G.R. No. 72908 August 11, 1989
EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN SUTERIO, petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS, respondents.

FACTS

This case involves a dispute over a 28-hectare land originally owned by Perfecta Balane de Cordero. Upon Perfecta’s death in 1945, her only heirs, siblings Juana Balane de Suterio and Felipe Balane, executed an Extra-Judicial Settlement on May 20, 1946. In this instrument, they agreed to donate the land to their niece, respondent Salud Suterio (de Matias), in accordance with Perfecta’s antemortem wish. Salud accepted the donation, paid the outstanding bank obligation on the property as stipulated, and took possession. However, the deed was never registered. Subsequently, the land was included in judicial intestate proceedings for Perfecta’s estate and was adjudicated to Juana in a project of partition, to which Salud did not object. Juana later requested and was allowed by Salud to possess the land and enjoy its fruits until Juana’s death.
In 1956, Juana executed a deed of absolute sale over the same land in favor of her son, Claudio Suterio, Sr. (husband of petitioner Eufemia Pajarillo and father of the other petitioners). Claudio registered the property and obtained a Transfer Certificate of Title in his name in 1958. After the deaths of Claudio (1961) and Juana (1963), Salud and her husband filed a complaint in 1965 for reconveyance of the property. They alleged the 1956 sale to Claudio was fictitious and procured through fraud, and that Claudio held the title in trust for Salud as the true owner by virtue of the 1946 donation.

ISSUE

The core issue is whether the action for reconveyance filed by Salud Suterio is proper and not barred by laches or prescription, and whether the 1946 donation vested ownership in her despite the subsequent sale and registration.

RULING

The Supreme Court denied the petition and upheld the decision of the Intermediate Appellate Court ordering reconveyance. The legal logic centers on the nature of the title acquired by Claudio Suterio, Sr. The Court ruled that the 1946 Extra-Judicial Settlement constituted a valid donation, accepted by Salud, who also complied with its condition by paying the bank loan. This made Salud the true owner. Juana’s subsequent inclusion of the property in the judicial settlement and its adjudication to her did not nullify the prior perfected donation. When Juana later sold the land to Claudio, she no longer had title to convey. Claudio’s registration of the property, despite knowledge of the prior donation (as his wife witnessed the deed of acceptance), constituted fraud.
Thus, Claudio became a trustee of an implied or constructive trust for the benefit of the real owner, Salud. An action for reconveyance based on such a trust prescribes in ten years from the date of registration, which serves as constructive notice. Claudio registered the title in 1958, and Salud filed her complaint in 1965, well within the prescriptive period. The Court also found no laches, as Salud’s delay in asserting her right was justified by her mother’s lifetime usufruct and her subsequent discovery of the fraudulent sale. The Torrens title cannot be used to protect one who obtained it through fraud. Therefore, the petitioners, as Claudio’s successors-in-interest, are obligated to reconvey the property to Salud Suterio.