Peñales v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Petitioners Maria Peñales and Consorcia Peñales (PEÑALES) are litigating with private respondents (LUSTRIAS) over the ownership of one-half share in Lot No. 6026. On June 8, 1953, Transfer Certificate of Title (TCT) No. T-14243 was issued in the name of Adalia Peñaflorida, single, covering the property. The title stated that the property was registered in fee simple, subject to encumbrances mentioned in Article 39 of the Land Registration Act and any claim provided for in Section 4, Rule 74 of the New Rules of Court with respect to the 1/2 share of the deceased Segundo Lustria within two years from the date thereof. The private respondents are three children of Segundo Lustria. On August 25, 1970, Adalia sold the entire property to the PEÑALES, who were issued TCT No. T-63055, which also contained the encumbrances. On May 15, 1972, the PEÑALES executed an affidavit to cancel the two-year claim annotation. Procedural History: The LUSTRIAS, claiming to be heirs of Segundo Lustria, instituted an action on March 21, 1977, for cancellation of the PEÑALES' title, damages, and reconveyance of the 1/2 portion of the property. The Court of First Instance of Iloilo rendered judgment in favor of the LUSTRIAS, ordering reconveyance and payment of damages and attorney's fees. The Intermediate Appellate Court affirmed this decision, rationalizing that the PEÑALES, by appropriating the entire land in 1972, set up an adverse title, constituting an implied trust under Article 1456 of the Civil Code, and that the action, which prescribes in 10 years, had not yet lapsed when the complaint was filed in 1977. The Petition: The PEÑALES filed a Petition for Review on Certiorari, arguing that the respondent Appellate Court erred in its pronouncements regarding the commencement of prescriptive periods and the nature of the annotation.
Issue(s)
Whether the prescriptive period for the LUSTRIAS' claim commenced on June 8, 1953, the date of issuance of TCT No. T-14243, or on May 15, 1972, the date of cancellation of the annotation; and if the LUSTRIAS had constructive notice of Adalia's adverse claim from June 8, 1953. Whether the annotation under Section 4, Rule 74, of the Rules of Court, in conjunction with the sale to the PEÑALES, constituted an implied trust that tolled the prescriptive period; and the effect and expiration of the annotation under Section 4, Rule 74.
Ruling
The Supreme Court set aside the judgment of the Appellate Court and held that the property in question appertains exclusively to the petitioners.
Ratio Decidendi
On the commencement of prescriptive periods: The Supreme Court held that the Appellate Court erred in stating that the PEÑALES "set up a title adverse to the heirs of Segundo Lustria" only when the annotation under Section 4, Rule 74, was cancelled on May 15, 1972, and that prescriptive periods commenced only on that date. The Court clarified that title to the entire property was placed solely in the name of Adalia on June 8, 1953, subject to possible claims. From that date of registration, the LUSTRIAS must be deemed to have had constructive notice of Adalia's adverse claim. Therefore, the prescriptive period commenced from June 8, 1953. On the nature of the annotation and implied trust: The Court found error in the Appellate Court's statement that the annotation in TCT No. T-63055 "recognizes the fact that the late Segundo Lustria, Sr., is an owner to the extent of one-half" of the property, implying he was a co-owner. The proper view under Section 4, Rule 74, is that Adalia was registered as owner in fee simple, subject to the condition that one-half thereof might be claimed within the two-year period after June 8, 1953, by a third person with an alleged interest. The Court emphasized that generally, an annotation under Section 4, Rule 74, reads only as subject to "the rights of any legal heir or claims of any creditor of the deceased which have not been paid," and that heirs and creditors would not in effect be "owners" of the property. The Court further stated that the prescriptive period in Section 4, Rule 74, was enacted with the principle of prescription as a statute of repose in mind, aiming to suppress fraudulent and stale claims. When the LUSTRIAS filed their complaint on March 21, 1977, more than 10 years after June 8, 1953, they had already lost their rights, if any, to any part of the property. Their claim could not be based on the encumbrance because its effectivity expired two years after June 8, 1953. The Court cited Carreon vs. Agcaoile to the effect that the annotation of an encumbrance pursuant to Section 4, Rule 74, becomes functus officio at the expiration of the two-year period.
Main Doctrine
The two-year period for claims against an estate under Section 4, Rule 74 of the Rules of Court commences from the date of issuance of the certificate of title, and prescriptive periods for actions arising from implied trusts also commence from the date of registration, not from the cancellation of the encumbrance.