VILORIA VS CA

FACTS: 

In December 1980 Nicolasa Viloria passed away, followed by her sister Rosaida in June 1989.  Both died single, survived by their brothers Ruperto Viloria, Anastacio Viloria, the heirs of their sister Felicitacion Cacanando, who predeceased them, Lida Aquino and Manuel  Cacanando, and the heirs of their other sister Josefina Ancheta, who likewise predeceased them, Rodolfo Ancheta, Estrella Ancheta and Carmen Nicolasura.

In February 1991 the heirs of Rosaida and Nicolasa Viloria filed an action for partition with the Regional Trial Court of La Union, against their co-heir Rupero.  The heirs claims that during the lifetime of Nicolasa and Rosaida they were co-owners in equal shares and pro-indiviso with Ruperto of a commercial lot and an orchard.  After Nicolasa and Rosaida died, their heirs demanded from Ruperto, who was in possession of the properties, to partition the same among them but he refused claiming that during their lifetime Nicolasa and Rosaida sold and conveyed to him all their shares, interests and participation over the properties in question. Ruperto alleged that Nicolasa and Rosaida sold the commercial lot to him by virtue of a deed of sale executed in August 1965 and duly registered in the Office of the Register of Deeds, while the heirs of Josefina sold and relinquished to him all their claims and ownership over the commercial lot.  Ruperto further alleged that the orchard came to his possession when Nicolasa sold to him her share of the land and the ancestral house standing thereon by virtue of a private agreement written in Ilocano, referred to as “Catulagan,” in June 1978.

The heirs of Nicolasa and Rosaida maintained that the transfer of title of the commercial lot in the name of Ruperto was only for loan purposes and not to convey and relinquish ownership over the property, and that Ruperto assured Nicolasa and Rosaida that they would remain as co-owners and the deed of sale returned to them.

Through their co-heirs Lida and Atty. Gerardo Viloria, private respondents also asserted that while Rosaida executed a deed of sale conveying her share of the orchard to Ruperto, it was without any consideration. Thereafter upon realization of the iniquitous nature of the document, Rosaida Viloria immediately executed a deed of revocation of the sale.

Trial Court held that title over the commercial lot was not transferred in the name of Ruperto for the parties to the deed of sale merely intended to create an express trust.  By admitting the trust and assuring his sisters Nicolasa and Rosaida as well as private respondents that they would remain as co-owners, an express trust had been created. Petitioner Ruperto Viloria thus became only a trustee to an express trust which incapacitated him from acquiring for his own benefit the property committed to his custody although titled in his name. Nicolasa and Rosaida remained as co-owners of the commercial lot, which upon their demise passed on to their heirs.

The trial court likewise declared that there was no effective conveyance of the one thitd share of Rosaida over the orchard in Nalasin since the document of conveyance was in effect nullified when Rosaida executed the deed of revocation. Neither did the “Catulagan” allegedly executed by Nicolasa convey her share of the orchard to Ruperto since she had already disposed of the property in favor of Rodolfo Ancheta by virtue of a deed of donation. Consequently, the trial court declared Ruperto portion titled in the name of Rodolfo, Aurora and Estrella Ancheta) and the entire orchard, and ordered a partition of the properties such that the commercial lot and the orchard would be divided into four (4) equal parts each, one fourth for Ruperto Viloria and three-fourths for the other heirs.

Ruperto filed a case to the Court of Appeals. The court affirmed the findings of the trial court with the modification that petitioner and private respondents should be declared co-owners of the commercial lot only to the extent of two-thirds of the property and co-owners of one third of the orchard.   Therefore, with regard to the commercial lot, what should be divided into four (4) equal parts should only be the two-thirds share of Nicolasa and Rosaida Viloria.  The court further held that the deed of revocation executed by Rosaida did not rescind the 1987 deed of sale over the orchard since it was duly notarized and hence enjoyed the presumption of validity which could only be annulled through proper judicial action.  In the absence thereof, the 1987 deed of sale remained valid.  Therefore only the one third share of Rosaida in the orchard should be divided among petitioner and private respondents.

ISSUE: Whether or not the 1965 deed of sale of the commercial lot was an express trust and not a true conveyance of the real property.

Whether or not the prescription did not run against the private respondents.

HELD: The Court held that the 1965 deed of sale was in fact an express trust and hence no actual conveyance took place. The parties in the case freely gave their consent to the deed of sale but intended the same to be merely a trust agreement between them and not alienation of the property in litigation. In the present case, by admitting the trust and assuring his sisters Nicolasa and Rosaida as well as private respondents that they would remain as co-owners, an express trust had been created. Deceased owners, Nicolasa and Rosaida, did not relinquish their claim of ownership over the commercial lot but continued to exercise acts of administration and dominion over it. The property continued to form part of their estate and devolved upon their demise on their heirs.

The allegation that the sale was notarized does not affect the nature of the contract which both parties are bound. Notarization creates a presumption that there is a consummated sale, however if the intention of the parties states otherwise, the instrument is binding according to the intent of the parties.

On the allegation that Ruperto owns the property and there is no trust since the property was already registered in the name of Ruperto, the court held that under the Torrens system registration is the operative act that gives validity to the transfer or creates a lien upon the land. However petitioner cannot rely on the registration of the land subject of the 1965 sale and the corresponding issuance of a certificate of title in his name as vesting ownership on him because the trial court found the deed of sale is in fact an express trust.  It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration.

With respect to the second issue, the court held that the prescriptive period for an action of reconveyance of real property based on implied or constructive trust which is counted from the date of registration of property which applies when the plaintiff is not in possession of the contested property. Likewise, an action to compel the trustee to convey property registered in his name for the benefit of the cestui que trust does not prescribe unless the trustee repudiates the trust. In the present case, Nicolasa and Rosaida were in possession of the land and were exercising acts of ownership and administration over the property consistent with their responsibility as co-owners. Ruperto did not openly repudiate the claims of his co-owners but continued to assure them of their rights regarding the property.  Hence, prescriptive period did not commence to run against private respondents.

Therefore, the decision of the Court of Appeals declaring petitioner and private respondents as co-owners of the two-thirds portion of the commercial lot in the name of Ruperto, Nicolasa and Rosaida, is AFFIRMED.