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EN BANC

G.R. No. L-11156 February 23, 1961

PURA CARREON, ET AL., Plaintiffs-Appellants, vs. RUFO AGCAOILI and LOURDES SANTIAGO, defendants- appellees.

Domingo R. Maddumba for plaintiffs-appellants.
Meris, Moya, Revilla & Gaffud for defendant-appellee.
Nillo and Tiburcio for the other defendant-appellee.

BAUTISTA ANGELO, J.:chanrobles virtual law library

During the marriage of Bonifacio Carreon and Celerina Dauag the registered land subject of this case was acquired. After the death of Carreon, his widow Celerina executed on September 24, 1946, an affidavit adjudicating to herself alone the said land. She declared in said document that she was the only heiress of her husband. The original certificate of title covering the land was cancelled and a transfer certificate was issued in her name. There was however annotated on her certificate a lien to the effect that her title was subject to Section 4 of Rule 74 of the Rules of Court.chanroblesvirtualawlibrarychanrobles virtual law library

On September 25, 1946, she borrowed P1,200.00 from the Philippine National Bank guaranteed by a mortgage on one-half of the land. A memorandum of the mortgage was annotated on her transfer certificate. After the maturity of the loan, she requested a certain Mr. Pintang to look for a buyer of the land for P3,000.00. One by the name of Rufo Agcaoili was found. The latter made an advance payment of Pl,500.00 and the balance was paid in full on October 13, 1947. The loan from the bank was paid, the mortgage was released and the deed of absolute sale executed in his favor was registered.¹ A new transfer certificate of title was issued in the name of Agcaoili.chanroblesvirtualawlibrarychanrobles virtual law library

On February 19, 1955, the children of Celerina with the deceased husband filed a complaint against the spouses Agcaoili seeking to have the deed of sale executed by their mother declared as one of mortgage and to recover one half pro-indiviso of the land described in the complaint. Simultaneous with the filing of said complaint, Celerina filed an action for intervention which was dismissed by the trial court.chanroblesvirtualawlibrarychanrobles virtual law library

Defendants filed a motion for summary judgment upon the plea that the main averments of the complaint even if admitted do not constitute a cause of action and supported their plea with certain documentary evidence. Plaintiffs filed an opposition on the ground that there was a genuine issue which could not be determined unless a trial is had. The trial court, however, allowed the parties to submit evidence in support of their contentions and after a careful analysis thereof found for defendants holding that plaintiffs, claim has no legal basis.chanroblesvirtualawlibrarychanrobles virtual law library

As may be gleaned from the appellants' assignments of error, the present appeal is predicated on the arguments that appellees were buyers in bad faith; that there existed a trust relationship between them and appellants, and that such being the case, the action against appellees is imprescriptible.chanroblesvirtualawlibrarychanrobles virtual law library

There is no clear proof that when Rufo Agcaoili bought the land he knew of any flaw in the title of Celerina Dauag. The mere fact that he was a townmate of Celerina is not sufficient basis to conclude that he knew that she had children by her first husband. It has been shown that since 1920 Rufo Agcaoili has been an enlisted man in the Philippine constabulary and seldom come home to visit his relatives. A man of such a situation cannot be expected to know the relatives and children of his vendor even if they are townmates,. Fraud cannot be presumed. It must be established by clear and sufficient evidence. Here every indication is that Agcaoili bought the land in all good faith oblivious of the source of its acquisition.chanroblesvirtualawlibrarychanrobles virtual law library

If fraud had been committed such was perpetrated by Celerina, appellants' mother. By her action she induced Agcaoili to believe that she was the absolute owner of the land which bore a torrens title. In dealing with it he merely relied on such title. He was not required to do more. He is only charged with notice of the burdens which are noted on the face of said title. So, after he bought the land and a new title was issued in his name, he became a purchaser thereof for value and a holder of a good and valid title.²

On the transfer certificate of title issued to Agcaoili there was annotated a statement that it was subject to Section 4, Rule 74 of the Rules of Court. This was an annotation carried over from Celerina's transfer certificate. Section 4, Rule 74, provides the following:

SEC. 4. Liability of distributees and estate. - If it shall appear at any time within two years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two years after such distribution, notwithstanding any transfers of the real estate that may have been made.

The above lien is effective only for a period of two years. From September 28, 1946, when a transfer certificate of title was issued to Celerina, to September 8, 1949 when the deed of sale in favor of Agcaoili was issued and registered, more than two years had elapsed We sustain the lower court's opinion that thenceforth the right to have such lien cancelled became vested on appellee Agcaoili and that the same had become functus oficio.³ And there being no fraud in the transaction on the part of appellee, nor proof that he knew of any legal infirmity in the title of his vendor, we find no reason to apply the proposition that he is deemed to be holding the land in trust for the children of Celerina Dauag.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the decision appealed from is affirmed, without pronouncement as to costs.chanroblesvirtualawlibrarychanrobles virtual law library

Bengzon, Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.

Endnotes:

¹ It is also noted that the said sale was approved by the Secretary of Agriculture and Natural Resources, the land having been acquired as a homestead.chanroblesvirtualawlibrarychanrobles virtual law library

² Castillo v. Valdez, 53 Phil. 120; Seva and Seva v. Nolan and Arimas, 64 Phil. 374; Bacolod-Murcia Milling Co., Inc. v. Concepcion de la Rama de Villaruz, L-4526, September 29, 1951.chanroblesvirtualawlibrarychanrobles virtual law library

³ Laplana v. Garchitorena Chereau 48 Phil. 163.