Cañezo vs. Rojas

No express or resulting trust arises from a mere profit-sharing arrangement and entrustment of property absent clear and convincing evidence of intent to create a trust, manifested with reasonable certainty; without a trust relationship, adverse possession for the statutory period vests ownership in the possessor, and the beneficiary's claim is barred by prescription, estoppel, and laches.

Soledad Cañezo is the daughter of Crispulo Rojas from his first marriage, while respondent Concepcion Rojas is Crispulo's second wife. The disputed property is an unregistered parcel of land measuring 4,169 square meters in Higatangan, Naval, Biliran. The controversy centers on whether petitioner bought the land in 1939 from Crisogono Limpiado and merely entrusted it to her father, or whether Crispulo himself purchased the property in 1948. The resolution of this dispute turns on the existence vel non of a trust relationship between petitioner and her father, which determines whether the prescriptive period for recovery of property was suspended.

Petitioner Soledad Cañezo is the daughter of Crispulo Rojas from his first marriage. Respondent Concepcion Rojas is Crispulo's second wife. The subject of the dispute is an unregistered parcel of land with an area of 4,169 square meters, situated at Higatangan, Naval, Biliran.

According to the petitioner, she bought the parcel of land in 1939 from Crisogono Limpiado, although the transaction was not reduced into writing. She immediately took possession of the property thereafter. When she and her husband left for Mindanao in 1948, she entrusted the land to her father, Crispulo Rojas, who took possession of and cultivated the property. Petitioner testified that her agreement with Crispulo was that she would be given a share in the produce of the property, and that while she was in Bansalan, Davao del Sur, Crispulo periodically remitted to her amounts of ₱200.00 or ₱300.00 every three months. In 1980, petitioner discovered that respondent, her stepmother, was in possession of the property and cultivating it. She also found that the tax declaration over the property had been transferred to the name of Crispulo Rojas without her consent.

For her part, the respondent asserted that it was her husband, Crispulo Rojas, who bought the property from Crisogono Limpiado in 1948, which accounted for the tax declaration being in Crispulo's name. From 1948 until his death in 1978, Crispulo possessed and cultivated the property. Upon his death, the property was included in his estate, which was administered by a special administrator, Bienvenido Ricafort. The petitioner, as heir, received her share in the produce of the estate. Respondent further contended that petitioner ought to have impleaded all the heirs as defendants, and that the fact that petitioner filed the complaint only in 1997 meant she had abandoned her right over the property.

On January 29, 1997, petitioner filed a complaint for recovery of real property plus damages with the MTC of Naval, Biliran. The MTC, crediting the testimony of petitioner's witnesses that Crisogono Limpiado sold the property to petitioner in 1939, ruled in her favor. The RTC initially reversed the MTC on the ground of prescription, but upon reconsideration amended its decision in petitioner's favor, holding that the action had not prescribed because the property was held in trust. The Court of Appeals reversed the RTC's amended decision, dismissing the complaint on the grounds of laches and prescription, finding that 17 years had elapsed since petitioner discovered respondent's adverse possession, and that petitioner had not contested the inclusion of the property in Crispulo's estate during probate proceedings.

• Timeliness of CA Petition: Petitioner argued that the respondent's petition for review before the CA was filed out of time, and that the CA erred in granting a second motion for extension because the need to secure a certified copy of annexes did not constitute a compelling reason justifying additional time. She raised this issue for the first time in her motion for reconsideration but maintained it could be raised at any time as it concerned the CA's jurisdiction.
• Trust Relationship Bars Prescription: Petitioner insisted that prescription and laches were unavailing because an express trust existed between her and her father, and express trusts do not prescribe. Alternatively, even if it was not an express trust, a resulting trust existed which generally does not prescribe absent repudiation by the trustee.
• Ownership and Possession: Petitioner claimed she bought the property in 1939 from Crisogono Limpiado, took immediate possession, and merely entrusted it to her father when she relocated to Mindanao in 1948.

• Estoppel on Procedural Issue: Respondent argued that petitioners were estopped from questioning the CA resolution granting the second motion for extension because the issue was not raised in the comment filed before the CA. She maintained that the grant was warranted because the certified true copy of the assailed RTC orders did not arrive at her counsel's office in Cebu City in time for filing.
• Prescription, Laches, and Estoppel: Respondent asserted that the complaint was barred by prescription, laches, and estoppel, given that Crispulo adversely possessed the property from 1948 until his death in 1978, and that 49 years elapsed before the complaint was filed in 1997. Even assuming petitioner discovered respondent's possession only in 1980, she allowed 17 years to pass before asserting her right.
• Indispensable Parties: Respondent maintained that the other co-owners and heirs were indispensable parties who were not impleaded, warranting dismissal of the complaint.

• Timeliness of CA Petition: Whether the Court of Appeals committed grave abuse of discretion in granting respondent's second motion for extension of time to file the petition for review.
• Trust and Prescription: Whether the action for recovery of real property was barred by prescription and laches, or whether an express or resulting trust existed between petitioner and her father that suspended the running of the prescriptive period.

• Timeliness of CA Petition: No. The grant or denial of a motion for extension of time is addressed to the sound discretion of the court, and the CA's consideration of the difficulty in securing a certified true copy due to distance constituted a compelling reason warranting the extension.
• Trust and Prescription: No trust was established. Petitioner failed to prove by clear and convincing evidence the existence of an express or resulting trust, and absent a trust relationship, Crispulo's 49 years of uninterrupted adverse possession ripened into ownership by prescription under Act No. 190. The complaint was further barred by estoppel and laches.

• Timeliness of CA Petition: The grant or denial of a motion for extension of time is addressed to the sound discretion of the court. The CA evidently considered the difficulty in securing a certified true copy of the assailed decision, given the distance between respondent's counsel's office in Cebu City and the trial court, as a compelling reason for the request. In the absence of any showing that the CA granted the motion capriciously, its exercise of discretion would not be disturbed. Petitioner was also estopped from raising this issue, having failed to raise it in her comment before the CA.

• Trust and Prescription: The resolution of the prescription issue hinged on whether a trust—express or implied—existed between petitioner and her father. Express trusts are created by the direct and positive acts of the parties, by writing, deed, or words evincing an intention to create a trust; they may not be established by parol evidence concerning real property (Article 1443, Civil Code). The only evidence of an express trust was petitioner's self-serving testimony, which is inadequate. While oral testimony may prove a partially performed trust where intention is manifest, the inference of intent must be made with reasonable certainty and cannot rest on vague or indefinite declarations. Petitioner's testimony established only a profit-sharing arrangement—her father would give her a share of the copra produce—which does not necessarily translate to a trust relation, as profit-sharing can exist in other relationships such as deposit. What distinguishes a trust is the separation of legal title and equitable ownership; petitioner herself alleged that the tax declaration was transferred to Crispulo without her consent, which is inconsistent with a trust, since in a trust the trustee necessarily holds legal title and would have the right to transfer the tax declaration to his name. No resulting trust was established either, as there was no evidence of any transaction between petitioner and her father from which a resulting trust could be inferred. Resulting trusts, while provable by oral evidence, require proof as fully convincing as if proven by an authentic document. Absent any trust, Crispulo's uninterrupted possession from 1948 for 49 years, coupled with acts of ownership such as payment of real estate taxes and tax declarations in his name, ripened into ownership by prescription under Section 41 of Act No. 190, which allows adverse possession in any character to ripen into ownership after ten years, even without good faith or just title. Even assuming a trust existed, it would have been personal to Crispulo and terminated upon his death in 1978, after which a constructive trust would arise by operation of law. Unlike express and resulting trusts, prescription may supervene in constructive trusts even without repudiation, because a constructive trust does not emanate from or generate a fiduciary relation—the holding is adverse at all times. Additionally, petitioner was estopped from asserting ownership by her failure to contest the property's inclusion in Crispulo's estate during probate proceedings and her participation in the project of partition approved in 1984, having received her share of the estate's proceeds for 12 years. The action was also barred by laches, as petitioner allegedly discovered respondent's possession in 1980 but filed the complaint only in 1997. Finally, the other heirs were indispensable parties whose absence warranted dismissal, though this issue was rendered academic by the finding that the complaint was already barred by prescription, estoppel, and laches.

• Imprescriptibility of Express and Resulting Trusts — A trustee cannot acquire by prescription ownership of property entrusted to him unless he repudiates the trust. This rule applies squarely to express trusts, because the possession of a trustee is not adverse. It may also apply to resulting trusts as long as the trustee has not repudiated the trust. Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust; and (c) the evidence thereon is clear and conclusive. In this case, no express or resulting trust was established, so the doctrine did not apply.

• Prescriptibility of Constructive Trusts — In constructive trusts, prescription may supervene even if the trustee does not repudiate the relationship; repudiation is not a condition precedent to the running of the prescriptive period. A constructive trust does not emanate from or generate a fiduciary relation, and the holding is at all times adverse. The Court applied this doctrine to hold that even if a constructive trust arose upon Crispulo's death, prescription could still run against petitioner.

• Burden of Proving a Trust — The burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. The elements are: (1) a trustor or settlor who executes the instrument creating the trust; (2) a trustee expressly designated to carry out the trust; (3) the trust res, consisting of duly identified and definite real properties; and (4) the cestui que trust, or beneficiaries whose identity must be clear. Petitioner failed to discharge this burden.

• Essential Element of a Trust: Separation of Legal Title and Equitable Ownership — What distinguishes a trust from other relations is the separation of legal title (vested in the fiduciary) and equitable ownership (vested in the cestui que trust). Profit-sharing per se does not necessarily translate to a trust relation, as it can exist in other relations such as deposit. The Court found that petitioner's profit-sharing arrangement with her father was insufficient to establish a trust.

• Acquisitive Prescription Under Act No. 190 — Under Section 41 of Act No. 190, ten years of actual adverse possession by any person claiming to be owner, uninterruptedly continued, vests a full and complete title. Prescription under this section may occur even in the absence of good faith and just title. Tax declarations and receipts, while not conclusive evidence of ownership, constitute evidence of great weight when coupled with actual possession and can be the basis of a claim of ownership through prescription.

• Laches — Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to it has either abandoned or declined to assert it. Petitioner's 17-year inaction from 1980 to 1997 constituted laches.

• Estoppel in Pais — The principle of estoppel in pais applies when, by one's acts, representations, admissions, or silence when there is a need to speak out, one intentionally or through culpable negligence induces another to believe certain facts to exist, and the latter rightfully relies and acts on such belief so as to be prejudiced if the former is permitted to deny the existence of those facts. Petitioner's failure to contest the property's inclusion in Crispulo's estate during probate and her receipt of shares from the estate for 12 years estopped her from later claiming ownership.

• Indispensable Parties in Actions for Reconveyance — Owners of property over which reconveyance is asserted are indispensable parties. Without them being impleaded, no relief is available, and the court cannot render valid judgment. Their absence renders all subsequent actions of the trial court null and void for want of authority to act.

• "What distinguishes a trust from other relations is the separation of the legal title and equitable ownership of the property. In a trust relation, legal title is vested in the fiduciary while equitable ownership is vested in a cestui que trust." — This passage articulates the essential element that distinguishes a trust from other legal relationships such as deposit, and was central to the Court's finding that no trust existed.

• "Acquisitive prescription may bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust where (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive." — This passage sets out the three requisites for prescription to bar a beneficiary's action against a trustee in an express trust, a formulation frequently cited in subsequent jurisprudence.

• "However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of the said trust is not a condition precedent to the running of the prescriptive period." — This passage establishes the distinction between express/resulting trusts and constructive trusts with respect to prescription, holding that repudiation is not required for prescription to run in constructive trusts.

• "Profit-sharing per se, does not necessarily translate to a trust relation. It could also be present in other relations, such as in deposit." — This passage clarifies that a profit-sharing arrangement alone is insufficient to establish a trust, a principle important for distinguishing trusts from other fiduciary or quasi-fiduciary relationships.

• Pilapil vs. Heirs of Maximino R. Briones, G.R. No. 150175, February 5, 2007 — Cited for the rule on the three requisites for acquisitive prescription to bar a beneficiary's action against a trustee in an express trust (repudiation, knowledge, and clear and conclusive evidence).
• Ringor vs. Ringor, G.R. No. 147863, August 13, 2004 — Cited for the elements of a trust (trustor, trustee, trust res, cestui que trust) and for the principle that intention to create a trust may be inferred from circumstances but must be made with reasonable certainty.
• Buan Vda. de Esconde vs. Court of Appeals, 323 Phil. 81 (1996) — Cited for the definitions of express and implied trusts, and for the rule that prescription may supervene in constructive trusts even without repudiation.
• Heirs of Flores Restar vs. Heirs of Dolores R. Cichon, G.R. No. 161720, November 22, 2005 — Cited for the rule that the statutory period of prescription commences when a person without title or good faith secures a tax declaration in his name, and that tax declarations coupled with actual possession constitute strong evidence of ownership through prescription.
• Salvador vs. Court of Appeals, 313 Phil. 36 (1995) — Cited by analogy for the principle that a co-owner's possession akin to a trustee's is not adverse absent clear and convincing evidence of ouster, and that petitioner's objection to the tax declaration transfer was inconsistent with a trust relationship.
• MWSS vs. Court of Appeals, 357 Phil. 966 (1998) — Cited for the rule that indispensable parties must be impleaded and their absence renders all subsequent actions of the court null and void.

• Section 40, Act No. 190 (Code of Civil Procedure) — Provides that an action for recovery of real property or an interest therein can be brought only within ten years after the cause of action accrues. The Court noted this period coincides with the ten-year period for acquisitive prescription under Section 41.
• Section 41, Act No. 190 (Code of Civil Procedure) — Provides that ten years of actual adverse possession by any person claiming to be owner, uninterruptedly continued, vests a full and complete title. The Court applied this provision to hold that Crispulo's 49 years of adverse possession ripened into ownership, even in the absence of good faith and just title.
• Article 1116, Civil Code of the Philippines — Provides that prescription already running before the effectivity of the Civil Code shall be governed by laws previously in force, but if the entire period required under the present Code elapses since its effectivity, the present Code shall apply. The Court cited this provision to justify applying Act No. 190 to the prescriptive period that began in 1948.
• Article 1441, Civil Code of the Philippines — Provides that trusts are either express or implied; express trusts are created by the intention of the trustor or parties, while implied trusts come into being by operation of law. The Court used this provision to frame the analysis of whether an express or implied trust existed.
• Article 1443, Civil Code of the Philippines — Provides that the existence of express trusts concerning real property may not be established by parol evidence. The Court applied this provision to hold that petitioner's bare oral testimony was insufficient to prove an express trust over real property.

Consuelo Ynares-Santiago (Chairperson), Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, and Ruben T. Reyes concurred in the decision. No separate concurring opinions were written.