In an action for quieting of title, the plaintiffs must show not only that there is a cloud or contrary interest over the subject real property, but that they have a valid title to it. In the present case, the action must fail, because petitioners failed to show the requisite title.

Before us is a Petition for Review seeking to set aside the July 30, 1998 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 38580,1 [Seventeenth Division, composed of J. Portia Aliño-Hormachuelos (ponente), J. Buenaventura J. Guerrero (chairman) and J. Renato C. Dacudao (member).] which affirmed the judgment2 [Penned by Judge German G. Lee Jr.] of the Regional Trial Court (RTC) of Cebu City. The CA ruled:

The decretal portion of the trial court Decision reads as follows: Mis-edp

Likewise challenged is the October 14, 1998 CA Resolution which denied petitioners’ Motion for Reconsideration.5 [Rollo, p. 31.]

The present Petition is rooted in an action for quieting of title filed before the RTC by Benigna, Miguel, Marcelino, Corazon, Rufina, Bernardino, Natividad, Gliceria and Purita -- all surnamed Secuya -- against Gerarda M. vda. de Selma. Petitioners asserted ownership over the disputed parcel of land, alleging the following facts:

Respondent Selma’s version of the facts, on the other hand, was summarized by the appellate court as follows: Sc-jj

In affirming the trial court’s ruling, the appellate court debunked petitioners’ claim of ownership of the land and upheld Respondent Selma’s title thereto. It held that respondent’s title can be traced to a valid TCT. On the other hand, it ruled that petitioners anchor their claim on an "Agreement of Partition" which is void for being violative of the Public Land Act. The CA noted that the said law prohibited the alienation or encumbrance of land acquired under a free patent or homestead patent, for a period of five years from the issuance of the said patent. S-jcj

Hence, this Petition.8 [This case was deemed submitted for decision on July 29, 1999, upon simultaneous receipt by this Court of the Memoranda of both parties. Petitioners’ Memorandum was signed by Atty. Alejandro V. Peregrino; respondent’s Memorandum, by Atty. Roberto R. Palmares.]

In their Memorandum, petitioners urge the Court to resolve the following questions:

For a clearer understanding of the above matters, we will divide the issues into three: first, the implications of the Agreement of Partition; second, the validity of the Deed of Confirmation of Sale executed in favor of the petitioners; and third, the validity of private respondent’s title. Supr-eme

The Petition fails to show any reversible error in the assailed Decision.

In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or an equitable title to, or an interest in, the subject real property.10 [Art. 477, Civil Code. "The plaintiff must have legal or equitable title to, or an interest in the real property which is the subject matter of the action. He need not be in possession of said property."] Likewise, they must show that the deed, claim, encumbrance or proceeding that purportedly casts a cloud on their title is in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.11 [Tolentino, Civil Code of the Philippines, Vol. II, p. 150.] This point is clear from Article 476 of the Civil Code, which reads:

In the case at bar, petitioners allege that TCT No. 5679-C-120, issued in the name of Private Respondent Selma, is a cloud on their title as owners and possessors of the subject property, which is a 3,000--square-meter portion of Lot No. 5679-C-120 covered by the TCT. But the underlying question is, do petitioners have the requisite title that would enable them to avail themselves of the remedy of quieting of title?

Petitioners anchor their claim of ownership on two documents: the Agreement of Partition executed by Maxima Caballero and Paciencia Sabellona and the Deed of Confirmation of Sale executed by Ramon Sabellona. We will now examine these two documents.

The duly notarized Agreement of Partition dated January 5, 1938, is worded as follows: Jle-xj

Notwithstanding its purported nomenclature, this Agreement is not one of partition, because there was no property to partition and the parties were not co-owners. Rather, it is in the nature of a trust agreement. Juri-smis

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary.13 [Rizal Surety & Insurance Company v. CA, , 261 SCRA 69, August 28, 1996.] Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operation of law.14 [Art. 1441, Civil Code.]

The present Agreement of Partition involves an express trust. Under Article 1444 of the Civil Code, "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." That Maxima Caballero bound herself to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval of the former's application is clear from the terms of the Agreement. Likewise, it is evident that Paciencia acquiesced to the covenant and is thus bound to fulfill her obligation therein.

As a result of the Agreement, Maxima Caballero held the portion specified therein as belonging to Paciencia Sabellona when the application was eventually approved and a sale certificate was issued in her name.15 [Records, p. 6.] Thus, she should have transferred the same to the latter, but she never did so during her lifetime. Instead, her heirs sold the entire Lot No. 5679 to Silvestre Aro in 1955.

From 1954 when the sale certificate was issued until 1985 when petitioners filed their Complaint, Paciencia and her successors-in-interest did not do anything to enforce their proprietary rights over the disputed property or to consolidate their ownership over the same. In fact, they did not even register the said Agreement with the Registry of Property or pay the requisite land taxes. While petitioners had been doing nothing, the disputed property, as part of Lot No. 5679, had been the subject of several sales transactions16 [Lot No. 5679 was sold to Silvestre Aro in 1955, and TCT No. 4752 was issued in his name in 1959. Upon his death, his heirs inherited the property, and his children sold their shares to Cesaria Caballero, Aro’s widow. Cesaria Caballero then entered into several mortgage and sales transactions with several banks and with Francisco Sioson, Edgar Adlawan and Private Respondent Gerarda Selma.] and covered by several transfer certificates of title. Jj-juris

While no time limit is imposed for the enforcement of rights under express trusts,17 [Aquino, Civil Code , Vol. II, p. 557.] prescription may, however, bar a beneficiary's action for recovery, if a repudiation of the trust is proven by clear and convincing evidence and made known to the beneficiary.18 [See Mindanao Development Authority v. CA, 113 SCRA 429, April 5, 1982.]

There was a repudiation of the express trust when the heirs of Maxima Caballero failed to deliver or transfer the property to Paciencia Sabellona, and instead sold the same to a third person not privy to the Agreement. In the memorandum of incumbrances of TCT No. 308719 [Dated March 9, 1954.] issued in the name of Maxima, there was no notation of the Agreement between her and Paciencia. Equally important, the Agreement was not registered; thus, it could not bind third persons. Neither was there any allegation that Silvestre Aro, who purchased the property from Maxima’s heirs, knew of it. Consequently, the subsequent sales transactions involving the land in dispute and the titles covering it must be upheld, in the absence of proof that the said transactions were fraudulent and irregular. Jksm

Even granting that the express trust subsists, petitioners have not proven that they are the rightful successors-in-interest of Paciencia Sabellona.

Petitioners insist that Paciencia sold the disputed property to Dalmacio Secuya on October 20, 1953, and that the sale was embodied in a private document. However, such document, which would have been the best evidence of the transaction, was never presented in court, allegedly because it had been lost. While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be considered binding on third persons, if it is not embodied in a public instrument and recorded in the Registry of Property.20 [Article 709, Civil Code.]

Moreover, while petitioners could not present the purported deed evidencing the transaction between Paciencia Sabellona and Dalmacio Secuya, petitioners’ immediate predecessor-in-interest, private respondent in contrast has the necessary documents to support her claim to the disputed property.

To prove the alleged sale of the disputed property to Dalmacio, petitioners instead presented the testimony of Miguel Secuya, one of the petitioners; and a Deed21 [Records, p. 4.] confirming the sale executed by Ramon Sabellona, Paciencia’s alleged heir. The testimony of Miguel was a bare assertion that the sale had indeed taken place and that the document evidencing it had been destroyed. While the Deed executed by Ramon ratified the transaction, its probative value is doubtful. His status as heir of Paciencia was not affirmatively established. Moreover, he was not presented in court and was thus not quizzed on his knowledge -- or lack thereof -- of the 1953 transaction.

Petitioners insist that they had been occupying the disputed property for forty-seven years before they filed their Complaint for quieting of title. However, there is no proof that they had exercised their rights and duties as owners of the same. They argue that they had been gathering the fruits of such property; yet, it would seem that they had been remiss in their duty to pay land taxes. If petitioners really believed that they owned the property, they should have been more vigilant in protecting their rights thereto. As noted earlier, they did nothing to enforce whatever proprietary rights they had over the disputed parcel of land.

Petitioners debunk Private Respondent Selma’s title to the disputed property, alleging that she was aware of their possession of the disputed properties. Thus, they insist that she could not be regarded as a purchaser in good faith who is entitled to the protection of the Torrens system.

Indeed, a party who has actual knowledge of facts and circumstances that would move a reasonably cautious man to make an inquiry will not be protected by the Torrens system. In Sandoval v. Court of Appeals,22 [260 SCRA 283, August 1, 1996, per Romero, J.] we held:

Granting arguendo that private respondent knew that petitioners, through Superales and his family, were actually occupying the disputed lot, we must stress that the vendor, Cesaria Caballero, assured her that petitioners were just tenants on the said lot. Private respondent cannot be faulted for believing this representation, considering that petitioners' claim was not noted in the certificate of the title covering Lot No. 5679.

Moreover, the lot, including the disputed portion, had been the subject of several sales transactions. The title thereto had been transferred several times, without any protestation or complaint from the petitioners. In any case, private respondent's title is amply supported by clear evidence, while petitioners’ claim is barren of proof.

Clearly, petitioners do not have the requisite title to pursue an action for quieting of title.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.