Viloria v. Court of Appeals
REITERATIONFacts
The Antecedents: Nicolasa and Rosaida Viloria died single and without issue, survived by their brother Ruperto L. Viloria, Anastacio L. Viloria, and the heirs of their predeceased sisters Felicitacion V. Cacanando and Josefina V. Ancheta. The heirs of Nicolasa and Rosaida filed an action for partition against Ruperto, alleging they were co-owners with Ruperto of a commercial lot and an orchard. Ruperto claimed he acquired their shares through a deed of sale for the commercial lot (1965) and a private agreement (Catulagan) and deed of sale for the orchard (1978 and 1987). The heirs countered that the transfer of title for the commercial lot was for loan purposes, not to convey ownership, and that Nicolasa and Rosaida remained co-owners, exercising acts of administration and collecting rentals for 25 years. They also asserted that Rosaida's deed of sale for the orchard was without consideration and subsequently revoked, while Nicolasa's share in the orchard was donated to Rodolfo Ancheta. Procedural History: The Regional Trial Court (RTC) declared Ruperto a trustee of an express trust for the commercial lot, finding no effective conveyance of Rosaida's share in the orchard due to revocation, and that Nicolasa's share in the orchard was donated. The RTC ordered partition of the commercial lot and orchard into four equal parts. The Court of Appeals (CA) affirmed with modification, declaring Ruperto and private respondents co-owners of 2/3 of the commercial lot and 1/3 of the orchard, holding that Rosaida's deed of revocation did not rescind the 1987 deed of sale over the orchard as it was duly notarized and presumed valid without judicial annulment. The Petition: Ruperto Viloria assailed the CA decision, arguing that the 1965 deed of sale was a true conveyance, not an express trust, and that prescription had run against his sisters' claims. He also contended that the CA erred in assuming jurisdiction over the validity of the 1965 deed of sale and that it should not have been declared an express trust without a court declaration of nullity.
Issue(s)
Whether the 1965 deed of sale over the commercial lot constitutes a true conveyance of ownership or merely an express trust. Whether prescription has run against the claims of the heirs of Nicolasa and Rosaida Viloria. Whether the Court of Appeals exceeded its jurisdiction in ruling on the validity of the 1965 deed of sale. Whether the deed of revocation executed by Rosaida Viloria effectively rescinded the 1987 deed of sale over her share in the orchard.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, declaring petitioner and private respondents as co-owners of the 2/3 portion of the commercial lot and 1/3 portion of the orchard. The properties are to be divided into four equal parts: 1/4 for petitioner and 3/4 for private respondents.
Ratio Decidendi
On the nature of the 1965 deed of sale: The Court held that the 1965 deed of sale was an express trust, not a true conveyance. The lower courts found that the parties intended it as a trust agreement, with Ruperto acting as a trustee. This conclusion was supported by evidence that Nicolasa and Rosaida continued to exercise acts of administration and dominion over the property and collected rentals for 25 years, consistent with their co-ownership. The Court reiterated that a trustee who obtains a Torrens title over property held in trust cannot repudiate the trust by relying on the registration. The notarization of the deed of sale does not validate an instrument never intended to have binding legal effect as a relinquishment of rights. On prescription: The Court ruled that prescription had not run against the claims of Nicolasa and Rosaida Viloria. The prescriptive period for an action of reconveyance based on an express trust does not commence until the trustee repudiates the trust. In this case, Nicolasa and Rosaida remained in possession and exercised acts of ownership, and Ruperto never openly repudiated their claims but assured them of their rights. Therefore, the trust was not repudiated, and the action did not prescribe. On the Court of Appeals' jurisdiction: The Court found no merit in the petitioner's contention that the CA exceeded its jurisdiction. In an action for partition, where the petitioner claims ownership based on a deed of sale and the respondents assert co-ownership, the issue of ownership and the validity of the deed of sale must necessarily be resolved to determine if partition is proper. The CA did not err in ruling on the validity of the 1965 sale as it was intrinsically linked to the issue of co-ownership. On the deed of revocation and the 1987 deed of sale: The Court affirmed the CA's finding that the deed of revocation executed by Rosaida did not rescind the 1987 deed of sale over the orchard because it was duly notarized and enjoyed a presumption of validity, which could only be annulled through a proper judicial action. In the absence of such action, the 1987 deed of sale remained valid. Consequently, only Rosaida's 1/3 share in the orchard was subject to partition among the heirs.
Main Doctrine
A deed of sale, even if notarized and registered, may be declared an express trust if the parties intended it as a mere trust agreement and not a relinquishment of rights, especially when the alleged seller continues to exercise acts of ownership and administration over the property. Registration under the Torrens system does not vest ownership in a trustee who obtains a title over property held in trust, as the trustee cannot repudiate the trust by relying on the registration.