1. LAND REGISTRATION; TITLE OBTAINED THROUGH FRAUD; RIGHT OF DEFRAUDED PARTY TO VINDICATE PROPERTY. — If a person obtains legal title to property by fraud or concealment, a constructive trust is created in favor of the defrauded party and the latter has the right to vindicate the property regardless of the lapse of time.

2. ID.; ID.; ACTION TO ENFORCE TRUST; PRESCRIPTION NOT A DEFENSE. — The rule that registration of real property under the Torrens system has the effect of a constructive notice to the whole world cannot be availed of when the purpose of the action is to compel a trustee to convey the property registered in his name for the benefit of the cestui que trust. In another words, the defense of prescription cannot be set up an action to enforce a trust.

Originally brought to the Court of Appeals wherein printed briefs were submitted, this record was later forwarded to us because it involved no factual issues, the statement of facts in appellants’ brief having been accepted by the only appellee who has filed a brief, sustaining the appealed decision.

As legitimate heirs of Ines Francisco, the plaintiffs filed this action in the Bulacan court of first instance to recover her 1/4 pro-indiviso share in Lot No. 1175 of the Malinta Friar Lands Estate in the municipality of Polo, Bulacan. The facts as found by the Bulacan court were these:jgc:chanrobles.com.ph

"1. That on June 27, 1931 Luciana Ciderio died in Polo, Bulacan leaving real property situated in said municipality, known as Lot 1175 of Malinta Friar Land Estate with an area of 72,106 square meters, more less, covered by Transfer Certificate of Title No. 5983 of the land records of Bulacan. Her only heirs at the time of her death were her legitimate children Ines, Crisanto, Ciriaco and Bartolome, all surnamed Francisco.

2. On March 31, 1932, Bartolome, Ciriaco and Crisanto, all surnamed Francisco executed an extra-judicial deed of partition (Escritura de Particion y Adjudicacion) whereby they stated among other things their deceased mother Luciana Ciderio "solo ha dejado a su fallecimiento, a sus unicos hijos legitimos Crisanto Francisco, Ciriaco Francisco y Bartolome Francisco aqui otorgantes, como sus unicos herederos forzosos, legitimos, directos y universales, sin haber dejado a ningun heredero legitimo ni hijo natural legalmente reconocido. Que al fallacimiento de nuestra referida madre esta no dejo ninguna clase de deuda ni obligacion siquiera ni tampoco existe otra persona extrana que pretendiese ser privada de su derecho hereditaria . . ." and thereupon divided the land aforementioned into three equal parts so that to each and everyone of them was adjudicated 1/3 undivided portion of the said land. In other words Ines Francisco was not given any share in the property in question;

3. On April 22, 1932, the extrajudicial partition was duly registered in the office of the register of deeds of Bulacan and as a result thereof Transfer Certificate of Title No. 8683 was issued in the name of Bartolome, Ciriaco and Crisanto, all surnamed Francisco;

4. On June 27, 1934, Ciriaco Francisco died, leaving as his only heir his daughter Gavina Francisco, one of the defendants herein;

5. On September 28, 1939 Ines Francisco died leaving as her only heirs her legitimate children Eustaquio Juan, Dionisio Juan, and Adela Juan, plaintiffs herein;

6. On March 30, 1941 Crisanto Francisco and Bartolome Francisco executed a deed of sale whereby they sold their participation in the land in question consisting of 2/3 in favor of Vicente Zuñiga, one of the herein defendants for the sum of P1,000.00 subject to repurchase within the term of two years from said date. The deed of sale was duly registered in the office of the register of deeds on May 17, 1941 and annotated at the back Transfer Certificate of Title No. 8683 under the heading "Memorandum of Encumbrances Affecting the Property Described in this Certificate" ;

7. On December 3, 1941, Crisanto Francisco executed a deed of absolute sale whereby for and in consideration of the sum of P500.00 he sold absolutely all his rights, interest and participation in and over the 1/3 portion of the land in question in favor of Vicenta Zuñiga, Defendant. The deed of sale was duly registered on September 17, 1942 and annotated at the back of Transfer Certificate of Title No. 8683 under the heading "Memorandum of Encumbrances" on said date;

8. On December 16, 1941 Crisanto Francisco died, leaving his legitimate children Marcos, Lourdes, Dominga, Esperanza, Cayetano, Celestino and Benita, all surnamed Francisco, defendants herein as his only heirs;

9. On August 17, 1948 Bartolome Francisco sold all his rights, interest and participation in the land in question in favor of defendant Vicenta Zuñiga for the sum of 920.00. The deed of sale was registered on June 26, 1954 and duly inscribed on said date at the back of Transfer Certificate of Title No. 8683 under the heading "Memorandum of Encumbrances" ;

10. On November 5, 1948 Bartolome Francisco died leaving as his only heir his legitimate son Florencio Francisco, one of the herein defendants;

The only question to be resolved in this case is as to whether the plaintiffs’ right of action has already prescribed. It will be noted from the foregoing that this is essentially an action for relief on the ground of fraud. There is no allegation in the complaint nor evidence of any kind tending to show that the alleged fraud perpetrated by Ciriaco Francisco, Bartolome Francisco and Crisanto Francisco upon Ines Francisco, mother of herein plaintiffs was discovered by the latter only within 4 years from February 4, 1957 when this action was filed. As a matter of fact it appears that since the registration of the deed extrajudicial partition in the office of the register of deeds of Bulacan on April 22, 1932 and the transfer of the land in question in the names of Crisanto, Bartolome end Ciriaco, Ines Francisco had not asserted her rights to the land or taken any action whatsoever in order to protect her interest thereto up to her death on September 28, 1939. . .

It is our considered opinion, therefore, that whatever right of action the late Ines Francisco and/or the herein plaintiffs had has already prescribed under Sec. 43, Par. 3 of Act 190, the law applicable to the case at bar."cralaw virtua1aw library

It should be explained that the defendants are: (a) Vicenta Zuñiga who has purchased the shares (2/3 of Lot 1175 of Crisanto Francisco and Bartolome Francisco (and the heirs of the latter); and (b) the only heir of Ciriaco Francisco (who got 1/3), namely, Gavina Francisco.

Said court held that the plaintiffs’ action had prescribed. It held, furthermore, that as Zuñiga was a buyer in good faith of land with a Torrens Title, recovery of the 2/3 from her is barred by the provisions and principles of the Land Registration Law.

The plaintiffs appealed; and now, they do not insist on recovering from Zuñiga They insist, however, in recovering from Gavina Francisco, a portion of the lot of Ciriaco. They say he (Ciriaco) was entitled only to 1/4 of the lot (1175) of 72,106 square meters, which means 18026 square meters; and since he obtained 24,035 square meters, more or less, because of the fraudulent partition (depriving Ines Francisco of her portion) Ciriaco received an excess of 6,009 square meters, which he (Ciriaco or his heir Gavina) should now turn over to plaintiffs.

This explains the presentation of a brief for Gavina only, and the non-presentation of a brief for the other appellees. The controversy here is thus reduced.

It is undeniable that Ciriaco, Bartolome and Crisanto defrauded their sister Ines of her share, by falsely representing in the extrajudicial deed of partition that they were the only three legitimate children and heirs of their mother Luciana Ciderio.

Such being the case, our ruling in Sevilla v. Angeles, G.R. No. L-7745, November 18, 1955; is clearly conclusive. There, pretending to be the sole heir of the deceased Felix Sevilla, the defendant succeeded in obtaining thru fraud, a new certificate of title in her own name, substituting a previous title issued in the name of the "heirs of Felix Sevilla" and in taking and holding possession of the land for 14 years. Sued by the true heirs of Felix Sevilla, she pleaded prescription. She lost the case. Our reasoning therein, may now be quoted because it plainly points out the error in the point of view adopted by the Bulacan trial judge, as herein-above quoted:jgc:chanrobles.com.ph

"In considering that the action of the plaintiffs had already prescribed even if the complaint does not expressly state the date when the alleged fraud was discovered by them, the court (referring to the lower court) made the following comment: ’That the complaint does not allege when plaintiffs discovered the commission of the fraud, that is, the fraudulent cancellation of Original Certificate of Title No. 1056 and the issuance of T. C. T. No. 577 in the name of the defendant. The property, however, is covered by a certificate of title duly registered in the office of the Register of Deeds, and, therefore, open to examination by any interested party therein. As the records of the Register of Deeds are public records and open to the inspection and examination of the interested parties, there can be no concealment.’ In other words, since it appears that the aforesaid Certificate of Title No. 577 was issued in 1936 as a result of the fraud practiced by defendant and the plaintiffs have taken the present action only in 1951, the action, in the opinion of the court (lower), is now barred upon the theory that plaintiffs had had constructive notice of the fraud for more than 14 years since the issuance in 1936 of said Certificate of Title No. 577.

While this ruling is correct if applied to ordinary actions of recovery of real property which is covered by a Torrens Title upon the theory that its registration under our registration system has the effect of a constructive notice to the whole world, the same cannot be availed of when the purpose of the action is to compel a trustee to convey the property registered in his name for the benefit of the cestui que trust. In other words, the defense of prescription cannot be set up in an action whose purpose is to recover property held by a person for the benefit of another. . . .

A similar situation obtains in the present case. The complaint alleges that the patent of the land was granted on April 27, 1934 and to implement it, Original Certificate of Title No. 1056 was issued in the name of the "Heirs of Felix Sevilla" — meaning the plaintiffs herein who were at that time minors — and that sometime in 1936 defendant through fraudulent representation, or by pretending to be the sole heir of the deceased, succeeded in having the original title cancelled and a new one issued in her name enabling her to possess the land and appropriate its produce. This way of acquiring title creates what is called ’constructive trust’ in favor of the defrauded party and grants to the latter the right to vindicate the property regardless of the lapse of time. Thus, it has been held that ’if a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party.’ The use of the word trust in this sense is not technically accurate . . . but as courts are agreed in administering the same remedy in a certain class of frauds as are administered in fraudulent breaches of trust, and as courts and the profession have concurred in calling such frauds constructive trust, there can be no misapprehension in continuing the same phraseology, while a change might lead to confusion and misunderstanding."cralaw virtua1aw library

We need not reiterate those cases holding imprescriptible the action to enforce a trust. 1 A different view could encourage fraud and permit one person unjustly to enrich himself at the expense of another.

The decision is therefore reversed in so far as it affects the plaintiffs’ rights against Gavina Francisco; and the record is returned for further proceedings in accordance with this opinion. Costs against said appellee.

Bautista Angelo, Concepcion, Barrera and Paredes, JJ., concur.

Reyes, J.B.L., J., concurs in the result.

Endnotes:

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1. Castro v. Castro, 57 Phil. 675; Cristobal v. Gomez, 50 Phil. 81.