corazon, Fernando and Roberto, all surnamed
Lopez, explained that he learned that respondents had migrated to
the United States only when the case was pending before the Court
of Appeals. [9] Counsel for the rest of the respondents likewise
manifested that the failure by said respondents to contact or
communicate with him possibly signified their lack of interest in
the case.[10] In a Resolution dated 19 September 2005, the Court
dispensed with the filing of a comment and considered the case
submitted for decision.[11]
The core issue of the instant petition hinges on whether
petitioners 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 to29
prescription of action to prevent the recovery of the disputed
properties by the beneficiary against the trustee. Evidently,
Julianas 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 courts 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 Joses
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 of30
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] 1452[21]
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] 1455[27] 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 theFideicomiso. 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 courts 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.31
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 reconveyancebased 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 theFideicomiso. 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 petitioners 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 Julianas 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.
DANTE O. TINGA Associate Justice32
WE CONCUR:
LEONARDO A. QUISUMBING Associate Justice Chairperson
CONCHITA CARPIO MORALES Associate Justice
PRESBITERO J. VELASCO, JR. Associate Justice
ARTURO D. BRION Associate Justice ATTESTATION I attest that the
conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the
Courts Division.
LEONARDO A. QUISUMBING Associate Justice Chairperson, Second
Division
33
CERTIFICATION Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
REYNATO S. PUNO Chief JusticeRepublic of the Philippines SUPREME
COURT Manila FIRST DIVISION G.R. No. 165696 April 30, 2008
ALEJANDRO B. TY, petitioner, vs. SYLVIA S. TY, in her capacity
as Administratrix of the Intestate Estate of Alexander Ty,
respondent. DECISION AZCUNA, J.: This is a petition for review on
certiorari under Rule 45 of the Rules of Court against the
Decision1 of the Court of Appeals (CA) in CA-G.R. No. 66053 dated
July 27, 2004 and the Resolution therein dated October 18, 2004.
The facts are stated in the CA Decision: On May 19, 1988, Alexander
Ty, son of Alejandro B. Ty and Bella Torres, died of cancer at the
age of 34. He was survived by his wife, Sylvia Ty, and his only
daughter, Krizia Katrina