Aznar Brothers Realty Company v.

Aying
G.R. No. 144773, 16 May 2005

FACTS:
Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her
favor over Lot No. 4399 located in Lapu-Lapu City. Crisanta died, so the
Cadastral court issued a decision directing the issuance of a decree of title
in the name of her 8 children, namely: Juan, Celedonio,Emiliano,
Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.
However, the certificate was lost during the war.

All the heirs of the Aying siblings executed an Extra-Judicial Partition of

Real Estate with Deed of Absolute Sale conveying the lot in issue to the
Aznar Brothers Realty Company. The deed was registered with the ROD of
Lapu-Lapu City on March 6, 1994 under Act. No. 3344 (the law governing
registration of unregistered land) and since then, the realty company
religiously paid the real property taxes on the property. Later, Aznar
Brothers Realty Company filed a Petition for Reconstitution of the Original
Title since the original title of the lot was lost during the war. This was
granted by the court and the ROD of Lapu-Lapu was directed to issue a
reconstituted title in the name of the Aying Siblings. Thus, OCT No.
RO-2856 was issued.

The Aznar Brothers Realty Company then sent out notices to vacate the lot
to the persons occupying the property, reasoning that they were the rightful
owner. The occupants refused to vacate, hence an ejectment case was
filed against them before the MTC. The MTC ordered the occupants to
vacate. Eventually, this case reached the Supreme Court and a decision
was rendered in favor of the realty company declaring them as the rightful
possessor of the land.
Meanwhile, persons claiming to be the descendants of the eight Aying
siblings, numbering around 220 persons submitted an amended complaint
before the RTC and alleged that they are co-owners of the land being the
descendants of the registered owners under OCT No. RO-2856; that they
had been in actual, peaceful, physical, open, adverse, continuous and
uninterrupted possession in concept of owner of subject parcel of land
since time immemorial; and that the deed of absolute sale executed in
favor of the realty company by the alleged heirsof Crisanta Maloloy-on is a
fraud and is null and void ab initio because not all the co-owners of subject
property affixed their signature on said document and some of the co-
owners who supposedly signed said document had been dead at the time
of the execution thereof; that Aznar Brothers Realty Company held the land
in bad faith, knowing fully well that it did nothave any right to the land and
used force, threat and intimidation against them thus, suffering moral
damages.

Aznar Brothers Realty Company denied that the Ayings are the lawful
owners of the land and alleged it had been in actual possession of subject
land as owner thereof by virtue of the extra-judicial partition of real property
and deed of absolute sale executed in its favor; that in fact, it had been
paying taxes thereon religiously. The realty company further alleged that
they are barred by prescription to file an action for recovery of property
which should be instituted within 4 years from discovery of the fraud. It took
the Aying heirs 27 years to file their action against the realty company.

ISSUE:
Whether or not the realty company’s defense, that they acquired the entire
parcel of land with the mistaken belief that all the heirs have executed the
document, entitle them to ownership over the land by prescription.

RULING:
No, Aznar Brothers Realty Company cannot be entitled ownership over the
land based on mistaken belief. The law provides that if property is acquired
through mistake or fraud, the person obtaining it is considered a trustee of
an implied trust for the benefit of the person from whom the property
comes. Based on this rule, a trustee cannot acquire by prescription
ownership over property entrusted to him until and unless he repudiates the
trust. However, in constructive implied trusts, prescription may supervene
even if the trustee does not repudiate the relationship. Necessarily,
repudiation of said trust is not a condition precedent to the running of the
prescriptive period.