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AZNAR BROTHERS REALTY COMPANY vs.

AYING
G.R. No. 144773
May 16, 2005
FACTS:
Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her
favor over Lot No. 4399 located in Lapu-Lapu City.
Crisanta Maloloy-on died, so the Cadastral court issued a decision directing the
issuance of a decree of title in the name of her 8 children, namely: Juan, Celedonio,
Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying.
However, the certificate was lost during the war.
All the heirs of the Aying siblings executed an Extra-Judicial Partition of Real
Estate with Deed of Absolute Sale conveying the lot in issue to the Aznar Brothers
Realty Company. The deed was registered with the ROD of Lapu-Lapu City on March
6, 1994 under Act. No. 3344 (the law governing registration of unregistered land,
and since then, the realty company religiously paid the real property taxes on the
property.
Later, Aznar Brothers Realty Company filed a Petition for Reconstitution of
the Original Title since the original title of the lot was lost during the war.
This was granted by the court and the ROD of Lapu-Lapu was directed to issue a
reconstituted title in the name of the Aying Siblings. Thus, OCT No. RO-2856 was
issued.
The Aznar Brothers Realty Company then sent out notices, to vacate the lot, to
the persons occupying the property, reasoning that they were the rightful owner.
The occupants refused to vacate, hence an ejectment case was filed against them
before the MTC. The MTC ordered the occupants to vacate. Eventually, this case
reached the Supreme Court and a decision was rendered in favor of the realty
company declaring them as the rightful possessor of the land.
Meanwhile, persons claiming to be the descendants of the eight Aying siblings,
numbering around 220 persons submitted an amended complaint before the RTC
and alleged that they are co-owners of the land being the descendants of the
registered owners under OCT No. RO-2856; that they had been in actual, peaceful,
physical, open, adverse, continuous and uninterrupted possession in concept of
owner of subject parcel of land since time immemorial; and that the deed of
absolute sale executed in favor of the realty company by the alleged heirs
of Crisanta Maloloy-on is a fraud and is null and void ab initio because not
all the co-owners of subject property affixed their signature on said
document and some of the co-owners who supposedly signed said
document had been dead at the time of the execution thereof; that Aznar
Brothers Realty Company held the land in bad faith, knowing fully well that it did not
have any right to the land and used force, threat and intimidation against them thus
suffering moral damages.
Aznar Brothers Realty Company denied that the Ayings are the lawful owners of
the land and alleged it had been in actual possession of subject land as owner
thereof by virtue of the extra-judicial partition of real property and deed of absolute
sale executed in its favor; that in fact, it had been paying taxes thereon religiously.
The realty company further alleged that they are barred by prescription to file
an action for recovery of property which should be instituted within

4years from discovery of the fraud. It took the Aying heirs 27years to file their
action against the realty company.
ISSUE: Is the registration of the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale conveying the lot in issue to the Aznar Brothers Realty Company with
the ROD binding and consequently, results in the running of the prescriptive period
for reconveyance?
Held: No. The sale of registered property, recorded in the ROD, cannot be
considered as registered.
Rationale: Jurisprudence dictates that that registration of instruments must be
done in the proper registry, in order to affect and bind the land and, thus, operate
as constructive notice to the world. In this case, the Extrajudicial Partition of Real
Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under
Act No. 496, therefore the document cannot be deemed registered. As consequence
of non-registration, the 10year prescriptive period cannot be reckoned from the date
of registration of the document under Act. No. 3444 since no constructive notice to
the world was perfected by such registration. The prescriptive period only began to
run from the time the Aying heirs had actual notice of the Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale which was not proven by clear and
convincing evidence in this case.
Issue: Is the extra-judicial partition with deed of absolute sale null and void, as
claimed by the Aying Descendants, because not all the co-owners of subject
property affixed their signature on said document and some of the co-owners who
supposedly signed said document had been dead at the time of the execution
thereof?
Held: No. The extra-judicial partition with deed of absolute sale is VALID but only
between the heirs who participated in the execution thereof. Therefore, the heirs
who undisputedly did not participate therein, cannot be bound by said document.

Issue: Does the realty companys defense, that they acquired the entire parcel of
land with the mistaken belief that all the heirs have executed the document, entitle
them to ownership over the land by prescription?
Held: No, Aznar Brothers Realty Company cannot be entitled ownership over the
land based on mistaken belief.
Rationale: The law provides that if property is acquired through mistake or
fraud, the person obtaining it is considered a trustee of an implied trust
for the benefit of the person from whom the property comes. Based on this
rule, a trustee cannot acquire by prescription ownership over property entrusted to
him until and unless he repudiates the trust. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of said trust is not a condition precedent to
the running of the prescriptive period.
Notes:
1. Who has the burden of proving that prescription has begun to run?

-Aznar Brothers Realty Company has the burden of proving the running of
prescription because it was the realty company that set up the defense that of
prescription which was denied by the Aying heirs.
2. Does laches apply here?
-No laches will not apply here because the three heirs took action to protect their
interest well within the period prescribed by law.