G.R. No. L-45645 June 28, 1983
FRANCISCO A. TONGOY, for himself and as Judicial Administrator of the Estate of the Late Luis D. Tongoy and Ma. Rosario Araneta Vda. de Tongoy, petitioners, vs. THE HONORABLE COURT OF APPEALS, MERCEDES T. SONORA, JUAN T. SONORA, JESUS T. SONORA, TRINIDAD T. SONORA, RICARDO P. TONGOY, CRESENCIANO P. TONGOY, AMADO P. TONGOY, and NORBERTO P. TONGOY, respondents.

FACTS

The case involves an action for reconveyance of two parcels of land in Bacolod City: Hacienda Pulo and the Cuaycong property. Hacienda Pulo was originally co-owned by five siblings, children of Juan Aniceto Tongoy. To prevent its foreclosure by the Philippine National Bank (PNB) due to an unpaid mortgage, several co-owners executed “Escrituras de Venta” in 1934 and 1935, transferring their rights and interests to their brother, Luis D. Tongoy. Consequently, the title was consolidated in Luis’s name. In 1936, Luis also acquired the adjacent Cuaycong property. He then mortgaged both properties to the PNB to secure new loans. Luis fully paid these obligations in 1956, and the mortgage was formally released in 1958.
The respondents, who are descendants of the original co-owners Francisco Tongoy and Jovita Tongoy, filed the complaint in 1966. They alleged that the transfers to Luis were not actual sales but part of a trust agreement designed to save the properties from foreclosure, with the understanding that he would later reconvey their shares. The petitioners, Luis’s heirs, argued that the action was barred by prescription and laches, contending that the respondents should have asserted their claims decades earlier.

ISSUE

The primary issue is whether the action for reconveyance based on an implied trust is barred by prescription or laches.

RULING

The Supreme Court ruled that the action was not barred. The legal logic centers on the nature of implied trusts and the commencement of the prescriptive period. An implied trust arises by operation of law, and the prescriptive period for an action to enforce it is ten years. This period does not run from the date of the fraudulent registration or the execution of the documents of transfer. Instead, it commences from the date the trust is repudiated by the trustee.
The Court found that Luis D. Tongoy, as trustee, did not make a clear and unequivocal repudiation of the trust during his lifetime. His act of obtaining new mortgages and paying off the loans was consistent with the fiduciary purpose of preserving the properties for the benefit of all co-owners’ heirs. A decisive act of repudiation occurred only when his successor, petitioner Francisco A. Tongoy, refused the respondents’ demand for reconveyance after Luis’s death in 1966. Alternatively, the Court noted that prescription could be counted from May 5, 1958, the date of the recording of the release of mortgage, which signified the termination of the peril of foreclosure and allowed the beneficiaries to rightfully demand reconveyance. Counting ten years from either event, the 1966 filing was timely. The defense of laches also failed because the respondents’ delay was justified, as they relied on Luis’s fiduciary role and only acted upon his heir’s refusal to comply.