SECOND DIVISION

[G.R. No. 160711. August 14, 2007.]

HEIRS OF MAXIMO LABANON, represented by ALICIA LABANON

CAÑEDO and the PROVINCIAL ASSESSOR OF COTABATO , petitioners,
vs . HEIRS OF CONSTANCIO LABANON, represented by ALBERTO
MAKILANG , respondents.

DECISION

VELASCO, JR., J : p

The Case
This Petition for Review on Certiorari under Rule 45 seeks the recall and nulli cation
of the May 8, 2003 Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 65617
entitled Heirs of Constancio Labanon represented by Alberto Makilang v. Heirs of Maximo
Labanon represented by Alicia Labanon Cañedo and the Provincial Assessor of Cotabato,
which reversed the August 18, 1999 Decision 2 of the Kidapawan City, Cotabato Regional
Trial Court (RTC), Branch 17, in Civil Case No. 865. Likewise assailed is the October 13,
2003 Resolution 3 which disregarded petitioners' Motion for Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the outbreak of WWII,
he settled upon a piece of alienable and disposable public agricultural land
situated at Brgy. Lanao, Kidapawan, Cotabato . . . Constancio cultivated the said
lot and introduced permanent improvements that still exist up to the present.
Being of very limited educational attainment, he found it di cult to le his public
land application over said lot. Constancio then asked his brother, Maximo
Labanon who was better educated to le the corresponding public land
application under the express agreement that they will divide the said lot as soon
as it would be feasible for them to do so. The offer was accepted by Maximo.
During the time of the application it was Constancio who continued to cultivate
the said lot in order to comply with the cultivation requirement set forth under
Commonwealth Act 141, as amended, on Homestead applications. After which,
on June 6, 1941, due to industry of Constancio, Homestead Application No.
244742 (E-128802) of his brother Maximo was approved with Homestead Patent
No. 67512. Eventually, Original Certi cate of Title No. P-14320 was issued by the
Register of Deeds of Cotabato over said lot in favor of Maximo Labanon. DSIaAE

On February 11, 1955, Maximo Labanon executed a document

denominated as "Assignment of Rights and Ownership" and docketed as Doc. No.
20; Page No. 49; Book No. V; Series of 1955 of the Notarial Register of Atty.
Florentino Kintanar. The document was executed to safeguard the ownership and
interest of his brother Constancio Labanon. Pertinent portion of which is
reproduced as follows:

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 "That I, MAXIMO LABANON, of legal age, married to Anastacia
Sagarino, and a resident of Kidapawan, Cotabato, for and in consideration
of the expenses incurred by my elder brother CONSTANCIO LABANON also
of legal age, Filipino, widower and a resident of Kidapawan, Cotabato, for
the clearing, cultivation and improvements on the eastern portion . . . Lot
No. 1, Blk. 22, Pls-59 . . . which expenses have been incurred by my said
brother . . . before the outbreak of the last world war . . . I do hereby assign
transfer and convey my rights to, interests in and ownership on the said
eastern portion of said Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M)
ALONG THE NATIONAL HIGHWAY, (DAVAO-COTABATO ROAD) by TWO
HUNDRED FIFTY METERS (250 M) going inside the land to cover an area
of TWO AND ONE HALF HECTARES (25,000 SQ. M.), more or less,
adjoining the school site of barrio Lanao, Kidapawan, Cotabato, to the said
CONSTANCIO LABANON, his heirs and assigns, can freely occupy for his
own use and benefit . . . .

IN WITNESS WHEREOF, I have hereunto set my hand this 11th day

of February 1995 at Kidapawan, Cotabato.
(SGD) MAXIMO LABANON

With my marital consent.

(SGD) ANASTACIA SAGARINO

(Wife)" (p.16, rollo)

On April 25, 1962, Maximo Labanon executed a sworn statement

reiterating his desire that his elder brother Constancio, his heirs and assigns shall
own the eastern portion of the Lot, pertinent portion of which reads:

"That I am the same and identical person who is a homestead

applicant (HA-224742, E-128802) of a tract of land which is covered by
Homestead Patent No. 67512 dated June 6, 1941, known as Lot No. 1,
Block 22, Pls-59, situated in [B]arrio Lanao, Municipality of Kidapawan,
Province of Cotabato, Philippines, and containing an area of 5.0000
hectares, more or less; HAaDTE

That I am the same and identical person who executed a deed of

ASSIGNMENT OF RIGHTS AND OWNERSHIP in favor of my brother
Constancio Labanon, now deceased, now for his heirs, for the eastern half
portion of the land above described, and which deed was duly notarized by
notary public Florentino P. Kintanar on February 11, 1955 at Kidapawan,
Cotabato and entered in his Notarial Register as Doc. No. 20, Page No. 49,
Book No. V, Series of 1955; and

That in order that I and the Heirs of Constancio Labanon will

exercise our respective rights and ownership over the aforementioned lot,
and to give force and effect to said deed of assignment, I hereby, by these
presents, request the Honorable Director of Lands and the Land Title
Commission to issue a separate title in my favor covering the western half
portion of the aforementioned lot and to the Heirs of Constancio Labanon
a title for the eastern half portion thereof.

IN WITNESS THEREOF, I have hereunto set my hand this 25th day

of April, 1962, at Pikit, Cotabato, Philippines." (p. 9, records)
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 After the death of Constancio Labanon, his heirs executed an [e]xtra-
judicial settlement of estate with simultaneous sale over the aforesaid
eastern portion of the lot in favor of Alberto Makilang, the husband of
Visitacion Labanon, one of the children of Constancio. Subsequently, the
parcel of land was declared for taxation purposes in the name of Alberto
under TD No. 11593. However, in March 1991, the defendants heirs of
Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon, Roberto
Nieto and Pancho Labanon, caused to be cancelled from the records of the
defendant Provincial Assessor of Cotabato the aforesaid TD No. 11593
and the latter, without rst verifying the legality of the basis for said
cancellation, did cancel the same. . . . Further, after discovering that the
defendant-heirs of Maximo Labanon were taking steps to deprive the heirs
of Constancio Labanon of their ownership over the eastern portion of said
lot, the latter, thru Alberto Makilang, demanded the owner's copy of the
certi cate of title covering the aforesaid Lot to be surrendered to the
Register of Deeds of Cotabato so that the ownership of the heirs of
Constancio may be fully effected but the defendants refused and still
continue to refuse to honor the trust agreement entered into by the
deceased brothers. . . . 4
DaHISE

Thus, on November 12, 1991, petitioners led a complaint 5 for Speci c

Performance, Recovery of Ownership, Attorney's Fees and Damages with Writ of
Preliminary Injunction and Prayer for Temporary Restraining Order against respondents
docketed as Civil Case No. 865 before the Kidapawan City RTC. After hearing, the trial
court rendered its August 18, 1999 Decision, the decretal portion of which reads:
Wherefore, prescinding from the foregoing facts and considerations the
Court nds and so holds that the [defendant-heirs] of Maximo Labanon
represented by Alicia Labanon Caniedo have proved by preponderance of
evidence that they are entitled to the reliefs set forth in their answer and
consequently judgment is hereby rendered as follows:

1. Ordering the dismissal of the complaint against the Heirs of

Maximo Labanon represented by Alicia Labanon Caniedo for lack of
merit;

2. Ordering the dismissal of the case against the Provincial Assessor.

The claim of the plaintiff is untenable, because the duties of the
Provincial Assessor are ministerial. Moreover, the presumption of
regularity in the performance of his duty is in his favor;

3. Ordering the plaintiff to pay the defendants the amount of

P20,000.00 as exemplary damages, P10,000.00 for Attorney's Fees,
P500.00 per appearance in Court; and

4. To pay the costs of this suit.

IT IS SO ORDERED. 6

Aggrieved, respondents elevated the adverse judgment to the CA which issued the
assailed May 8, 2003 Decision in CA-G.R. CV No. 65617, the fallo of which states:
WHEREFORE, the appeal is hereby GRANTED for being meritorious. The
assailed decision of the Regional Trial Court is hereby REVERSED and SET ASIDE
and a new one is hereby entered as follows:

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 1) Recognizing the lawful possession of the plaintiffs-appellants over the
eastern portion of the property in dispute;

2) Declaring the plaintiffs-appellants as owners of the eastern portion of the

property by reason of lawful possession; aCSHDI

3) Ordering the Provincial Assessor to reinstate TD No. 11593 and declaring

TD No. 243-A null and void;

4) Ordering the defendants-appellees to pay the plaintiffs-appellants the

amount of P20,000 as moral damages, P10,000 for attorney's fees,
P500.00 per appearance in Court and

5) To pay the costs of the suit.

SO ORDERED.

The Issues
Surprised by the turn of events, petitioners brought this petition before us raising
the following issues, to wit:
1. Whether or not Original Certi cate of Title No. 41320 issued on April 10,
1975 in the name of MAXIMO LABANON be now considered indefeasible
and conclusive; and

2. Whether or not the Trust Agreement allegedly made by Constancio

Labanon and Maximo Labanon prescribed. 6

The Court's Ruling

The petition must fail.
First Issue
Respondents are not precluded from challenging the validity of Original
Certificate of Title No. P-41320
Petitioners argue that respondents can no longer question Maximo Labanon's
ownership of the land after its registration under the principle of indefeasibility of a
Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section 32 of Presidential
Decree No. (PD) 1529, amending the Land Registration Act, which provides:
Section 32. Review of decree of registration; Innocent purchaser for
value. — The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected thereby, nor
by any proceeding in any court for reversing judgments, subject, however, to the
right of any person, including the government and the branches thereof, deprived
of land or of any estate or interest therein by such adjudication or con rmation of
title obtained by actual fraud, to le in the proper Court of First Instance a petition
for reopening and review of the decree of registration not later than one year from
and after the date of the entry of such decree of registration, but in no case shall
such petition be entertained by the court where an innocent purchaser for value
has acquired the land or an interest therein, whose rights may be prejudiced.
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 Whenever the phrase "innocent purchaser for value" or an equivalent phrase
occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value. AIDcTE

Upon the expiration of said period of one year, the decree of registration
and the certi cate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy by
action for damages against the applicant or any other persons responsible for the
fraud.

Contrary to petitioners' interpretation, the aforequoted legal provision does not

totally deprive a party of any remedy to recover the property fraudulently registered in the
name of another. Section 32 of PD 1529 merely precludes the reopening of the
registration proceedings for titles covered by the Torrens System, but does not foreclose
other remedies for the reconveyance of the property to its rightful owner. As elaborated in
Heirs of Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that the decree of registration
becomes incontrovertible after a year, it does not altogether deprive an aggrieved party of a
remedy in law. The acceptability of the Torrens System would be impaired, if it is utilized to
perpetuate fraud against the real owners. 7

A more succinct explanation is found in Vda. De Recinto v. Inciong, thus:

The mere possession of a certificate of title under the Torrens system does not necessarily
make the possessor a true owner of all the property described therein for he does not by virtue of
said certi cate alone become the owner of the land illegally included. It is evident from the
records that the petitioner owns the portion in question and therefore the area should be
conveyed to her. The remedy of the land owner whose property has been wrongfully or
erroneously registered in another's name is, after one year from the date of the
decree, not to set aside the decree, but, respecting the decree as incontrovertible and no longer
open to review, to bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser
for value, for damages. 8 (Emphasis supplied.)

Undeniably, respondents are not precluded from recovering the eastern portion of
Original Certi cate of Title (OCT) No. P-14320, with an area subject of the "Assignment of
Rights and Ownership" previously owned by their father, Constancio Labanon. The action
for Recovery of Ownership before the RTC is indeed the appropriate remedy.
Second Issue
The trust agreement between Maximo Labanon and Constancio Labanon may
still be enforced
Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained the
nature and import of a trust: ATICcS

Trust is the legal relationship between one person having an equitable

ownership in 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. 9

This legal relationship can be distinguished from other relationships of a duciary

character, such as deposit, guardianship, and agency, in that the trustee has legal title to
the property. 1 0 In the case at bench, this is exactly the relationship established between
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 the parties.
Trusts are classi ed under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that "[n]o particular
words are required for the creation of an express trust, it being su cient that a trust is
clearly intended."
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for the manifestation
of intention to create a trust. It is possible to create a trust without using the word
"trust" or "trustee". Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship
which to lawyers is known as trust. It is immaterial whether or not he knows that
the relationship which he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is called a trust. 1 1

Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles Parsons

and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the parties, by
some writing or deed or by words evidencing an intention to create a trust; the use
of the word trust is not required or essential to its constitution, it being su cient
that a trust is clearly intended. 1 2

In the instant case, such intention to institute an express trust between Maximo
Labanon as trustee and Constancio Labanon as trustor was contained in not just one but
two written documents, the Assignment of Rights and Ownership as well as Maximo
Labanon's April 25, 1962 Sworn Statement. In both documents, Maximo Labanon
recognized Constancio Labanon's ownership and possession over the eastern portion of
the property covered by OCT No. P-14320, even as he recognized himself as the applicant
for the Homestead Patent over the land. Thus, Maximo Labanon maintained the title over
the property while acknowledging the true ownership of Constancio Labanon over the
eastern portion of the land. The existence of an express trust cannot be doubted nor
disputed. SCaDAE

On the issue of prescription, we had the opportunity to rule in Bueno v. Reyes that
unrepudiated written express trusts are imprescriptible:
While there are some decisions which hold that an action upon a trust is
imprescriptible, without distinguishing between express and implied trusts, the
better rule, as laid down by this Court in other decisions, is that prescription does
supervene where the trust is merely an implied one. The reason has been
expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4
SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions for
recovery of real property prescribed in 10 years, excepting only actions
based on continuing or subsisting trusts that were considered by section
38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229,
March 29, 1958, however, the continuing or subsisting trusts contemplated
in section 38 of the Code of Civil Procedure referred only to express
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 unrepudiated trusts, and did not include constructive trusts (that are
imposed by law) where no duciary relation exists and the trustee does not
recognize the trust at all. 1 3

This principle was ampli ed in Escay v. Court of Appeals this way: "Express trusts
prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen
Gorricho et al., 54 O.G. p. 8429, Sec. 40, Code of Civil Procedure)." 1 4
In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive
period for the enforcement of an express trust of ten (10) years starts upon the
repudiation of the trust by the trustee. 15
In the case at bar, Maximo Labanon never repudiated the express trust instituted
between him and Constancio Labanon. And after Maximo Labanon's death, the trust could
no longer be renounced; thus, respondents' right to enforce the trust agreement can no
longer be restricted nor prejudiced by prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo
Labanon's Sworn Statement were executed after the Homestead Patent was applied for
and eventually granted with the issuance of Homestead Patent No. 67512 on June 6, 1942.
Evidently, it was the intent of Maximo Labanon to hold the title over the land in his name
while recognizing Constancio Labanon's equitable ownership and actual possession of the
eastern portion of the land covered by OCT No. P-14320. ICHcaD

In addition, petitioners can no longer question the validity of the positive declaration
of Maximo Labanon in the Assignment of Rights and Ownership in favor of the late
Constancio Labanon, as the agreement was not impugned during the former's lifetime and
the recognition of his brother's rights over the eastern portion of the lot was further
affirmed and confirmed in the subsequent April 25, 1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of the settled precept
that "[w]here one derives title to property from another, the act, declaration, or omission of
the latter, while holding the title, in relation to the property, is evidence against the former."
Thus, petitioners have accepted the declaration made by their predecessor-in-interest,
Maximo Labanon, that the eastern portion of the land covered by OCT No. P-14320 is
owned and possessed by and rightfully belongs to Constancio Labanon and the latter's
heirs. Petitioners cannot now feign ignorance of such acknowledgment by their father,
Maximo.
Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied in the
Assignment of Rights and Ownership pursuant to Article 1371 of the Civil Code that
contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by their
father with respect to the subject property since they were merely subrogated to the rights
and obligations of their predecessor-in-interest. They simply stepped into the shoes of
their predecessor and must therefore recognize the rights of the heirs of Constancio over
the eastern portion of the lot. As the old adage goes, the spring cannot rise higher than its
source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision and October 13,
2003 Resolution in CA-G.R. CV No. 65617 are AFFIRMED with the modi cations that the
Kidapawan City, Cotabato RTC, Branch 17 is directed to have OCT No. P-14320
segregated and subdivided by the Land Management Bureau into two (2) lots based on
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 the terms of the February 11, 1955 Assignment of Rights and Ownership executed by
Maximo Labanon and Constancio Labanon; and after approval of the subdivision plan, to
order the Register of Deeds of Kidapawan City, Cotabato to cancel OCT No. P-14320 and
issue one title each to petitioners and respondents based on the said subdivision plan.
Costs against petitioners. DaAIHC

SO ORDERED.
Quisumbing, Carpio, Carpio-Morales and Tinga, JJ., concur.

Footnotes

1. Rollo, pp. 40-49. The Decision was penned by Associate Justice Eloy R. Bello, Jr., with
Justices Cancio C. Garcia (Chairman) and Mariano C. Del Castillo concurring.

2. Id. at 25-39.
3. Id. at 42-43.
4. Id. at 43-45.
5. Id. at 25; per August 18, 1999 RTC Decision; cf. November 3, 2003 Petition, id. at 6, where
the complaint is dated November 12, 1999, which should be November 12, 1991 per
the RTC Decision.
6. Supra note 2, at 39.
6. n Rollo, p. 15.
7. G.R. No. 149679, May 30, 2003, 403 SCRA 291, 297; citations omitted.

8. No. L-26083, May 31, 1977, 77 SCRA 196, 201.

9. IV A. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES 669 (1995).
10. Id. at 670.
11. Id. at 675.
12. G.R. No. 159810, October 9, 2006, 504 SCRA 67, 81.
13. No. L-22587, April 28, 1969, 27 SCRA 1179, 1183; citations omitted.

14. No. L-37504, December 18, 1974, 61 SCRA 369, 388; citation omitted.
15. G.R. No. 136021, February 22, 2000, 326 SCRA 244, 254.
n Note from the Publisher: Copied verbatim from the o cial copy; Duplication of Footnote No.
6.

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