Philippine Development Alternatives Foundation, Inc. v. Fortune Tobacco Corp.

THIRD DIVISION

[G.R. No. 209090. September 23, 2020.]

PHILIPPINE DEVELOPMENT ALTERNATIVES FOUNDATION, INC. [FORMERLY TECHNOLOGY RESOURCES CENTER FOUNDATION, INC.], petitioner,vs. FORTUNE TOBACCO CORPORATION, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution dated September 23, 2020, which reads as follows:

"G.R. No. 209090 (Philippine Development Alternatives Foundation, Inc. [formerly Technology Resources Center Foundation, Inc.] v. Fortune Tobacco Corporation). — This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeks to set aside the Decision 2 dated May 14, 2013 and the Resolution 3 dated August 27, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 92075 which denied petitioner's appeal and motion for reconsideration, respectively.

Facts of the Case

This case stemmed from a Complaint 4 for Reconveyance of Real Property filed by petitioner Philippine Development Alternatives Foundation, Inc. (PDAF) against respondent Fortune Tobacco Corporation (Fortune) before the Regional Trial Court (RTC) of Makati City, Branch 147, docketed as Civil Case No. 03-1490.

The subject of the controversy is a parcel of land situated in Makati City with an area of 2,000 square meters, more or less, originally registered in the name of Federal Homes, Inc. and covered by Transfer Certificate of Title (TCT) No. 436748. 5

PDAF alleged that sometime in 1977, it acquired from Federal Homes, Inc. the ownership rights and interest over the subject property. Shortly thereafter, it constructed a five-storey building, previously known as the "Technology Resource Center Building" and now as "Philippine Development Alternatives Foundation Building." PDAF has since been in actual, open, uncontested and continuous possession of the subject property and building in the concept of an owner. 6

In 2001, however, PDAF's Board of Trustees came to know that the title to the property is registered in the name of Fortune under TCT No. S-44415 7 of the Register of Deeds of Makati City. PDAF claimed that Fortune did not pay any valuable consideration for the transfer of title to its name and never staked any claim of ownership over the parcel of land. It discovered that no copy of the deed of sale or any deed transferring the land to Fortune's name may be found in the records of the Register of Deeds of Makati City. Fortune never paid any realty tax either on the land or on the building. 8 The Makati City government recognized PDAF as the registered owner of the PDAF Building as shown in the Warrant of Levy 9 dated July 25, 2003 where under the heading "Registered Property Owner," the name "Technology Resource Center Foundation, Inc./Philippine Development Alternatives Foundation, Inc." appear. 10 PDAF averred that Fortune never took any action or asserted any claim of ownership over the land. Neither did Fortune at any time dispute PDAF's ownership of the same. 11

On August 18, 2003, PDAF wrote a letter to Fortune, through its Chairman, Mr. Lucio Tan, requesting that a deed of conveyance be executed by the latter in favor of PDAF as this would allow PDAF to proceed with its intended course of donating both the land and building to the Philippine Government. 12 Fortune failed to comply. Hence, PDAF filed this complaint praying that judgment be rendered declaring Fortune to be a mere trustee/holder of title over the parcel of land in behalf of PDAF; ordering the Register of Deeds of Makati City to cancel TCT No. S-44415; and to issue a new transfer certificate of title in the name of PDAF. 13

Fortune filed a Motion to Dismiss 14 arguing that PDAF's cause of action, if any, is barred by prescription or laches; the complaint fails to state a cause of action; and PDAF's cause of action, if any, is unenforceable under the Statute of Frauds. PDAF filed its Opposition 15 asserting that prescription or laches does not apply since PDAF is in actual possession of the property in the concept of an owner; the complaint states sufficient cause of action having alleged the ultimate fact of having acquired the property but its naked title is registered in the name of Fortune; 16 and the statute of frauds does not apply to express or implied trusts. 17

On May 31, 2004, the RTC denied Fortune's Motion to Dismiss. 18

In its Answer with Compulsory Counterclaim, 19 Fortune alleged that it acquired the property, together with the building and other improvements thereon, from Federal Homes, Inc. through a Deed of Absolute Sale 20 dated February 24, 1977, paying the sum of P10,500,000.00 as consideration thereof. The deed was duly registered with the Register of Deeds for Metro Manila District IV (now the Makati Register of Deeds) on March 2, 1977 under Primary Entry No. 51133. TCT No. S-44415 was thereafter issued in the name of Fortune. The building was then leased to and occupied by Metropolitan Bank and Trust Company which was also stated in the deed. The Certification from the Deputy Register that the original copy of the Deed of Absolute Sale dated February 24, 1977 cannot be located among the available records of the Registry does not detract from the fact that the Deed was indeed entered in the records of the Register of Deeds and that the corresponding TCT was issued in the name of Fortune on the basis of said registration. Fortune maintained that it is the registered owner of the subject property and said registration of title is conclusive as against the whole world. 21

On October 17, 2005, PDAF amended 22 its complaint, alleging by way of alternative cause of action, that Fortune, through fraud and/or misrepresentation, obtained title to the subject property. No Board Resolution or Secretary's Certificate purporting to show any authority for the alleged execution by the designated representative on Fortune's behalf in the Deed of Sale was submitted to the Register of Deeds of Makati, thereby disputing its authenticity and due execution and making the issuance of TCT No. S-44415 highly irregular. PDAF, as the lawful owner and possessor of the subject property, is entitled to the removal of any cloud of doubt over its title by reason of TCT No. S-44415 which should be cancelled and/or reconveyed in its favor. Fortune has lost by reason of laches whatever rights it had as registered owner over the subject property. 23

Fortune denied PDAF's allegations in its Answer to the Amended Complaint. 24

PDAF, likewise, filed a Request for Written Interrogatories 25 served upon Lucio Tan, as the recognized owner and controlling shareholder of Fortune. It sought answers, among others, about his relationship with Imelda Marcos, the Chairman of PDAF in 1977, when the subject property was registered in the name of Fortune; and why the subject property was never included in the list or inventory of assets of Fortune from 1977 up to the present. 26

Lucio Tan filed his Answer to Written Interrogatories with Objections 27 declaring, among others, that he is the majority stockholder of Fortune; that he signed above the name Lucio Tan in the Deed of Absolute Sale dated February 7, 1977; and that he cannot answer the question if Fortune paid the real estate taxes on the subject property, explaining that he never involved himself with administrative matters of his company. Lucio Tan objected to: (a) questions concerning his relationship with the Marcoses claiming that it is not material to the issue of the validity of the title of Fortune; (b) question as to the forgery of his signature in the subject Deed of Sale considering that PDAF has no standing to assail the authenticity and due execution of the same; and (c) question as to whether the subject property was not included in the list or inventory of assets of Fortune, contending that being a registered land, the subject property cannot be lost by failing to include the same into some form of list. 28

On November 20, 2007, PDAF and Fortune entered and submitted a Joint Stipulation of Facts 29 stating the following:

1. Since 1977, plaintiff, then known as Technology Resource Center Foundation, Inc. and known as Philippine Development Alternatives Foundation, Inc. ("PDAF" for brevity), has been in actual, open, uncontested and continuous possession in the concept of owner of a parcel of land described as:

"A parcel of land (Lot 1-M of the subdivision plan (LRC) Psd-181302, being a portion of Lot 1, (LRC) Psd-170741, LRC Rec. No. 2029), situated in the Municipality of Makati, Province of Rizal, Island of Luzon. Bounded on the NE., points 1 to 2 by Lot 2 (LRC) Psd-170741 (Widening), beyond Jupiter Streets 17.50 m. wide (Street Lot 1), (LRC) Pcs 666; on the SE., points 2 to 4 by Lot 1-P (Pump Site); points 4 to 5 by Lot 1-N, both on the subdivision plan; on the SW., points 5 to 6 by Street Lot 1-C. (LRC) Pcs-666 beyond Buendia Avenue 35.00 m. wide (Street Lot 1, (LRC) Psd-5014); and on the NW., points 6 to 1 by Lot 1-L of the subdivision plan x x x containing an area of 2,000 square meters, more or less. x x x."

(hereinafter called the "LAND," for brevity).

However, the said parcel of land appears to be registered in the name of defendant Fortune Tobacco Corporation ("Fortune" for brevity) covered by Transfer Certificate of Title No. S-44415 of the Registry of Deeds of Makati City. Such registration of the LAND is the basis for Fortune's allegations in its Answer with Counterclaims dated June 24, 2004 and its Amended Answer with Counterclaims dated January 18, 2006.

2. Notwithstanding registration of the abovementioned parcel of land in the name of defendant Fortune as evidenced by TCT No. S-44415 of the Registry of Deeds of Makati City, Fortune has not included and/or listed the same in its inventory of corporate properties. Neither has Fortune paid any real estate taxes of the LAND nor has ever taken physical possession over the same.

3. Shortly after, also in 1977, plaintiff developed, constructed and built a five-storey "PDAF Building." All throughout, plaintiff has been in actual, open, uncontested and continuous possession of both the LAND and PDAF Building in the concept of owner. Fortune has not contested PDAF's possession and claim ownership.

4. PDAF has never paid any rental to Fortune for the occupancy and use of the subject parcel of land. There is no lease contract or other contractual relationship between Fortune and PDAF. Except for the Answer with Counterclaims dated June 24, 2004 and Amended Answer with Counterclaims dated January 18, 2006 filed in this case, Fortune has never engaged PDAF in litigation. Notwithstanding, Fortune's Answer with Counterclaims dated June 24, 2004 and Amended Answer with Counterclaims dated January 18, 2006 does not include prayer for recovery of possession of the LAND.

5. On the other hand, PDAF has been renting/leasing office space in the PDAF Building to other third parties and collects rental thereof as its own income.

6. The owner's duplicate copy of TCT No. S-44415 cannot be located in the corporate records of Fortune. Fortune has not filed any action for the replacement of the lost owner's duplicate copy of TCT No. S-44415.

7. Fortune cannot present or locate any receipt, voucher and checks showing that Fortune purchased the LAND. Fortune cannot present or locate a board resolution that could support an acquisition or purchase of the LAND.

8. Fortune cannot present the original or duplicate original copy of a Deed of Absolute Sale dated February 4, 1977, a photocopy of which attached as Annex "1" to Fortune's Answer with Counterclaims dated June 24, 2004 or Fortune's Amended Answer with Counterclaims dated January 18, 2006. Fortune cannot present any witness to identify the signatures appearing in the photocopy of the said Deed of Absolute Sale or to prove the authenticity thereof in accordance with the Rules of Court.

9. On August 28, 2003, PDAF wrote a letter to Fortune, through its Chairman Mr. Lucio Tan, which is attached to PDAF's Complaint dated December 23, 2003 and Amended Complaint dated October 14, 2005, requesting for the reconveyance of the LAND to PDAF. Fortune acknowledges having received PDAF's said letter and not replying to PDAF's said letter.

Ruling of the Regional Trial Court

After trial on the merits, the RTC rendered a Decision 30 dated January 18, 2008 which dismissed PDAF's complaint, the latter having failed to discharge its burden of proof with respect to its affirmative assertions. The RTC ruled that PDAF has not shown a title to the subject property which it can assert in an action for reconveyance, cancellation of title or quieting of title. PDAF adduced no evidence to show that it is the owner of the property and that the registration thereof in the name of Fortune was fraudulent, wrongful or erroneous. The RTC also ruled that the action is barred by laches. PDAF failed to take steps to assert, preserve and protects its alleges right over the land from the time of the alleged sale in its favor. 31

PDAF moved for reconsideration 32 but it was denied by the RTC in its Order 33 dated July 10, 2008.

PDAF appealed the case to the CA.

Ruling of the Court of Appeals

On May 14, 2013, the CA promulgated a Decision 34 denying PDAF's appeal for lack of merit and affirming the Decision of the RTC. The CA ratiocinated that PDAF failed to present evidence to substantiate its allegations that it is the real owner of the subject property. There is nothing on records which supports PDAF's contention that it has acquired from Federal Homes, Inc. ownership rights and interests in the subject property. Likewise, PDAF offered no proof showing how Fortune committed fraud or mistake in the acquisition of title as to warrant reconveyance. 35 Lastly, the CA declared that PDAF failed to seasonably assert its right, if any, to the land, such that if the doctrine of laches were to be applied, it would logically be against PDAF, the latter having failed to take steps to assert, preserve and protect its alleged right over the land from the time of the alleged sale in its favor, or from the time its right to do so accrued. 36

PDAF sought reconsideration but the same was denied in a Resolution dated August 27, 2013. 37

Hence, PDAF filed this petition for review on certiorari under Rule 45 anchored on the following grounds:

A) The CA committed serious legal error in denying reconveyance, the existence of implied trust being amply established in the Joint Stipulation of Facts and other evidence on record, showing PDAF as the true owner of the property and Fortune Tobacco as mere holder of naked title by fraud or otherwise.

B) The CA committed serious legal error in applying laches against PDAF, the judgment being grossly inconsistent with the established rule that an action for reconveyance of title does not prescribe against the party in possession of the property.

C) The CA committed serious legal error in refusing to apply laches against Fortune Tobacco, the judgment being incongruent with the rule that laches applies even as against a registered owner not in possession of the property. 38

PDAF's Arguments

PDAF insists that it is the true and beneficial owner of the subject property, while Fortune was a mere holder of naked title. Its ownership need not be established by direct evidence such as by presentation of a copy of deed of sale executed by the former owner, or public recording or annotation of the transaction. 39 Its status as real owner of the property can be established by proof of facts and circumstances showing ownership thereof. PDAF was relieved of the burden of presenting the required quantum of preponderant evidence of its ownership when Fortune, in its bid to shield its Chairman (Lucio Tan) from being called as hostile witness, offered and entered into a "Joint Stipulation of Facts" which PDAF offered in evidence as proof that PDAF is the true and beneficial owner of the land. The offer of evidence for the cited purpose was never objected to by Fortune. The admissions in the "Joint Stipulation of Facts" more than made up for the absence of the deed of sale in establishing PDAF's status as true and beneficial owner of the property and that Fortune is a mere holder of the naked title thereof. PDAF avers that Fortune failed to exercise any of the attributes of ownership of the property since its acquisition of title in 1977. Even in its Answer to the Complaint, Fortune opted not to claim possession of the property, limiting instead its prayer to attorney's fees in the handling of the case. 40

Further, PDAF maintains that Fortune's registration of title over the property in 1977 is fraught with fraud. The Primary Entry Book of the Makati Register of Deeds bears no entry of a Secretary's Certificate authorizing the purchase transaction by Fortune, which is a mandatory requirement for registration involving corporate entities, thereby rendering its acquisition or registration of title in 1977 inherently fraudulent. Fortune failed to present the Secretary's Certificate or any corresponding Board Resolution, the authenticated copy of the Deed of Sale; and any voucher or similar document evidencing payment in 1977. 41 Even assuming that fraud was not duly established by evidence, PDAF is still entitled to reconveyance applying constructive or implied trust based on the general principles of equity and good conscience. 42

PDAF also asserts that the CA erred in applying laches against it. Prescription and laches do not apply where plaintiff is in possession of the property. PDAF has been in possession of the property continuously and openly since 1977 and up to the present. On the other hand, laches should be applied against Fortune, which never exercised ownership from the time it acquired title in 1977 up to the present, a telling indicator that it is a mere holder of naked title in favor of the actual owner-possessor, PDAF. 43

Comment and Supplemental Comment of Fortune

Fortune avers that the CA correctly upheld the Decision of the RTC dismissing the action for reconveyance because PDAF failed to present evidence, documentary or testimonial, proving its ownership of the property. 44 PDAF failed present the supposed Deed of Absolute Sale executed by Federal Homes in its favor, much less a copy thereof or prove its execution and its loss. There is no evidence that it caused the registration of its alleged deed with the Register of Deeds of Makati City, or caused the transfer of the certificate of title from the name of Federal Homes to its name, or caused the annotation thereof in Federal Homes' certificate of title. 45 Given these circumstances, Fortune claims that no Deed of Sale from Federal Homes ever existed. This omission proves that Fortune bought the subject land from Federal Homes and that the building constructed thereon existed long before PDAF was ever incorporated. Fortune argues that PDAF cannot rely on its open, continuous, peaceful, notorious and adverse exercise of the attributes of ownership as basis for its claim of ownership of the property for it is contrary to the rule under Section 47 of Presidential Decree No. 1529 that no title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession. 46

Also, Fortune posits that PDAF failed to present evidence in support of its allegation that an implied trust existed as to warrant reconveyance. PDAF failed to prove the intentional acts of Fortune constituting fraud. Fortune need not present documents in support of its purchase of the property because it is presumed that all the requisites for the issuance of its TCT No. S-44415 have been complied with. 47 In the absence of fraud, no implied trust was established between Fortune and PDAF under Article 1456 of the Civil Code. As the party claiming the existence of implied trust, PDAF is charged with the burden to establish its existence by clear and satisfactory evidence. 48

In addition, Fortune asserts that PDAF's action for reconveyance is barred by laches because it was brought 26 years after the issuance of the certificate of title in Fortune's name. PDAF failed to exercise due diligence in asserting its claim of ownership to the property. PDAF should not be allowed to defeat Fortune's title to the property by a belated assertion of its claim of ownership after more than 26 years. 49

In its Supplemental Comment, 50 Fortune claims that the subject property is titled in its name. It is settled that registered lands are not subject to prescription. Title to land can no longer be acquired by prescription after a Torrens title has been issued for it. It is of no consequence that Fortune has not been in possession of the land since "the right to recover possession of registered land is imprescriptible because possession is a mere consequence of ownership." Further, Fortune states that tax declaration or realty tax payments of property are only prima facie evidence of possession and are not conclusive evidence of ownership. While PDAF has been collecting rental payments, it does not follow that it is the owner; it may be considered as usufructuary of the land. This is because ownership and title over a property is never presumed and in order to acquire ownership and other rights over property, through (acquisitive) prescription, just title must be proved. 51

PDAF's Reply with Manifestation

PDAF manifests that on June 2, 2014, it received a letter from the Chairman of the Presidential Commission on Good Government (PCGG) regarding the letter of F. Arthur Villaraza claiming to have acquired the property from Fortune, citing lack of legal impediment on the transfer and registration of title, the previous PCGG sequestration over the property having been dissolved. 52 PDAF posits that Fortune's disposition of the subject property is not consistent with good faith, especially that it failed to disclose the transaction to this Court in its Comment and Supplemental Comment. 53

In its Reply, PDAF maintains that it is the true and beneficial owner of the property. It has established the existence of implied trust as to warrant reconveyance. PDAF contends that the failure of a registered owner to exercise possession of the property for a long period of time may indicate simulation or fraud warranting reconveyance. 54 Further, it claims that the general principles on "equity and good conscience" call for the application of constructive trust, there being sufficient basis to adjudge Fortune as mere trustee, holding mere naked title over the property with PDAF as its true and beneficial owner. Lastly, PDAF insists that laches cannot be applied against it, being in possession of the subject property. 55

Ruling of the Court

The petition is bereft of merit.

After a judicious study of the case, the Court finds no reversible error on the part of the CA in affirming the Decision of the RTC, which dismissed PDAF's Complaint for Reconveyance of Real Property.

PDAF failed to prove that it is

An action for reconveyance is a legal and equitable remedy granted to the rightful owner of land which has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the land to him. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property, which has been wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or to one with a better right. 56

As found by the RTC and affirmed by the CA, PDAF failed to substantially prove that it is the rightful owner of the property. There is nothing on record which supports its assertion that it acquired ownership rights and interests from Federal Homes, Inc. (Federal Homes). In its original and amended complaint, PDAF did not specifically allege as to how it acquired the property from Federal Homes. It merely stated that "x x x sometime in 1977, it acquired from Federal Homes, Inc. the ownership rights and interest over the subject property." Even its witness Dalisay Saflor, PDAF's accountant, only stated that the documents expressly evidencing PDAF's acquisition were lost and/or misplaced. 57 Nothing more. There was no mention of a Deed of Sale or even the amount of consideration for the sale.

On the contrary, it was established that Fortune purchased the subject property from Federal Homes paying the amount of P10,500,000.00 as consideration for the sale. In fact, it was PDAF's own witness, Noel Malga, the Records Officer of the Register of Deeds of Makati, who confirmed that it is the Deed of Absolute Sale dated February 24, 1977 executed by Federal Homes in favor of Fortune that was recorded and reflected in the Primary Entry Book of the Register of Deeds as Entry No. 51133 on March 2, 1977. 58 Contrary to PDAF's assertion, that said Deed of Sale cannot be found in the Archive envelope of the Register of Deeds and that no Secretary's Certificate was annotated in the Primary Entry Book do not inherently prove that Fortune's title was fraudulently issued.

Fraud is not presumed. It must be proved by clear and convincing evidence, mere preponderance of evidence not being adequate. 59 Mere allegations will not suffice to sustain the existence of fraud. 60 The burden of evidence rests on the part of the plaintiff or the party alleging fraud. 61 Fraud is a question of fact which must be proved. 62 In this case, PDAF failed to discharge its burden that the title to the subject property was fraudulently, wrongfully, and erroneously registered in the name of Fortune. The fact remains that a transfer certificate of title was issued to Fortune on the basis of the Deed of Absolute Sale. Said certificate of title is an absolute and indefeasible evidence of ownership of the property in favor Fortune. It is binding and conclusive upon the whole world. 63

PDAF anchors its claim of ownership on its open, continuous, peaceful, notorious and adverse possession and occupation of the property since 1977 up to the present. It should be stressed, however, that a registered land can never be acquired by adverse possession. 64 Thus, no matter how long PDAF's possession is over the subject property, it can never acquire the same through acquisitive prescription. Under Section 47 of the Property Registration Decree, or Presidential Decree No. 1529, "[n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession." Adverse, notorious and continuous possession under a claim of ownership for the period fixed by law is ineffective against a Torrens title. 65 Title to land can no longer be acquired by prescription after a Torrens title has been issued for it. 66

No implied trust exists

In the case of Estate of Cabacungan v. Laigo, 67 the Court had occasion to fully explain trust and its kinds — express trust and implied trust, viz.:

A trust is the legal relationship between one person having an equitable ownership of property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. Trusts are either express or implied. Express or direct trusts are created by the direct and positive acts of the parties, by some writing or deed, or will, or by oral declaration in words evincing an intention to create a trust.

Implied trusts — also called "trusts by operation of law," "indirect trusts" and "involuntary trusts" — arise by legal implication based on the presumed intention of the parties or on equitable principles independent of the particular intention of the parties. They are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or, independently of the particular intention of the parties, as being inferred from the transaction by operation of law basically by reason of equity.

Implied trusts are further classified into constructive trusts and resulting trusts. Constructive trusts, on the one hand, come about in the main by operation of law and not by agreement or intention. They arise not by any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the demands of justice. Also known as trusts ex maleficio, trusts ex delicto and trusts de son tort, they are construed against one who by actual or constructive fraud, duress, abuse of confidence, commission of a wrong or any form of unconscionable conduct, artifice, concealment of questionable means, or who in any way against equity and good conscience has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. They are aptly characterized as "fraud-rectifying trust," imposed by equity to satisfy the demands of justice and to defeat or prevent the wrongful act of one of the parties. Constructive trusts are illustrated in Articles 1450, 1454, 1455 and 1456.

On the other hand, resulting trusts arise from the nature or circumstances of the consideration involved in a transaction whereby one person becomes invested with legal title but is obligated in equity to hold his title for the benefit of another. This is based on the equitable doctrine that valuable consideration and not legal title is determinative of equitable title or interest and is always presumed to have been contemplated by the parties. Such intent is presumed as it is not expressed in the instrument or deed of conveyance and is to be found in the nature of their transaction. Implied trusts of this nature are hence describable as "intention-enforcing trusts." Specific examples of resulting trusts may be found in the Civil Code, particularly Articles 1448, 1449, 1451, 1452 and 1453.

Articles 1448 to 1456 of the Civil Code enumerate cases of implied trust, but the list according to Article 1447 is not exclusive of others which may be established by the general law on trusts so long as the limitations laid down in Article 1442 are observed, that is, that they be not in conflict with the New Civil Code, the Code of Commerce, the Rules of Court and special laws. 68 (Citations omitted)

Obviously, there is no express trust in this case. There was no intention to create a trust as evinced by the direct and positive acts of the parties, by some writing, or by oral declaration in words. Neither is there implied trust — whether resulting or constructive.

A resulting trust is always presumed to have been contemplated by the parties, the intention as to which can be found in the nature of their transaction although not expressed in a deed or instrument of conveyance. 69 A resulting trust is based on the equitable doctrine that it is the more valuable consideration than the legal title that determines the equitable interest in property. 70 It arises where, there being no fraud or violation of the trust, the circumstances indicate intent of the parties that legal title in one be held for the benefit of another. 71 It also arises in some instances as where property, for example, is gratuitously conveyed for a particular purpose and that purpose is either fulfilled or frustrated, the court may affirm the resulting trust in favor of the grantor or transferor, where the beneficial interest in property was not intended to vest in the grantee. 72

None of the above instances apply in this case. PDAF, having the burden to prove the existence of trust, 73 failed to prove by clear and satisfactory evidence that the intent was for Fortune to hold the legal title for the benefit of PDAF. The parties herein did not contemplate of creating a trust.

Constructive trusts are created in order to satisfy the demands of justice and prevent unjust enrichment. They arise against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. 74 Constructive trusts are aptly characterized as "fraud-rectifying trust."

It was held that when a party uses fraud or concealment to obtain a certificate of title of property, a constructive trust is created in favor of the defrauded party. 75 When property is registered in another's name, an implied or constructive trust is created by law in favor of the true owner. 76

In this case, it was not proven by clear and convincing evidence that Fortune acquired the subject property through fraud. On the contrary, it was established that Fortune purchased the subject property for a considerable amount. Hence, Fortune cannot become, by operation of law, a trustee of an implied trust for the benefit of PDAF. 77 Likewise, it was not shown that when the subject property was sold and granted to Fortune, it was PDAF who paid the purchase price for the purpose of having the beneficial interest of the property. 78 PDAF claimed that it also purchased the subject property from Federal Homes although it did not adduce any evidence showing how transfer was made. Fortune also claimed acquiring the subject property from Federal Homes presenting as evidence the Deed of Absolute Sale it executed with Federal Homes. The RTC, as affirmed by the CA, gave more weight and credence to the sale made by and between Federal Homes and Fortune, declaring Fortune as the real owner of the subject property. It cannot be said, therefore, that Fortune is merely a trustee of the subject property, as what PDAF vigorously insists.

PDAF avers that, even assuming that fraud was not duly established by evidence, it is still entitled to reconveyance applying constructive or implied trust based on the general principles of equity and good conscience. It claims that Fortune has not exercised any of the attributes of ownership of property and it has not declared the property for assessment purposes or paid any taxes due from the time of the registration of its title in 1977 up to the present. PDAF asserts that the general principles of equity and good conscience call for the application of constructive trust, there being sufficient basis to adjudge Fortune as mere trustee, holding mere naked title over the property with PDAF as its true and beneficial owner.

PDAF did not show how the general principles of equity and good conscience should be applied in this case especially in light of its failure to prove its claim of ownership over the subject property aside from its actual possession and payment of real property taxes. Be it noted that implied trusts are remedies against unjust enrichment. 79 There could be no unjust enrichment in this case since the fact remains that Fortune bought the subject property, together with the building and other improvements thereon, from Federal Homes for a considerable amount. The sale was duly registered and a transfer certificate of title was issued in the name of Fortune. Further, tax declarations and tax receipts cannot prevail over a certificate of title which is an incontrovertible proof of ownership. 80 Thus, if the general principles of equity and good conscience would be applied, it certainly would be in favor of Fortune.

The cases of Roa v. Court of Appeals81 and Sumaoang v. Hon. Judge, RTC of Nueva Ecija82 cited by PDAF in its petition have different factual settings. In Roa, this Court held that implied trust exists because the property was registered in the name of the Roas by virtue of a compromise agreement executed by respondent Valdehuesa who withdrew his opposition to the land registration case upon certain conditions, but the terms of which petitioner failed to comply. Petitioner Roa was ordered to reconvey the land to respondents since the land could not have been registered in the name of the Roas if not for the voluntary agreement of Valdehuesa to withdraw his opposition to the registration of the land under the Torrens system. 83 In Sumaoang, an implied trust was established because of the presence of fraud or mistake. The Court clarified that the "mistakes" or "fraud" that results in an implied trust being impressed upon the property involved, may be the mistake or fraud of athird person, and need not be a mistake or fraud committed directly by the trustee himself under the implied trust. 84 In the case at bar, there was no condition that Fortune failed to comply with. Neither is there any fraud or mistake committed by Fortune in the purchase and transfer of the property, as earlier explained.

PDAF further cites the cases of Suntay v. Court of Appeals85 and Santiago v. Court of Appeals, 86 where it was held that the failure of the registered owner to exercise possession of the property for a long period of time may indicate simulation or fraud warranting reconveyance. Again, these cases have different factual settings, hence, these cannot be applied in this case.

In Suntay, the sale of the subject property from respondent Federico, the registered owner, to petitioner Rafael was, from the very start, not intended to have any legal effect between them. The Court took note of the different badges of simulation, one of which was Rafael's failure to take exclusive possession of the property allegedly sold to him. We therein ruled in favor of Federico and found that the deed of sale in question was merely an absolutely simulated contract for the purpose of accommodation and therefore void. In Santiago, the Court, citing the case of Suntay, held that the failure of petitioners to take exclusive possession of the property allegedly sold to them, or in the alternative, to collect rentals from the alleged vendee, is contrary to the principle of ownership and a clear badge of simulation that renders the whole transaction void and without force and effect. Like Suntay, the parties to the deed of sale in Santiago never intended to convey the property from one party to the other; rather, the transaction was merely used to facilitate a loan with the SSS, with petitioners-mortgagors using the property in question, the title to which they were able to register in their names through the simulated sale, as collateral.

Here, there was no evidence to show that Federal Homes and Fortune had no intention to be legally bound by the sale transaction from the very beginning. PDAF failed to prove that the sale transaction between Federal Homes and Fortune was merely for the purpose of accommodation. The sale was, for all intents and purposes, valid and binding between the parties. Hence, there is no need to even look for any badge of simulation of the sale.

The "Joint Stipulation of Facts" fails to

PDAF argues that it was relieved of the burden of proving ownership of the subject property by preponderance of evidence when Fortune entered into "Joint Stipulation of Facts." It claims that the admissions in the "Joint Stipulation of Facts" more than made up for the absence of the deed of sale in establishing PDAF's status as the true and beneficial owner of the property. While it is true that the stipulation of facts amounts to a judicial admission which requires no proof, 87 a careful scrutiny of the "Joint Stipulation of Facts" by the parties fails to show that PDAF is the real owner of the subject property.

In paragraphs one and three in the "Joint Stipulation of Facts," PDAF stated that it "has been in actual, open, uncontested and continuous possession in the concept of owner" of the subject land and the PDAF Building. It did not state that it has been in possession as owner of the land and the building. Possession in the concept of owner is only material in acquiring ownership by acquisitive prescription.

It has been held that in order to ripen into ownership, possession must be in the concept of an owner, public peaceful and uninterrupted. Mere possession with a juridical title, such as, to exemplify, by a usufructuary, a trustee, a lessee, an agent or a pledge, not being in the concept of an owner, cannot be ripen into ownership by acquisitive prescription. 88 Possession, to constitute the foundation of a prescriptive right, must be en concepto de dueno, or, to use the common law equivalent of the term, that possession should be adverse; if not, such possessory acts, no matter how long, do not start the running of the period of prescription. 89

It was admitted by the parties that Fortune is the registered owner of the subject property. As this Court earlier explained, "[n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession." Hence, even if PDAF's possession of the subject land is in the concept of an owner, it can never acquire the same by acquisitive prescription considering that it is already a registered land covered by TCT No.·S-44415 in the name of Fortune.

As to paragraph two, the fact that Fortune has not included and/or listed the subject property in its inventory of corporate properties would not prove PDAF's ownership over the same. As argued by Fortune, being a registered land, the subject property cannot be lost by failing to include the same in its inventory or into some form of list. Likewise, tax declarations and tax receipts cannot prevail over a certificate of title which is an incontrovertible proof of ownership. 90 Well settled is the rule that tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by any other evidence. 91

As to paragraphs four and five, these statements do not prove PDAF's ownership of the subject property. Non-payment of rental does not make one in possession the owner thereof. Also, while PDAF has been renting/leasing office space in the PDAF Building to other third parties and collects rentals thereof as its own income, this does not prove that it is the owner of the land. For even a lessee can sublease the premises, or a usufructuary for that matter. Further, even if Fortune did not include a prayer for the recovery of possession of the land in its Answer with Counterclaims and Amended Answer with Counterclaim, as the registered owner of the subject property, it is not estopped to recover possession thereof through the appropriate action in court.

Paragraphs six, seven and eight in the "Joint Stipulation of Facts" state that the owner's duplicate copy of Fortune's TCT cannot be located in the corporate records; that no receipt, voucher and checks can be located by Fortune; and that the original or duplicate original copy of the Deed of Absolute Sale dated February 4, 1977 between Federal Homes and Fortune cannot be presented. Again, these admissions do not prove that PDAF is the owner of the subject property. It strains simple logic to conclude that the absence of these documents makes PDAF the owner of the subject property.

Lastly, paragraph nine merely admits receipt by Fortune of PDAF's letter. Nothing can be implied therein as to who owns the subject property.

PDAF is guilty of laches.

Finally, the RTC and the CA correctly ruled that it is PDAF, the party seeking reconveyance of the subject property, which is guilty of laches. PDAF failed to take steps to assert, preserve and protect its alleged right over the subject property from the time of the alleged sale in 1977. It took no steps to register the purported Deed of Sale from Federal Homes with the Register of Deeds of Makati City for the issuance of a certificate of title in its name, or have it annotated in Federal Homes' title. PDAF waited for an unreasonable length of time to assert its claim of ownership over the subject property with no excusable explanation as to why it rested on its rights for more than 26 years.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated May 14, 2013 and the Resolution dated August 27, 2013 of the Court of Appeals in CA-G.R. CV No. 92075 are hereby AFFIRMED.

SO ORDERED." (Gesmundo, J., no part, due to his prior participation in a related case in the Sandiganbayan; Lazaro-Javier, J., designated additional Member per raffle dated September 16, 2020; Zalameda, J., on official leave.)

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

 

Footnotes

1.Rollo, pp. 10-42.

2. Penned by Associate Justice Elihu A. Ybañez, with the concurrence of Associate Justices Japar B. Dimaampao and Angelita A. Gacutan; Id. at 47-58.

3.Id. at 60-61.

4. Records, pp. 1-7.

5.Id. at 1-2.

6.Id.

7.Id. at 8-9.

8.Id. at 2.

9.Id. at 14.

10.Id. at 14-15.

11.Id. at 3.

12.Id. at 3-4.

13.Id. at 4.

14.Id. at 34-41.

15.Id. at 48-62.

16.Id. at 55-59.

17.Id. at 59-62.

18.Id. at 72-73.

19.Id. at 74-79.

20.Id. at 80-81.

21.Id. at 75-77.

22.Id. at 138-144.

23.Id. at 141-142.

24.Id. at 170-176.

25.Id. at 206-209.

26.Id.

27.Id. at 220-224.

28.Id.

29.Id. at 281-283.

30. Penned by Presiding Judge Maria Cristina J. Cornejo; id. at 556-561.

31.Id. at 559-561.

32.Id. at 562-584.

33.Id. at 646.

34.Supra note 2.

35.Rollo, p. 54.

36.Id. at 57.

37.Id. at 60-61.

38.Id. at 22.

39.Id. at 159-160.

40.Id. at 161-164.

41.Id. at 167-169.

42.Id. at 172-173.

43.Id. at 178-180.

44.Id. at 279.

45.Id. at 280-281.

46.Id. at 281-282.

47.Id. at 284-286.

48.Id. at 287.

49.Id. at 291-292.

50.Id. at 316-320.

51.Id. at 317-319.

52.Id. at 326-328.

53.Id. at 329-331.

54.Id. at 335-336.

55.Id. at 342.

56.Uy v. Court of Appeals, 769 Phil. 705, 714 (2015).

57. Records, p. 290; see Affidavit of Dalisay Saflor (Exh. "CC").

58. TSN dated August 30, 2005, pp. 23-27.

59.Sampaco v. Lantud, 669 Phil. 304, 318 (2011).

60.Pangasinan v. Disonglo-Almazora, 762 Phil. 493, 508 (2015).

61.Id.

62.Sampaco v. Lantud, supra note 59 at 507.

63.Castillo v. Escutin, 600 Phil. 303, 330-331 (2009), citing Barrera v. Court of Appeals, 423 Phil. 559, 569-570 (2001).

64.Id.

65.Umbay v. Alecha, 220 Phil. 103, 106 (1985).

66.Id. at 107.

67. 671 Phil. 132 (2011).

68.Id. at 146-148.

69.Canejo v. Roxas, 563 Phil. 551, 567-568 (2007).

70.Id.

71.Estate of Cabacungan v. Laigo, supra at note 67 at 149.

72.Id.

73.Herbon v. Palad, 528 Phil. 130, 141 (2006).

74.Heirs of Sumagang v. Aznar Enterprises, Inc., G.R. No. 214315, August 14, 2019.

75.Sps. Aboitiz v. Sps. Po, 810 Phil. 123, 144 (2017).

76.Id., citing Crisostomo v. Garcia, Jr., 516 Phil. 743, 753 (2006).

77. CIVIL CODE OF THE PHILIPPINES, Art. 1456.

Article 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

78. CIVIL CODE OF THE PHILIPPINES, Art. 1448.

Article 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.

79.Juan v. Yap, Jr., 662 Phil. 321, 328 (2011).

80.Heirs of Vencilao, Sr. v. Court of Appeals, 351 Phil. 815, 823 (1998).

81. 208 Phil. 2 (1983).

82. 289 Phil. 577 (1992).

83.Roa v. Court of Appeals, supra note 81 at 13.

84.Sumaoang v. Hon. Judge, RTC of Guimba, Nueva Ecija, supra note 82 at 590-591.

85. 321 Phil. 809 (1995).

86. 343 Phil. 612 (1997).

87.Silot, Jr. v. De La Rosa, 567 Phil. 505, 511 (2008), citing Lim v. Jabalde, 254 Phil. 209, 220 (1989).

88.Marcelo v. Court of Appeals, 365 Phil. 354, 361 (1999).

89.Id. at 362.

90.Heirs of Vencilao, Sr. v. Court of Appeals, supra note 80 at 823.

91.Republic v. Manimtim, 661 Phil. 158, 174 (2011).