GR L 36850; (September, 1982) (Digest)
G.R. No. L-36850 September 23, 1982
ROSARIO PEREZ, ET AL., plaintiffs-appellants, vs. PILAR ONG CHUA, ET AL., defendant-appellees.
FACTS
On April 13, 1928, spouses Francisco Arcillas and Rosario Perez mortgaged 23 parcels of land to Nanon L. Worcester. Upon default, Worcester filed a foreclosure action in 1930. During its pendency, Francisco Arcillas died. No notice of his death was filed, and the court proceeded without substituting his heirs. Judgment was rendered for Worcester, the properties were sold at auction to her, and titles were issued in her name on November 24, 1930. Two days later, Worcester sold the lands to Enrique Ong Chua, who obtained new titles. Upon Enrique’s death, the properties passed to his heirs, the appellees, who possessed them openly and adversely.
Thirty-eight years later, on October 14, 1968, Rosario Perez and her children (the Arcillas heirs) filed an action for annulment of title and reconveyance against the Ong Chuas. They alleged fraud and mistake in the foreclosure and subsequent transfers, creating an implied trust in their favor. The trial court dismissed the complaint on grounds of prescription and laches.
ISSUE
Whether the appellants’ action for reconveyance based on an implied trust is barred by prescription and laches.
RULING
Yes, the action is barred. The Court affirmed the trial court’s dismissal. The cause of action accrued in 1930 upon the registration of the sheriff’s deed and issuance of new titles. The appellants filed suit only in 1968, far beyond the 10-year prescriptive period under the then-governing Code of Civil Procedure.
The appellants argued that the 1930 judgment was void for lack of substitution and that prescription does not run against a registered owner. The Court rejected this, clarifying that an action to enforce an implied or constructive trust prescribes in 10 years and can also be barred by laches, distinct from an express trust. The four elements of laches are present: (1) the appellees’ predecessors derived title from the 1930 sale; (2) the appellants unreasonably delayed for 38 years despite knowledge of the sale and adverse possession; (3) the appellees had no notice the appellants would assert their right; and (4) the appellees would be prejudiced, having spent time, effort, and money on the land in the belief of rightful ownership. The appellants’ prolonged inaction converted their claim into a stale demand.