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Ecsay v.

CA
61 SCRA 369
FACTS: Emilio Ecsay mortgaged his property now in question to the PNB. He was not able to pay his
loan before he died in 1924, thus the bank filed a foreclosure suit against the estate of the former.
Pending the said suit, on 1933 an original contract was entered between the bank, the administrator, and
Jose Ecsay, brother of Emilio where the latter assumed the mortgage indebtedness of his deceased
brother. This was agreed to by Magdalena widow of Emilio, in her own behalf and as guardian of their
children. When it was discovered that the original contract failed to state the transfer of ownership of the
properties in question, in consideration of Joses assumption of the mortgaged, a supplementary contract
was entered by the parties which was approved by the probate court taking cognizance of the estate of
the deceased Emilio in 1934.
In 1941, Magdalena and the other children filed a complaint against the petitioner and the administrator
for the recovery of the ownership and possession of the properties in question. Petitioners contend that
since the titles over the properties in question were transferred by fraudulent means, an implied trust was
created between the testate estate of Emilio and Jose Sr. under which, by operation of law, the latter
became a trustee of the properties in question in favor of the heirs of Emilio; consequently, the
respondents are duty bound to reconvey the properties in question to the petitioners whose right to
recover the properties does not prescribe.
ISSUE: Whether or not an implied trust was created during the reconveyance of property in question to
Jose Ecsay.
HELD : No. The court held that as the Court of Appeals held, no fraud was proved. The evidence is
clear that the original and supplementary contracts were the result of a series of negotiations by the
testate estate of Emilio Escay through its Judicial Administrator and legal representative; its creditor, the
Philippine National Bank; the heirs represented by their guardian ad litem, Magdalena Vda. de Escay; and
Jose Escay. Since there was no fraud, there was no trust relation that arose.
Assuming that there was fraud in the transfer of the properties, the lapse of time since the discovery of
the alleged fraud in 1941 has extinguished any right on the part of the petitioners to seek the
reconveyance of the properties. The prescriptibility of an action for reconveyance based on implied or
constructive trust, is now a settled question in this jurisdiction. It prescribes in ten years.

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