Pacheco vs. Arro et al.

When claimants withdraw their cadastral claims in reliance on an opposing claimant's open-court promise to convey the lots, a trust or fiduciary relation arises; the trustee cannot invoke the statute of limitations or the Statute of Frauds to defeat the cestui que trust's right to compel conveyance.

The lots in dispute were situated on Zamora and Quennon Streets in Isabela, Occidental Negros, and were involved in cadastral case No. 11, G.L.R.O. cadastral record No. 100, and civil case No. 6088. Petitioners are the heirs of Jose Yulo y Regalado, represented by Dolores Pacheco as guardian of the minors Concepcion, Alicia, and Herminia Yulo; respondents are the claimants who had asserted ownership of the lots. The controversy centers on the legal effect of a promise made in open court during the cadastral proceedings and the subsequent registration of the lots in Jose Yulo y Regalado's name.

In cadastral case No. 11, G.L.R.O. cadastral record No. 100, the respondents, Santiago Arro et al., filed answers claiming the lots in Isabela, Occidental Negros, as their property and began presenting evidence before a referee appointed by the court. Jose Yulo y Regalado also claimed the same lots. On 3 December 1917, in a session of the Court of First Instance of Occidental Negros presided over by Judge Norberto Romualdez, Dr. Mariano Yulo, representing Jose Yulo y Regalado, promised in open court that if Zamora and Quennon Streets were renamed T. Yulo and G. Regalado Streets, respectively, Jose Yulo y Regalado would donate the lots to the claimants. The promise provided that if a later municipal council again changed the street names and implemented the change, the property would revert to the donor. Relying on that promise, the respondents withdrew their claims and the evidence they had begun to present, and the cadastral court confirmed title to the lots and decreed their registration in the name of Jose Yulo y Regalado.

After efforts to change the street names, a law was enacted authorizing municipalities to change street names within their jurisdictions. The Municipal Council of Isabela passed a resolution ordering the change, the Provincial Board of Negros Occidental approved it, and the change was implemented by executive order of the municipal president in February 1934. In May and June 1928, Jose Yulo y Regalado partially complied with the agreement by executing Exhibits D, E, F, G, H, and I in favor of some of the claimants, donating the lots corresponding to them; those claimants obtained transfers of title. The other claimants then asked Jose Yulo y Regalado to cede their lots. He instructed them to have the corresponding deeds prepared by Atty. Hugo P. Rodriguez, who had represented him in the case, but he refused to sign the deeds until he died, alleging that the claimants had been ungrateful by not favoring a candidate of his in a past election.

After Jose Yulo y Regalado died, the complaint was amended to substitute his children, all minors, represented by their guardian Dolores Pacheco, who filed amended answers. The plaintiffs filed the action to compel the defendant or his heirs to respect the agreement and to execute the corresponding deeds of donation for their respective lots. The trial court found that the respondents had withdrawn their claims in reliance on the open-court promise, that Jose Yulo y Regalado had partially complied by executing deeds of donation to some claimants, and that lot 224 had also been claimed by one of the respondents. The Court of Appeals confirmed these findings.

• Admissibility of Exhibit B: Petitioner argued that Exhibit B, the copy of the transcript of the stenographic notes, was incompetent because it was not certified or authenticated by the clerk of court or by the judge.
• Statute of Frauds: Petitioner argued that Exhibit B was not a contract signed by the defendant and could not be presented under the Statute of Frauds, nor could its contents be proved by oral evidence.
• Trustee's Lack of Title: Petitioner argued that a trustee does not have title to the property subject of the trust because title is vested in the cestui que trust; therefore, if the predecessor-in-interest was a trustee, he or his successors could not be compelled in an action for specific performance to convey the property, since the party to be compelled must be the owner or have title.
• Final Cadastral Decree: Petitioner argued that the promise could not prevail over the final decree of the cadastral court holding the predecessor-in-interest to be the owner of the lots claimed by the respondents.
• Lot 224: Petitioner contended that lot 224 was claimed in the cadastral case by the predecessor-in-interest alone, and not by one of the respondents as found by the lower courts.

• Admissibility of Exhibit B: Whether the unauthenticated copy of the transcript of stenographic notes (Exhibit B) was admissible in evidence.
• Statute of Frauds: Whether the open-court promise was unenforceable under the Statute of Frauds and could not be proved by oral evidence.
• Prescription: Whether the action to compel conveyance was barred by the statute of limitations.
• Trust and Specific Performance: Whether a trustee under a fiduciary relation may be compelled in an action for specific performance to convey the property to the cestui que trust, considering the claim that the trustee does not hold title.
• Final Cadastral Decree: Whether the open-court promise could prevail over the final cadastral decree declaring the predecessor-in-interest the owner of the lots.
• Lot 224: Whether the finding that lot 224 was claimed by one of the respondents could be reviewed by the Supreme Court.

• Admissibility of Exhibit B: Yes. The unauthenticated copy was admissible because no objection was raised to its admission, the original transcript was part of the cadastral record, and its contents were corroborated by Exhibits D-I.
• Statute of Frauds: No. The Statute of Frauds applies only to executory contracts, not to consummated or partially performed agreements; the open-court promise was partially performed and the defendant was estopped to deny it.
• Prescription: No. The title was held in a fiduciary capacity, and the trustee cannot invoke the statute of limitations to defeat the cestui que trust's right.
• Trust and Specific Performance: Yes. A trust or fiduciary relation arose from the open-court promise, and the trustee may be compelled to convey the property; the concept of trust is not confused with specific performance.
• Final Cadastral Decree: Yes. The promise could prevail over the cadastral decree because the decree did not extinguish the fiduciary obligation; otherwise, actions to compel conveyance of registered property to co-owners or co-heirs could no longer be brought or succeed.
• Lot 224: No. The claim is a question of fact, not reviewable in the proceedings.

• Admissibility of Exhibit B: The Supreme Court held that the admission of Exhibit B, an unauthenticated copy of the transcript of stenographic notes, could not be questioned because no objection was made to its admission. The original transcript was part of the record of the cadastral case and was admitted by the trial court, which based its judgment on it. The lack of certification by the clerk of court did not justify disregarding the copy. The uncontroverted finding that the predecessor-in-interest complied with the promise by executing deeds of donation to some claimants, as shown by Exhibits D, E, F, G, H, and I, strongly corroborated the truth and authenticity of Exhibit B's contents. Its probative value could not therefore be disregarded.
• Statute of Frauds: The Court of Appeals held that the Statute of Frauds applies only to executory contracts, not to consummated or partially performed agreements. The open-court promise had been partially performed: Jose Yulo y Regalado obtained title to the lots after the respondents withdrew their claims, and he later executed deeds to some claimants. Oral evidence was admissible when proving fraud, citing Yacapin vs. Neri. Having induced the respondents to withdraw their opposition in the cadastral case by his promise in open court, the defendant was estopped to deny the agreement. The Supreme Court affirmed.
• Prescription: The trial court and Court of Appeals concluded that the title to the lots was issued in the name of the defendant as a fiduciary or trustee, with the obligation to transfer the lots to the claimants once the condition was fulfilled. In a fiduciary deposit or trust, prescription does not run in favor of the trustee. The Supreme Court held that when the respondents withdrew their claims relying on the open-court promise, a trust or fiduciary relation arose, and the trustee cannot invoke the statute of limitations to bar the action and defeat the cestui que trust's right.
• Trust and Specific Performance: Counsel for petitioners argued that a trustee does not have title because title is vested in the cestui que trust, so the trustee cannot be compelled in specific performance. The Supreme Court rejected this, stating that the juridical concept of a trust must not be confused with an action for specific performance. The trust or fiduciary relation arose when the respondents withdrew their claims in reliance on the promise. The trustee's title is held subject to the obligation to convey. If the promise could not prevail over the cadastral decree, actions to compel a party to assign or convey an undivided share in registered land to a co-owner or co-heir could no longer be brought or succeed.
• Final Cadastral Decree: The final cadastral decree did not defeat the fiduciary obligation. The decree registered the lots in the predecessor-in-interest's name, but the promise made in open court created a trust or fiduciary relation. The trustee cannot use the registered title to defeat the cestui que trust's right. Otherwise, the promise would be meaningless and actions to compel conveyance of registered property to co-owners or co-heirs would be impossible.
• Lot 224: The contention that lot 224 was claimed by the predecessor-in-interest alone, and not by one of the respondents, was a question of fact. The trial court and Court of Appeals had adjudged that it was also claimed by one of the respondents. The Supreme Court held that this finding of fact could not be reviewed in the proceedings.

• Trust or Fiduciary Relation — When claimants withdraw their cadastral claims in reliance on an open-court promise by an opposing claimant to convey the lots after a condition is fulfilled, a trust or fiduciary relation arises. The trustee holds title subject to the obligation to convey to the cestui que trust. The trustee cannot invoke the statute of limitations to bar the action to compel conveyance.
• Statute of Frauds — The Statute of Frauds applies only to executory contracts, not to consummated or partially performed agreements. The open-court promise was partially performed and the defendant was estopped to deny it. Oral evidence is admissible when proving fraud.
• Trust Distinguished from Specific Performance — The juridical concept of a trust must not be confused with an action for specific performance. A trustee may be compelled to convey property to the cestui que trust even if the registered title is in the trustee's name.
• Admissibility of Unauthenticated Copy — Failure to object to the admission of an unauthenticated copy of a transcript waives the objection. The original transcript being part of the record and the corroborating deeds (Exhibits D-I) support its probative value.
• Findings of Fact — Findings of fact of the trial court confirmed by the Court of Appeals are not reviewable by the Supreme Court.
• Agreement upon Doubtful Right — An agreement entered into upon a supposition of a right or of a doubtful right is binding even if the right later turns out to be on the other side. The trial court applied this principle, and the Court of Appeals and Supreme Court affirmed the judgment in favor of the claimants.

• "When the claim to the lots in the cadastral case was withdrawn by the respondents relying upon the assurance and promise made in open court by Dr. Mariano Yulo in behalf of Jose Yulo y Regalado, the predecessor-in-interest of the petitioners, a trust or a fiduciary relation between them arose, or resulted therefrom, or was created thereby. The trustee cannot invoke the statute of limitations to bar the action and defeat the right of the cestui que trust." — This passage states the ratio decidendi: the open-court promise created a trust or fiduciary relation, and prescription cannot be invoked by the trustee against the cestui que trust.
• "The juridical concept of a trust, which in a broad sense involves, arises from, or is the result of, a fiduciary relation between the trustee and the cestui que trust as regards certain property — real, personal, funds or money, or choses in action — must not be confused with an action for specific performance." — This passage defines the trust concept and distinguishes it from specific performance, rejecting the petitioner's argument that a trustee cannot be compelled to convey because title is vested in the cestui que trust.
• "Habiendo los demandantes retirado su oposicion en el expediente catastral en virtud de la promesa hecha por el demandado en Corte abierta, este esta ahora en estoppel para negar la existencia de dicho convenio." — This passage, from the Court of Appeals decision, holds that the defendant was estopped to deny the open-court agreement after the claimants withdrew their opposition in reliance on it.
• "The uncontroverted and undisputed finding of the trial court, confirmed by the Court of Appeals, that the predecessor-in-interest of the petitioners had complied with the promise by executing deeds of donation or assignment to some of the claimants, as shown in or by Exhibits D, E, F, G, H, and I, is a strong proof or corroboration of the truth or authenticity of the contents of the unauthenticated copy of the transcript of the stenographic notes referred marked Exhibit B." — This passage addresses the admissibility and probative value of Exhibit B, the unauthenticated transcript of the open-court promise.

• Bantigui vs. Platon, G.R. No. 31317 — Cited by the Court of Appeals as a similar case where oppositors withdrew their opposition based on the applicant's promise to transfer portions; the Supreme Court affirmed the order compelling conveyance. It supports the trust or fiduciary relation and the non-applicability of prescription.
• Yacapin vs. Neri, 40 Phil. 61 — Cited by the Court of Appeals for the rule that oral evidence is admissible when proving fraud, in rejecting the Statute of Frauds defense.
• Filipinas Compañia de Seguros vs. Tan Chuaco, G.R. No. L-1559, 31 January 1950 — Cited in footnote 1 for the rule that findings of fact cannot be reviewed by the Supreme Court.
• Stapleton vs. Stapleton, 1 Atl., 2 — Cited by the trial court for the principle that an agreement entered into upon a supposition of a right or of a doubtful right is binding even if the right later turns out to be on the other side.

• Statute of Frauds — The Court of Appeals held that it applies only to executory contracts, not to consummated or partially performed agreements, and that oral evidence was admissible when proving fraud; thus the open-court promise was enforceable.
• Statute of Limitations — The Court held that a trustee cannot invoke the statute of limitations to bar an action to compel conveyance and defeat the right of the cestui que trust.

Moran, C.J., Ozaeta, Pablo, Bengzon, Tuason, Montemayor, Reyes, and Torres, JJ., concur.