EXTINGUISHMENT OF AGENCY

Case Citation: G.R. No. 136021

Date: February 22, 2000

Petitioners: BENIGNA SECUYA, MIGUEL SECUYA, MARCELINO SECUYA, CORAZON

SECUYA, RUFINA SECUYA, BERNARDINO SECUYA, NATIVIDAD SECUYA,
GLICERIA SECUYA and PURITA SECUYA

Respondents: GERARDA M. VDA. DE SELMA

Antecedent Facts: The present Petition is rooted in an action for quieting of title filed before the RTC by
Benigna, Miguel, Marcelino, Corazon, Rufina, Bernardino, Natividad, Gliceria and Purita
— all surnamed Secuya — against Gerarda M. vda. de Selma. Petitioners asserted
ownership over the disputed parcel of land, alleging that:

 The parcel of land subject of this case is a PORTION of Lot 5679 of the Talisay-
Minglanilla Friar Lands Estate. The property was originally sold, and the
covering patent issued, to Maxima Caballero Vda. de Cariño

 During the lifetime of Maxima Caballero, vendee and patentee (Lot 5679),
she entered into that AGREEMENT OF PARTITION with Paciencia
Sabellona, whereby the former bound herself and parted 1/3 portion of Lot
5679 in favor of the latter. Among others it was stipulated in said agreement of
partition that the said portion of one-third so ceded will be located adjoining the
municipal road;

 Paciencia Sabellona took possession and occupation of that one-third

portion adjudicated to her. Later, she sold the 3,000 square meter portion
thereof to Dalmacio Secuya, for a consideration of P1,850.00, by means of a
private document which was lost. Such sale was admitted and confirmed by
Ramon Sabellona, only heir of Paciencia Sabellona, per that instrument
denominated CONFIRMATION OF SALE OF UNDIVIDED SHARES

 Ramon Sabellona was the only [or] sole voluntary heir of Paciencia
Sabellona, per that Last Will and Testament of Paciencia Sabellona,
executed and acknowledged before Notary Public Teodoro P. Villarmina.
Pursuant to such will, Ramon Sabellona inherited all the properties left by
Paciencia Sabellona;

 After the purchase by Dalmacio Secuya, predecessor-in interest of

plaintiffs of the property in litigation, Dalmacio, together with his brothers
and sisters — he being single — took physical possession of the land and
cultivated the same. In 1967, Edilberto Superales married Rufina Secuya,
niece of Dalmacio Secuya. With the permission and tolerance of the Secuyas,
Edilberto Superales constructed his house on the lot in question in January
1974 and lived thereon continuously up to the present.

 Dalmacio Secuya died. Thus his heirs — brothers, sisters, nephews and nieces
now the petitioners;

 In 1972, defendant-respondent Gerarda Selma bought a 1,000 square-

meter portion of Lot 5679. Then later on, she bought the bigger bulk of Lot
5679,evidenced by that deed of absolute sale. The land in question, a 3,000-
square meter portion of Lot 5679, is embraced and included within the boundary
of the later acquisition by respondent Selma;

 Defendant-respondent Gerarda Selma lodged a complaint, and had the

plaintiffs-petitioners summoned, before the Barangay Captain of the place, and
in the confrontation and conciliation proceedings at the Lupong Tagapayapa,
defendant-respondent Selma was asserting ownership over the land inherited
by plaintiffs-petitioners from Dalmacio Secuya of which they had long been in
possession . . . in concept of owner. Such claim of defendant-respondent Selma
is a cloud on the title of plaintiffs-petitioners, hence, their complaint
 Respondent Selma's version of the facts

She is the registered owner of Lot 5679-C-120 consisting of 9,302 square meters as
evidenced by TCT No. T-35678), having bought the same from Cesaria Caballero as
evidenced by a notarized Deed of Sale and ha[ve] been in possession of the same
since then. Cesaria Caballero was the widow of Silvestre Aro, registered owner of the
mother lot, Lot. No. 5679 with an area of 12,750 square meters of the Talisay-
Minglanilla Friar Lands Estate, as shown by Transfer Certificate of Title No. 4752. Upon
Silvestre Aro's demise, his heirs executed an "Extrajudicial Partition and Deed of
Absolute Sale" wherein one-half plus one-fifth of Lot No. 5679 was adjudicated to the
widow, Cesaria Caballero, from whom defendant-appellee derives her title.

MTC/RTC Ruling: The trial court finds the preponderance of evidence to be in favor of the
defendant Gerarda Selma as judgment is rendered Dismissing the Complaint for
Quieting of title, Cancellation of Certificate of Title of Gerarda vda. de Selma and
damages,

CA Ruling: In affirming the trial court's ruling, the appellate court debunked petitioners'
claim of ownership of the land and upheld Respondent Selma's title thereto. It
held that respondent's title can be traced to a valid TCT.

On the other hand, it ruled that petitioners anchor their claim on an "Agreement of
Partition" which is void for being violative of the Public Land Act. The CA noted that the
said law prohibited the alienation or encumbrance of land acquired under a free patent
or homestead patent, for a period of five years from the issuance of the said patent.

Issue: Whether or not the agreement is one of partition? No

SC Ruling: The Agreement: An Express Trust, Not a Partition

Notwithstanding its purported nomenclature, the Agreement is not one of partition,

because there was no property to partition and the parties were not co-owners. Rather,
it is in the nature of a trust agreement.

Trust is the right to the beneficial enjoyment of property, the legal title to which is
vested in another. It is a fiduciary relationship that obliges the trustee to deal
with the property for the benefit of the beneficiary. Trust relations between parties
may either be express or implied. An express trust is created by the intention of the
trustor or of the parties. An implied trust comes into being by operation of law.

The present Agreement of Partition involves an express trust. Under Article 1444
of the Civil Code, "[n]o particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended." That Maxima Caballero bound herself
to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval of the
former's application is clear from the terms of the Agreement. Likewise, it is evident that
Paciencia acquiesced to the covenant and is thus bound to fulfill her obligation therein.

As a result of the Agreement, Maxima Caballero held the portion specified therein
as belonging to Paciencia Sabellona when the application was eventually
approved and a sale certificate was issued in her name. Thus, she should have
transferred the same to the latter, but she never did so during her lifetime. Instead,
her heirs sold the entire Lot No. 5679 to Silvestre Aro in 1955.

From 1954 when the sale certificate was issued until 1985 when petitioners filed their
Complaint, Paciencia and her successors-in-interest did not do anything to enforce their
proprietary rights over the disputed property or to consolidate their ownership over the
same. In fact, they did not even register the said Agreement with the Registry of
Property or pay the requisite land taxes. While petitioners had been doing nothing, the
disputed property, as part of Lot No. 5679, had been the subject of several sales
transactions and covered by several transfer certificates of title.

The Repudiation of the Express Trust

 While no time limit is imposed for the enforcement of rights under express
trusts, prescription may, however, bar a beneficiary's action for recovery, if a
repudiation of the trust is proven by clear and convincing evidence and made known to
the beneficiary.

There was a repudiation of the express trust when the heirs of Maxima Caballero
failed to deliver or transfer the property to Paciencia Sabellona, and instead sold
the same to a third person not privy to the Agreement. In the memorandum of
incumbrances of TCT No. 3087 issued in the name of Maxima, there was no notation of
the Agreement between her and Paciencia. Equally important, the Agreement was not
registered; thus, it could not bind third persons. Neither was there any allegation that
Silvestre Aro, who purchased the property from Maxima's heirs, knew of it.
Consequently,the subsequent sales transactions involving the land in dispute and the
titles covering it must be upheld, in the absence of proof that the said transactions were
fraudulent and irregular.

Others The Purported Sale to Dalmacio Secuya

Even granting that the express trust subsists, petitioners have not proven that they
are the rightful successors-in-interest of Paciencia Sabellona.

The Absence of the Purported Deed of Sale

Petitioners insist that Paciencia sold the disputed property to Dalmacio Secuya and
that the sale was embodied in a private document. However, such document, which
would have been the best evidence of the transaction, was never presented in court,
allegedly because it had been lost. While a sale of a piece of land appearing in a private
deed is binding between the parties, it cannot be considered binding on third persons, if it is
not embodied in a public instrument and recorded in the Registry of Property.

Moreover, while petitioners could not present the purported deed evidencing the transaction
between Paciencia Sabellona and Dalmacio Secuya, petitioners' immediate predecessor-in-
interest, private respondent in contrast has the necessary documents to support her claim
to the disputed property.

The Questionable Value of the Deed Executed by Ramon Sabellona

To prove the alleged sale of the disputed property to Dalmacio, petitioners instead
presented the testimony of Miguel Secuya, one of the petitioners; and a Deed
confirming the sale executed by Ramon Sabellona, Paciencia's alleged heir. The testimony
of Miguel was a bare assertion that the sale had indeed taken place and that the
document evidencing it had been destroyed. While the Deed executed by Ramon
ratified the transaction, its probative value is doubtful. His status as heir of Paciencia was
not affirmatively established. Moreover, he was not presented in court and was thus not
quizzed on his knowledge — or lack thereof — of the 1953 transaction.

Petitioners' Failure to Exercise Owners' Rights to the Property

Petitioners insist that they had been occupying the disputed property for forty-seven
years before they filed their Complaint for quieting of title. However, there is no proof
that they had exercised their rights and duties as owners of the same. They argue that
they had been gathering the fruits of such property; yet, it would seem that they had been
remiss in their duty to pay the land taxes. If petitioners really believed that they owned the
property, they have should have been more vigilant in protecting their rights thereto. As
noted earlier, they did nothing to enforce whatever proprietary rights they had over the
disputed parcel of land.

The Validity of Private Respondent's Title

Petitioners debunk Private Respondent Selma's title to the disputed property, alleging that
she was aware of their possession of the disputed properties. Thus, they insist that she
could not be regarded as a purchaser in good faith who is entitled to the protection of the
Torrens system.

Indeed, a party who has actual knowledge of facts and circumstances that would move a
reasonably cautious man to make an inquiry will not be protected by the Torrens system.
In Sandoval v. Court of Appeals, we held:

It is settled doctrine that one who deals with property registered under the Torrens
system need not go beyond the same, but only has to rely on the title. He is
charged with notice only of such burdens and claims as are annotated on the title.

Granting arguendo that private respondent knew that petitioners, through Superales and his
family, were actually occupying the disputed lot, we must stress that the vendor, Cesaria
Caballero, assured her that petitioners were just tenants on the said lot. Private respondent
cannot be faulted for believing this representation, considering that petitioners' claim was
not noted in the certificate of the title covering Lot No. 5679.

Moreover, the lot, including the disputed portion, had been the subject of several
sales transactions. The title thereto had been transferred several times, without any
protestation or complaint from the petitioners. In any case, private respondent's title
is amply supported by clear evidence, while petitioners' claim is barren of proof.

Clearly, petitioners do not have the requisite title to pursue an action for quieting of
title.
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