DONATA A. ABADILLA, LUCIANA CA-G.R. CV NO. 93490 A. TABIJE, LIBERATA A. BUEN, AURORA A. MANGAOIL, ERLINDA A. ROSALES, THE HEIRS OF THE LATE EULALIA A. ABENOJAR, NAMELY: LILIAN A…

Abadilla versus Ancheta

The Case

This is a case about land registered in one name but bought with another person's money. The brothers and sisters of the late Ana Ancheta-Diego, together with the heirs of their deceased siblings, sued their own brother Wilfredo Ancheta for partition of two parcels of land in Gattaran, Cagayan. The titles stood in Wilfredo's name, but the plaintiffs claimed that Ana had bought the lots and that Wilfredo was merely her trustee. Wilfredo answered that he was the absolute owner and that the action was barred by prescription and laches. The case matters because it shows how the Court treats a Torrens title held by a trustee, and how an express trust may be proved and enforced despite the Statute of Frauds and the passage of time.

Procedural History

The plaintiffs filed their amended complaint for partition before Branch 9 of the Regional Trial Court of Aparri, Cagayan. After trial, the Regional Trial Court rendered its decision on April 23, 2009, ordering the partition of the two lots among the plaintiffs and the defendant share and share alike, and ordering Wilfredo to pay 100,000 pesos as attorney's fees, appearance fees, and litigation expenses, plus the costs of suit. Wilfredo appealed to the Court of Appeals by ordinary appeal. The Court of Appeals affirmed the trial court, and the case reached the Supreme Court, which likewise affirmed the decision of the Regional Trial Court.

Facts

The plaintiffs, except the heirs of Eulalia Abenojar and the heirs of Ireneo Ancheta, are brothers and sisters. Their elder siblings were Ana Ancheta-Diego, Estefania Ancheta, Eulalia Abenojar, and Ireneo Ancheta. Ana and Estefania died without issue. Sometime in 1962, Ana acquired Lot 2319 from Marcela Cababag and Francisca Cababag, and Lot 2439 from Agapito Palino. The deeds of conveyance, however, were executed only in 1965 and 1966, and they were made out in favor of Wilfredo, who was a geodetic engineer and could work for the titling of the lots. Transfer certificates of title were then issued in Wilfredo's name.

From the time of the purchases, the agricultural rents were delivered to Ana's parents, Severo and Maria Ancheta, during their lifetime. After their deaths, the rents passed through overseers and tenants acting on Ana's instructions, and portions were donated to the United Methodist Church and used to build a church in Capissayan. Ana also declared Lot 2319 in her name for taxation purposes and paid the corresponding taxes. Ana possessed the lots openly and continuously in the concept of an owner for more than twenty eight years.

From the year 2002, Wilfredo began collecting the fruits of the lots for his own purposes, prompting the plaintiffs to file the action for partition. Wilfredo claimed absolute ownership, acquired in good faith and for value, denied any trusteeship, and invoked prescription and laches.

Issues

• Whether or not the trial court erred in ordering the partition of the two parcels of land among the appellees and the appellant.
• Whether or not the trial court erred in not dismissing the complaint for failure of the appellees to implead indispensable parties.
• Whether or not the trial court erred in awarding 100,000 pesos as attorney's fees, appearance fees, and litigation expenses to the appellees.

Applicable Provisions

Article 2208 of the Civil Code provides:

In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

This provision is the basis for the award of attorney's fees and litigation expenses sustained by the Court.

Ruling

On the first issue, the Court held that there was an express trust between Ana as trustor and Wilfredo as trustee. The Court defined a trust as the legal relationship between one having an equitable ownership in property and another owning the legal title, and distinguished express trusts from implied trusts, and resulting trusts from constructive trusts. The burden of proving a trust lies on the party asserting it, and the proof must be clear. What is crucial is the intention to create the trust, which may be inferred from the language, conduct, or circumstances of the parties, provided the inference is made with reasonable certainty. Here, the testimony of the vendor Francisca Cababag, who said the land was sold to Ana by installments through her brother Willy and that the document was placed in Wilfredo's name because Ana was in the United States, together with the testimony of the tenants and overseers and Ana's tax declarations and payments, overwhelmingly established that Ana was the true buyer and Wilfredo the trustee. The Court quoted with approval the trial court's finding that Ana's open and continuous possession in the concept of an owner raised a strong presumption of ownership, and that the tax declarations and receipts were strong evidence of ownership when coupled with actual possession.

The Court also held that the trust was not barred by the Statute of Frauds, applying the doctrine of partial performance, and cited the Ringor case, where it was held that when a verbal contract has been completed, executed, or partially consummated, its enforceability will not be barred by the Statute of Frauds, which applies only to an executory agreement.

On prescription and laches, the Court held that as trustee of an express trust, Wilfredo could acquire the lots by prescription only if the following requisites concur:

(a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui trust and (c) the evidence thereon is clear and conclusive.

These requisites were not met. The Court further held that a trustee who obtains a Torrens title over property held in trust cannot repudiate the trust by relying on the registration, and that the rule requires a clear repudiation of the trust duly communicated to the beneficiary. The Torrens system was not intended to foment betrayal in the performance of a trust, and where one does not have a rightful claim to the property, the Torrens system can confirm or record nothing.

On the second issue, the Court found no merit in the claim of failure to implead indispensable parties, as the trial court's findings were supported by clear and convincing evidence and the factual findings of the trial court are entitled to great weight on appeal.

On the third issue, the Court held that attorney's fees may be awarded when the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought, and that in the absence of stipulation, a winning party may be awarded attorney's fees only where the losing party's stand is so untenable as to amount to gross and evident bad faith, which obtained in this case. The award of 100,000 pesos was therefore proper.

Doctrine

An express trust may be proved by the conduct and circumstances of the parties, and the intention to create it must be inferred with reasonable certainty. A verbal trust that has been partially performed is enforceable despite the Statute of Frauds. A trustee who holds a Torrens title over property held in trust cannot repudiate the trust by relying on the registration; a clear repudiation duly communicated to the beneficiary is required. As trustee, he may acquire the property by prescription only upon unequivocal acts of repudiation amounting to ouster, made known to the beneficiary, and proved by clear and conclusive evidence. Laches cannot be used to defeat justice or perpetuate fraud and injustice. Attorney's fees may be awarded under Article 2208 of the Civil Code where the losing party's stand is so untenable as to amount to gross and evident bad faith.

Disposition

The Supreme Court affirmed the decision of the Regional Trial Court, ordering the partition of the two lots among the plaintiffs and the defendant share and share alike, and sustaining the award of 100,000 pesos as attorney's fees, appearance fees, and litigation expenses, plus costs.

Remember This

The single line worth memorizing is that a trustee who obtains a Torrens title over property held in trust cannot repudiate the trust by relying on the registration; a clear repudiation duly communicated to the beneficiary is required. Examiners like to use this case on the nature and proof of express trusts, the doctrine of partial performance against the Statute of Frauds, and the rule that the Torrens system cannot be used to defeat a trust.