AZNAR BROTHERS REALTY COMPANY vs. AYING G.R. No. 144773 May 16, 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 Maloloy-on 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 heirs of 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 not have 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
4years from discovery of the fraud. It took the Aying heirs 27years to file their action against the realty company. ISSUE: Is the registration of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale conveying the lot in issue to the Aznar Brothers Realty Company with the ROD binding and consequently, results in the running of the prescriptive period for reconveyance? Held: No. The sale of registered property, recorded in the ROD, cannot be considered as registered. Rationale: Jurisprudence dictates that that registration of instruments must be done in the proper registry, in order to affect and bind the land and, thus, operate as constructive notice to the world. In this case, the Extrajudicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496, therefore the document cannot be deemed registered. As consequence of non-registration, the 10year prescriptive period cannot be reckoned from the date of registration of the document under Act. No. 3444 since no constructive notice to the world was perfected by such registration. The prescriptive period only began to run from the time the Aying heirs had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale which was not proven by clear and convincing evidence in this case. Issue: Is the extra-judicial partition with deed of absolute sale null and void, as claimed by the Aying Descendants, 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? Held: No. The extra-judicial partition with deed of absolute sale is VALID but only between the heirs who participated in the execution thereof. Therefore, the heirs who undisputedly did not participate therein, cannot be bound by said document.
Issue: Does 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? Held: No, Aznar Brothers Realty Company cannot be entitled ownership over the land based on mistaken belief. Rationale: 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. Notes: 1. Who has the burden of proving that prescription has begun to run?
-Aznar Brothers Realty Company has the burden of proving the running of prescription because it was the realty company that set up the defense that of prescription which was denied by the Aying heirs. 2. Does laches apply here? -No laches will not apply here because the three heirs took action to protect their interest well within the period prescribed by law.
