DIAZ V.

GORRICHO & AGUADO

G.R. No. L-11229
March 29, 1958
Kristel Descallar
DOCTRINE: In constructive trusts, laches constitutes a bar to actions to enforce the trust, and
repudiation is not required, unless there is concealment of the facts giving rise to the trust
although the concealment must be adequately pleaded by the plaintiff in a suit to declare a trust,
where the delay is apparent on the face of his pleading.
FACTS:
Spouses Francisco Diaz and Maria Sevilla originally owned Lot Nos. 1941 and 3073. Francisco
Diaz died in 1919, survived by his widow Maria Sevilla and their three children Manuel, Lolita and
Constancia. In 1935, defendant Carmen J. Gorricho filed an action against Sevilla, wherein a writ of
attachment was issued upon the shares of Sevilla in said lots, which were later on sold at a public auction
to Gorricho. Since Sevilla failed to redeem the lots in one year, the acting provincial sheriff executed a
final deed of sale in favor of Gorricho; however, the sheriff wrongfully conveyed to Gorricho the whole
of the two lots, instead of only the half-interest of Sevilla therein.
In 1951, Sevilla died. A year later, Sevillas children, plaintiffs Manuel, Constancia and Lolita
filed an against defendants Gorricho and her husband Francisco Aguado, compelling the latter to execute
in their favor a deed of reconveyance over an undivided one-half interest over the two lots the share of
their deceased father, Francisco Diaz, which was illegally conveyed by the provincial sheriff to Gorricho.
The siblings Diaz contend that Gorricho acquired their fathers half of the disputed property
through an error of the provincial sheriff, so it was subject to an implied trust, under Article 1456 of the
New Civil Code. Furthermore, they allege that since the trust is continuing and subsisting, the siblings
Diaz may compel reconveyance of the property despite the lapse of time, because prescription does not
run against titles registered under Act 496.
Defendants denied and alleged that plaintiffs' action had prescribed. The trial court held that
while a constructive trust in siblings Diaz favor arose when defendant Gorricho took advantage of the
error of the provincial sheriff in conveying to her the whole of the lots and obtained title in herself, the
action of plaintiffs was, however, barred by laches and prescription. So, the plaintiffs appealed.
ISSUES:
1. Whether or not a constructive trust was created in favor of the siblings Diaz.
2. Whether or not the action for reconveyance of the two lots to siblings Diaz was barred by laches.
3. Whether or not the action for reconveyance of the two lots to siblings Diaz was barred by prescription.
HELD:
1. YES. Art. 1456 of the NCC provides that 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. Since Gorricho acquired the whole of the disputed lots through the error of
the sheriff, when in fact Gorricho was only entitled to the half of it, then a constructive trust was created
in favor of the siblings Diaz.
2. YES. The action for reconveyance of the two lots to siblings Diaz was barred by laches.
Express trusts are created by intention of the parties, while implied or constructive trusts are
exclusively created by law and are not trusts in their technical sense. The express trusts disable the trustee
from acquiring for his own benefit the property committed to his management or custody, at least while
he does not openly repudiate the trust, and makes such repudiation known to the beneficiary. Thus, the old

Code of Civil Procedure (Act 190) declared that rules on adverse possession do not apply to "continuing
and subsisting" (i.e., unrepudiated) trusts.
In the case of an express trust, a beneficiary is entitled to rely upon the fidelity of the trustee. No
laches exists until a reasonable time after a beneficiary is notified of a breach or other cause of suit
against the trustee. However, laches exists where suit is not commenced within such reasonable time.
In constructive trusts, laches constitutes a bar to actions to enforce the trust, and
repudiation is not required, unless there is concealment of the facts giving rise to the trust. Time
runs from the moment that the law creates the trust, which is the time when the cause of action arises. But
laches does not exist while the trustee, fraudulently and successfully conceals the facts giving rise to the
trust, although the concealment must be adequately pleaded by the plaintiff in a suit to declare a
trust, where the delay is apparent on the face of his pleading.
The reason for the difference in treatment is that on one hand, in express trusts, the delay of the
beneficiary is directly attributable to the trustee who holds the property for the former, thus creating a
fiduciary relation between them. The trustee's possession is, therefore, not adverse to the beneficiary, until
and unless the latter is made aware that the trust has been repudiated.
On the other hand, in constructive trusts, there is neither promise nor fiduciary relation; the
trustee does not recognize any trust and has no intent to hold for the beneficiary; therefore, the
beneficiary is not justified in delaying action to recover his property. It is his fault if he delays;
hence, he may be estopped by his own laches.
Since the cause of action of siblings Diaz to attack the sheriff's deed and cancel the transfer
certificates of title issued to spouses Gorricho and Aguado accrued since its issuance and recording in
1937, and plaintiffs had allowed fifteen (15) years to elapse before seeking remedy in 1952, then the
dismissal of the case must be upheld. Even considering that Constancia only became of age in 1939, more
than sufficient time (thirteen years) had been allowed to elapse to extinguish appellant's action.
3. YES. Under the old Code of Civil Procedure in force at the time, the longest period of extinctive
prescription was only ten years. Since 15 years lapsed from the time the cause of action arose before
plaintiffs sought for remedy, then their action for reconveyance was barred by prescription.
The judgment appealed from is affirmed.