Segura vs. Segura

An action for reconveyance of property held under an implied trust prescribes in ten years from the repudiation of the trust, which occurs when a transferee registers a Torrens title that omits a prior annotation acknowledging the true owners’ rights, such registration operating as constructive notice to the whole world of the transferee’s adverse claim of exclusive ownership.

Gertrudes Zamora died intestate and without debts in 1936, leaving a 4,060-square-meter parcel of land originally registered under Original Certificate of Title No. 1994 in the Registry of Deeds of Iloilo. She was survived by four sons, who never partitioned the property. The litigation involved the grandchildren of Gertrudes by three of her sons (the fourth son having died without issue). Nine grandchildren comprised the generation of heirs. On April 6, 1941, three of them—Nicolas, Santiago, and Gaudencio Segura—executed a deed of extrajudicial partition arrogating the entire property to themselves as equal pro indiviso owners, excluding their own siblings and cousins. They thereafter sold the land with right of repurchase to Emiliano Amojido. The excluded grandchildren eventually sought to recover their shares, and the trial court dismissed their second complaint on grounds of prescription and res judicata.

• The Common Ancestor and Heirs: Gertrudes Zamora died intestate in 1936, leaving a 4,060-square-meter parcel of land covered by Original Certificate of Title No. 1994 in Iloilo. Her four sons survived her but never partitioned the property. The parties are Gertrudes’s nine grandchildren by three of her sons—the fourth son died without issue. Six of the grandchildren became plaintiffs (Felipe, Antonia, Nicanora, Bernandina, Alipio, and Monserrat Segura), while three became defendants (Nicolas, Santiago, and Gaudencio Segura), together with subsequent transferees and a mortgagee bank.

• The Extrajudicial Partition: On April 6, 1941, Nicolas, Santiago, and Gaudencio Segura executed a deed of extrajudicial partition by which they allocated the entire property exclusively to themselves as equal pro indiviso owners. The partition excluded the other six grandchildren, including their own siblings and cousins. The partition was registered only in 1946.

• The Sale to Amojido and Consolidation: The three partitioners sold the land with right of repurchase to Emiliano Amojido for ₱50.00, with the right exercisable until February 15, 1942. The right was not exercised. On November 28, 1946, Amojido executed an affidavit of consolidation of ownership and obtained Transfer Certificate of Title No. 28336. This title carried an annotation expressly reserving the rights of any heir or person deprived of lawful participation in the estate of Gertrudes Zamora, to claim within two years from the extrajudicial settlement.

• Subsequent Transfers: On March 31, 1953, Amojido sold the land to Mirope Mascareñias vda. de Elison for ₱1,500.00. She obtained Transfer Certificate of Title No. T-19396, which did not retain the annotation. On February 14, 1957, Elison sold the land to Mildred Elison vda. de Javelosa (TCT No. 22074). On January 15, 1958, Mildred sold to Ernesto and Igmedio Amojido (TCT No. 24342). On July 23, 1961, the land was mortgaged to the Rural Bank of Santa Barbara.

• The First Complaint: The six excluded grandchildren filed Civil Case No. 3941 for recovery of possession and ownership on May 28, 1956. At the hearing, plaintiffs’ counsel moved for dismissal because his clients had gone to Mindanao and their return date was unknown. The trial court granted the motion without stating that the dismissal was with prejudice.

• The Second Complaint: On January 11, 1968, the same plaintiffs filed Civil Case No. 7477 in the Court of First Instance of Iloilo, alleging that the extrajudicial partition and all subsequent transfers were null and void insofar as they deprived the plaintiffs of their shares as co-owners. Defendants moved to dismiss on pleas of res judicata and prescription.

• Res Judicata: Petitioners argued that the dismissal of Civil Case No. 3941 operated without prejudice, as the order did not specify otherwise, and could not bar the subsequent suit.

• Prescription: Petitioners maintained that the extrajudicial partition was a total nullity as to them because they neither participated in nor had notice of it; thus, the two-year prescriptive period under Rule 74 of the Rules of Court did not apply. They further contended that the action was one for reconveyance of property held under an implied trust, which is imprescriptible as long as the trust is not repudiated, and that no effective repudiation had occurred to start the running of prescription.

• Res Judicata: Respondents contended that Civil Case No. 3941 involved the same parties, subject matter, and theory; its dismissal therefore operated as res judicata barring the second action.

• Prescription under Rule 74: Respondents argued that under Section 4, Rule 74 of the Rules of Court, any claim against an extrajudicial settlement must be asserted within two years from its execution. The partition having been executed in 1941, the actions filed in 1956 and 1968 were both time-barred.

• Prescription under the Civil Code: Alternatively, respondents invoked Articles 1134 and 1144 of the Civil Code, asserting that ownership and real rights over immovable property are acquired by ordinary prescription through possession for ten years, and that actions upon an obligation created by law prescribe in ten years. The continuous possession by respondents and their predecessors allegedly barred the claim.

• Res Judicata: Whether the dismissal of Civil Case No. 3941 constituted res judicata that precluded the filing of the subsequent complaint.

• Prescription under Rule 74: Whether the action to nullify the extrajudicial partition had prescribed under the two-year period prescribed in Rule 74, Section 4 of the Rules of Court.

• Prescription of the Reconveyance Action (Implied Trust): Whether the action for recovery of the petitioners’ shares based on an implied trust had prescribed, and if so, when the prescriptive period commenced.

• Res Judicata: The prior dismissal was without prejudice and could not bar the second suit. Under Rule 17, Section 2 of the Rules of Court, a dismissal upon the plaintiff’s motion is without prejudice unless the order otherwise specifies. The order dismissing Civil Case No. 3941 did not state that it was with prejudice, and the reason given—counsel’s inability to proceed because his clients were in Mindanao—indicated an intention to revive the case.

• Prescription under Rule 74: The two-year prescriptive period under Rule 74, Section 4 did not apply because the partition was void as to the excluded heirs. Section 1 of the same Rule explicitly provides that “no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.” The partition, which completely excluded six of the nine heirs without their participation, was a total nullity as to them and did not trigger the prescriptive period.

• Prescription of the Reconveyance Action (Implied Trust): The action was barred by prescription. The vendors, having validly sold only their undivided one-third share, could transfer no more than they owned. Amojido, the first buyer, became a co-owner pro indiviso with the excluded heirs and held the latter’s two-thirds share under an implied trust. An action for reconveyance of trust property is imprescriptible only as long as the trustee does not repudiate the trust. The repudiation occurred when Mirope Mascareñias vda. de Elison obtained Transfer Certificate of Title No. T-19396 in 1953, which deleted the annotation acknowledging the rights of the other heirs. The Torrens title served as notice to the whole world of her adverse claim of exclusive ownership, and the 10-year prescriptive period under Article 1144 (or Article 1134) began to run from that repudiation. The running of the period was suspended by the filing of Civil Case No. 3941 on May 28, 1956, and resumed 30 days after its dismissal on January 16, 1958. The remaining period elapsed in 1965, more than two years before the filing of the second complaint in 1968.

• Validity of Extrajudicial Partition Excluding Heirs — Under Rule 74, Section 1, no extrajudicial settlement binds a person who did not participate or had no notice. A partition executed by some heirs that excludes others without their participation is void as to the excluded heirs and does not trigger the two-year prescriptive period under Section 4.

• Co-owner’s Right to Alienate Undivided Share (Article 493, Civil Code) — Each co-owner has full ownership of his undivided share and may alienate, assign, or mortgage it. The effect of the alienation is limited to the portion that may be allotted to him upon partition. The other co-owners cannot demand the nullification of the sale; the buyer merely steps into the seller’s shoes as a co-owner pro indiviso with the remaining co-heirs.

• Implied Trust in Co-ownership and Inheritance — A co-owner or co-heir in possession of an inheritance pro indiviso for himself and in representation of his co-owners holds the shares of the others under an implied trust, with the obligation to deliver them, akin to a depository, lessee, or trustee (Bargayo v. Camumot, 40 Phil. 857).

• Prescription of Action for Reconveyance of Implied Trust — An action for reconveyance based on an implied trust is imprescriptible while the trustee acknowledges the cestui que trust’s title. Prescription begins to run upon repudiation of the trust. Repudiation may be effected by the issuance of a transfer certificate of title that omits an annotation reserving the rights of the true owners; the registration of such title constitutes constructive notice to the whole world and marks the commencement of the 10-year prescriptive period under Article 1144 (obligation created by law) or Article 1134 (acquisitive prescription).

• Nemo Dat Quod Non Habet — No one can transfer a better right than he has. A buyer acquires only what the seller can legally transfer; he cannot acquire the shares of persons who did not join in the sale.

• “There is no question that an action for reconveyance of property held in implied trust is imprescriptible. However, this is true only as long as the trustee continues to acknowledge the title of the cestui que trust, or, otherwise stated, provided he does not repudiate such title.” — This passage articulates the general rule and its exception regarding prescription of implied trusts.

• “By the deletion of this annotation, Mirope, as the new transferee, repudiated as of the date of registration the claim of the other heirs to their shares in the property. From then on her assertion of ownership over the whole land became adverse even as against the appellants herein. And as the certificate of title was notice to the whole world of her exclusive title to the land, such rejection was binding on the said heirs and started as against them the period of prescription.” — This explains how the omission of a protective annotation in a Torrens title constitutes repudiation and constructive notice, triggering prescription.

• “In law it is understood that the co-owners or co-heir who is in possession of an inheritance pro indiviso for himself and in representation of his co-owners or co-heirs, if, as such owner, he administers or takes care of the rest thereof with the obligation of delivering it to his co-owners or co-heirs, is under the same situation as a depository, a lessee, or a trustee.” — (quoting Bargayo v. Camumot) The foundation of the implied trust relationship in co-ownership scenarios.

• “To repeat, the general rule is that no one can give what he does not have — nemo dat quod non habet.” — The principle underpinning the limitation of a co-owner’s sale to his own share.

• Bargayo v. Camumot, 40 Phil. 857 — Established that a co-owner in possession of an inheritance pro indiviso on behalf of his co-owners holds their shares under an implied trust, equivalent to that of a depository or trustee.

• Cabuniag v. Magundayao, 26 Phil. 248; Ramirez v. Bautista, et al., 14 Phil. 528; Mainit v. Bandoy, 14 Phil. 730 — Applied for the rule that each co-owner may alienate only his undivided share, and the alienation does not affect the other co-owners’ rights; the buyer acquires no more than the seller’s interest and becomes a co-owner pro indiviso with the rest.

• Juan v. Zuñiga, 4 SCRA 1221; Jacinto v. Jacinto, 5 SCRA 370; Sebial v. Sebial, 64 SCRA 385 — Cited for the imprescriptibility of an action for reconveyance of property held under an implied trust while the trust subsists.

• Lopez v. Gonzaga, 10 SCRA 167; Gerona v. De Guzman, 11 SCRA 153; Fabian v. Fabian, 22 SCRA 231; Jaramil v. Court of Appeals, 78 SCRA 420 — Cited for the rule that the prescriptive period for an action based on an implied trust runs from the repudiation of the trust.

• Rule 74, Sections 1 and 4, Rules of Court — Section 1 provides that extrajudicial settlements are not binding on persons who did not participate or had no notice; Section 4 fixes a two-year prescriptive period for claims against such settlements. The partition here was void as to the excluded heirs under Section 1, so the two-year bar did not apply.

• Rule 17, Section 2, Rules of Court — Provides that dismissal upon the plaintiff’s motion is without prejudice unless otherwise specified in the order. The dismissal of Civil Case No. 3941 omitted such a specification; thus, res judicata was inapplicable.

• Article 493, Civil Code — Each co-owner may alienate, assign, or mortgage his undivided share, with the effect limited to the portion allotted to him upon partition. This defined the extent of the vendors’ capacity to transfer, confirming that only their one-third share passed to the buyer and that the excluded heirs retained ownership of their two-thirds share, creating a co-ownership and implied trust.

• Articles 1134 and 1144, Civil Code — Article 1134 provides for acquisitive prescription of ownership over immovables through ten years’ possession; Article 1144 prescribes a ten-year period for actions upon an obligation created by law. The action for reconveyance was barred under these provisions after the trust was repudiated and more than ten years elapsed.

Narvasa, Gancayco, Griño-Aquino, and Medialdea, JJ., concurred.