DIAZ, ET.AL. VS.

GORRICHO AND AGUADO

Facts:

Spouses Francisco Diaz and Maria Sevillaowned two parcels of lots (Lots Nos. 1941 and 3073)in
Cabanatuan. Sometime later, Francisco died, andthe properties were left in the hands of her wife andthree
children.Sometime in 1935, the
appellee Carmen Gorrichof i l e d a n a c t i o n a g a i n s t M a r i a S e v i l l a a n d i n c o n n e c t i o
n therewith, a writ of attachment wasissued upon the shares of the latter in
t h e t w o parcels of land. Since Maria Sevilla failed to redeemit within one year, a final deed of sale in
favor of C a r m e n G o r r i c h o w a s i s s u e d . I n t h e s a i d d e e d , however, the sheriff conveyed to
Gorricho the wholeof the two parcels instead of only the half-interest of Maria Sevilla therein. Pursuant
to the said deed,C a r m e n G o r r i c h o o b t a i n e d t h e t i t l e s o f t h e t w o parcels of land in her name in
the year 1937, and hasbeen possessing the said lands as owner ever since.In 1952, the children of Maria Sevilla
(who died ayear before) filed an action against the respondentsto compel the latter to execute in their favor
a deedof reconveyance over an undivided one-half interestof the lots in question, which the respondents
wereallegedly holding in trust for them. The respondentsraised the defense that the petitioners’ action
haslong prescribed.

Issue:
Do implied trust prescribe or may they be defeated by laches?

Ruling of the CFI of Nueva Ecija:

W h i l e a c o n s t r u c t i v e t r u s t i n p l a i n t i f f ’ s f a v o r a r o s e w h e n Gorricho took advantage of the
error of the provincialyepquestion and obtained title in herself, the actionof the plaintiff was, however,
barred by laches andprescription.

Petitioners:
The disputed property was acquired byGorricho through an error of the provincial
sheriff;t h a t h a v i n g b e e n a c q u i r e d t h r o u g h e r r o r , i t w a s subject to an implied trust, as
provided by Article1456 of the New Civil Code; and therefore, since thetrust is continuing and subsisting,
the appellants maycompel reconveyance of the property despite thelapse of time, specially because
prescription does notrun against titles registered under Article 496.

Held:
The petitioners are in error in believing that like express trusts, such constructive trusts may notbe
barred by lapse of time. The American law ontrusts has always maintained a distinction
betweenexpress trusts created by intention of parties,
andthe implied/constructive trusts that are exclusivelycreated by law, the later not being trusts
in theirtechnical sense.
The express trusts disable thetrustee from acquiring for his own benefit the
property committed to his management orcustody, at least while he does
n o t o p e n l y r e p u d i a t e t h e t r u s t , a n d m a k e s s u c h repudiation known to
the beneficiary or
cestui que trust.
Also, in express trusts, the
d e l a y o f t h e b e n e f i c i a r y i s d i r e c t l y a t t r i b u t a b l e t o t h e trustee who
undertakes to hold the
propertyf o r t h e f o r m e r , o r w h o i s l i n k e d t o t h e b e n e f i c i a r y b y c o n
f i d e n t i a l o r f i d u c i a r y relations
. The trustee’s possession is, therefore, not adverse to the beneficiary, until and unless
thel a t t e r i s m a d e a w a r e t h a t t h e t r u s t h a s b e e n repudiated.But in constructive
trusts, there is neither promisenor fiduciary relation. The
so-called trustee doesn o t r e c o g n i z e a n y t r u s t a n d h a s n o i n t e n t t o hold for the beneficiary;
therefore, the latter isnot justified in delaying action to recover his property. It is his fault if
he delays; hence, hemay be estopped by his own laches
. Thus, the
judgment of dismissal (of the CFI) should be upheld
, because the petitioners’ cause of
actiont o a t t a c k t h e d e e d a n d c a n c e l t h e t r a n s f e r certificates of title issued to the
respondents accruedfrom the year of issuance and recording, 1937,
andt h e p e t i t i o n e r s h a v e a l l o w e d 1 5 y e a r s t o e l a p s e before taking remedial action in 1952. Under
the oldC o d e o f C i v i l P r o c e d u r e , i n f o r c e a t t h e t i m e , t h e longest period of extinctive prescription
was only 10years