1

[ GR No. 182177, Mar 30, 2011 ]

RICHARD JUAN v. GABRIEL YAP +

DECISION

662 Phil. 321

CARPIO, J.:
The Case

This resolves the petition for review[1] of the ruling[2] of the Court of Appeals finding
petitioner Richard Juan as trustee of an implied trust over a mortgage contract in favor
of respondent Gabriel Yap, Sr.

The Facts

On 31 July 1995, the spouses Maximo and Dulcisima Cañeda (Cañeda spouses)
mortgaged to petitioner Richard Juan (petitioner), employee and nephew of
respondent Gabriel Yap, Sr. (respondent), two parcels of land in Talisay, Cebu to secure
a loan of P1.68 million, payable within one year. The Contract was prepared and
notarized by Atty. Antonio Solon (Solon).

On 30 June 1998, petitioner, represented by Solon, sought the extrajudicial foreclosure

of the mortgage. Although petitioner and respondent participated in the auction sale,
the properties were sold to petitioner for tendering the highest bid of P2.2 million.[3] No
certificate of sale was issued to petitioner, however, for his failure to pay the sale's
commission.[4]

On 15 February 1999, respondent and the Cañeda spouses executed a memorandum of

agreement (MOA) where (1) the Cañeda spouses acknowledged respondent as their
"real mortgagee-creditor x x x while Richard Juan [petitioner] is merely a trustee"[5] of
respondent; (2) respondent agreed to allow the Cañeda spouses to redeem the
foreclosed properties for P1.2 million; and (3) the Cañeda spouses and respondent
agreed to initiate judicial action "either to annul or reform the [Contract] or to compel
Richard Juan to reconvey the mortgagee's rights"[6] to respondent as trustor. Three
days later, the Cañeda spouses and respondent sued petitioner in the Regional Trial
Court of Cebu City (trial court) to declare respondent as trustee of petitioner vis a
vis the Contract, annul petitioner's bid for the foreclosed properties, declare the
Contract "superseded or novated" by the MOA, and require petitioner to pay damages,
attorney's fees and the costs. The Cañeda spouses consigned with the trial court the
amount of P1.68 million as redemption payment.

In his Answer, petitioner insisted on his rights over the mortgaged properties.
Petitioner also counterclaimed for damages and attorney's fees and the turn-over of the
owner's copy of the titles for the mortgaged properties.
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The Ruling of the Trial Court

The trial court ruled against respondent and his co-plaintiffs and granted reliefs to
petitioner by declaring petitioner the "true and real" mortgagee, ordering respondent to
pay moral damages and attorney's fees, and requiring respondent to deliver the titles in
question to petitioner.[7] The trial court, however, granted the Cañeda spouses' prayer
to redeem the property and accordingly ordered the release of the redemption payment
to petitioner. In arriving at its ruling, the trial court gave primacy to the terms of the
Contract, rejecting respondent's theory in light of his failure to assert beneficial interest
over the mortgaged properties for nearly four years.

Respondent appealed to the Court of Appeals (CA), imputing error in the trial court's
refusal to recognize a resulting trust between him and petitioner and in granting
monetary reliefs to petitioner.

Ruling of the Court of Appeals

The CA granted the petition, set aside the trial court's ruling, declared respondent the
Contract's mortgagee, directed the trial court to release the redemption payment to
respondent, and ordered petitioner to pay damages and attorney's fees.[8] The CA found
the following circumstances crucial in its concurrence with respondent's theory,
notwithstanding the terms of the Contract: (1) Solon testified that he drew up the
Contract naming petitioner as mortgagee upon instructions of respondent; (2)
Dulcisima Cañeda acknowledged respondent as the creditor from whom she and her
husband obtained the loan the Contract secured; and (3) respondent shouldered the
payment of the foreclosure expenses.[9] Instead, however, of annulling the Contract, the
CA held that reformation was the proper remedy, with the MOA "serv[ing] as the
correction done by the parties to reveal their true intent."[10]

In this petition, petitioner prays for the reversal of the CA's ruling. Petitioner relies on
the terms of the Contract, and argues that respondent's proof of a resulting trust
created in his favor is weak. Petitioner also assails the award of damages to respondent
for lack of basis.

On the other hand, respondent questions the propriety of this petition for raising only
factual questions, incompatible with the office of a petition for review on certiorari.
Alternatively, respondent argues that the pieces of parol evidence the CA used to
anchor its ruling are more than sufficient to prove the existence of an implied trust
between him and petitioner.

The Issues

The petition raises the following questions:

1. Whether an implied trust arose between petitioner and respondent, binding

petitioner to hold the beneficial title over the mortgaged properties in trust for
respondent; and
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2. Whether respondent is entitled to collect damages.

The Ruling of the Court

We hold in the affirmative on both questions, and thus affirm the CA.

Conflicting Rulings Below Justify

Rule 45 Review

The question of the existence of an implied trust is factual,[11] hence, ordinarily outside
the purview of a Rule 45 review of purely legal questions.[12] Nevertheless, our review is
justified by the need to make a definitive finding on this factual issue in light of the
conflicting rulings rendered by the courts below.[13]

Implied Trust in Mortgage Contracts

An implied trust arising from mortgage contracts is not among the trust relationships
the Civil Code enumerates.[14] The Code itself provides, however, that such listing "does
not exclude others established by the general law on trust x x x."[15] Under the general
principles on trust, equity converts the holder of property right as trustee for the
benefit of another if the circumstances of its acquisition makes the holder ineligible "in
x x x good conscience [to] hold and enjoy [it]."[16] As implied trusts are remedies
against unjust enrichment, the "only problem of great importance in the field of
constructive trusts is whether in the numerous and varying factual situations presented
x x x there is a wrongful holding of property and hence, a threatened unjust enrichment
of the defendant."[17]

Applying these principles, this Court recognized unconventional implied trusts in

contracts involving the purchase of housing units by officers of tenants' associations in
breach of their obligations,[18] the partitioning of realty contrary to the terms of a
compromise agreement,[19] and the execution of a sales contract indicating a buyer
distinct from the provider of the purchase money.[20] In all these cases, the formal
holders of title were deemed trustees obliged to transfer title to the beneficiaries in
whose favor the trusts were deemed created. We see no reason to bar the recognition of
the same obligation in a mortgage contract meeting the standards for the creation of an
implied trust.

Parol Evidence Favor Respondent

The resolution of this appeal hinges on the appreciation of two conflicting sets of proofs
- petitioner's (based on the mortgage contract) or respondent's (based on parol
evidence varying the terms of the mortgage contract, allowed under the Civil Code[21]).
After a review of the records, we find no reason to reverse the ruling of the CA finding
respondent's case convincing.

In the first place, the Cañeda spouses acknowledged respondent as the lender from
whom they borrowed the funds secured by the Contract. They did so in the MOA[22] and
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Dulcisima Cañeda reiterated the concession on the stand.[23] True enough, when the
Cañeda spouses sought an extension of time within which to settle their loan, they
directed their request not to petitioner but to respondent who granted the
extension.[24] Petitioner, therefore, was a stranger to the loan agreement, the principal
obligation the Contract merely secured.

Secondly, Solon, the notary public who drew up and notarized the Contract, testified
that he placed petitioner's name in the Contract as the mortgagor upon the instruction
of respondent.[25] Respondent himself explained that he found this arrangement
convenient because at the time of the Contract's execution, he was mostly abroad and
could not personally attend to his businesses in the country.[26] Respondent disclosed
that while away, he trusted petitioner, his nephew by affinity and paid employee, to
"take care of everything."[27] This arrangement mirrors that in Tigno v. Court of
Appeals[28] where the notary public who drew up a sales contract testified that he
placed the name of another person in the deed of sale as the vendee upon instructions
of the actual buyer, the source of the purchase money, who had to go abroad to attend
to pressing concerns. In settling the competing claims between the nominal buyer and
the financier in Tigno, we gave credence to the parol evidence of the latter and found
the former liable to hold the purchased property in trust of the actual buyer under an
implied trust. No reason has been proffered why we should arrive at a different
conclusion here.

Lastly, it was respondent, not petitioner, who shouldered the payment of the
foreclosure expenses.[29] Petitioner's failure to explain this oddity, coupled with the fact
that no certificate of sale was issued to him (despite tendering the highest bid) for his
non-payment of the commission, undercuts his posturing as the real mortgagor.

Clearly then, petitioner holds title over the mortgaged properties only because
respondent allowed him to do so. The demands of equity and justice mandate the
creation of an implied trust between the two, barring petitioner from asserting
proprietary claims antagonistic to his duties to hold the mortgaged properties in trust
for respondent. To arrive at a contrary ruling is to tolerate unjust enrichment, the very
evil the fiction of implied trust was devised to remedy.

Award of Damages Proper

Nor do we find reversible error in the CA's award of moral and exemplary damages to
respondent. Respondent substantiated his claim for the former[30] and the interest of
deterring breaches of trusts justifies the latter.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23

November 2007 and Resolution dated 6 March 2008 of the Court of Appeals.

SO ORDERED.

Nachura, Peralta, Abad, and Mendoza, JJ., concur.

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[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

Decision dated 23 November 2007 and Resolution dated 6 March 2008 per by
[2]

Associate Justice Isaias P. Dicdican with Associate Justices Stephen C. Cruz and
Franchito N. Diamante, concurring.

[3]While the mortgage contract (Exhibit "A," records p. 7) mentioned only two parcels
of land, the notice of extrajudicial foreclosure sale (Exhibit "15," folder of exhibits)
listed three parcels of land for foreclosure. None of the parties has raised this matter as
an issue below or here.

[4] TSN (Arthur Cabigon), 23 April 2004, p. 21.

[5] Records, p. 10.

[6] Id. at 11.

[7] The dispositive portion of the ruling provides (Rollo, p. 93):

WHEREFORE, foregoing premises considered, judgment is hereby rendered by:

1. Declaring defendant as the true and real mortgagee of the parcels of land as covered
by the Deed of Real Estate Mortgage, Exhibit "A";

2. The plaintiff Gabriel Yap, Sr. having violated articles 19, 20 and 21 of the New Civil
Code of the Philippines is ordered to pay to defendant Richard Juan in concept of
Moral Damages the amount of Php 100,000.00;

3. The plaintiff Gabriel Yap, Sr. is ordered to pay Attorney's Fees in the amount of
Php50,000.00 and litigation expenses in the amount of Php25,000.00;

4. The plaintiff Gabriel Yap, Sr. is ordered to return to defendant Richard Juan TCT No.
1600; TCT No. 83727 and TCT No. 80639;

5. The plaintiffs Maximo Cañeda and Dulcisima Cañeda or their heirs and successors in
interest is allowed to redeem their mortgaged properties;

6. The money deposited with the Clerk of Court in the sum of Php1,680,000.00
Philippine Currency including the interest thereon be released to defendant Richard
Juan, as redemption price.

[8] The dispositive portion of the ruling provides (id. at 77):

WHEREFORE, in view of the foregoing premises, the decision of the RTC, Branch 19,
in Cebu City in Civil Case No. CEB-23375 is hereby REVERSED and SET ASIDE.
Accordingly, a new judgment is hereby rendered as follows:
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1. Declaring the plaintiff-appellant as the true mortgagee of the parcels of land covered
by the Deed of Real Estate Mortgage dated July 31, 1995;

2. Allowing the plaintiffs-appellees mortgagors to redeem their mortgaged properties;

3. Directing the Clerk of Court of the RTC to release the sum of P1,680,000.00,
including the interest thereon, to the plaintiff-appellant as redemption price; and

4. Ordering defendant-appellee Richard Juan to pay the plaintiff-appellant the sum of

P50,000.00 as moral damages; P35,000.00 as exemplary damages and P20,000.00 as
attorney's fees and litigation expenses.
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PERLAS-BERNABE, J.:
Assailed in these consolidated[1] petitions for review on certiorari[2] are the
Decision[3] dated December 19, 2013 and the Resolution[4] dated April 1, 2014 rendered
by the Court of Appeals (CA) in CA-G.R. CV No. 96697, which modified the
Decision[5] dated June 8, 2009 of the Regional Trial Court of Quezon City, Branch 224
(RTC) in Civil Case No. Q-97-32515, and thereby ordered: (a) the nullification of the
Deed of Sale dated January 23, 1997 in favor of Wilson Go (Wilson) and Peter Go
(Peter), petitioners in G.R. No. 211972; (b) the reconveyance ofthe disputed property to
the Estate of Felisa Tamio; and (c) the cancellation of Transfer Certificate of Title (TCT)
No. N-170475, as well as the issuance of a new title in the name of the Estate ofFelisa
Tamio by the Register of Deeds.
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The Facts

On March 17, 1959, the late Felisa Tamio de Buenaventura (Felisa) purchased from
Carmen Zaragosa, Inc. a parcel of land with an area of 533 square meters, more or less,
situated at Retiro corner Kanlaon Streets, Sta. Mesa Heights, Quezon City (subject
property) and, thus, TCT No. 45951/T-233 was issued in her name. Thereafter, she
constructed a three-storey building thereon, called D'Lourds Building, where she
resided until her death on February 19, 1994.[6]

On February 10, 1960, Felisa supposedly sold the subject property to one of her
daughters, Bella Guerrero (Bella), the latter's husband, Delfin Guerrero, Sr. (Delfin,
Sr.), and Felimon Buenaventura, Sr. (Felimon, Sr.), Felisa's common-law
husband.[7] Bella, co-petitioner in G.R. No. 212045, and Delfin, Sr. paid P15,000.00 as
consideration therefor.[8] Thus, TCT No. 45951/T-233 in the name of Felisa was
cancelled and TCT No. 49869[9] was issued in the names of Felimon, Sr. and Bella,
married to Delfin, Sr..

Sometime in 1968, Resurrecion A. Bihis[10] (Resurrecion), the other daughter ofFelisa,

sister of Bella, and respondent in both G.R. Nos. 211972 and 212045, began to occupy
the second floor of the D'Lourds Building and stayed therein until her death in 2007.[11]

As it appears that TCT No. 49869 in the names of Felimon, Sr. and Bella, married to
Delfin, Sr., was irretrievably destroyed in the interim, Bella caused its reconstitution
and was issued TCT No. RT-74910 (49869),[12] again registered in their names.

When Felisa died on February 19, 1994, she allegedly bequeathed, in a disputed last
will and testament, half of the subject property to Resurrecion and her daughters, Rhea
A. Bihis (Rhea) and Regina A. Bihis (Regina), co respondents in both G.R. Nos. 211972
and 212045 (collectively, the Bihis Family). Thus, on April 19, 1994, the Bihis Family
caused the annotation of an adverse claim on TCT No. RT-74910 (49869). Felisa's
purported will likewise declared Bella as the administrator of the subject property.[13]

On the strength of such appointment, Bella filed, on May 24, 1994, a petition for the
probate of Felisa's will. She was eventually appointed as the administratrix of the
Estate of Felisa and, in an inventory of Felisa's properties, Bella included the subject
property as part of said estate.[14]

On January 22, 1997, the adverse claim of the Bihis Family was cancelled. The
following day, January 23, 1997, Felimon Buenaventura, Jr. (Felimon, Jr.) and Teresita
Robles, a.k.a. Rosalina Buenaventura Mariano[15] (Teresita), apparently the heirs of
Felimon, Sr. (Heirs of Felimon, Sr.), executed a purported Extrajudicial Settlement of
the Estate of Felimon Buenaventura, Sr., and caused its annotation on TCT No. RT-
74910 (49869). By virtue thereof, TCT No. RT-74910 (49869) was cancelled and TCT
No. N-170416 was issued in the names of the Heirs of Felimon, Sr., Bella, and her co-
petitioners in G.R. No. 212045, Delfin A. Guerrero, Jr. (Delfin, Jr.) and Lester Alvin A.
Guerrero (Lester) (collectively, Bella, et al.).[16]

On the very same day, January 23, 1997, through a Deed of Sale of even date, the
subject property was sold to Wilson and Peter by Bella, et al. for the amount of
P4,500,000.00, a transaction completely unknown to Felisa's other heirs, the Bihis
9

Family. Thus, TCT No. N-170416 was cancelled and, in lieu thereof, TCT No. 170475
was issued in the names of Wilson and Peter. Thereafter, Wilson and Peter filed
ejectment cases against the occupants and/or lessees of the subject property.[17]

In July 1997, the probate court revoked the appointment of Bella as administratrix of
the Estate of Felisa and eventually, granted letters of administration to
Resurrecion.[18] Hence, on October 17, 1997, herein respondents, the Estate of Felisa, as
represented by the Bihis Family, and the Bihis Family, in their personal capacities
(collectively, respondents), filed a complaint for reconveyance and damages before the
RTC, docketed as Civil Case No. Q-97-32515, against Bella, et al., Wilson, Peter, and the
Register of Deeds of Quezon City, alleging that Felisa, during her lifetime, merely
entrusted the subject property to Felimon, Sr., Bella, and Delfin, Sr. for the purpose of
assisting Bella and Delfin, Sr. to obtain a loan and mortgage from the Government
Service Insurance System (GSIS). To facilitate the transaction, Felisa agreed to have the
title over the subject property transferred to Bella and Felimon, Sr. However, Felisa
never divested herself of her ownership over the subject property, as evidenced by her
continuous residence thereon, as well as her act of leasing several units to various
tenants. In fact, in a letter[19] dated September 21, 1970 (September 21, 1970 letter)
addressed to Delfin, Sr., Felisa reminded Bella, Delfin, Sr., and Felimon, Sr. that the
subject property was merely entrusted to them for Bella and Delfin, Sr. to procure a
loan from the GSIS.[20] At the bottom of the letter, Bella's and Delfin, Sr.'s signatures
appear beside their names.[21]

Likewise, respondents alleged that Wilson and Peter were buyers in bad faith, as they
were aware of the facts and circumstances that would have warranted further inquiry
into the validity of the title of the sellers, Bella, et al. They averred that Wilson and
Peter knew that the building was occupied by individuals other than the sellers, as in
fact, the Bihis Family was residing therein.[22]

In their defense, Bella and Felimon, Jr. claimed that the subject property was owned by
Bella and (the late) Felimon, Sr., as evidenced by TCT No. RT-74910 (49869), which
title was issued to them as early as February 10, 1960. Such title has therefore subsisted
for almost thirty seven (37) years without having been voided or nullified by a court
decree. Moreover, they have exercised acts of ownership over the subject property, such
as moiigaging the same and leasing the building to third parties. Finally, they asserted
that Bella's act of including the subject property in the inventory of properties of the
Estate of Felisa was merely because of inadvertence.[23]

For his part, Wilson claimed that when he and his brother, Peter, purchased the subject
property from Bella, et al. on January 23, 1997, he was not aware of the judicial
settlement of the Estate of Felisa. He testified that before they acquired the subject
property, hverified the validity of the title covering the same with the Registry of Deeds,
and that a period of two (2) months had lapsed before the sale was consummated
because his lawyer advised him to. request Bella to cancel the encumbrance annotated
on the title over the subject property. However, he asserted that his lawyer merely
advised him to ask for the cancellation of the annotation but he was not aware of the
details surrounding the same. Eventually, the annotation was cancelled and that he
only knew that the subject property was included in the Estate of Felisa when herein
respondents' complaint before the RTC was filed. As such, he maintained that he and
Peter were purchasers in good faith.[24]
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The RTC Ruling

In a Decision[25] dated June 8, 2009, the RTC found that there was an implied trust
between Felisa, on the one hand, and Bella and Felimon, Sr., on the other, created by
operation of law. The RTC concluded that it was the intention of the late Felisa to
merely entrust to Bella and Felimon, Sr. the subject property for the sole purpose of
using the same as collateral to secure a loan with the GSIS. As such, while it is true that
a title was issued in the names of Bella, Delfin, Sr., and Felimon, Sr. by virtue of the
sale of the subject property to them, it was clear that Felisa never intended to
relinquish her ownership over the subject property. In concluding so, the RTC gave
probative weight to the September 21, 1970 letter executed and signed by Felisa which
not only reminded Bella, Delfin, Sr., and Felimon, Sr. that the subject property was
merely entrusted to them for purposes of securing a loan from the GSIS, but also
expressed Felisa's desire to have the subject property divided equally among her
heirs.[26]

However, the RTC held that reconveyance can no longer be effected since the subject
property had already been transferred to Wilson and Peter, whom it found to be
purchasers in good faith. The RTC found that through Wilson's testimony, they were
able to disprove respondents' allegation that they were aware of an infirmity in the title
of the sellers when they acquired the subject property.[27]

Consequently, as Bella, Delfin, Sr., and Felimon, Sr. were unjustly enriched at the
expense of the respondents who, as compulsory heirs, were also entitled to their share
in the subject property, the RTC directed Bella, et al. to pay plaintiffs, jointly and
severally, the amounts of: (a) P2,000,000.00 as compensatory damages, representing
half of the purchase price of the subject property considering that reconveyance can no
longer be granted; (b) P200,000.00 as moral damages; (c) P100,000.00 as exemplary
damages; and (d) P200,000.00 as attorney's fees.[28]

Dissatisfied, the following parties filed their separate appeals before the CA: the Estate
of Felisa; the Bihis Family; the Estate of Rosalinda B. Mariano;[29] and Bella, Delfin, Jr.,
and Lester.[30] The CA simplified the issues

raised in the separate appeals, as follows: (a) whether or not there was a trust
established by Felisa in favor of Bella, Delfin, Sr., and Felimon, Sr.; (b) whether or not
the action for reconveyance had already prescribed; and (c) whether or not Wilson and
Peter are purchasers in good faith.[31]

The CA Ruling

In a Decision[32] dated December 19, 2013, the CA modified the RTC Decision, and
thereby ordered: (a) the nullification of the Deed of Sale dated January 23, 1997 in
favor of Wilson and Peter; (b) the reconveyance of the disputed property to the Estate
of Felisa; and (c) the cancellation of TCT No. N-170475 in the name of Wilson and
Peter, as well as the issuance of a new title in the name of the Estate of Felisa by the
Register of Deeds.[33]

In its ruling, the CA upheld the RTC's finding that an implied trust was constituted
between Felisa, during her lifetime, and Bella, Delfin, Sr., and Felimon, Sr. when the
former sold the subject property to the latter. Like the RTC, it gave substantial weight
11

and credence to the September 21, 1970 letter executed by Felisa which expressed her
intention to convey the subject property to Bella, Delfin, Sr., and Felimon, Sr. only for
the purpose of obtaining a loan from the GSIS. The CA similarly found that Felisa had
not intended to relinquish her ownership over the subject property in their favor, as
evidenced not only by the said letter but also by her contemporaneous and subsequent
acts of ownership, i.e., leasing the building to tenants, instituting ejectment suits,
having business permits issued in her name, and including the subject property in her
last will and testament.[34]

Moreover, the CA ruled that the issuance of TCT No. 49869 in the names of Bella,
Delfin, Sr., and Felimon, Sr. did not operate to vest ownership of the subject property
upon them, as a cetiificate of title is not equivalent to title. Hence, the presentation of
TCT No. 49869 does not conclusively prove their claim of ownership over the subject
property.[35]

With respect to the issue of whether or not the action for reconveyance based on an
implied trust had already prescribed, the CA found that prescription has not set in.
Citing jurisprudence, it held that an action for reconveyance based on an implied trust
prescribes in ten (10) years, to be counted from the date of issuance of the Torrens title
over the property. However, the rule applies only when the claimant or the person
enforcing the trust is not in possession of the property. When the claimant is in actual
possession of the property, the action for reconveyance, which is effectively an action
for quieting of title, is imprescriptible. In this case, it has been indubitably established
that the Bihis Family have been in actual possession of the subject property; hence,
their action for reconveyance is imprescriptible.[36]

Finally, with regard to the question of whether or not Wilson and Peter are purchasers
in good faith, the CA ruled in the negative. It took into consideration the admission
made by Wilson that he has knowledge of the adverse claim of the Bihis Family
annotated on the title of the subject property but denied knowledge of its contents.
Likewise, he admitted that he directed his lawyer to have the said annotation cancelled
before purchasing the subject property. Records also show that he knew that the Bihis
Family have been occupying the second floor of the D'Lourds Building. However,
despite knowledge of the foregoing facts, he and his brother failed to make the
necessary inquiries as to the validity of the title of the sellers, Bella, et al. Consequently,
he and Peter cannot be considered as buyers in good faith.[37]

Wilson and Peter, Bella, Delfin, Jr., and Lester, Felimon, Jr., and the Estate of
Rosalinda Buenaventura Mariano filed separate motions for reconsideration,[38] which
were all denied in the Resolution[39] dated April 1, 2014; hence, these petitions.

The Issues Before the Court

The issues advanced for the Court's consideration are: (a) whether or not the CA erred
in ruling that there was an implied trust created between Felisa, on one hand, and
Bella, Delfin, Sr., and Felimon, Sr., on the other; (b) whether or not the action for
reconveyance had not yet prescribed; and (c) whether or not Wilson and Peter are
purchasers in good faith.

The Court's Ruling

12

The petitions are bereft of merit.

The following facts are undisputed: in 1960, Felisa, as owner of the subject property,
transferred the same to her daughter Bella, married to Delfin, Sr., and Felimon, Sr. to
assist them in procuring a loan from the GSIS. In view thereof, her title over the
property, TCT No. 45951/T-233, was cancelled and a new one, TCT No. 49869, was
issued in the names of Bella, married to Delfin, Sr., and Felimon, Sr. After it was lost,
TCT No. 49869 was reconstituted and TCT No. RT-74910 (49869) was issued in their
names.

Upon Felisa's death in 1994, the Bihis Family, Felisa's other heirs who have long been
occupying the subject property, caused the annotation of their adverse claim over the
same on TCT No. RT-74910 (49869). Subsequently, however, or on January 22, 1997,
the said annotation was cancelled, and the next day, the Heirs of Felimon, Sr. executed
an Extrajudicial Settlement of his estate and caused its annotation on said title. TCT
No. RT-74910 (49869) was then cancelled and TCT No. N-170416 was issued in the
names of Bella, et al. Finally, by virtue of a Deed of Sale dated January 23, 1997, the
subject property was sold to Wilson and Peter, in whose names TCT No. 170475
currently exists. Months later, or on October 17, 1997,[40] the complaint for
reconveyance and damages, docketed as Civil Case No. Q-97-32515, was instituted.

From the foregoing factual milieu, the Court holds that: one, a trust was established
between Felisa, on the one hand, and Bella, Delfin, Sr., and Felimon, Sr., on the other,
albeit not an implied trust as concluded by the RTC and the CA but an express
one; two, the present action for reconveyance has not yet prescribed; and, three,
Wilson and Peter are not purchasers in good faith.

I.

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. 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, while an implied trust comes into being by operation of law.[41]

Express trusts are created by direct and positive acts of the parties, by some writing or
deed, or will, or by words either expressly or impliedly evincing an intention to create a
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." It is
possible to create a trust without using the word "trust" or "trustee." Conversely, the
mere fact that these words are used does not necessarily indicate an intention to create
a trust. The question in each case is whether the trustor manifested an
intention to create the kind of relationship which to lawyers is known as
trust. It is immaterial whether or not he knows that the relationship which he intends
to create is called a trust, and whether or not he knows the precise characteristics of the
relationship which is called a trust.[42]

Further, in the case of Tamayo v. Callejo,[43] the Court recognized that a trust may have
a constructive or implied nature in the beginning, but the registered owner's
subsequent express acknowledgement in a public document of a previous sale of the
13

property to another party effectively converted the same into an express trust.[44]

In the present case, both the RTC and the CA found that an implied trust was
established, heavily giving credence, among others, to the September 21, 1970 letter
executed by Felisa during her lifetime, which partly reads:

Dear Delfin,

Ipinaaabot ko sa iyo ang sulat kong ito upang malaman mo ang aking nagiging
damdamin. Hinihiling ko sa iyo at ipinakikiusap sa iyo tungkol doon sa late at
building ng D'lourds.

Hindi naman kaila sa iyo kung papaano ko ito naisalin sa inyong

pangalan nina Filemon C. Buenaventura Sr., Bella Alvarez Guerrero at
Delfin Guerrero Sr. Ang daltilan nito ay dahil sa pag-utang sa GSIS.

Kaya gusto kong malaman mo na ito ay nagpapatotoo na ito ay sarili kong pag-aari
at walang sinumang nagbigay o tumulong sa akin sa lupang ito. At maski si Ka
Feling mo ay walang naibigay na pera dito.

Kaya hinihiling ko ang gusto kong mangyari sa ngayon ay maging kaparehong-

kapareho ang paghahati ng bawat isa sa anumang aking kabuhayan.

Kaya hinihiling ko sa iyo Delfin na kung maaari lamang ay ang lahat ng nakatala
dito ay pirmahan ninyo.

x x x x[45] (Emphasis and underscoring supplied)

Beneath the letter appear the signatures of Bella and Delfin, and the signature of Felisa
signing as "MOMMY" as well.[46]

Taking the contents of the foregoing letter into consideration - the validity and due
execution of which were never put in issue, hence, indubitably established - the Court
therefore differs from the finding of the courts a quo that an implied trust was
established; instead, the Court rules that an express trust was duly proved in this case.

The words of Felisa in the above-quoted letter unequivocally and absolutely declared
her intention of transferring the title over the subject property to Bella, Delfin, Sr., and
Felimon, Sr. in order to merely accommodate them in securing a loan from the GSIS.
She likewise stated clearly that she was retaining her ownership over the subject
property and articulated her wish to have her heirs share equally therein. Hence, while
in the beginning, an implied trust was merely created between Felisa, as trustor, and
Bella, Delfin, Sr., and Felimon, Sr., as both trustees and beneficiaries, the execution of
the September 21, 1970 letter settled, once and for all, the nature of the trust
established between them as an express one, their true intention irrefutably extant
thereon.

Bella's attempt to thwart the express trust established in this case by claiming that she
affixed her signature on the September 21, 1970 letter only "to appease" her mother,
Felisa, and that she could afford to sign the letter since the title covering the subject
property was in their name as owners anyway,[47] does not hold water. As correctly
ruled by the CA, citing Lee Tek Sheng v. CA,[48] the "[m]ere issuance of the certificate of
title in the name of any person does not foreclose the possibility that the real property
14

may be under co-ownership with persons not named in the ce1iificate or that the
registrant may only be a trustee or that other parties may have acquired interest
subsequent to the issuance of the certificate of title,"[49] as in this case.[50] Registration
does not vest title; it is merely the evidence of such title.[51]

Moreover, the Court notes that even during the proceedings before the RTC, Bella
never denied the purpose for which the sale to them of the subject property was
effected. Instead, they relied heavily and anchored their defense on the existence of
their certificate of title covering the subject property, which, to reiterate, was
insufficient to prove their ownership over the same independent of the express trust.

In light of the foregoing, while the Court agrees with the RTC, as affirmed by the CA,
that Bella, Delfin, Sr., and Felimon, Sr. only hold the subject property in trust for
Felisa, the Court however finds that an express trust, not an implied one, was
established in this case.

II.

Anent the issue of prescription, the Court finds that the action for reconveyance
instituted by respondents has not yet prescribed, following the jurisprudential rule
that express trusts prescribe in ten (10) years from the time the trust is
repudiated.[52]

In this case, there was a repudiation of the express trust when Bella, as the remaining
trustee, sold the subject property to Wilson and Peter on January 23, 1997.[53] As the
complaint for reconveyance and damages was filed by respondents on October 17,
1997,[54] or only a few months after the sale of the subject property to Wilson and Peter,
it cannot be said that the same has prescribed.

III.

Finally, with regard to the question of whether or not Wilson and Peter are purchasers
of the subject property in good faith, the Court concurs with the CA's finding that they
are not.

A purchaser in good faith is one who buys the property of another without
notice that some other person has a right to, or an interest in, such
property and pays a full and fair price for the same at the time of such
purchase, or before he has notice of some other person's claim or interest
in the property.[55] Corollory thereto, when a piece of land is in the actual possession
of persons other than the seller, the buyer must be wary and should investigate the
rights of those in possession. Without making such inquiry, one cannot claim that he is
a buyer in good faith. When a man proposes to buy or deal with realty, his duty is to
read the public manuscript, that is, to look and see who is there upon it and what his
rights are. A want of caution and diligence, which an honest man of ordinary prudence
is accustomed to exercise in making purchases, is in contemplation of law, a want of
good faith. The buyer who has failed to know or discover that the land sold
to him is in adverse possession of another is a buyer in bad faith.[56]

In his testimony[57] before the RTC, Wilson claimed to have verified the validity of the
15

title covering the subject property before the Registry of Deeds. However, he also
admitted that two (2) months had lapsed before the sale could be consummated
because his lawyer advised him to request Bella, one of the sellers, to cancel the
encumbrance annotated on the title of the subject property. He also claimed that he
had no knowledge about the details of such annotation, and that he was aware that
individuals other than the sellers were in possession of the subject property.

As aptly concluded by the CA, such knowledge of the existence of an annotation on the
title covering the subject property and of the occupation thereof by individuals other
than the sellers negates any presumption of good faith on the part of Wilson and Peter
when they purchased the subject property. A person who deliberately ignores a
significant fact which would create suspicion in an otherwise reasonable man is not an
innocent purchaser for va1ue,[58] as in this case.

WHEREFORE, the petitions are DENIED. The Decision dated December 19, 2013
and the Resolution dated April 1, 2014 of the Court of Appeals in CA-G.R. CV No.
96697 are hereby AFFIRMED.

SO ORDERED.

SECURITIES v. REYNALDO M. LAIGO, GR No. 188639, 2015-09-02

Facts:
petition for certiorari[1] under Rule 65 of the Rules of Court,... (SEC) to prescribe rules and regulations
governing the pre-need industry.
New Rules on the Registration and Sale of Pre-Need Plans (New Rules)
Rule 1.9 of the New Rules, " 'Trust Fund' means a fund set up from planholders' payments, separate and
distinct from the paid-up capital of a registered pre-need company, established with a trustee under a trust
agreement approved by the SEC, to pay for the... benefits as provided in the pre-need plan."
Legacy, being a pre-need provider, complied with the trust fund requirement and entered into a trust
agreement with the Land Bank of the Philippines (IBP).
mid-2000, the industry collapsed for a range of reasons.
Legacy being the subject of a petition for involuntary insolvency... filed... by private respondents in their
capacity as planholders.
Legacy did not object to the proceedings.
declared insolvent by the RTC... trial court also ordered Legacy to submit an inventory of its assets and
liabilities
RTC ordered the SEC, being the pre-need industry's regulator, to submit the documents pertaining to
Legacy's assets and liabilities.
SEC opposed the inclusion of the trust fund in the inventory of corporate assets on the ground that to do
so would contravene the New Rules which treated trust funds as principally established for the exclusive...
purpose of guaranteeing the delivery of benefits due to the planholders.
It was of the position that the inclusion of the trust fund in the insolvent's estate and its being opened to
claims by non-planholders would contravene the purpose for its establishment.
Judge Laigo viewed the trust fund as Legacy's corporate assets and, for said reason, included it in the...
insolvent's estate.
SEC filed "this present recourse directly to this Honorable Court in accordance with Section 5 (1), Article
VIII of the 1987 Constitution for the reason... that the matters involve an issue of transcendental
importance
16

SEC contends... that the trust fund should redound exclusively to the benefit of the planholders, who are
the ultimate beneficial owners;... the trust fund is held, managed and administered by the trustee bank to
address and answer the claims against the pre-need company by all its planholders and/or beneficiaries...
in issuing the order, Judge Laigo effectively allowed non-planholders to reach the trust fund in patent
violation of the New Rules established to protect the pre-need investors.
SEC stressed that the setting-up of the trust funds effectively created a demarcation line between the
claims of planholders vis-a-vis those of the other creditors of Legacy;
SEC is of the position that Section 52 of the Pre-Need Code[10] should be given retroactive effect for
being procedural in character.
the private respondents... submit that nothing in the New Rules expressly provided that the trust fund is
excluded from the inventory of... corporate assets which is required to be submitted to the insolvency
court... under the provisions of the Insolvency Law, all claims, including those against the trust funds...
should be filed in the liquidation proceedings.
the Assignee contends that the trust fund forms part of Legacy's corporate assets... insolvency court has
jurisdiction over all the claims... against the insolvent... cited Abrera v. College Assurance Plan,... Court
held that claims arising from pre-need contracts should not be treated separately from other claims...
against a pre-need company.
no law authorized the SEC to interfere in the insolvency proceedings because its authority under the SRC
is only to regulate the sale of pre-need plans and not to regulate the management of trust funds.
Issues:
Whether or not the Trust Funds of Legacy form part of its Corporate Assets.
Whether or not respondent Trial Court Judge committed grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing the herein assailed Order dated June 26,... Whether or not the claims of
planholders are to be treated differently from the claims of other creditors of Legacy.
Whether or not Legacy retains ownership over the trust funds assets despite the execution of trust
agreements.
Whether or not the insolvency court, presided by respondent Trial Court Judge, has the authority to enjoin
petitioner SEC from further validating the claims of Legacy's planholders and treating them as if they are
ordinary creditors of Legacy.
Whether or not the provision of the Pre-need Code regarding liquidation is in the nature of a procedural
law that can be retroactively applied to the case at bar
Ruling:
The overarching consideration in the legislative mandate to establish trust funds is the protection of the
interest of the planholders in the investment plans.
It is in this context that this Court rules to grant the petition filed by the SEC.
Principles:
The Trust Fund is for the sole benefit... of the planholders and cannot be used to... satisfy the claims of
other creditors of Legacy... the Pre-Need Code clearly provides that the proceeds of trust funds shall
redound solely to the planholders.
SECTION 30. Trust Fund. — To ensure the delivery of the guaranteed benefits and services provided
under a pre-need plan contract, a trust fund per pre-need plan category shall be established. A portion of
the installment payment collected shall be deposited by the... pre-need company in the trust fund, the
amount of which will be as determined by the actuary based on the viability study of the pre-need plan
approved by the Commission. Assets in the trust fund shall at all times remain for the sole benefit of the
planholders. At... no time shall any part of the trust fund be used for or diverted to any purpose other than
for the exclusive benefit of the planholders. In no case shall the trust fund assets be used to satisfy claims
of other creditors of the pre-need company. The provision of... any law to the contrary notwithstanding, in
case of insolvency of the pre-need company, the general creditors shall not be entitled to the trust fund.
Legacy's claimed interest in the enforcement of the trust and in the trust properties is mere apparent than
real. Legacy is not a... beneficiary.
17

a person is considered as a beneficiary of a trust if there is a manifest intention to give such a person the
beneficial interest over the trust properties.
Here, the terms of the trust agreement plainly confer the status of beneficiary to the planholders, not to
Legacy.
This categorical declaration doubtless indicates that the intention of the trustor is to make the planholders
the beneficiaries of the trust properties, and not Legacy.
Second, considering the fact that a mandated pre-need trust is one imbued with public interest, the issue
on who the beneficiary is must be determined on the basis of the entire regulatory framework. Under the
New Rules, it is unmistakable that the beneficial interest... over the trust properties is with the planholders.
Rule 16.3
[n]o withdrawal shall be made from the trust fund except for paying the benefits such as monetary
consideration, the cost of services rendered or property delivered, trust... fees, bank charges and
investment expenses in the operation of the trust fund, termination values payable to the planholders,
annuities, contributions of cancelled plans to the fund and taxes on trust funds.
Rule 17.1... to ensure the liquidity of the trust fund to guarantee the delivery of the benefits provided for
under the plan contract and to obtain sufficient capital growth to meet the growing actuarial reserve
liabilities, all investments of the trust fund shall... be limited to Fixed Income Instruments, Mutual Funds,
Equities, and Real Estate, subject to certain limitations.
trustee to exercise due diligence for the protection of the planholders guided by sound investment
principles in the exclusive management and control over the funds and its right, at any
18
19

Spouses Trinidad v. Imson, G.R. No.

197728, September 16, 2015
FACTS:

Petitioners filed with the Metropolitan Trial Court (MeTC) of Pasig City a Complaint for ejectment
against herein respondent. Petitioners alleged that: they are the owners of a condominium unit, which
is located at AIC Gold Tower, Emerald Avenue, Ortigas Center, Pasig City; they purchased the
condominum unit from three (3) Indian nationals who originally contracted to buy the said property
from the developer, AIC Realty Corporation (AIC), but had not fully paid for it yet; petitioners’
purchase was evidenced by a Deed of Assignment and Transfer of Rights and, later on, evidenced by
a Deed of Absolute in the name of petitioner Armando; at the time of petitioners’ purchase of the
subject condominium unit, the same was being leased by respondent from the original owners; the
period of lease was from April 1, 2002 to March 1, 2003; petitioners respected the contract of lease
between respondent and the original owners; however, since June 2002 up to the time of the filing of
the complaint for ejectment, respondent neither remitted nor consigned the monthly rentals due to
petitioners for her continued use of the condominium unit; the rental arrears amounted to a total of
P2,130,000.00; petitioners sent a letter of demand to respondent requiring that she, together with any
and all persons using the said unit with her approval, vacate the premises and pay her arrears;
respondent ignored petitioners’ demand letter; petitioners tried to settle the case amicably but no
agreement was reached.

In her Answer with Compulsory Counterclaims, respondent countered that: she, indeed, entered
into a contract of lease with the original owners of the disputed condominium unit which was to
commence on April 1, 2002 and would end on March 1, 2003; sometime in June 2002, she decided to
purchase the unit; however, since she was then undergoing proceedings to annul her previous
marriage and thinking that her purchase of the subject property would disrupt the property
arrangements already agreed upon, she thought it best not to have the condominium unit registered
yet in her name; instead, she requested Armando Trinidad, who was her confidante, to purchase the
unit and register it under his name with the understanding that the said property would actually be
owned by respondent; Armando agreed without objection, which led to the execution of the Deed of
Assignment and Transfer of Rights in his name; payments for the purchase price were made by
respondent through cash and checks paid to the original owners who acknowledged said payments;
aside from paying the purchase price, respondent also paid the real property taxes due on the
condominium unit as well as the association dues, water bills, common area real estate tax, building
insurance and other charges billed by the developer; having full trust in Armando, coupled with her
hectic schedule, respondent did not bother to transfer ownership of the subject unit in her name;
since April 2002 up to the time of filing her Answer, respondent has been in open and public
possession of the subject property; in 2007, while respondent was out of the country, Armando,
without respondent’s knowledge, annotated his claim on the condominium certificate of title; he also
executed a Deed of Absolute Sale in his favor on July 13, 2007; as a result, respondent was
surprised to receive a copy of petitioners’ demand letter and complaint.

The MeTC dismissed the complaint. The MeTC found that respondent is the true owner of the subject
property and that the true intention of the parties is for Armando to hold the condominium unit in
behalf of respondent until the property could be placed in the latter’s name. Petitioner filed an appeal
with RTC Pasig which reversed the decision of MeTC.

The RTC held that, by preponderance of evidence, the question of ownership is resolved in favor of
petitioners. The RTC held that the subject Deed of Assignment and Transfer of Rights and the Deed
of Absolute Sale in the name of Armando is superior to the evidence presented by respondent, which
merely consisted of bills of payments of association dues, utility bills, real estate tax on the common
areas and building insurance.
20

Respondent filed a petition for review with the CA. The CA promulgated its assailed Decision setting
aside the RTC judgment and ordering petitioners to return possession of the subject condominium
unit to respondent.

The CA ratiocinated that, based on the evidence adduced by the parties, respondent’s claim of
ownership deserves more credence. The CA ruled that records of payment of the purchase price of
the subject property, through respondent’s personal checks, acknowledgment of these payments by
the former owners by way of receipt and affidavit, and respondent’s exercise of acts of ownership
prove that she is the owner of the disputed condominium unit and, thus, is entitled to the possession
thereof.

Hence, this petition.

ISSUES: Whether or not:

1. The pieces of evidence shown by the Respondent suffice to provisionally declare her as owner
of the subject condomunium unit?

2. The evidence of the Respondent suffice to make an impression that it was the Respondent who
paid the consideration for the Deed of Assignment and Transfer of Rights?

3. Section 2 (b), Rule 131 of the Rules of Court is applicable

HELD:

The Court finds that the petition must fail as it finds no error in the findings of fact and conclusions of
law of the CA and the MeTC that respondent is, indeed, entitled to the possession of the subject
property.

1. YES. It is true that the subject Deed of Assignment and Transfer of Rights and Deed of
Absolute Sale are notarized. It is well settled that a document acknowledged before a notary public is
a public document that enjoys the presumption of regularity. It is a prima facie evidence of the truth of
the facts stated therein and a conclusive presumption of its existence and due execution.However,
the CA correctly held that the existence and due execution of these documents are not in issue.
Moreover, the presumption of truth of the facts stated in notarized documents is merely prima facie,
which means that this presumption can be overcome by clear and convincing evidence. Hence, the
truth of the facts stated in the disputed Deed of Assignment and Transfer of Rights as well as the
Deed of Absolute Sale may be rebutted by evidence.

In the present case, what is being asserted by respondent is that the above documents do not
embody the true intent and agreement of the parties. To this end, respondent submitted sufficient
proof to refute the contents of the aforementioned documents and to establish the real intent of the
parties, to wit: (1) nine [9] checks drawn from the personal account of respondent, variously dated
from October 11, 2002 to June 11, 2003, each of which amounts to P416,666.67 and paid to the
order of Amarnath Hinduja;22 (2) Acknowledgment Receipt recognizing the various payments made by
respondent to the former owners of the subject property;(3) Real Property Tax Receipts evidencing
respondent’s payment of the real estate taxes due on the property; (4) Certification issued by AIC
Golden Tower Condominium acknowledging respondent’s regular payment of association dues, water
bills, common area real estate tax, building insurance and other charges billed by AIC; (5) Affidavit
executed by the former owners acknowledging the supposed agreement of the parties that the
condominium unit shall be purchased in the name of Armando with the understanding that he will hold
it in behalf of respondent until the same could be placed in her name
21

2. Petitioners failed to offer any credible explanation why payments of the purchase price were
made by respondent by using her personal checks if she is not, in fact, the buyer of the property.
Neither was there any justification why respondent paid the real property taxes due on the property,
as well as the utility bills, association dues, common area real estate tax and building insurance. More
importantly, petitioners also fell short in advancing a plausible refutation why the former owners would
execute an affidavit indicating therein that the agreement among the parties is that the subject
property shall be purchased in the name of Armando with the understanding between the latter and
respondent that Armando would hold the property in respondent’s behalf until it will be placed in her
name, thus exposing themselves to possible perjury charges, if such agreement is not really true.

3. NO. Petitioners argue that under the Parole Evidence Rule, when the terms of an agreement have
been reduced to writing, it is considered as containing all the terms agreed upon and there can be, as
between the parties, no evidence of such terms other than the contents of the written
agreement.Based on this rule, petitioners contend that since the former owners, as well as
respondent, are all parties to the Deed of Assignment and Transfer of Rights, they are bound by the
said Deed and they cannot allege terms which are not found within the said agreement.

The Court is not convinced.

The fact that the Deed of Assignment and Transfer of Rights was put in writing and notarized does
not accord it the quality of incontrovertibility otherwise provided by the Parole Evidence Rule.The rule
on parole evidence is not, as it were, ironclad. Thus, the second paragraph of Section 9, Rule 130 of
the Rules of Court provides the exceptions, to wit:

Section 9. Evidence of written agreements. – x x x

However, a party may present evidence to modify, explain or add to the terms of written agreement if
he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;ChaRoblesViualalibray

(b) The failure of the written agreement to express the true intent and agreement of the parties
thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after the
execution of the written agreement.

The term “agreement” includes wills.As observed by the CA, respondent squarely put in issue in her
Answer that the Deed of Assignment and Transfer of Rights did not express the true intent of the
parties. Hence, the exception applies.

The Court is neither convinced by petitioners’ argument that when ley bought the subject property
from its former owners, they stepped into the shoes of the latter who were the lessors of respondent
and that, as lessee, respondent is barred from contesting the title of her lessor or her lessor’s
sjuccessor-in-interest, who are herein petitioners.

Article 1436 of the Civil Code provides that “[a] lessee or bailee is estopped from asserting title to
the thing leased or received, as against the lpssor or bailor.” In addition, the conclusive presumption
found in Section 2(b), Rule 131 of the Rules of Court known as estoppel against tenants provides
as follows:
22

Sec. 2. Conclusive presumptions. — The following are instances of conclusive presumptions:

xxxx

(b) The tenant is not permitted to deny the title of his landlord at the time of the commencement of the
relation of landlord and tenant between them.

It is clear from the above-quoted provision that what a tenant is stopped from denying is the
title of his landlord at the time of the commencement of the landlord-tenant relation. If the title
asserted is one that is alleged to have been acquired subsequent to the commencement of that
relation, the presumption will not apply. Hence, the tenant may show that the landlord’s title has
expired or been conveyed to another or himself; and he is not estopped to deny a claim for rent, if he
has been ousted or evicted by title paramount. In the present case, what respondent is claiming is her
title to the subject property which she acquired subsequent to the commencement of the landlord-
tenant relation between her and the former owners of the questioned condominium unit. Thus, the
presumption under Section 2 (b), Rule 131 of the Rules of Court does not apply and
respondent is not estopped from asserting title over the disputed property.

THIRD DIVISION

[ G.R. No. 197728, September 16, 2015 ]

SPOUSES ARMANDO AND LORNA TRINIDAD, PETITIONERS, VS. DONA* MARIE

GLENN IMSON, RESPONDENT.

DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking the reversal and setting aside of the Decision[1] and Resolution of the
Court of Appeals (CA), dated December 22, 2010 and June 23, 2011,[2] respectively, in
CA-G.R. SP No. 110357. The assailed CA Decision reversed and set aside the
Decision[3] dated June 19, 2009 of the Regional Trial Court (RTC) of Pasig City, Branch
155, while the questioned CA Resolution denied petitioners' Motion for
Reconsideration.

The factual and procedural antecedents of the case are as follows:

On August 17, 2007, herein petitioners filed with the Metropolitan Trial Court (MeTC)
of Pasig City a Complaint[4] for ejectment against herein respondent. In their Position
Paper,[5] petitioners alleged that: they are the owners of a condominium unit,
denominated as Unit 2203, which is located at AIC Gold Tower, Emerald Avenue,
Ortigas Center, Pasig City; they purchased the condominum unit from three (3) Indian
nationals who originally contracted to buy the said property from the developer, AIC
Realty Corporation (AIC), but had not fully paid for it yet; petitioners' purchase was
evidenced by a Deed of Assignment and Transfer of Rights[6] dated June 13, 2002 and,
later on, a Deed of Absolute Sale[7] dated July 13, 2007 in the name of petitioner
Armando; at the time of petitioners' purchase of the subject condominium unit, the
same was being leased by respondent from the original owners; the period of lease was
23

from April 1, 2002 to March 1, 2003; petitioners respected the contract of lease
between respondent and the original owners; however, since June 2002 up to the time
of the filing of the complaint for ejectment, respondent neither remitted nor consigned
the monthly rentals due to petitioners for her continued use of the condominium unit;
the rental arrears amounted to a total of P2,130,000.00; petitioners sent a letter of
demand to respondent requiring that she, together with any and all persons using the
said unit with her approval, vacate the premises and pay her arrears; respondent
ignored petitioners' demand letter; petitioners tried to settle the case amicably but no
agreement was reached.

In her Answer with Compulsory Counterclaims,[8] respondent countered that: she,

indeed, entered into a contract of lease with the original owners of the disputed
condominium unit which was to commence on April 1, 2002 and would end on March
1, 2003; sometime in June 2002, she decided to purchase the unit; however, since she
was then undergoing proceedings to annul her previous marriage and thinking that her
purchase of the subject property would disrupt the property arrangements already
agreed upon, she thought it best not to have the condominium unit registered yet in her
name; instead, she requested Armando Trinidad, who was her confidante, to purchase
the unit and register it under his name with the understanding that the said property
would actually be owned by respondent; Armando agreed without objection, which led
to the execution of the Deed of Assignment and Transfer of Rights in his name;
payments for the purchase price were made by respondent through cash and checks
paid to the original owners who acknowledged said payments; aside from paying the
purchase price, respondent also paid the real property taxes due on the condominium
unit as well as the association dues, water bills, common area real estate tax, building
insurance and other charges billed by the developer; having full trust in Armando,
coupled with her hectic schedule, respondent did not bother to transfer ownership of
the subject unit in her name; since April 2002 up to the time of filing her Answer,
respondent has been in open and public possession of the subject property; in 2007,
while respondent was out of the country, Armando, without respondent's knowledge,
annotated his claim on the condominium certificate of title; he also executed a Deed of
Absolute Sale in his favor on July 13, 2007; as a result, respondent was surprised to
receive a copy of petitioners' demand letter and complaint.

On August 8, 2008, the MeTC of Pasig City, Branch 70, rendered its
Decision[9] dismissing petitioners' complaint and ordering them to pay respondent the
amount of P250,000.00 as attorney's fees and cost of suit.

The MeTC found that respondent is the true owner of the subject property and that the
true intention of the parties is for Armando to hold the condominium unit in behalf of
respondent until the property could be placed in the latter's name.

Petitioners filed an appeal with the RTC of Pasig City.

On June 19, 2009, the RTC of Pasig City, Branch 155, rendered its Decision which
24

reversed the MeTC Decision. The dispositive portion of the RTC judgment reads, thus:

WHEREFORE, premises considered, the Decision dated August 8, 2008 rendered by

the Metropolitan Trial Court, Branch 70, Pasig City is hereby
ordered REVERSED and SET ASIDE and a new one ENTERED ordering the
defendant-appellee [herein respondent] and all persons claiming rights under her to
vacate Unit 2203, AIC Gold Tower, Emerald Avenue, Ortigas Center, Pasig City and to
pay rental arrearages from July 13, 2007, at the rate of P30,000.00 per month, until
such arrearages shall have been fully paid and the premises vacated and possession
thereof restored to plaintiffs-appellants.

SO ORDERED.[10]

The RTC held that, by preponderance of evidence, the question of ownership is

resolved in favor of petitioners. The RTC held that the subject Deed of Assignment and
Transfer of Rights and the Deed of Absolute Sale in the name of Armando is superior to
the evidence presented by respondent, which merely consisted of bills of payments of
association dues, utility bills, real estate tax on the common areas and building
insurance.

Aggrieved by the RTC Decision, respondent filed a petition for review with the CA.

On December 22, 2010, the CA promulgated its assailed Decision setting aside the RTC
judgment and ordering petitioners to return possession of the subject condominium
unit to respondent.

The CA ratiocinated that, based on the evidence adduced by the parties, respondent's
claim of ownership deserves more credence. The CA ruled that records of payment of
the purchase price of the subject property, through respondent's personal checks,
acknowledgment of these payments by the former owners by way of receipt and
affidavit, and respondent's exercise of acts of ownership prove that she is the owner of
the disputed condominium unit and, thus, is entitled to the possession thereof.

Petitioners filed a Motion for Reconsideration,[11] but the CA denied it in its Resolution
dated June 23, 2011.

Hence, the instant petition for review on certiorari, raising the following issues, to wit:

Do the pieces of evidence shown by the Respondent suffice to provisionally declare her
as owner of the subject condomunium unit?[12]

Does the evidence of the Respondent suffice to make an impression that it was the
Respondent who paid the consideration for the Deed of Assignment and Transfer of
Rights?[13]
25

[Was there] an implied trust?[14]

The petition should be denied.

At the outset, the Court notes that both parties anchor their right to possess the
disputed property on their supposed ownership of the same. Thus, the courts are left
with no recourse but to resolve the issue of ownership for the sole purpose of
determining as to who between the parties is entitled to possess the subject
condominium unit. However, as held by the CA, where the issue of ownership is
inseparably linked to that of possession, adjudication of the ownership issue is not final
and binding, but only for the purpose of resolving the issue of possession.[15] The
adjudication of the issue of ownership is only provisional, and not a bar to an action
between the same parties involving title to the property.[16]

The resolution of the issue of ownership, however, would entail going into factual
matters. Settled is the rule that questions of fact are not reviewable in petitions for
review on certiorari under Rule 45 of the Rules of Court.[17] Section 1 of Rule 45 states
that petitions for review on certiorari shall raise only questions of law which must be
distinctly set forth. Doubtless, in the instant case, the issue of whether respondent
possesses the subject property as owner, or whether she occupies the same as a lessee,
is a question of fact. Thus, as a rule, it is not reviewable.

Nonetheless, the Court has, at times, allowed exceptions from the abovementioned
restriction. Among the recognized exceptions are the following:

(a) When the findings are grounded entirely on speculation, surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee;

(g) When the CA's findings are contrary to those of the trial court;

(h) When the findings are conclusions without citation of specific evidence on which
they are based;

(i) When the facts set forth in the petition as well as in the petitioners main and reply
26

briefs are not disputed by the respondent;

(j) When the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and

(k) When the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion.[18]

In the present case, the findings of fact of the MeTC and the CA are in conflict with
those of the RTC. It thus behooves this Court to look into the factual findings of the
lower courts to determine the nature of respondent's possession of the disputed
property.

After a careful review of the records at hand, the Court finds that the petition must fail
as it finds no error in the findings of fact and conclusions of law of the CA and the
MeTC that respondent is, indeed, entitled to the possession of the subject property.

As earlier stated, petitioners relied heavily on the Deed of Assignment and Transfer of
Rights as well as the Deed of Absolute Sale, which were executed in Armando's favor, to
prove their ownership of the subject property. Having been notarized, they contend
that these documents outweigh all the pieces of evidence presented by respondent.

The Court is not persuaded.

It is true that the subject Deed of Assignment and Transfer of Rights and Deed of
Absolute Sale are notarized. It is well settled that a document acknowledged before a
notary public is a public document that enjoys the presumption of regularity.[19] It is
a prima facie evidence of the truth of the facts stated therein and a conclusive
presumption of its existence and due execution.[20] However, the CA correctly held that
the existence and due execution of these documents are not in issue. Moreover, the
presumption of truth of the facts stated in notarized documents is merely prima facie,
which means that this presumption can be overcome by clear and convincing
evidence.[21] Hence, the truth of the facts stated in the disputed Deed of Assignment
and Transfer of Rights as well as the Deed of Absolute Sale may be rebutted by
evidence.

In the present case, what is being asserted by respondent is that the above documents
do not embody the true intent and agreement of the parties. To this end, respondent
submitted sufficient proof to refute the contents of the aforementioned documents and
to establish the real intent of the parties, to wit: (1) nine [9] checks drawn from the
personal account of respondent, variously dated from October 11, 2002 to June 11,
2003, each of which amounts to P416,666.67 and paid to the order of Amarnath
Hinduja;[22] (2) Acknowledgment Receipt recognizing the various payments made by
respondent to the former owners of the subject property;[23] (3) Real Property Tax
Receipts evidencing respondent's payment of the real estate taxes due on the
property;[24] (4) Certification issued by AIC Golden Tower Condominium
27

acknowledging respondent's regular payment of association dues, water bills, common

area real estate tax, building insurance and other charges billed by AIC;[25] (5) Affidavit
executed by the former owners acknowledging the supposed agreement of the parties
that the condominium unit shall be purchased in the name of Armando with the
understanding that he will hold it in behalf of respondent until the same could be
placed in her name.[26]

The MeTC and the CA were one in holding that the foregoing pieces of evidence
submitted by respondent, coupled with the surrounding circumstances in this case, are
sufficient to overcome the prima facie presumption of the truth of the facts stated in
the questioned Deed of Assignment and Transfer of Rights and Deed of Absolute Sale.
The Court agrees.

Indeed, petitioners failed to offer any credible explanation why payments of the
purchase price were made by respondent by using her personal checks if she is not, in
fact, the buyer of the property. Neither was there any justification why respondent paid
the real property taxes due on the property, as well as the utility bills, association dues,
common area real estate tax and building insurance. More importantly, petitioners also
fell short in advancing a plausible refutation why the former owners would execute an
affidavit indicating therein that the agreement among the parties is that the subject
property shall be purchased in the name of Armando with the understanding between
the latter and respondent that Armando would hold the property in respondent's behalf
until it will be placed in her name, thus exposing themselves to possible perjury
charges, if such agreement is not really true.

In addition, if petitioners are the real owners of the subject condominium unit, why did
they wait until February 19, 2007,[27] or almost four (4) years after the supposed
expiration of respondent's lease contract, to demand that she vacate the disputed
premises and pay rentals. Moreover, as the MeTC has noted, it was only in 2007 that
Armando annotated his claim on the condominium certificate of title, executed the
subject Deed of Absolute Sale and requested certification of his ownership from the
developer.

Petitioners argue that under the Parole Evidence Rule, when the terms of an agreement
have been reduced to writing, it is considered as containing all the terms agreed upon
and there can be, as between the parties, no evidence of such terms other than the
contents of the written agreement.[28] Based on this rule, petitioners contend that since
the former owners, as well as respondent, are all parties to the Deed of Assignment and
Transfer of Rights, they are bound by the said Deed and they cannot allege terms which
are not found within the said agreement.

The Court is not convinced.

The fact that the Deed of Assignment and Transfer of Rights was put in writing and
notarized does not accord it the quality of incontrovertibility otherwise provided by the
28

Parole Evidence Rule.[29] The rule on parole evidence is not, as it were, ironclad. Thus,
the second paragraph of Section 9, Rule 130 of the Rules of Court provides the
exceptions, to wit:

Section 9. Evidence of written agreements. - x x x

However, a party may present evidence to modify, explain or add to the terms of
written agreement if he puts in issue in his pleading:

(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

(b) The failure of the written agreement to express the true intent and
agreement of the parties thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest
after the execution of the written agreement.

The term "agreement" includes wills.[30]

As observed by the CA, respondent squarely put in issue in her Answer[31] that the Deed
of Assignment and Transfer of Rights did not express the true intent of the parties.
Hence, the exception applies.

The Court is neither convinced by petitioners' argument that when ley bought the
subject property from its former owners, they stepped into the shoes of the latter who
were the lessors of respondent and that, as lessee, respondent is barred from contesting
the title of her lessor or her lessor's sjuccessor-in-interest, who are herein petitioners.

Article 1436 of the Civil Code provides that "[a] lessee or bailee is estopped from
asserting title to the thing leased or received, as against the lpssor or bailor." In
addition, the conclusive presumption found in Section 2(b), Rule 131 of the Rules of
Court known as estoppel against tenants provides as follows:

Sec. 2. Conclusive presumptions. — The following are instances of conclusive

presumptions:

xxxx

(b) The tenant is not permitted to deny the title of his landlord at the time of the
commencement of the relation of landlord and tenant between them.
29

It is clear from the above-quoted provision that what a tenant is stopped from denying
is the title of his landlord at the time of the commencement of the landlord-tenant
relation.[32] If the title asserted is one that is alleged to have been acquired subsequent
to the commencement of that relation, the presumption will not apply.[33] Hence, the
tenant may show that the landlord's title has expired or been conveyed to another or
himself; and he is not estopped to deny a claim for rent, if he has been ousted or evicted
by title paramount.[34] In the present case, what respondent is claiming is her title to
the subject property which she acquired subsequent to the commencement of the
landlord-tenant relation between her and the former owners of the questioned
condominium unit. Thus, the presumption under Section 2 (b), Rule 131 of the Rules of
Court does not apply and respondent is not estopped from asserting title over the
disputed property.

As to whether or not an implied trust was created in respondent's favor, the first
sentence of Article 1448 of the Civil Code provides that "[t]here is an implied trust
when property is sold and the legal estate is granted to one party but the price is paid
by another for the purpose of having the beneficial interest of the property." This is
sometimes referred to as a purchase money resulting trust, the elements of which are:
(a) an actual payment of money, property or services, or an equivalent, constituting
valuable consideration; and (b) such consideration must be furnished by the alleged
beneficiary of a resulting trust.[35] The principle of a resulting trust is based on the
equitable doctrine that valuable consideration, and not legal title, determines the
equitable title or interest and are presumed always to have been contemplated by the
parties.[36] They arise from the nature or circumstances of the consideration involved in
a transaction whereby one person thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the benefit of another.[37]

Intention - although only presumed, implied or supposed by law from the nature of the
transaction or from the facts and circumstances accompanying the transaction,
particularly the source of the consideration - is always an element of a resulting trust
and may be inferred from the acts or conduct of the parties rather than from direct
expression of conduct.[38] Certainly, intent as an indispensable element, is a matter that
necessarily lies in the evidence, that is, by evidence, even circumstantial, of statements
made by the parties at or before the time title passes.[39] Because an implied trust is
neither dependent upon an express agreement nor required to be evidenced by writing,
Article 1457 of our Civil Code authorizes the admission of parole evidence to prove their
existence.[40] Parole evidence that is required to establish the existence of an implied
trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or
Indefinite declarations.[41] In the instant petition, the Court finds no cogent reason to
depart from the findings of the MeTC and the CA that, under the circumstances of the
case, the parole evidence presented by respondent sufficiently proves that an implied
trust was created in her favor.

Finally, a trust, which derives its strength from the confidence one reposes on another,
does not lose that character simply because of what appears in a legal
30

document.[42] Applying this principle to the present case, petitioner Armando, as

trustee, cannot repudiate the trust by simply relying on the questioned Deed of
Assignment and Transfer of Rights and the Deed of Absolute Sale.

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the
Court of Appeals, dated December 22, 2010 and June 23, 2011, respectively, in CA-G.R.
SP No. 110357, are AFFIRMED.

SO ORDERED.