RUFINO BUENO, FILOMENA B. GUERRERO, LUIS B. GUERRERO, BENJAMIN B. GUERRERO, VIOLETA B. REYES-SAMONTE, FELICIDAD B. REYES-FONACIER, MERCEDES B. REYES, HONESTA B. REYES-SARMIENTO,…

In Civil Case No. 3636 of the Court of First Instance of Ilocos Norte, the plaintiffs’ complaint was dismissed, upon
motion of the defendants, in an order dated July 29, 1963.  The
case is before us on appeal from the said order of dismissal.

The antecedent facts are as follows:  On January
7, 1936 Francisco H. Reyes filed an answer in Cadastral Case No. 47
of Ilocos Norte, claiming lot No. 2357 of the Laoag Cadastre as property belonging to himself and to his
two brothers, Juan and Mateo.  The case
was heard without opposition, and the lot was adjudicated in favor of the
claimants on March 27, 1939, in whose names original certificate of title No.
19074 was issued on the following July 7.

Twenty-three years thereafter, or on December 12, 1962 to be exact, the plaintiffs
filed the action below for reconveyance of lot No.
2357.  They allege in their complaint
that the said lot originally belonged to Jorge Bueno,
who died leaving three children, namely, Brigida Bueno, Eugenia Bueno and Rufino Bueno, to whom the pro­perty
descended by intestate succession; that subsequently Brigida
and Eugenia died, leaving their respective children, who are now the
plaintiffs-appellants together with Rufino Bueno; that Francisco H. Reyes was Eugenia’s husband and
the father of the plaintiffs surnamed Reyes, “who by agreement among the
heirs of Jorge Bueno was entrusted in filing the
answer in the cadastral proceedings and in obtaining the title thereto for and
in behalf of all the heirs of Jorge Bueno, including
his wife Eugenia Bueno.” (Par. V of the
complaint.)

The other pertinent allegations in the complaint read:

VI

“That as agreed upon with said Francisco Reyes, said Francisco
Reyes declared the said parcel of land above-described in his name, and
either in bad faith or by mistake filed an answer in the cadastral proceedings
and obtained title thereto in his name and those of brothers, Mateo and Juan,
who connived and consented to the malicious or erroneous acts of the late
Francisco Reyes, knowing fully well that said parcel of land was never owned by
them and has never been in their possession, and knowing further that said parcel
of land belonged to, and possessed by the wife of Francisco Reyes in
conjunction with her sister and brother, Brigida and Rufino, respectively;

VII

“That the fact that Francisco Reyes, Mateo Reyes and Juan
Reyes are declared owners of the lot in suit by virtue of Original Certificate
of Title No. 19074 has only been discovered during this year when Mateo Reyes
and Juan Reyes, the defendants herein, including Francisco Reyes who was dead
long ago, filed with this Court a petition for the issuance of a writ of
possession against a wrong person by the name of Mateo R. Reyes, who now admittedly
(sic) not the possessor of the lot but plaintiffs herein, and the plaintiffs
have demanded from the defendants the reconveyance
and/or the quitclaiming of their undivided shares as appearing in said
Certificate of Title No. 19074 but then, they refused, and continue to refuse
to do so;”

The defendants Juan and Mateo Reyes^[1]
filed their answer, in which they raised a number of defenses, including Laches, imprescriptibility of
title, and prescription of action.  This
last defense was reiterated in a subsequent motion to dismiss, which was upheld
by the court a quo in the order already referred to and now
subject of this appeal.

Two errors are assigned by the appellants:  (1) in the dismissal of the complaint on the
ground of prescription; and (2) in the dismissal of the complaint “even in
relation to appellants surnamed Reyes, the children of Francisco Reyes.”

Both the appellees and the court below
proceeded on the theory that the action for reconveyance
was predicated on the existence of an implied trust, and that such an action
prescribes in 10 years.  The appellants
counter in this appeal, that the trust was not implied but express, and that in
any case even an implied trust, according to some decisions of this Court, is imprescriptible.

The first prong of the appellants’ argument is untenable.  What was apparently designed to be an express
trust, as alleged in paragraph V of the complaint, was for the late
Francisco H. Reyes to file an answer in the cadastral proceeding and to obtain
title to the land for and in behalf of all the heirs of Jorge Bueno.^[2]  But such express trust failed to
materialize.  In the next paragraph of
the complaint Francisco H. Reyes is charged with “either bad faith or
mistake” in filing the cadastral answer and obtaining title to the
property in his own name and in the names of his two brothers, Juan and Mateo,
“who connived and consented to the (said) malicious or erroneous
acts.”

If any trust can be deduced at all from the foregoing facts it
was an implied one, arising by operation of law not from any presumed
intention of the parties but to satisfy the demands of justice and equity and
as a protection against unfair dealing or downright fraud.  Indeed, in this kind of implied trust,
commonly denominated constructive, as distinguished from resulting, trust,
there exists a certain antagonism between the cestui que trust and the trustee. 
Thus, for instance, under Article 1456 of the Civil Code, “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 a number of cases this Court has held
that 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.^[3]

While there are some decisions which hold that an action upon a
trust is imprescriptible, without distinguishing
between express and implied trusts, the better rule, as laid down by this Court
in other decisions, is that prescription does supervene where the trust is
merely an implied one.^[4]
The reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal,
4 SCRA, 84, 88, as follows:

“Under Section 40 of the old Code of Civil Procedure, all
actions for recovery of real property prescribed in 10 years, excepting only
actions based on continuing or subsisting trusts that were considered by
section 38 as imprescriptible.  As held in the case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing
or subsisting trusts con­templated in section 38 of the Code of Civil Procedure
referred only to express unrepudiated trusts, and did
not include constructive trusts (that are imposed by law) where no fiduciary
relation exists and the trustee does not recognize the trust at all.”

Upon the general proposition that an action for reconveyance such as the present is subject to prescription
in ten years the appellees and the court a quo
are correct.  The question here, however,
is: from what time should the prescriptive period be counted, in the light of
the allegations in the complaint?  It
should be remembered that the constructive trust arose by reason of the
“bad faith or mistake” of the deceased Francisco H. Reyes, compounded
by the “connivances” the appellees Juan and
Mateo Reyes.  Consequently, the cause of
action upon such trust must be deemed to have accrued only upon the discovery
of such bad faith or mistake, or to put it more specifically, upon the
discovery by the appellants that Francisco H. Reyes, in violation of their
agreement with him, had obtained registration of the disputed property in his
own name and in the names of his brothers. 
It would not do to say that the cadastral proceeding itself, by virtue
of its nature as a proceeding in rem, was
constructive notice to the appellants, for as far as they were concerned the
cadastral answer they had authorized. 
Francisco H. Reyes to file was not adverse to them; and neither he nor
the appellees may invoke the constructive-notice rule
on the basis of their own breach of the authority thus given.  On top of all this, it was the appellants and
not the appellees who were
in possession of the property as owners, continuously up to 1962, when for the
first time the latter appeared upon the scene and tried to get such possession,
thereby revealing to them the fact of the mistaken or fraudulent registration.

The foregoing, of course, are not facts already established by
evidence.  But they are alleged in the
complaint and therefore deemed hypothetically admitted for purposes of the
motion to dismiss filed by the defendants. 
To be sure, there are contradictory allegations of fact in the answer,
but these are matters of defense that must be substantiated at the trial.  At the very least the grounds upon which the
order of dismissal is based do not appear to us to be indubitable; and it would
be more in keeping with justice to afford the plaintiffs as well as the
defendants the opportunity to lay their respective claims and defenses before
the Court in a full-blown litigation.

With this view we take of the case, it is unnecessary to take up
the second error assigned.

Wherefore, the order appealed from is set aside and the
case is remanded for further proceedings. 
No costs.

Reyes, J.B.L., Acting C.J., Dizon, Zaldivar, Sanchez, Fernando, Capistrano, Teehankee, and Barredo, JJ., concur.

Concepcion, C.J., voted in favor of this opinion before going on
official leave.

Castro, J., on leave, did not
take part.

^[1]
Francisco H. Reyes died in 1956.

^[2]
Incidentally, as pointed out by the appellees, an
express trust concerning immovable property, may not be proved by parol evidence (Act 1443, Civil Code); and there is no
allegation that the supposed trust agreement was made in writing.

^[3]
De Ocampo v. Zaporteza,
53 Phil. 442; Gayondato v. Treasurer of P.I.,
49 Phil. 244; Gemora, et al. v. F.M. Yap Tico & Co., et al., 52 Phil. 161; Fabian v.
Fabian, G. R. No. L-20449, January 29,
1968.

^[4] Alzona v.
Capunitan, G. R. No. L-10228, February 28, 1962, (4 SCRA, p. 450)
and the cases cited; Gerona, et al.
v. De Guzman, et al., G. R. No. L-19060, May 29, 1964; Gonzales vs. Jimenez, et al., G. R. No. L-19073, January 30, 1965; Cuaycong et al. v. Cuaycong,
G. R. No. L-21616, December 11, 1967; Fabian v. Fabian, supra).