G.R. No.

L-26699 March 16, 1976

BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO ALCURIZA,

ARTURO ALCURIZA, OSCAR ALCURIZA and ANITA ALCURIZA, the latter two being minors
are represented by guardian ad litem, ARTURO ALCURIZA, plaintiffs-appellants,
vs.
JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the Intestate of
JUAN S. SALAO; now MERCEDES P. VDA. DE SALAO, ROBERTO P. SALAO, MARIA SALAO
VDA. DE SANTOS, LUCIANA P. SALAO, ISABEL SALAO DE SANTOS, and PABLO P. SALAO,
as successors-in-interest of the late JUAN S. SALAO, together with PABLO P. SALAO,
Administrator, defendants-appellants.

Eusebio V. Navarro for plaintiffs-appellants.

Nicolas Belmonte & Benjamin T. de Peralta for defendants-appellants.

AQUINO, J.:

This litigation regarding a forty-seven-hectare fishpond located at Sitio Calunuran, Hermosa, Bataan
involves the law of trusts and prescription. The facts are as follows:

The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot four
children named Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel Salao died in 1885. His
eldest son, Patricio, died in 1886 survived by his only child. Valentin Salao.

There is no documentary evidence as to what, properties formed part of Manuel Salao's estate, if
any. His widow died on May 28, 1914. After her death, her estate was administered by her daughter
Ambrosia.

It was partitioned extrajudicially in a deed dated December 29, 1918 but notarized on May 22, 1919
(Exh. 21). The deed was signed by her four legal heirs, namely, her three children, Alejandra, Juan
and Ambrosia, and her grandson, Valentin Salao, in representation of his deceased father, Patricio.

The lands left by Valentina Ignacio, all located at Barrio Dampalit were as follows:

Nature of Land

Area in

square meters

(1) One-half interest in a fishpond which she had inherited from her parents, Feliciano Ignacio and
Damiana Mendoza, and the other half of which was owned by her co-owner, Josefa Sta. Ana . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700

(2) Fishpond inherited from her parents . . . . . . . . . . . . 7,418

(3) Fishpond inherited from her parents . . . . . . . . . . . . . 6,989

(4) Fishpond with a bodega for salt . . . . . . . . . . . . . . . . 50,469

(5) Fishpond with an area of one hectare, 12 ares and 5 centares purchased from Bernabe and
Honorata Ignacio by Valentina Ignacio on November 9, 1895 with a bodega for salt . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,205

(6) Fishpond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

(7) One-half interest in a fishpond with a total area of 10,424 square meters, the other half was
owned by A. Aguinaldo . . . . . . . . . . . . . . . . . . . . . . . 5,217

(8) Riceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,454

(9) Riceland purchased by Valentina Ignacio from Eduardo Salao on January 27, 1890 with a house
and two camarins thereon . . . . . . . . . . . . . . . . . . 8,065

(10) Riceland in the name of Ambrosia Salao, with an area of 11,678 square meters, of which 2,173
square meters were sold to Justa Yongco . . . . . . . . . .9,505

TOTAL . . . . . . . . . . . . .. 179,022 square

meters

To each of the legal heirs of Valentina Ignacio was adjudicated a distributive share valued at
P8,135.25. In satisfaction of his distributive share, Valentin Salao (who was then already forty-eight
years old) was given the biggest fishpond with an area of 50,469 square meters, a smaller fishpond
with an area of 6,989 square meters and the riceland with a net area of 9,905 square meters. Those
parcels of land had an aggregate appraised value of P13,501 which exceeded Valentin's distributive
share. So in the deed of partition he was directed to pay to his co-heirs the sum of P5,365.75. That
arrangement, which was obviously intended to avoid the fragmentation of the lands, was beneficial
to Valentin.

In that deed of partition (Exh. 21) it was noted that "desde la muerte de Valentina Ignacio y
Mendoza, ha venido administrando sus bienes la referida Ambrosia Salao" "cuya administracion lo
ha sido a satisfaccion de todos los herederos y por designacion los mismos". It was expressly
stipulated that Ambrosia Salao was not obligated to render any accounting of her administration "en
consideracion al resultado satisfactorio de sus gestiones, mejoradas los bienes y pagodas por ella
las contribusiones (pages 2 and 11, Exh. 21).

By virtue of the partition the heirs became "dueños absolutos de sus respectivas propiedadas, y
podran inmediatamente tomar posesion de sus bienes, en la forma como se han distribuido y
llevado a cabo las adjudicaciones" (page 20, Exh. 21).

The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio her two
children, Juan Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, OCT No. 185 of the
Registry of Deeds of Pampanga, in their names for a forty-seven-hectare fishpond located at Sitio
Calunuran, Lubao, Pampanga (Exh. 14). It is also known as Lot No. 540 of the Hermosa cadastre
because that part of Lubao later became a part of Bataan.

The Calunuran fishpond is the bone of contention in this case.

Plaintiffs' theory is that Juan Y. Salao, Sr. and his sister Ambrosia had engaged in the fishpond
business. Where they obtained the capital is not shown in any documentary evidence. Plaintiffs'
version is that Valentin Salao and Alejandra Salao were included in that joint venture, that the funds
used were the earnings of the properties supposedly inherited from Manuel Salao, and that those
earnings were used in the acquisition of the Calunuran fishpond. There is no documentary evidence
to support that theory.

On the other hand, the defendants contend that the Calunuran fishpond consisted of lands
purchased by Juan Y. Salao, Sr. and Ambrosia Salao in 1905, 1906, 1907 and 1908 as, shown in
their Exhibits 8, 9, 10 and 13. But this point is disputed by the plaintiffs.

However, there can be no controversy as to the fact that after Juan Y. Salao, Sr. and Ambrosia
Salao secured a Torrens title for the Calunuran fishpond in 1911 they exercised dominical rights
over it to the exclusion of their nephew, Valentin Salao.

Thus, on December 1, 1911 Ambrosia Salao sold under pacto de retro for P800 the Calunuran
fishpond to Vicente Villongco. The period of redemption was one year. In the deed of sale (Exh19)
Ambrosia confirmed that she and her brother Juan were the dueños proindivisos of the
said pesqueria. On December 7, 1911 Villongco, the vendee a retro, conveyed the same fishpond to
Ambrosia by way of lease for an anual canon of P128 (Exh. 19-a).

After the fishpond was redeemed from Villongco or on June 8, 1914 Ambrosia and Juan sold it
under pacto de retro to Eligio Naval for the sum of P3,360. The period of redemption was also one
year (Exh. 20). The fishpond was later redeemed and Naval reconveyed it to the vendors a retro in a
document dated October 5, 1916 (Exh. 20-a).

The 1930 survey shown in the computation sheets of the Bureau of Lands reveals that the
Calunuran fishpond has an area of 479,205 square meters and that it was claimed by Juan Salao
and Ambrosia Salao, while the Pinanganacan fishpond (subsequently acquired by Juan and
Ambrosia) has an area of 975,952 square meters (Exh. 22).

Likewise, there is no controversy as to the fact that on May 27, 1911 Ambrosia Salao bought for four
thousand pesos from the heirs of Engracio Santiago a parcel of swampland planted to bacawan and
nipa with an area of 96 hectares, 57 ares and 73 centares located at Sitio Lewa, Barrio
Pinanganacan, Lubao, Pampanga (Exh. 17-d).

The record of Civil Case No. 136, General Land Registration Office Record No. 12144, Court of First
Instance of Pampanga shows that Ambrosia Salao and Juan Salao filed an application for the
registration of that land in their names on January 15, 1916. They alleged in their petition that "han
adquirido dicho terreno por partes iguales y por la compra a los herederos del finado, Don Engracio
Santiago" (Exh. 17-a).

At the hearing on October 26, 1916 before Judge Percy M. Moir, Ambrosia testified for the
applicants. On that same day Judge Moir rendered a decision, stating, inter alia, that the heirs of
Engracio Santiago had sold the land to Ambrosia Salao and Juan Salao. Judge Moir "ordena la
adjudicacion y registro del terreno solicitado a nombre de Juan Salao, mayor de edad y de estado
casado y de su esposa Diega Santiago y Ambrosia Salao, de estado soltera y mayor de edad, en
participaciones iguales" (Exh. 17-e).

On November 28, 1916 Judge Moir ordered the issuance of a decree for the said land. The decree
was issued on February 21, 1917. On March 12, 1917 Original Certificate of Title No. 472 of the
Registry of Deeds of Pampanga was issued in the names of Juan Salao and Ambrosia Salao.
That Pinanganacan or Lewa fishpond later became Cadastral Lot No. 544 of the Hermosa cadastre
(Exh. 23). It adjoins the Calunuran fishpond (See sketch, Exh. 1).

Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years (Exh. C). His nephew,
Valentin Salao, died on February 9, 1933 at the age of sixty years according to the death certificate
(Exh. A. However, if according to Exhibit 21, he was forty-eight years old in 1918, he would be sixty-
three years old in 1933).

The intestate estate of Valentin Salao was partitioned extrajudicially on December 28, 1934 between
his two daughters, Benita Salao-Marcelo and Victorina Salao-Alcuriza (Exh. 32). His estate
consisted of the two fishponds which he had inherited in 1918 from his grandmother, Valentina
Ignacio.

If it were true that he had a one-third interest in the Calunuran and Lewa fishponds with a total area
of 145 hectares registered in 1911 and 1917 in the names of his aunt and uncle, Ambrosia Salao
and Juan Y. Salao, Sr., respectively, it is strange that no mention of such interest was made in the
extrajudicial partition of his estate in 1934.

It is relevant to mention that on April 8, 1940 Ambrosia Salao donated to her grandniece, plaintiff
Benita Salao, three lots located at Barrio Dampalit with a total area of 5,832 square meters (Exit. L).
As donee Benita Salao signed the deed of donation.

On that occasion she could have asked Ambrosia Salao to deliver to her and to the children of her
sister, Victorina, the Calunuran fishpond if it were true that it was held in trust by Ambrosia as the
share of Benita's father in the alleged joint venture.

But she did not make any such demand. It was only after Ambrosia Salao's death that she thought of
filing an action for the reconveyance of the Calunuran fishpond which was allegedly held in trust and
which had become the sole property of Juan Salao y Santiago (Juani).

On September 30, 1944 or during the Japanese occupation and about a year before Ambrosia
Salao's death on September 14, 1945 due to senility (she was allegedly eighty-five years old when
she died), she donated her one-half proindiviso share in the two fishponds in question to her
nephew, Juan S. Salao, Jr. (Juani) At that time she was living with Juani's family. He was already the
owner of the the other half of the said fishponds, having inherited it from his father, Juan Y. Salao,
Sr. (Banli) The deed of denotion included other pieces of real property owned by Ambrosia. She
reserved for herself the usufruct over the said properties during her lifetime (Exh. 2 or M).

The said deed of donation was registered only on April 5, 1950 (page 39, Defendants' Record on
Appeal).

The lawyer of Benita Salao and the Children of Victorina Salao in a letter dated January 26, 1951
informed Juan S. Salao, Jr. that his clients had a one-third share in the two fishponds and that when
Juani took possession thereof in 1945, he refused to give Benita and Victorina's children their one-
third share of the net fruits which allegedly amounted to P200,000 (Exh. K).

Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated that Valentin Salao did
not have any interest in the two fishponds and that the sole owners thereof his father Banli and his
aunt Ambrosia, as shown in the Torrens titles issued in 1911 and 1917, and that he Juani was the
donee of Ambrosia's one-half share (Exh. K-1).
Benita Salao and her nephews and niece filed their original complaint against Juan S. Salao, Jr. on
January 9, 1952 in the Court of First Instance of Bataan (Exh. 36). They amended their complaint on
January 28, 1955. They asked for the annulment of the donation to Juan S. Salao, Jr. and for the
reconveyance to them of the Calunuran fishpond as Valentin Salao's supposed one-third share in
the 145 hectares of fishpond registered in the names of Juan Y. Salao, Sr. and Ambrosia Salao.

Juan S. Salao, Jr. in his answer pleaded as a defense the indefeasibility of the Torrens title secured
by his father and aunt. He also invoked the Statute of Frauds, prescription and laches. As counter-
claims, he asked for moral damages amounting to P200,000, attorney's fees and litigation expenses
of not less than P22,000 and reimbursement of the premiums which he has been paying on his bond
for the lifting of the receivership Juan S. Salao, Jr. died in 1958 at the age of seventy-one. He was
substituted by his widow, Mercedes Pascual and his six children and by the administrator of his
estate.

In the intestate proceedings for the settlement of his estate the two fishponds in question were
adjudicated to his seven legal heirs in equal shares with the condition that the properties would
remain under administration during the pendency of this case (page 181, Defendants' Record on
Appeal).

After trial the trial court in its decision consisting of one hundred ten printed pages dismissed the
amended complaint and the counter-claim. In sixty-seven printed pages it made a laborious recital of
the testimonies of plaintiffs' fourteen witnesses, Gregorio Marcelo, Norberto Crisostomo, Leonardo
Mangali Fidel de la Cruz, Dionisio Manalili, Ambrosio Manalili, Policarpio Sapno, Elias Manies
Basilio Atienza, Benita Salao, Emilio Cagui Damaso de la Peña, Arturo Alcuriza and Francisco
Buensuceso, and the testimonies of defendants' six witnesses, Marcos Galicia, Juan Galicia,
Tiburcio Lingad, Doctor Wenceslao Pascual, Ciriaco Ramirez and Pablo P. Salao. (Plaintiffs
presented Regino Nicodemus as a fifteenth witness, a rebuttal witness).

The trial court found that there was no community of property among Juan Y. Salao, Sr., Ambrosia
Salao and Valentin Salao when the Calunuran and Pinanganacan (Lewa) lands were acquired; that
a co-ownership over the real properties of Valentina Ignacio existed among her heirr after her death
in 1914; that the co-ownership was administered by Ambrosia Salao and that it subsisted up to 1918
when her estate was partitioned among her three children and her grandson, Valentin Salao.

The trial court surmised that the co-ownership which existed from 1914 to 1918 misled the plaintiffs
and their witnesses and caused them to believe erroneously that there was a co-ownership in 1905
or thereabouts. The trial court speculated that if valentin had a hand in the conversion into fishponds
of the Calunuran and Lewa lands, he must have done so on a salary or profit- sharing basis. It
conjectured that Valentin's children and grandchildren were given by Ambrosia Salao a portion of the
earnings of the fishponds as a reward for his services or because of Ambrosia's affection for her
grandnieces.

The trial court rationalized that Valentin's omission during his lifetime to assail the Torrens titles of
Juan and Ambrosia signified that "he was not a co-owner" of the fishponds. It did not give credence
to the testimonies of plaintiffs' witnesses because their memories could not be trusted and because
no strong documentary evidence supported the declarations. Moreover, the parties involved in the
alleged trust were already dead.

It also held that the donation was validly executed and that even if it were void Juan S. Salao, Jr.,
the donee, would nevertheless be the sole legal heir of the donor, Ambrosia Salao, and would inherit
the properties donated to him.
Both parties appealed. The plaintiffs appealed because their action for reconveyance was
dismissed. The defendants appealed because their counterclaim for damages was dismissed.

The appeals, which deal with factual and legal issues, were made to the Court of Appeals. However,
as the amounts involved exceed two hundred thousand pesos, the Court of Appeals elevated the
case to this Court in its resolution of Octoter 3, 1966 (CA-G.R. No. 30014-R).

Plaintiffs' appeal. — An appellant's brief should contain "a subject index index of the matter in the
brief with a digest of the argument and page references" to the contents of the brief (Sec. 16 [a],
Rule 46, 1964 Rules of Court; Sec. 17, Rule 48, 1940 Rules of Court).

The plaintiffs in their appellants' brief consisting of 302 pages did not comply with that requirement.
Their statements of the case and the facts do not contain "page references to the record" as
required in section 16[c] and [d] of Rule 46, formerly section 17, Rule 48 of the 1940 Rules of Court.

Lawyers for appellants, when they prepare their briefs, would do well to read and re-read section 16
of Rule 46. If they comply strictly with the formal requirements prescribed in section 16, they might
make a competent and luminous presentation of their clients' case and lighten the burden of the
Court.

What Justice Fisher said in 1918 is still true now: "The pressure of work upon this Court is so great
that we cannot, in justice to other litigants, undertake to make an examination of the voluminous
transcript of the testimony (1,553 pages in this case, twenty-one witnesses having testified), unless
the attorneys who desire us to make such examination have themselves taken the trouble to read
the record and brief it in accordance with our rules" (Palara vs. Baguisi 38 Phil. 177, 181). As noted
in an old case, this Court decides hundreds of cases every year and in addition resolves in minute
orders an exceptionally considerable number of petitions, motions and interlocutory matters (Alzua
and Arnalot vs. Johnson, 21 Phil. 308, 395; See In re Almacen, L-27654, February 18, 1970, 31
SCRA 562, 573).

Plaintiffs' first assignment of error raised a procedural issue. In paragraphs 1 to 14 of their first cause
of action they made certain averments to establish their theory that Valentin Salao had a one-third
interest in the two fishponds which were registrered in the names of Juan Y. Salao, Sr. (Banli) and
Ambrosia Salao.

Juan S. Salao, Jr. (Juani) in his answer "specifically" denied each and all the allegations" in
paragraphs I to 10 and 12 of the first cause of action with the qualification that Original certificates of
Title Nos. 185 and 472 were issued "more than 37 years ago" in the names of Juan (Banli) and
Ambrosia under the circumstances set forth in Juan S. Salao, Jr.'s "positive defenses" and "not
under the circumstances stated in the in the amended complaint".

The plaintiffs contend that the answer of Juan S. Salao, Jr. was in effect tin admission of the
allegations in their first cause of action that there was a co-ownership among Ambrosia, Juan,
AIejandra and Valentin, all surnamed Salao, regarding the Dampalit property as early as 1904 or
1905; that the common funds were invested the acquisition of the two fishponds; that the 47-hectare
Calunuran fishpond was verbally adjudicated to Valentin Salao in the l919 partition and that there
was a verbal stipulation to to register "said lands in the name only of Juan Y. Salao".

That contention is unfounded. Under section 6, Rule 9 of the 1940 of Rules of Court the answer
should "contain either a specific dinial a statement of matters in accordance of the cause or causes
of action asserted in the complaint". Section 7 of the same rule requires the defendant to "deal
specificaly with each material allegation of fact the truth of wihich he does not admit and, whenever
practicable shall set forth the substance of the matters which he will rely upon to support his denial".
"Material averments in the complaint, other than those as to the amount damage, shall be deemed
admitted when specifically denied" (Sec. 8). "The defendant may set forth set forth by answer as
many affirmative defenses as he may have. All grounds of defenses as would raise issues of fact not
arising upon the preceding pleading must be specifically pleaded" (Sec. 9).

What defendant Juan S. Salao, Jr. did in his answer was to set forth in his "positive defenses" the
matters in avoidance of plaintiffs' first cause of action which which supported his denials of
paragraphs 4 to 10 and 12 of the first cause of action. Obviously, he did so because he found it
impracticable to state pierceneal his own version as to the acquisition of the two fishponds or to
make a tedious and repetitious recital of the ultimate facts contradicting allegations of the first cause
of action.

We hold that in doing so he substantially complied with Rule 9 of the 1940 Rules of Court. It may be
noted that under the present Rules of Court a "negative defense is the specific denial of t the
material fact or facts alleged in the complaint essential to plaintiff's cause of causes of action". On
the other hand, "an affirmative defense is an allegation of new matter which, while admitting the
material allegations of the complaint, expressly or impliedly, would nevertheless prevent or bar
recovery by the plaintiff." Affirmative defenses include all matters set up "by of confession and
avoidance". (Sec. 5, Rule 6, Rules of Court).

The case of El Hogar Filipino vs. Santos Investments, 74 Phil. 79 and similar cases are
distinguishable from the instant case. In the El Hogar case the defendant filed a laconic answer
containing the statement that it denied "generally ans specifically each and every allegation
contained in each and every paragraph of the complaint". It did not set forth in its answer any
matters by way of confession and avoidance. It did not interpose any matters by way of confession
and avoidance. It did not interpose any affirmative defenses.

Under those circumstances, it was held that defendant's specific denial was really a general denial
which was tantamount to an admission of the allegations of the complaint and which justified
judgment on the pleadings. That is not the situation in this case.

The other nine assignments of error of the plaintiffs may be reduced to the decisive issue of whether
the Calunuran fishpond was held in trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia
Salao. That issue is tied up with the question of whether plaintiffs' action for reconveyance had
already prescribed.

The plaintiffs contend that their action is "to enforce a trust which defendant" Juan S. Salao, Jr.
allegedly violated. The existence of a trust was not definitely alleged in plaintiffs' complaint. They
mentioned trust for the first time on page 2 of their appelants' brief.

To determine if the plaintiffs have a cause of action for the enforcement of a trust, it is necessary to
maek some exegesis on the nature of trusts (fideicomosis). Trusts in Anglo-American jurisprudence
were derived from thefideicommissa of the Roman law (Government of the Philippine Islands vs.
Abadilla, 46 Phil. 642, 646).

"In its technical legal sense, a trust is defined as the right, enforceable solely in equity, to the
beneficial enjoyment of property, the legal title to which is vested in another, but the word 'trust' is
frequently employed to indicate duties, relations, and responsibilities which are not strictly technical
trusts" (89 C.J.S. 712).
A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards
property for the benefit of another person is known as the trustee; and the person for whose benefit
the trust has been created is referred to as the beneficiary" (Art. 1440, Civil Code). There is a
fiduciary relation between the trustee and thecestui que trust as regards certain property, real,
personal, money or choses in action (Pacheco vs. Arro, 85 Phil. 505).

"Trusts are either express or implied. Express trusts are created by the intention of the trustor or of
the parties. Implied trusts come into being by operation of law" (Art. 1441, Civil Code). "No express
trusts concerning an immovable or any interest therein may be proven by parol evidence. An implied
trust may be proven by oral evidence" (Ibid, Arts. 1443 and 1457).

"No particular words are required for the creation of an express trust, it being sufficient that a trust is
clearly intended" (Ibid, Art. 1444; Tuason de Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-
19012, October 30, 1967, 21 SCRA 543, 546). "Express trusts are those which are created by the
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" (89 C.J.S. 72).

"Implied trusts are those which, without being expressed, are deducible from the nature of the
transaction asmatters of intent, or which are superinduced on the transaction by operation of law as
matter of equity,independently of the particular intention of the parties" (89 C.J.S. 724). They are
ordinarily subdivided into resulting and constructive trusts (89 C.J.S. 722).

"A resulting trust. is broadly defined as a trust which is raised or created by the act or construction of
law, but in its more restricted sense it is a trust raised by implication of law and presumed to have
been contemplated by the parties, the intention as to which is to be found in the nature of their
transaction, but not expressed in the deed or instrument of conveyance (89 C.J.S. 725). Examples of
resulting trusts are found in articles 1448 to 1455 of the Civil Code. (See Padilla vs. Court of
Appeals, L-31569, September 28, 1973, 53 SCRA 168, 179; Martinez vs. Graño 42 Phil. 35).

On the other hand, a constructive trust is -a trust "raised by construction of law, or arising by
operation of law". In a more restricted sense and as contra-distinguished from a resulting trust, a
constructive trust is "a trust not created by any words, either expressly or impliedly evincing a direct
intension to create a trust, but by the construction of equity in order to satisfy the demands of
justice." It does not arise "by agreement or intention, but by operation of law." (89 C.J.S. 726-727).

Thus, "if property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes"
(Art. 1456, Civil Code).

Or "if a person obtains legal title to property by fraud or concealment, courts of equity will impress
upon the title a so-called constructive trust in favor of the defrauded party". Such a constructive trust
is not a trust in the technical sense. (Gayondato vs. Treasurer of the P. I., 49 Phil. 244).

Not a scintilla of documentary evidence was presented by the plaintiffs to prove that there was an
express trust over the Calunuran fishpond in favor of Valentin Salao. Purely parol evidence was
offered by them to prove the alleged trust. Their claim that in the oral partition in 1919 of the two
fishponds the Calunuran fishpond was assigned to Valentin Salao is legally untenable.

It is legally indefensible because the terms of article 1443 of the Civil Code (already in force when
the action herein was instituted) are peremptory and unmistakable: parol evidence cannot be used to
prove an express trust concerning realty.
Is plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or constructive,
regarding the two fishponds?

Plaintiffs' pleadings and evidence cannot be relied upon to prove an implied trust. The trial court's
firm conclusion that there was no community of property during the lifetime of Valentina; Ignacio or
before 1914 is substantiated by defendants' documentary evidence. The existence of the alleged co-
ownership over the lands supposedly inherited from Manuel Salao in 1885 is the basis of plaintiffs'
contention that the Calunuran fishpond was held in trust for Valentin Salao.

But that co-ownership was not proven by any competent evidence. It is quite improbable because
the alleged estate of Manuel Salao was likewise not satisfactorily proven. The plaintiffs alleged in
their original complaint that there was a co-ownership over two hectares of land left by Manuel
Salao. In their amended complaint, they alleged that the co-ownership was over seven hectares of
fishponds located in Barrio Dampalit, Malabon, Rizal. In their brief they alleged that the fishponds,
ricelands and saltbeds owned in common in Barrio Dampalit had an area oftwenty-eight hectares, of
which sixteen hectares pertained to Valentina Ignacio and eleven hectares represented Manuel
Salao's estate.

They theorized that the eleven hectares "were, and necessarily, the nucleus, nay the very root, of
the property now in litigation (page 6, plaintiffs-appellants' brief). But the eleven hectares were not
proven by any trustworthy evidence. Benita Salao's testimony that in 1918 or 1919 Juan, Ambrosia,
Alejandra and Valentin partitioned twenty-eight hectares of lands located in Barrio Dampalit is not
credible. As noted by the defendants, Manuel Salao was not even mentioned in plaintiffs'
complaints.

The 1919 partition of Valentina Ignacio's estate covered about seventeen hectares of fishponds and
ricelands (Exh. 21). If at the time that partition was made there were eleven hectares of land in
Barrio Dampalit belonging to Manuel Salao, who died in 1885, those eleven hectares would have
been partitioned in writing as in the case of the seventeen hectares belonging to Valentina Ignacio's
estate.

It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to Valentin

Salao mere by by word of mouth. Incredible because for the partition of the seventeen hectares of
land left by Valentina Ignacio an elaborate "Escritura de Particion" consisting of twenty-two pages
had to be executed by the four Salao heirs. Surely, for the partition of one hundred forty-five
hectares of fishponds among three of the same Salao heirs an oral adjudication would not have
sufficed.

The improbability of the alleged oral partition becomes more evident when it is borne in mind that the
two fishponds were registered land and "the act of registration" is "the operative act" that conveys
and affects the land (Sec. 50, Act No. 496). That means that any transaction affecting the registered
land should be evidenced by a registerable deed. The fact that Valentin Salao and his successors-
in-interest, the plaintiffs, never bothered for a period of nearly forty years to procure any
documentary evidence to establish his supposed interest ox participation in the two fishponds is very
suggestive of the absence of such interest.

The matter may be viewed from another angle. As already stated, the deed of partition for Valentina
Ignacio's estate wag notarized in 1919 (Exh. 21). The plaintiffs assert that the two fishponds were
verbally partitioned also in 1919 and that the Calunuran fishpond was assigned to Valentin Salao as
his share.
Now in the partition of Valentina Ignacio's estate, Valentin was obligated to pay P3,355.25 to
Ambrosia Salao. If, according to the plaintiffs, Ambrosia administered the two fishponds and was the
custodian of its earnings, then it could have been easily stipulated in the deed partitioning Valentina
Ignacio's estate that the amount due from Valentin would just be deducted by Ambrosia from his
share of the earnings of the two fishponds. There was no such stipulation. Not a shred of
documentary evidence shows Valentin's participation in the two fishponds.

The plaintiffs utterly failed to measure up to the yardstick that a trust must be proven by clear,
satisfactory and convincing evidence. It cannot rest on vague and uncertain evidence or on loose,
equivocal or indefinite declarations (De Leon vs. Molo-Peckson, 116 Phil. 1267, 1273).

Trust and trustee; establishment of trust by parol evidence; certainty of proof. —

Where a trust is to be established by oral proof, the testimony supporting it must be
sufficiently strong to prove the right of the alleged beneficiary with as much certainty
as if a document proving the trust were shown. A trust cannot be established,
contrary to the recitals of a Torrens title, upon vague and inconclusive
proof. (Syllabus, Suarez vs. Tirambulo, 59 Phil. 303).

Trusts; evidence needed to establish trust on parol testimony. — In order to establish

a trust in real property by parol evidence, the proof should be as fully convincing as if
the act giving rise to the trust obligation were proven by an authentic document. Such
a trust cannot be established upon testimony consisting in large part of insecure
surmises based on ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil.
110).

The foregoing rulings are good under article 1457 of the Civil Code which, as already noted, allows
an implied trust to be proven by oral evidence. Trustworthy oral evidence is required to prove an
implied trust because, oral evidence can be easily fabricated.

On the other hand, a Torrens title is generally a conclusive of the ownership of the land referred to
therein (Sec. 47, Act 496). A strong presumption exists. that Torrens titles were regularly issued and
that they are valid. In order to maintain an action for reconveyance, proof as to the fiduciary relation
of the parties must be clear and convincing (Yumul vs. Rivera and Dizon, 64 Phil. 13, 17-18).

The real purpose of the Torrens system is, to quiet title to land. "Once a title is registered, the owner
may rest secure, without the necessity of waiting in the portals of the court, or sitting in the mirador
de su casa, to avoid the possibility of losing his land" (Legarda and Prieto vs. Saleeby, 31 Phil. 590,
593).

There was no resulting trust in this case because there never was any intention on the part of Juan
Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There was no constructive
trust because the registration of the two fishponds in the names of Juan and Ambrosia was not
vitiated by fraud or mistake. This is not a case where to satisfy the demands of justice it is necessary
to consider the Calunuran fishpond " being held in trust by the heirs of Juan Y. Salao, Sr. for the
heirs of Valentin Salao.

And even assuming that there was an implied trust, plaintiffs' action is clearly barred by prescription
or laches (Ramos vs. Ramos, L-19872, December 3, 1974, 61 SCRA 284; Quiniano vs. Court of
Appeals, L-23024, May 31, 1971, 39 SCRA 221; Varsity Hills, Inc. vs. Navarro, 9, February 29,
1972, 43 SCRA 503; Alzona vs. Capunitan and Reyes, 114 Phil. 377).
Under Act No. 190, whose statute of limitation would apply if there were an implied trust in this case,
the longest period of extinctive prescription was only ten year (Sec. 40; Diaz vs. Gorricho and
Aguado, 103 Phil. 261, 266).

The Calunuran fishpond was registered in 1911. The written extrajudicial demand for its
reconveyance was made by the plaintiffs in 1951. Their action was filed in 1952 or after the lapse of
more than forty years from the date of registration. The plaintiffs and their predecessor-in-interest,
Valentin Salao, slept on their rights if they had any rights at all. Vigilanti prospiciunt jura or the law
protects him who is watchful of his rights (92 C.J.S. 1011, citing Esguerra vs. Tecson, 21 Phil. 518,
521).

"Undue delay in the enforcement of a right is strongly persuasive of a lack of merit in the claim, since
it is human nature for a person to assert his rights most strongly when they are threatened or
invaded". "Laches or unreasonable delay on the part of a plaintiff in seeking to enforce a right is not
only persuasive of a want of merit but may, according to the circumstances, be destructive of the
right itself." (Buenaventura vs. David, 37 Phil. 435, 440-441).

Having reached the conclusion that the plaintiffs are not entitled to the reconveyance of the
Calunuran fishpond, it is no longer n to Pass upon the validity of the donation made by Ambrosia
Salao to Juan S. Salao, Jr. of her one-half share in the two fishponds The plaintiffs have no right and
personality to assil that donation.

Even if the donation were declared void, the plaintiffs would not have any successional rights to
Ambrosia's share. The sole legal heir of Ambrosia was her nephew, Juan, Jr., her nearest relative
within the third degree. Valentin Salao, if living in 1945 when Ambrosia died, would have been also
her legal heir, together with his first cousin, Juan, Jr. (Juani). Benita Salao, the daughter of Valentin,
could not represent him in the succession to the estate of Ambrosia since in the collateral line,
representation takes place only in favor of the children of brothers or sisters whether they be of the
full or half blood is (Art 972, Civil Code). The nephew excludes a grandniece like Benita Salao or
great-gandnephews like the plaintiffs Alcuriza (Pavia vs. Iturralde 5 Phil. 176).

The trial court did not err in dismissing plaintiffs' complaint.

Defendants' appeal. — The defendants dispute the lower court's finding that the plaintiffs filed their
action in good faith. The defendants contend that they are entitled to damages because the plaintiffs
acted maliciously or in bad faith in suing them. They ask for P25,000 attorneys fees and litigation
expenses and, in addition, moral damages.

We hold that defemdamts' appeal is not meritorious. The record shows that the plaintiffs presented
fifteen witnesses during the protracted trial of this case which lasted from 1954 to 1959. They fought
tenaciously. They obviously incurred considerable expenses in prosecuting their case. Although their
causes of action turned out to be unfounded, yet the pertinacity and vigor with which they pressed
their claim indicate their sincerity and good faith.

There is the further consideration that the parties were descendants of common ancestors, the
spouses Manuel Salao and Valentina Ignacio, and that plaintiffs' action was based on their honest
supposition that the funds used in the acquisition of the lands in litigation were earnings of the
properties allegedly inherited from Manuel Salao.

Considering those circumstances, it cannot be concluded with certitude that plaintiffs' action was
manifestly frivolous or was primarily intended to harass the defendants. An award for damages to
the defendants does not appear to be just and proper.
The worries and anxiety of a defendant in a litigation that was not maliciously instituted are not the
moral damages contemplated in the law (Solis & Yarisantos vs. Salvador, L-17022, August 14, 1965,
14 SCRA 887; Ramos vs. Ramos, supra). The instant case is not among the cases mentioned in
articles 2219 and 2220 of the Civil Code wherein moral damages may be recovered. Nor can it be
regarded as analogous to any of the cases mentioned in those articles.

The adverse result of an action does not per se make the act wrongful and subject
the actor to the payment of moral damages. The law could not have meant to impose
a penalty on the right to litigate; such right is so precious that moral damages may
not be charged on those who may exercise it erroneously. (Barreto vs. Arevalo, 99
Phil. 771. 779).

The defendants invoke article 2208 (4) (11) of the Civil Code which provides that attorney's fees may
be recovered "in case of a clearly unfounded civil action or proceeding against the plaintiff"
(defendant is a plaintiff in his counterclaim) or "in any other case where the court deems it just and
equitable" that attorney's fees should he awarded.

But once it is conceded that the plaintiffs acted in good faith in filing their action there would be no
basis for adjudging them liable to the defendants for attorney's fees and litigation expenses (See
Rizal Surety & Insurance Co., Inc. vs. Court of Appeals, L-23729, May 16, 1967, 20 SCRA 61).

It is not sound public policy to set a premium on the right to litigate. An adverse decision does not
ipso facto justify the award of attorney's fees to the winning party (Herrera vs. Luy Kim Guan, 110
Phil. 1020, 1028; Heirs of Justiva vs. Gustilo, 61 O. G. 6959).

The trial court's judgment is affirmed. No pronouncement as to costs.

SO ORDERED.

G.R. No. L-17809 December 29, 1962

RESURRECCION DE LEON, ET AL., plaintiffs-appellees,

vs.
EMILIANA MOLO-PECKSON, ET AL., respondents-appellants.

Cornelio R. Magsarili for plaintiffs-appellees.

Sycip, Salazar, Luna and Associates for respondents-appellants.

BAUTISTA ANGELO, J.:

Resurreccion De Leon, et al. filed on November 13, 1958 before the Court of First Instance of Rizal
a complaint seeking to compel Emiliana Molo-Peckson, et al. to convey to the former ten parcel of
land located in Pasay City with an area of 1,749 sq. m. upon payment of P1.00 per parcel upon the
plea that said lots were willed or donated in 1948 to the latter by their foster parents Mariano Molo y
Legaspi and Juana Juan with the understanding that they should sell them to the plaintiffs under the
terms above-stated.

Defendants, in their answer, disclaimed any legal obligation on their part to sell the above properties
to the plaintiffs for the nominal consideration of P1.00 per lot alleging that if they executed the
document on which the complaint is predicated it was on the mistaken assumption that their foster
parents had requested them that they executed on August 9, 1956 a document revoking said
donation which was acknowledged before Notary Public Leoncio C. Jimenez.

No testimonial evidence was presented by either party. Instead, both agreed to submit the case
upon the presentation of their respective exhibits which were all admitted by the trial court.

After trial on the merits, the court a quo rendered on September 21, 1960 a decision wherein it held
that, under the facts established by the evidence, trust has been constituted by the late spouses
Mariano Molo and Juana Juan over the ten parcels of land in question in favor plaintiffs as
beneficiaries and, as a consequence concluded:

Considering all the foregoing, the Court orders:

1. The defendants, jointly and severally to free the said ten (10) parcels of land from the
mortgage lien in favor of the Rehabilitation Finance Corporation (now Development Bank of
the Philippines) and Claro Cortez, and thereafter to sign and execute in favor of the plaintiffs
a deed of absolute sale of the said properties for and in consideration of TEN (P10.00)
PESOS already deposited in Court after all conditions imposed in Exhibit A have been
complied with;

2. That in the event the defendants shall refuse to execute and perform the above, they are
ordered, jointly and severally, to pay the plaintiffs the value of said ten (10) parcels of land in
question, the amount to be assessed by the City of Pasay City as the fair market value of the
same, upon orders of the Court to assess said value;

3. The defendants jointly and severally to pay the plaintiffs' Attorney's fees in the amount of
P3,000.00, as defendants acted in gross and evident bad faith in refusing to satisfy the
plaintiffs' plainly valid, just and demandable claim, under Article 2208 sub-paragraph 5 of the
New Civil Code;

4. The defendants to render an accounting of the fruits of said ten (10) parcels of land from
the time plaintiffs demanded the conveyance of said parcels of land on August 11, 1956 as
per Exhibits B and C, in accordance with the provisions of Article 1164, New Civil Code
which provides that the creditor has a right to the fruit of the thing from the time the obligation
to deliver it arises; and

5. The defendants to pay the costs.

Defendants took the present appeal.

On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he bequeathed his entire
estate to his wife, Juana Juan. This will was probated in the Court of First Instance of Pasay City,
Rizal, which was affirmed by the Supreme Court on November 26, 1956 (G.R. No. L-8774). On May
11, 1948, Juana Juan in turn executed a will naming therein many devisees and legatees, one of
whom is Guillermo San Rafael, mother of the plaintiffs and defendant Pilar Perez Nable. On June 7,
1948, however, Juana Juan executed a donation inter vivos in favor of Emiliana Molo-Peckson and
Pilar Perez Nable of almost all of her entire property leaving only about P16,000.00 worth of property
for the devisees mentioned in the will. Among the properties conveyed to the donees are the ten
parcels of land subject of the present action. Juana Juan died on May 28, 1950.
On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed a document which
they called "MUTUAL AGREEMENT" the pertinent provisions of which are:

That the above named parties hereby mutually agree by these presents . . . that the following
lots should be sold at ONE (1) PESO each to the following persons and organization:

TO — JUSTA DE LEON and RESURRECCION DE LEON, several parcels of land located at

Calle Tolentino (South of Tenorio and Kapitan Magtibay), Pasay City, share and share alike
or half and half of TEN (10) LOTS described in:

Transfer Certificate of Title No. 28157 — and allocated as follows:

(a) To JUSTA DE LEON Five (5) Lots.

(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.

That this agreement is made in conformity with the verbal wish of the late Don Mariano Molo
y Legaspi and the late Dona Juana Francisco Juan y Molo. These obligations were
repeatedly told to Emiliana Molo Peckson, before their death and that same should be
fulfilled after their death.

On August 9, 1956, however, the same defendants, assisted by their husbands, executed another
document in which they revoked the so-called mutual agreement mentioned above, and another
relating to the same subject matter, stating therein that the parties, "after matured and thorough
study, realized that the above-mentioned public instruments . . . do not represent their true and
correct interpretation of the verbal wishes of the late spouses Don Mariano Molo y Legaspi and
Dona Juana Francisco Juan y Molo." But after the execution of this document, that is, on August 11,
1956, the beneficiary Resurreccion de Leon and Justa de Leon, thru their counsel demanded the
conveyance to them of the ten parcels of land for the consideration of P1.00 per parcel as stated in
the document of December 5, 1950. And having the defendants refused to do so, said beneficiaries
consigned on July 8, 1957 the amount of P10.00 as the consideration of the ten parcels of land.lawphil.net

In this appeal, appellants assign the following errors:

THE LOWER COURT ERRED IN HOLDING THAT THE SPOUSES, MARIANO MOLO AND
JUANA JUAN, CONSTITUTED A TRUST OVER THE PROPERTIES IN QUESTION
PETITION WITH PLAINTIFFS-APPELLEES AS BENEFICIARIES.

II

THE LOWER COURT ERRED IN APPLYING ARTICLE 1440, 1441, 1449, 1453 AND 1457
OF THE NEW CIVIL CODE TO THE CASE AT BAR.

III
 THE LOWER COURT ERRED IN HOLDING PLAINTIFFS-APPELLEES' EXHIBIT "A" TO BE
A DECLARATION AGAINST INTEREST AND AN ADMISSION BY DEFENDANTS-
APPELLANTS.

IV

THE LOWER COURT ERRED IN HOLDING THAT DEFENDANTS-APPELLANTS HAD NO

RIGHT TO REVOKE EXHIBIT "A".

THE LOWER COURT ERRED, IN ORDERING APPELLANTS TO RENDER AN

ACCOUNTING OF THE FRUIT OF THE PROPERTIES IN QUESTION.

VI

THE LOWER COURT ERRED IN ORDERING APPELLANTS TO FREE THE PROPERTIES

FROM THE MORTGAGE LIENS IN FAVOR OF THE DEVELOPMENT BANK OF THE
PHILIPPINES AND CLARO CORTEZ.

VII

THE LOWER COURT ERRED IN AWARDING ATTORNEY'S FEES TO THE APPELLEES.

VIII

THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT.

There is no merit in the claim that the document executed on December 5, 1950 does not represent
the true and correct interpretation by appellants of the verbal wish of their foster parents relative to
the conveyance for a nominal consideration to appellees of the ten parcels of land in question
considering the circumstances obtaining in the present case. To begin with, this document was
executed by appellants on December 5, 1950, or about two years and six months from the time they
acquired title to the lands by virtue of the donation inter vivos executed in their favor by their foster
mother Juana Juan and six months after the death of the donor. There is nobody who could cajole
them to execute it, nor is there any force that could corce them to make the declaration therein
expressed, except the constraining mandat of their conscience to comply with "the obligations
repeatedly told to Emiliana Molo Peckson," one of appellants, before their death, epitomized inthe
"verbal wish of the late Don Mariano Molo y Legaspi and the late Doña Juana Francisco Juan y
Molo" to convey after their death said ten parcelsof land at P1.00 a parcel to appellees. In fact, the
acknowledgement appended to the document they subscribed states that it was "their own free act
andvoluntary deed." 1awphi1.net

Indeed, it is to be supposed that appellants understood and comprehended the legal import of said
documents when they executed it more so when bothof them had studied in reputable centers of
learning, one being a pharmacist and the other a member of the bar. Moreover, they have more than
ample time — the six months intervening betwen the death of the donor and the execution of the
document — to ponder not only wish of their predecessors-in-interest but also on the propriety of
putting in writing the mandate they have received. It is, therefore, reasonable to presume that that
document represents the real wish of appellants' predecessors-in-interest and that the only thing to
be determinedis its real import and legal implications.
That the document represents a recognition of pre-existing trust or a declaration of an express trust
impressed on the ten parcels of land in question is evident. A declaration of trust has been defined
as an act by which a person acknowledges that the property, title to which he holds, is held by him
for the use of another (Griffith v. Maxfield, 51 S.W. 832, 66Ark. 513, 521). This is precisely the
nature of the will of the donor: to convey the titles of the lands to appellants with the duty to hold
them intrust for the appellees. Appellants oblingly complied with this duty byexecuting the document
under consideration.

True it is that to establish a trust the proof must be clear, satisfactory and convincing. It cannot rest
on vague, uncertain evidence, or on a loose,equivocal or indefinite declaration (In re Tuttle's Estate,
200 A. 921, 132 Pa. Super 356); but here the document in question clearly and
unequivocallydeclares the existence of the trust even if the same was executed subsequent to the
death of the trustor, Juana Juan, for it has been held that the right creating or declaring a trust need
not be contemporaneous or inter-parties (Stephenson v. Stephenson, 171 S.W. 2d 265, 351 Mo.
8; In re Corbin's Trust Orhp., 57 York Leg. Rec. 201). It was even held that an express trust maybe
declared by a writing made after the legal estate has been vested in the trustee (Kurtz v. Robinson,
Tex. Civ. App. 256 S.W. 2d 1003). The contention, therefore, of appellants that the will and the
donation executed by their predecessors-in-interest were absolute for it did not contain a hint that
the lots in question will be held in trust by them does not merit weight because the fact that an
express trust was created by a deed which was absolute on its face may be shown by a writing
separate from the deed itself (Mugan v. Wheeler, 145 S.W. 462, 241 Mo. 376).

The fact that the beneficiaries were not notified of the existence of the trust or that the latter have not
been given an opportunity to accept it isof no importance, for it is not essential to the existence of a
valid trustand to the right of the beneficiaries to enforce the same that they had knowledge thereof
the time of its creation (Stoehr v. Miller, 296 F. 414).Neither is it necessary that the beneficiary
should consent to the creation of the trust (Wockwire-Spencer Steel Corporation v. United Spring
Mfg. Co.,142 N.E. 758, 247 Mass. 565). In fact it has been held that in case of a voluntary trust the
assent of the beneficiary is not necessary to render itvalid because as a general rule acceptance by
the beneficiary is presumed (Article 1446, new Civil Code; Cristobal v. Gomez, 50 Phil. 810).

It is true, as appellants contend, that the alleged declaration of trust was revoked, and having been
revoked it cannot be accepted, but the attempted revocation did not have any legal effect. The rule is
that in the absence of any reservation of the power to revoke a voluntary trust is irrevocable without
the consent of the beneficiary (Allen v. Safe Deposit and Trust Co.of Baltimore, 7 A. 2d 180, 177 Md.
26). It cannot be revoked by the creatoralone, nor by the trustee (Fricke v. Weber, C.C.A. Ohio, 145
F. 2d 737;Hughes v. C.I.R., C.C.A. 9, 104 F. 2d 144; Ewing v. Shannahan, 20 S.W. 1065,113 Mo.
188). Here, there is no such reservation.

Appellants contend that the lower court erred in applying the provisions of the new Civil Code on
trust. This is correct. The express trust was constituted during the lifetime of the predecessor-in-
interest of appellants,that is, before the effectivity of the new Civil Code, although the
instrumentrecognizing and declaring such trust was executed on December 5, 1950, afterthe
effectivity of said Code. The Civil Code of 1889 and previous laws andauthorities on the matter,
therefore, should govern the herein trust under the provisions of Article 2253 of the new Civil code.

But the Civil Code of 1889 contains no specific provisions on trust as doesthe new Civil Code.
Neither does the Code of Civil Procedure of 1901 for thesame merely provides for the proceeding to
be followed relative to trustsand trustees (Chapter XVIII). This silence, however, does not mean that
thejuridical institution of trust was then unknown in this jurisdiction, for theprinciples relied upon by
the Supreme Court before the effectivity of thenew Civil Code were those embodied in Anglo-
American jurisprudence as derivedfrom the Roman and Civil Law principles (Government v.
Abadilla, 46 Phil. 42).And these are the same principles on which we predicate our ruling
heretoforestated and on which we now rely for the validity of trust in question.

The trial court ordered appellants to render an accounting of the fruits of the properties in question
even if appellees did not expressly ask for it intheir prayer for relief. We, however, believe that this is
covered by the general prayer "for such other relief just and equitable under the premises."What is
important is to know from what what date the accounting should bemade. The trial court ordered that
the accounting be made from the time appellees demanded the conveyance of the ten parcels of
land on August 11, 1956, in accordance with Article 1164 of the new Civil Code which provides that
the creditor has a right to the fruit of the thing from thetime the obligation to deliver it arises. But this
cannot be done without first submitting proof that the conditions stated in the mutual agreement
hadbeen complied with. And this only happened when the decision of the Supreme Court in G.R.
No. L-8774 became final and executory. The ruling of the trialcourt in this respect should therefore
be modified in the sense that the accounting should be made from the date of the finality of the said
decision.

We find no error in the directive of the trial court that appellants shouldfree the lands in question from
the encumbrance that was created thereon by them in favor of the Development Bank of the
Philippines and one Claro cortez, for as trustees it is their duty to deliver the properties to the cestui
que trust free from all liens and encumbrances.

To recapitulate, we hold: (1) that the document executed on December 5, 1950 creates an express
trust in favor of appellees; (2) that appellants had no right to revoke it without the consent of
the cestui que trust; (3) that appellants must render an accounting of the fruits of the lands from the
datethe judgement rendered in G.R. No. L-8774 became final and executory; and (4)that appellants
should free said lands from all liens and encumbrances.

WHEREFORE, with the modification as above indicated with regard to accounting,we hereby affirm
the decision appealed from, without pronouncement as to costs.

December 10, 1924

G.R. No. L-21334

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, petitioner,
vs.
ANASTASIA ABADILLA, ET AL., claimants.
THE MUNICIPALITY OF TAYABAS, ET AL., claimants-appellees, MARIA PALAD, ET AL., claimants-
appellants.

Domingo Lopez, Ramon Diokno and Gabriel N. Trinidad for appellants.

Attorney-General Villa-Real for municipality as appellee.
No appearance for the other appellees.

OSTRAND, J.:

This is an appeal from a judgment in cadastral and land registration case No. 3 of the Court of First Instance
of Tayabas (G. L. R. O. Record No. 213) in which case lots Nos. 3464, 3469, and 3470 are claimed by the
municipality of Tayabas and the governor of the province on one side, and by Maria, Eufemio, Eugenia,
Felix, Caridad, Segunda, and Emilia Palad on the other. Lot No. 3470 is also claimed by Dorotea Lopez. The
court below ordered the registration of the three lots in the name of the governor of the Province of Tayabas
in trust for a secondary school to be established in the municipality of Tayabas. The claimants Palad and
Dorotea Lopez appealed.

It appears from the evidence that the lands in question were originally owned by one Luis Palad, a school
teacher, who obtained titled to the land by composicion gratuita in 1894. On January 25, 1892, Palad
executed a holographic will party in Spanish and partly in Tagalog. Palad died on December 3, 1896, without
descendants, but leaving a widow, the appellant Dorotea Lopez, to whom he had been married since
October 4, 1885. On July 27, 1987, the Court of First Instance of Tayabas ordered the protocolization of the
will over the opposition of Leopoldo and Policarpio Palad, collateral heirs of the deceased and of whom the
appellants Palad are descendants.

The will contained a clause in Tagalog which, translated into English, reads:

That the cocoanut land in Colongcolong, which I have put under cultivation, be used by my wife after my
death during her life or until she marries, which property is referred to in the inventory under No. 5, but
from this cocoanut land shall be taken what is to be lent to the persons who are to plant cocoanut trees and
that which is to be paid to them as their share of the crop if any should remain; and that she try to earn
with the product of the cocoanut trees of which those bearing fruit are annually increasing; and if the times
aforementioned should arrive, I prepare and donate it to secondary college to be erected in the capital of
Tayabas; so this will be delivered by my wife and the executors to the Ayuntamiento of this town, should
there be any, and if not, to the civil governor of this province in order to cause the manager thereof to
comply with my wishes for the good of many and the welfare of the town.

After the death of Luis Palad the widow Dorotea Lopez remained in possession of the land and in the year
1900 married one Calixto Dolendo. On April 20, 1903, the aforesaid collateral heirs of Luis Palad brought an
action against the widow for the partition of the lands here in question on the ground that she, by reason of
her second marriage, had lost the right to their exclusive use and possession. In the same action the
municipality of Tayabas intervened claiming the land under the clause of the Palad will above quoted. During
the pendency of the action an agreement was arrived at by the parties under which the land which now
constitutes lots Nos. 3464 and 3469 were turned over to the municipality as its share of the inheritance
under the will, and the remaining portion of the land in controversy and which now forms lot No. 3470 was
left in the possession of Dorotea Lopez. On the strength of the agreement the action was dismissed on
November 9, 1904, upon motion by the counsel for the municipality and concurred in by all the parties,
reserving to the collateral heirs the right to bring another action. The municipality of Tayabas has been in
possession of said lots Nos. 3464 and 3469 ever since and Dorotea Lopez has likewise held uninterrupted
possession of lot No. 3470 7AcTTlEKD8.

In regard to lots Nos. 3464 and 3469, claimed by the appellants Palad and the appellees, the case presents
several problems not directly covered by statutory provisions or by Spanish or local precedents and, for the
solution of which, we must resort to the underlying principles of the law on the subject. As it is doubtful
whether the possession of the municipality of Tayabas can be considered adverse within the meaning of
section 41 of the Code of Civil Procedure, the case as to these lots turns upon the construction and validity
of the clause quoted from the will of Luis Palad, rather than upon the question of prescription of title.

The clause is very unskillfully drawn; its language is ungrammatical and at first blush seems somewhat
obscure, but on closer examination it sufficiently reveals the purpose of the testator. And if its provisions are
not in contravention of some established rule of law or public policy, they must be respected and given
effect. It may be observed that the question as to the sufficiency of the form of the will must be regarded as
settled by the protocolization proceedings had in the year 1897.

It is a well-known rule that testamentary dispositions must be liberally construed so as to give effect to the
intention of the testator as revealed by the will itself. Applying this rule of construction it seems evident that
by the clause in question the testator proposed to create a trust for the benefit of a secondary school to be
established in the town of Tayabas, naming as trustee theayuntamiento of the town or if there be
no ayuntamiento, then the civil governor of the Province of Tayabas.

As the law of trusts has been much more frequently applied in England and in the United Stated than it has
in Spain, we may draw freely upon American precedents in determining the effect of the testamentary trust
here under consideration, especially so as the trusts known to American and English equity jurisprudence
are derived from the fidei commissa of the Roman law and are based entirely upon Civil Law principles.

In order that a trust may become effective there must, of course, be a trustee and a cestui quetrust, and
counsel for the appellants Palad argues that we here have neither; that there is noayuntamiento, no
Gobernador Civil of the province, and no secondary school in the town of Tayabas.

An ayuntamiento corresponds to what in English is termed a municipal corporation and it may be conceded
that the ordinary municipal government in these Island falls short of being such a corporation. But we have
provincial governors who like their predecessors, the civil governors, are the chief executives of their
respective provinces. It is true that in a few details the function and power of the two offices may vary
somewhat, but it cannot be successfully disputed that one office is the legal successor of the other. It might
as well be contended that when under the present regime the title of the chief executive of the Philippine
was changed from Civil Governor to that of Governor-General, the latter was not the legal successor of the
former. There can therefore be but very little doubt that the governor of the Province of Tayabas, as the
successor of the civil governor of the province under the Spanish regime, may acts as trustee in the present
case.

In regard to private trust it is not always necessary that the cestui que trust should be named, or even be in
esse at the time the trust is created in his favor. (Flint on Trusts and Trustees, section 25; citing Frazier vs.
Frazier, 2 Hill Ch., 305; Ashurt vs. Given, 5 Watts & S., 329; Carson vs. Carson, 1 Wins. [N. C.] 24.) Thus a
devise to a father in trust for accumulation for his children lawfully begotten at the time of his death has
been held to be good although the father had no children at the time of the vesting of the funds in him as
trustees. In charitable trust such as the one here under discussion, the rule is still further relaxed. (Perry on
Trusts, 5th ed., section 66.)

This principle is in harmony with article 788 of the Civil Code which reads as follows:

Any disposition which imposes upon an heirs the obligation of periodically investing specified sums in
charitable works, such as dowries for poor maidens or scholarships for students, or in favor of the poor, or
any charitable public educational institution, shall be valid under the following conditions:

If the charge is imposed on real property and is temporary, the heir or heirs may dispose of the encumbered
estate, but the lien shall continue until the record thereof is canceled.

If the charge is perpetual, the heir may capitalize it and invest the capital at interest, fully secured by first
mortgage.

The capitalization and investment of the principal shall be made with the intervention of the civil governor of
the province after hearing the opinion of the prosecuting officer.

In any case, if the testator should not have laid down any rules for the management and application of the
charitable legacy, it shall be done by the executive authorities upon whom this duty devolves by law.

It is true that minor distinctions may possibly be drawn between the case before us and that presupposed in
the article quoted, but the general principle is the same in both cases. Here the trustee, who holds the legal
title, as distinguished from the beneficial title resting in the cestui quetrust, must be considered the heirs.
The devise under consideration does not in terms require periodical investments of specified sums, but it is
difficult to see how this can affect the general principle involved, and unless the devise contravenes some
other provision of the Code it must be upheld.

We have been unable to find any such provision. There is no violation of any rule against perpetuities: the
devise does not prohibit the alienation of the land devised. It does not violate article 670 of the Code: the
making of the will and the continuance or quantity of the estate of the heir are not left in the discretion of
the third party. The devisee is not uncertain and the devise is therefore are repugnant to article 750 of the
Civil Code. The provincial governor can hardly be regarded as a public establishment within the meaning of
article 748 and may therefore receive the inheritance without the previous approval of the Government.

But counsel argues that assuming all this to be true the collateral heirs of the deceased would nevertheless
be entitled to the income of the land until the cestui que trust is actually in esse. We do not think so. If the
trustee holds the legal title and the devise is valid, the natural heirs of the deceased have no remaining
interest in the land except their right to the reversion in the event the devise for some reason should fail, an
event which has not as yet taken place. From a reading of the testamentary clause under discussion it
seems quite evident that the intention of the testator was to have income of the property accumulate for the
benefit of the proposed school until the same should be established ZIOQurZRbW.
From what has been said it follows that the judgment appealed from must be affirmed in regard to lots Nos.
3464 and 3469.

As to lot No. 3470 little need be said. It may be noted that though the Statute of Limitation does not run as
between trustee and cestui que trust as long as the trust relations subsist, it may run as between the trust
and third persons. Contending that the Colongcolong land was community property of her marriage with Luis
Palad and that lot No. 3470 represented her share thereof, Dorotea Lopez has held possession of said lot,
adverse to all other claimants, since the year 1904 and has now acquired title by prescription.

The judgment appealed from is affirmed in regard to lots Nos. 3464 and 3469 and is reversed as to lot No.
3470, and it is ordered that said lot No. 3470 be registered in the name of the claimant Dorotea Lopez. No
costs will be allowed.

October 5, 1927

G.R. No. L-27014

PAULINA CRISTOBAL, ET AL., plaintiffs-appellees,
vs.
MARCELINO GOMEZ, defendant-appellant.

M. H. de Joya and Jose Batungabacal for appellant.

Ambrosio Santos for appellees.

Street, J.:

This action was instituted in the Court of First Instance of the Province of Cavite by Paulina Cristobal, Luis
Gomez, Josefa Gomez, Paciencia Gomez and Jose Gomez, for the purpose of recovering from Marcelino
Gomez two parcels of land located in the sitio of Jabay, municipality of Bacoor, Province of Cavite, and lot
located in the town of Bacoor, Cavite, — all more particularly described in the second paragraph of the
complaint, and for the purpose of compelling the defendant to pay to the plaintiffs the income received by
him from said property since 1918. To the complaint the defendant answered with a general denial and two
special defenses not necessary to be here recounted other than to indicate that he claimed to be owner in
his own right of all of the property which is the subject of the action. Upon hearing the cause the trial court
found that the property in question belongs to the plaintiffs, as coowners, and he therefore ordered the
defendant to surrender the property to them and execute an appropriate deed of transfer as well as to pay
the costs of the proceeding. From this judgment the defendant appealed.

The property with which this action is concerned formerly belonged to Epifanio Gomez, deceased husband of
the plaintiff Paulina Cristobal an father of the four Gomez children who joined with their mother Paulina in
the complaint. On December 13, 1891, Epifanio Gomez sold this property under contract of sale with pacto
de retro to Luis R. Yangco, redeemable in five years for the sum of P2,500 the vendor remaining in
possession in the character of lessee. The period expressed in this agreement passed of lessee. The period
expressed in this agreement passed without redemption, with the result that the property consolidated in
Yangco, who, nevertheless, many years later conceded to the vendor the privilege of repurchasing. Gomez
was without means to effect the repurchase of the property himself, and he therefore found it necessary to
apply to a kinsman, Bibiano Bañas, for assistance. Bañas hesitated to lend Gomez the money upon his own
sole credit; but told him that he would let him have the money if his brother Marcelino Gomez and his sister
Telesfora Gomez would make themselves responsible for the loan. Epifanio therefor consulted with his
brother and sister and they agreed to assist him in getting back his property. Accordingly, in the latter part
of July, 1907, Bibiano Bañas was called in consultation, at the home of Telesfora Gomez in Manila, with
Epifanio Gomez and Marcelino Gomez. These four being present upon that occasion, an agreement was
reached, which was, in substance, that Bibiano Bañas, should advance the sum of P7,000, upon the personal
credit of Marcelino and Telesfora Gomez, and that this money should be used to repurchase the property in
the name of Telesfora Gomez and Marcelino Gomez, who should hold and administer the property until the
capital advanced by Bañas should be paid off, after which the property would be returned to Epifanio
Gomez. This agreement was carried into effect by the execution of the Exhibits A and D of the plaintiffs, and
though executed two days apart, these documents, as the trial court found, really constitute parts of one
transaction. By the Exhibit A, executed on August 12, 1907, Marcelino Gomez and Telesfora Gomez created
a "private partnership in participation" for the purpose of redeeming the property which their brother
Epifanio had sold to Yangco. It was therein agreed that the capital of this partnership should consist of
P7,000, of which Marcelino Gomez was to supply the amount of P1,500, and Telesfora Gomez the sum of
P5,550. It was further agreed that all the property to redeemed should be placed in the name of the two
namely, Marcelino Gomez and Telesfora Gomez, and that Marcelino Gomez should be its manager. Among
the provisions in this agreement of major importance to the present decision, we find the following:

(h) That all the income, rent, and produce of the aforesaid property of Epifanio Gomez shall be applied
exclusively to the amortization of the capital employed by the two parties, that is to say, Don Marcelino
Gomez and Doña Telesfora Gomez, with its corresponding interest and other incidental expenses.

(i) As soon as the capital employed, with its interest and other incidental expenses, shall have been covered,
said properties shall be returned to our brother Epifanio Gomez or to his legitimate children, with the direct
intervention, however, of both parties, namely, Don Marcelino Gomez and Doña Telesfora Gomez, or one of
them.

(j) In order that the property of Epifanio Gomez may be returned, it is made essential that he shall manifest
good behavior in the opinion of Don Marcelino Gomez and Doña Telesfora Gomez jointly.

By the Exhibit D, executed on July 10, 1907, Luis Yangco conveyed to Marcelino Gomez and Telesfora
Gomez the three pieces of property which he had obtained from Epifanio Gomez. Though this conveyance
recited a consideration of 5,000, the amount really paid to Yangco upon this occasion was P6,700, consisting
of the sum of P5,000 which was needed to redeem the property from Yangco, the further sum of P1,500
necessary to pay a loan which Epifanio Gomez had obtained from Gregoria Yangco, sister of Luis R. Yangco,
and finally the sum of P200 which Yangco exacted as a present for his manager. The payment of these sums
left P300 of the capital which Bañas had advanced, and this balance was left with Marcelino Gomez to pay
the expenses of documentation and to make certain needed repairs upon the property.

A little more than a year after the transaction above-mentioned had been consummate, Epifanio Gomez
died, leaving a widow, Paulina Cristobal, and the four children who are coplaintiffs with their mother in this
action. Marcelino Gomez meanwhile entered into possession of the property, — a possession which he
subsequently maintained until his death, which occurred after this action had been tried in the court below.
During this period of about twenty years Marcelino Gomez improved the larger parcel by extending the salt
beds constructed upon it and by converting them from the Filipino form to the Chinese style. During the
same period the three parcels of property quintupled in value, being now worth about P50,000, according to
the estimate made by Marcelino Gomez himself.

Less than a year after the death of Epifanio Gomez, his sister Telesfora became desirous of freeing herself
from the responsibility which she had assumed to Bibianio Bañas. Accordingly, on September 10, 1909, with
the consent of Bañas, the document Exhibit E was prepared and executed by Telesfora and Marcelino
Gomez. By this instrument Telesfora conveyed to Marcelino her interest and share in the three properties
previously redeemed from Yangco. The conveyance recites a consideration of the sum of P6,096, paid in the
act. Nevertheless, no money passed, and the real consideration of the conveyance, as admitted by Marcelino
Gomez himself, was that Marcelino should assume the obligation which Telesfora had contracted with Bañas
by reason of the loan of P7,000 made the latter upon the occasion of the redemption of the property from
Yangco. The amount of this obligation was estimated at P6,096, and the consideration mentioned in the
Exhibit E was therefore fixed in this amount. At the time that Exhibit E was executed the same parties,
Marcelino Gomez and Telesfora Gomez, executed the document Exhibit 13 of the defendant, whereby they
declared dissolved the partnership that had been created by the Exhibit A; and Telesfora Gomez again
declared that she conveyed to Marcelino Gomez the three parcels in questions for the same consideration
recited in the Exhibit E.

As long as both Telesfora and Marcelino Gomez had been personally answerable to Bañas for the loan of
P7,000, he had been content to look to their personal responsibility for reimbursement; but not that the loan
was being novated, with Marcelino as the sole debtor, Bañas required him to execute a contract of sale for
the three parcels, with pacto de retro, for the purpose of securing the indebtedness (Exhibit 14 of the
defendant). This instrument was executed on September 10, 1909, contemporaneously with the execution
of the documents by which Telesfora conveyed her interest in the property to Marcelino and by which the
partnership was declared dissolved. In the instrument Exhibit 14 it is declared that Marcelino Gomez sells
the property to Bañas for the sum of P8,500, with pacto de retro, redeemable within the period of five
years, extendible for whatever time Bañas may consider convenient. At the same time, and by the same
instrument, Bañas leased the property to the vendor Gomez for the period fixed for repurchase at a
semiannual rental of P510, taxes to be paid by the lessee. The period of repurchase fixed in this contract
passed without redemption having been effected, but by an instrument dated June 26, 1915, Bañas
conceded to Gomez the right to repurchase, without any definite limit of time, conditioned upon the
payment of the rent. Finally, on April 1, 1918, Marcelino Gomez paid to Bañas the sum of P7,575.92 in full
satisfaction of the entire claim and received from Bañas a reconveyance of the three parcels, thus closing
the documentary history of the property so far as concerns this litigation. Reflection upon the foregoing
transaction leaves no room for doubt as to the fact that Bañas held the property under the contract of sale
with pacto de retro (Exhibit 14) as a mere security for his loan. This inference is borne out by the fact that
partial payments on the capital had been accepted by him and that he voluntarily extended the period of
redemption indefinitely after the property had nominally consolidated.

The defendant Gomez says that the money used by him to redeem the property in the end was money of his
own which he had obtained from the sale of lithographic plant. Assuming that this is true, it must
nevertheless be remembered that the properties in question, especially the salt beds, were productive of
considerable income; and Gomez admitted at the trial that he had obtained enough from the property to
reimburse him for all outlays. It is therefore evident that the Bañas loan has been fully liquidated from the
income of the property, or the equivalent, and that the purpose of the original trust had been fully
accomplished before this action was brought.

The proof shows that Epifanio Gomez was in financial straits from the time of the Philippine revolution until
his death; and in the early years of the present century he had from time to time informally hypothecated
several of these salt beds to different creditors to secure petty loans, and this notwithstanding the fact that
the property had previously been sold under contract of sale with pacto de retro to Luis R. Yangco. The fact
that these loans had been made was known to Marcelino and Telesfora Gomez when they entered into
partnership arrangement to get back the property from Yangco. Marcelino Gomez, as a manager, was
therefore confronted with the necessity of paying off these small debts, with the result that he finally paid
out upon the property a total of around P10,000, including of course the debt to Bañas of P7,000. For these
and all other expenses incident to the property he has, upon his own statement, been fully reimbursed.

The facts sketched above exhibit the dominant features of the case, and reflection upon their import
conducts us to the conclusion that the trial court committed no error in holding that the defendant Marcelino
Gomez must surrender the property involved in this lawsuit; and he being now dead, the same obligation
devolves on his heirs. The so-called partnership agreement (Exhibit A) between Marcelino Gomez and his
sister created a trust for the express purpose of rescuing the property of Epifanio Gomez; and now that the
purpose has been accomplished, the property should be returned to his legitimate children, as provided in
paragraph (i) of the agreement. This bilateral contract was fully binding on both the contracting parties; and
the trial court did not err in declaring that, under the second trial paragraph of article 1257 of the Civil Code,
the successors of Epifanio Gomez are entitled to demand fulfillment of the trust. In Martinez vs. Graño (42
Phil., 35), we held that a person who, before consolidation of property in the purchaser under a contract of
sale with pacto de retro, agrees with the vendors to buy the property and administer it till all debts
constituting an encumbrance thereon shall be paid, after which the property shall be turned back to the
original owner, is bound by such agreement; and upon buying in the property under these circumstances
such person becomes in effect a trustee and is bound to administer the property in this character. The same
rule is applicable in the case before us.

But it is claimed for the applicant that the trust agreement (Exhibit A) was kept secret from Epifanio Gomez
and that, having no knowledge of it, he could not have accepted it before the stipulation was revoked. This
contention is contradicted in act by the testimony of Bibiano Bañas, who says that Epifanio Gomez was
present when the arrangement for the repurchase of the property from Yangco was discussed and that he
assented thereto. Moreover, Bañas states that after the agreement had been executed, he told Epifanio
Gomez in the presence of his brother and sister that he should be well pleased as the object he had in view
had been accomplished, meaning, that the property was recorded. But even supposing that Epifanio Gomez
may never have seen the Exhibit A, we have no doubt that he understood the nature of the arrangement
and his assent thereto was a sufficient acceptance. This being true, it was not competent for the parties to
the trust agreement thereafter to dissolve the partnership and destroy the beneficial right of Epifanio Gomez
in the property. The effect of Exhibits E and 13 was merely to eliminate Telesfora Gomez from responsibility
in the performance of the trust and to clothe Marcelino Gomez alone with the obligations that had been
created by Exhibit A.

Much energy has been expended by the attorneys for the appellant in attempting to demonstrate that, if
Epifanio Gomez at any time had any right in the property by virtue of the Exhibit A, such right could only be
derived from the aspect of Exhibit A as a donation, and that, inasmuch as the donation was never accepted
by Epifanio Gomez in a public document, his supposed interest therein is unenforceable. But this, in our
opinion, is not a tenable hypothesis. The partnership agreement should not be viewed in the light of an
intended donation, but as an express trust.

Much stress is placed in the appellant's brief upon paragraph (j) of the partnership agreement which, it is
claimed, makes it a condition precedent to the return of the property to Epifanio Gomez that he should
Exhibit good behavior in the opinion of Marcelino and Telesfora Gomez; and it is claimed that Epifanio
Gomez violated this condition by two kinds of misbehavior before his death, namely, first, by selling
different salt lots to various persons, and secondly, by attending cockfights, an activity distasteful to his
brother and sister. This feature of the case if fully discussed and the contention of the appellant refuted in
the appealed decision. But a few words may be here added upon this aspect of the case. The trust
agreement provides that after the capital employed and other expenses shall have been covered, the
property shall be returned to Epifanio Gomez or his legitimate children. This contemplated the action to be
taken when the debt should be fully liquidated, something that did not occur in this case until 1918. But
Epifanio Gomez died in 1908. It is evident that misbehavior on the part of Epifanio Gomez during the year or
more that he lived after the trust agreement was made could not be attributed as a ground of forfeiture to
his legitimate children ten years later, especially as no step had ever been taken in the life of Epifanio
Gomez to defeat his rights under the trust on account of his alleged misbehavior.

Again, it is contended for the appellant that inasmuch as the property consolidated in Bañas in the year
1915 under the contract of sale with pacto de retro to him, the subsequent repurchase of the property by
Marcelino Gomez in 1918 vested an indefeasible title in the latter free from the original trust. But it is
obvious that the purchase effected in 1918 was really a repurchase, consequent upon the extension of the
time of redemption by Bañas, and Gomez must be considered to be holding in the same right as before, that
is, subject to the trust in favor of Epifanio Gomez.

Lastly, it is urged that Gomez has the benefit of prescription in his favor, having been in possession more
than ten years under the deed by which he acquired the sole right from his sister in 1909. This contention
would be valid if the defendant had really been holding adversely under a claim of title exclusive of any
other right and adverse to all other claimants; but, as we have already demonstrated, he was merely a
trustee in possession under a continuing and subsisting trust. Prescription is not effective in favor of such a
holder (Code of Civil Procedure, sec. 38). Moreover, even supposing that the statute of limitations might
have begun to run in the defendant's favor when he recovered the property from Bañas in 1918, the ten
years allowed by law had not been completed when this action was instituted; and in this connection the
minority of one or more of the plaintiffs during this period may be disregarded.

A point unconnected with the other issues in the case is raised by the fourth assignment of error in the
appellants brief. This has reference to the title to parcel C, the lot located in Bacoor. There can be no doubt
that the ownership of this piece of property was originally vested in Epifanio Gomez by virtue of a
composition title from the Government; and said title has never passed from him except by virtue of the
contract of sale of 1891 in favor of Luis R. Yangco. Nevertheless, the defendant has submitted in evidence a
notarial document emitted on December 31, 1904, by Epifanio Gomez, in the character of notary public,
wherein he certifies that Marcelino Gomez had requested him to draw up a notarial act showing the
properties of which Marcelino Gomez was known to be the true owner: upon which follows an enumeration
of properties possessed by Marcelino Gomez. Among these we find the lot in Bacoor, being the parcel C
described in the complaint. The appellant relies upon this instrument as proving title in Marcelino Gomez,
and it is contended that Epifanio Gomez and his successors are estopped from claiming said lot. This
contention is untenable. It is true that we have here the written admission of Epifanio Gomez would have
been estopped from asserting ownership in himself. Nevertheless, it is clear enough this document Epifanio
Gomez, in conclusion with his brother Marcelino, was merely laying the basis of a scheme to defeat Yangco's
rights under his contract of purchase of 1891, or perhaps to defeat other creditors of Epifanio Gomez, — a
plot which, in view of subsequent occurrences, they did not attempt to carry into effect. No estoppel can be
invoked by Marcelino Gomez or his successors, based upon this document, for the reason that he was not
misled by the false statement contained therein.

In conclusion we note that the trial court did not determine the extent of the proportional interest in the
property pertaining to the different plaintiffs, and no issue has been made with respect to the extent of their
several rights. The solution of this point, if any contention should arise among them in the future, depends
upon the character of the property in relation to the spouses Epifanio Gomez and Paulina Cristobal, that is,
whether it was conjugal property or the individual property of Epifanio Gomez. In the dispositive paragraph
of the appealed decision the court ordered Marcelino Gomez to executed a deed conveying the three parcels
in question to the plaintiffs; but, the defendant being now dead, and the exact extent of the several
interests pertaining to the plaintiffs not being determined, it will be sufficient for us to declares, as we now
do, that the plaintiffs are the owners of the property in question, and to require the successors in interest of
the defendant to deliver the property to the plaintiffs SxbK.

The appealed judgment will therefore be modified by incorporating therein a declaration of ownership in
favor of the plaintiffs and by eliminating the requirement for the specific execution of a conveyance. In other
respects the judgment is affirmed. So ordered, with costs against the appellant.

Avanceña, C. J., Johnson, Malcolm, Villamor, Ostrand and Romualdez JJ., concur.

G.R. No. L-26117 July 17, 1980

J. ANTONIO ARANETA, Petitioner, vs. ANTONIO M. PEREZ and the HONORABLE EMIGDIO V.
NIETES, Judge of the Court of First Instance of Manila, Respondents.

BARREDO, J.:

Petition for certiorari and mandamus, respectively, (1) the annulment of two orders issued by the
Court of First Instance of Manila denying, in effect. the motion for execution of the judgment in its
Civil Case No. 50707, and, (2) the issuance of a writ to compel the court a quo to grant the writ of
execution prayed for to enforce the judgment aforesaid, as affirmed with modification by this Court in
G. R. Nos. L-20787 and L-20788. 1 chanrobles virtual law library
The background facts are narrated in the decision of this Court in the aforementioned cases, to wit:
library
chanrobles virtual law

On June 16, 1961, Antonio M. Perez executed a promissory note wherein he agreed to pay J. Antonio
Araneta, or order, the sum of P3,700.00 119 days from said date, or on October 13, 1961, and if it is
not paid on the date of maturity, to pay interest at 9% per on the amount of the loan, and P370.00 as
attorney's fees in addition to costs and other disbursements taxable under the Rules of Court. chanroblesvirtualawlibrary chanrobles virtual law library

The note having become due and Antonio M. Perez having failed to pay it despite demand made upon
him to do so, Araneta filed on October 31, 1961 a complaint in the Municipal Court of Manila to collect
its import under the terms therein stipulated (Civil Case No. 92265). chanroblesvirtualawlibra ry chanrobles virtual law library

In his answer, defendant Perez admitted the execution of the promissory note as well as his failure to
pay it despite its maturity and demand, but he averred certain allegations that were irrelevant to the
complaint Thus, Perez alleged that the proceeds of the note were applied by him to the payment of
the medical treatment of his minor daughter Angela Perez y Tuason, who is the beneficiary of the trust
then administered by Araneta as trustee in Special Proceeding No. Q-73 of the Court of First Instance
of Quezon City, and that the trust estate is bound to pay the expenses of said treatment because they
were for the benefit of said minor and so the personal fund he borrowed from Araneta and for which
he executed the aforesaid preliminary note should be paid by Araneta in the manner abovestated. In
the same answer, Perez set up a counterclaim demanding several amounts by way of moral damages,
exempt damages, and attorney's fees. chanroblesvirtualawlibra ry chanrobles virtual law library

On motion for judgment on the pleadings filed by Araneta, and without any opposition on the part of
defendant Perez, the municipal court rendered a decision on April 23, 1962 ordering Perez to pay the
amounts prayed for in the complaint and dismissing his counterclaim for damages. His motion for
reconsideration having been denied, Perez appealed to the court a quo where the appeal was docketed
as Civil Case No. 50707 and where he filed practically the same answer he filed in the municipal
court. chanroblesvirtualawlibrary chanrobles virtual law library

In the meantime, or on February 8, 1962, Perez filed a complaint in the Municipal Court of Manila
against Araneta in his capacity as trustee of the minor child Angela Perez y Tuason in Special
Proceeding No. Q-73 of the Court of First Instance of Quezon City wherein, making reference to Civil
Case No. 92265 filed against him by Araneta, he repeated the same petitions con in the answer he
interposed to the complaint of Araneta and prayed that Araneta as trustee be required to pay Perez
the aunt of P3,700.00 advanced by the latter in order to meet the obligation of the trust estate. And
on the basis of a motion to dismiss filed by Araneta as trustee, and over the opposition of Perez, the
municipal court dismissed the latters complaint. His motion for reconsideration having been denied,
Perez appealed to the court a quo where his case was docketed as Civil Case No. 50706 and where he
filed an amended complaint against Araneta. chanroblesvirtualawlibra ry chanrobles virtual law library

Considering that the two cases involved the same parties and the same promissory note, they were
ordered consolidated And on September 7, 1962, the court a quo issued a joint order wherein it
affirmed the judgment on the pleadings rendered by the municipal court in Civil Case No. 50707, while
it affirmed the order of that was likewise issued by the same court in Civil Case No. 50706.

It was this joint order that upon appeal to this Court was affirmed with modification. The dispositive
portion of the lower court orders thus: chanrobles virtual law library

WHEREFORE, in view of the foregoing, the court the judgment on the pleadings rendered by the
municipal court on April 23, 1962, in Civil Case No. 92265 or Civil Case No. 50707, and orders the
defendant therein to pay the plaintiff the sum of P3,700.00 with interest the son at the rate of 9% per
annum from Oct. 13, 1961, until the principal shall have been fully paid, plus the sum of P370 for
expenses and attorney's fees, as well as the costs of the suit in both instances. chanroblesvirtualawlibra ry chanrobles virtual law library

While that of this Court was as follows: chanrobles virtual law library
WHEREFORE, with the modification that the payment of interest on the note should start from the
date of extrajudicial demand, or Oct. 18, 1961, we hereby affirm the order appealed from in all other
respects, without pronouncement as to costs.

Soon after this Court had remanded the records of the cases above-mentioned to the court below, or
on August 24, 1965, Araneta filed with the court a quo a motion for execution in Civil Case No. 50707
(Appendix "C", pp. 30-31, Rollo) along with a bin of costs (Appendix "D", p. 32, Rollo and the motion
for execution aforesaid was granted by the lower court in an order dated September 21, 1965
(Appendix "F", pp. 45-47, Rollo), notwithstanding the opposition thereto (Appendix "E", pp. 34-36,
Reno) flied by Perez. The latter's motion for reconsideration of that order was denied in an order
issued by the same court on October 13, 1965 (Appendix "G", p. 48, Rollo). Still later, however, upon
certain allegations made by Perez in a subsequent motion (Appendix "H", pp. 49-51, Reno) and
manifestation (Appendix "J", p. 55, Rollo), the court below reconsidered the orders above-mentioned
and, in an order dated December 6, 1965, it denied, in effect, the motion for execution it had
previously granted. Basis of the change of mind of the court a quo may be gleaned from the order
referred to which pertinently reads as follows: chanrobles virtual law library

In the order of this Court dated October 13, 1965, the motion for reconsideration of the defendant to
the order of this Court dated September 21, 1965, was denied. In the said order of this Court dated
September 21, 1965, it is made manifest that the plaintiff, in his capacity as trustee in Sp. Proc. No.
Q-73, sent a check to the defendant as the judicial guardian of his daughter, Angela Tuason, in the
sum of P3,441.52, corresponding to the share of said Angela Tuason, in the net income of the trust
estate for a particular period (Annex A of the defendant's opposition, September 10, 1965). chanroblesvirtualawlibra ry chanrobles virtual law library

The defendant returned the check to the plaintiff as trustee without indorsing it although with
instructions that the plaintiff, in his personal capacity, appropriate the said sum of P3441.52 in
payment of his personal obligation. The plaintiff refused because the chock was not by the had no
authority to pay his and because the said defendants had no authority to pay his personal obligation
with funds due to his ward, and because the amount of P3,441.52 was not to pay for the pro note in
the sum of P3,700.60, plus in and attorney's fees, as shown in Annex D of the defendant's opposition
of September 10, 1965. The plaintiff again returned the check to the defendant with his letter dated
September 25, 1963 annex F of defendant's opposition). chanroblesvirtualawlibra ry chanrobles virtual law library

It appearing, however, that the defendant had obtained an order from the guardianship court
authorizing him as guardian of Angela Tuason to assign in favor of J. Antonio Araneta the t of
P3,700.00, and that in his letter of September 23, 1963, the defendant's counsel Atty. Alfonso Felix,
Jr., advised the plaintiff of the said order and returned again the cheek to the plaintiff, the Court takes
convince of this fact of the proffer of payment by the defendant and considers the said payment as a
payment authorized by the guardianship court, confirming the act of the guardian which has the effect
of settling the obligation of the guardian. Under the circumstances the plaintiff could have mind with
the amount and considered the obligation paid the amount represented in the chock in the total sum
of P3,700.00. chanroblesvirtualawlibrary chanrobles virtual law library

It appears further that the in the amount of P1.479.74 has been deposited with the Clerk of this Court
on November 16, 1965, which, as exposed in the motion of the plaintiff, balance due in the sum of
P927.18, plus interest of P75.20 and at- attorney's fees in the sum of P370.00, which fully represents
the total of the amount still due and owing to the plaintiff. chanroblesvirtualawlibra ry chanrobles virtual law library

For all the foregoing, the order of this Court executed of judgment is hereby reconsider and the
plaintiff is ordered to credit to himself the vs of the check in the sum of P3,700.00 as ordered by the
guardianship court plus P1,479.74 with am Clerk of Court which he is authorized to withdraw at any
time after receipt of this order.

On April 12, 1966, the order abovequoted was again reconsidered by the trial court upon motion of
Araneta in the following language: chanrobles virtual law library
Upon consideration of the motion for order of this Court dated 6, 1965, as well as the opposition
thereto, and finding the said motion for reconsideration to be well-taken the court hereby reconsiders
its order of December 6, 1965, and orders the plaintiff to credit to himself the amount of P3,441.52
presently in his possession as trustee. The Clerk of Court is hereby ordered to turn over to the plaintiff
the sum of P258.48 (P3.700.00 minus P3,441.52), plus interest of 9% per annum on the amount of
P3,700.00 from October 18, 1961, up to the time when the plaintiff was advised of the authority
granted to him as trustee to apply the funds of the ward in the amount of P3,441.52, plus costs in the
sum of P78.00 to be taken from the amount of P1,472.38 in the possession of the Clerk of Court, as
per his manifestation of March 10, 1966.

On April, 23, 1966, Araneta filed - a motion for clarification of the last mentioned order, pointing-out
that in the said ordered - of April 12, 1966, the court did not what it considers to be the time when
the plaintiff was advised of thre authority granted to him as trustee to apply the funds of the ward in
the amount P3,441.52, and also bred to direct the payment of attorney's fees in the amount of
P370.00 awarded in the final judgment of the court a quo as modified by this Court; and in respect of
such points, Araneta sought, in effect, the reconsideration of the order referred to. The motion was
denied by the trial court in an order it issued on May 7, 1966 which reads: chanrobles virtual law library

Not finding the motion for certification of the order of April 12, 1966 to be necessary as the same had
been fully threshed (out already as shown by the record, the motion for reconsideration is hereby
denied.

Upon the circumstances above-narrated, Araneta has en the position that the lower court had acted
with grave abuse of discretion in the premises and consequently, as we have earlier said Araneta now
seeks the annulment of the abovequoted orders of December 6, 1965 and April 12, 1966 and prays,
instead, for the issuance of a writ ofmandamus ordering the court a quo to issue the writ of execution
exactly as prayed for by hint.chanroblesvirtualawlibrary chanrobles virtual law library

There can be no dispute that the judgment of the court a quo, the execution of which is sought by
petitioners Araneta has become final and executory after the same was affirmed with modifications by
this Court. Ordinarily, said be entitled to its execution, as in fact, the court May did so direct in its
order of September 21, 1965. It cannot be denied, however, that upon motion and manifestation of
respondent Perez, the lower court was apprised of the fact that the guardship court had authority
Perez - as guardian of his daughter Angela Tuason who is the bonefide of a trust estate administered
by petitioner Araneta as trustee - to assign in favor of petitioner the amount of P3,700.00, and of the
additional fact that respondent Perez had likewise deposited with the Clerk of Court concerned, the
amount of P1,472.38 which Perez claims to be the balance of the obligation then owing to petitioner
under the judgment sought to be executed. It follows, therefore, that the order directing is. issuance
of a writ of execution it had previously issued was no longer necessary, and, accordingly, it changed
the tenor of the order referred to in its subsequent order of December 6, 1965, and directed
petitioner, instead, to credit to himself the sum of P3,700.00 as ordered by the court, plus the
P1,479.74 deposited with the Clerk of Court which he was authorized to withdraw anytime.
Accordingly, it is quite clear that the trial court did nothing more than to make its actuation vis-a-vis
the execution prayed for by petitioner conformable to the facts, law and justice by declaring in the
light of the incontrovertible facts before him that to issue a writ of execution in the manner prayed for
by petitioner was a superfluity, since by merely crediting to himself (petitioner) the chock of
P3,441.52 and withdrawing from the Clerk of the P1,472.38 deposited by private respondent, there
would be a full satisfaction of the judgment to be executed. chanroblesvirtualawlibrary chanrobles virtual law library

All other points raised in the petition are too insubstantial in amount and importance to require any
ruling from this Court, taking into account the relationship between and the respective well known
means of the parties. Any small differences in amounts and the necessity of renewing the check in
question should be duly attended to by them without having to bother the courts any further, as long
as the tenor of the foregoing opinion is substantially observed. chanroblesvirtualawlibrary chanrobles virtual law library

IN VIEW WHEREOF, the petition is no costs.

G.R. No. L-49087 April 5, 1982

MINDANAO DEVELOPMENT AUTHORITY, now the SOUTHERN PHILIPPINES DEVELOPMENT

ADMINISTRATION, petitioner,
vs.
THE COURT OF APPEALS and FRANCISCO ANG BANSING, respondents.

CONCEPCION JR., J.:

Petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No. 48488-R,
entitled: "Mindanao Development Authority, etc., plaintiff-appellee, versus Francisco Ang Bansing
defendant-appellant",which reversed the decision of the Court of First Instance of Davao and
dismissed the complaint filed in Civil Case No. 6480 of the said court.

It is not disputed that the respondent Francisco Ang Bansing was the owner of a big tract of land
with an area of about 300,000 sq.m., situated in Barrio Panacan Davao City. On February 25, 1939,
Ang Bansing sold a portion thereof, with an area of about 5 hectares to Juan Cruz Yap Chuy The
contract provided, among others, the following:

That I hereby agree to work for the titling of the entire area of my land under my own
expenses and the expenses for the titling of the portion sold to me shall be under the
expenses of the said Juan Cruz Yap Chuy.1

After the sale, the land of Ang Banging was surveyed and designated as Lot 664-B, Psd-1638. Lot
664-B was further subdivided into five (5) lots and the portion sold to Juan Cruz Yap Chuy shortened
to Juan Cruz, was designated as Lot 664B-3, with an area of 61.107 square meters, more or
less. 2 On June 15-17 and December 15, 1939, a cadastral survey was made and Lot 664-B-3 was
designated as Lot 1846-C of the Davao Cadastre. On December 23, 1939, Juan Cruz sold Lot 1846-
C to the Commonwealth of the Philippines for the amount of P6,347.50. 3 On that same day, Juan
Cruz, as vendor, and C.B. Cam and Miguel N. Lansona as sureties, executed a surety bond in favor
of the vendee to guarantee the vendor's absolute title over the land sold. 4

The cadastral survey plan was approved by the Director of Lands on July 10, 1940, 5 and on March
7, 1941, Original Certificate of Title No. 26 was issued in the means of Victoriana Ang Bansing,
Orfelina Ang Bansing and Francisco Ang Bansing as claimants of the land, pursuant to Decree No.
745358 issued on July 29, 1940. On March 31, 1941, OCT No. 26 was cancelled pursuant to a Deed
of Adjudication and Transfer Certificate of Title No. 1783 was issued in the name of Francisco Ang
Bansing. 6

On that day, March 31, 1941, Ang Banging sold Lot 1846-A to Juan Cruz and TCT No. 1783 was
cancelled. TCT No. 1784 was issued in the name of Juan Cruz, for Lot 1846-A and TCT No. 1785
was issued in the name of Ang Bansing for the remaining Lots 1846-B, 1846-C, 1846-D, and 1846-
E. Later, Ang Bansing sold two subdivision lots of Lot 1846-B, namely: Lot 1846-B-2-C and Lot
1846-B-1 to Vedasto Corcuera for which TCT No. 2551 and TCT No. 2552, respectively, were
issued in the name of the said Vedasto Corcuera on August 10, 1946. Thereafter, Lot 1848-A, with
an area of 9.6508 hectares, and Lots 1846-B-A and 1848- B-2-D all subdivided portions of Lot 1846-
B, were similarly conveyed to Juan Cruz for which TCT No. 2599 and TCT No. 2600, respectively,
were issued in the name of Juan Cruz on September 26, 1946. TCT No. 2601 was issued in the
name of Ang Bansing for the remainder of the property, including the lot in question. Then, another
portion of 1846-B, designated in the subdivision plan as Lot 1848-B-2-B was sold to Juan Cruz for
which TCT No. 184 was issued in the latter's name. On November 28, 1946, after these
conveyances, there remained in the possession of Ang Bansing under TCT No. 2601, Lot 1846-C,
the lot in question; Lot 1846-D; and Lot 1846-E. However, TCT No. 2601 was again partially
cancelled when Ang Bansing sold Lot 1846-D to Vedasto Corcuera. 7

On February 25, 1965, the President of the Philippines issued Proclamation No. 459, transferring
ownership of certain parcels of land situated in Sasa Davao City, to the Mindanao Development
Authority, now the Southern Philippines Development Administration, subject to private rights, if any.
Lot 1846-C, the disputed parcel of land, was among the parcels of land transferred to the Mindanao
Development Authority in said proclamation. 8
On March 31, 1969, Atty. Hector L. Bisnar counsel for the Mindanao Development Authority, wrote
Ang Bansing requesting the latter to surrender the Owner's duplicate copy of TCT No. 2601 so that
Lot 1846-C could be formally transferred to his client but Ang Bansing refused. 9 Consequently, on
April 11, 1969, the Mindanao Development Authority filed a complaint against Francisco Ang
Bansing before the Court of First Instance of Davao City, docketed therein as Civil Case No. 6480,
for the reconveyance of the title over Lot 1846-C, alleging, among others, the following:

xxx xxx xxx

9. That the deed of sale, marked as Annex 'A', it was stipulated by the parties that
the defendant would work to secure title of his entire tract of land of about 30
hectares defraying the expenses for the same and the expenses for the title of the
portion sold by the defendant to Juan Cruz Yap Chuy shall be borned by the latter;

10. That the defendant as vendor and the one who worked to secure the title of his entire
tract of land which included the portion sold by him. to Juan Cruz Yap Chuy acted in the
capacity of and/or served as trustee for any and all parties who become successor-in-
interest to Juan Cruz Yap Chuy and the defendant was bound and obligated to give,
deliver and reconvey to Juan Cruz Yap Chuy and/or his successor-in-interest the title
pertaining to the portion of land sold and conveyed by him to Juan Cruz Yap Chuy by
virtue of the deed of sale marked as Annex 'A' and his affidavit marked as Annex 'C'. 10

In answer, Ang Bansing replied:

xxx xxx xxx

9. That defendant admits that in Annex'A'of the complaint, it was agreed and
stipulated in paragraph 6 thereof that:

That I hereby agree to work for the titling of the entire area of my land
under my own expense and the expenses for the titling of the portion
sold to me shall be under the expenses of the said Juan Cruz Yap
Chuy.

and defendant in fact secured at his expense his OCT No. 26 for his entire land; that
in the process of defendant's securing his title neither Juan Cruz Yap Chuy nor the
Commonwealth of the Philippines asserted any right to ownership of the subject
property and that was almost 30 years ago until plaintiff filed its complaint, thus
plaintiff is forever barred from claiming any right over the subject property. There was
no real sale made but only the intention to sell a portion of the land as stated by
defendant in Annex 'C' of the complaint.

10. That defendant denies allegations contained in paragraph 10 of the complaint that he
acted as the trustee of Juan Cruz Yap Chuy Defendant was never such; matter of fact
Juan Cruz Yap Chuy for the last 26 years, that is until he. died in October, 1965, never
made any demand to have the title of the subject property transferred in his name
because he knew all the time that the alleged sale in his favor was per se null and void
he also knew that no sale was ever consummated. 11

After trial, the Court of First Instance of Davao City found that an express trust had been established
and ordered the reconveyance of the title to Lot 1846-C of the Davao Cadastre to the plaintiff
Mindanao Development Authority. 12
Ang Banging appealed to the Court of Appeals and the said appellate court ruled that no express
trust has been created and, accordingly, reversed the judgment and dismissed the complaint. 13

Hence, the present recourse.

The petition is without merit. As found by the respondent Court of Appeals, no express trust had
been created between Ang Banging and Juan Cruz over Lot 1846-C of the Davao Cadastre. "Trusts
are either express or implied. Express trusts are created by the intention of the trustor or of the
parties. Implied trusts come into being by operation of law." 14 It is fundamental in the law of trusts
that certain requirements must exist before an express trust will be recognized. Basically, these
elements include a competent trustor and trustee, an ascertainable trustres, and sufficiently certain
beneficiaries. Stilted formalities are unnecessary, but nevertheless each of the above elements is
required to be established, and, if any one of them is missing, it is fatal to the trusts. Furthermore,
there must be a present and complete disposition of the trust property, notwithstanding that the
enjoyment in the beneficiary will take place in the future. It is essential, too, that the purpose be an
active one to prevent trust from being executed into a legal estate or interest, and one that is not in
contravention of some prohibition of statute or rule of public policy. There must also be some power
of administration other than a mere duty to perform a contract although the contract is for a third-
party beneficiary. A declaration of terms is essential, and these must be stated with reasonable
certainty in order that the trustee may administer, and that the court, if called upon so to do, may
enforce, the trust." 15

In this case, the herein petitioner relies mainly upon the following stipulation in the deed of sale
executed by Ang Bansing in favor of Juan Cruz to prove that an express trust had been established
with Ang Bansing as the settlor and trustee and Juan Cruz as the cestui que trust or beneficiary:

That I hereby agree to work for the titling of the entire area of my land under my own
expenses and the expenses for the titling of the portion sold to me shall be under the
expenses of said Juan Cruz Yap Chuy.

The above-quoted stipulation, however, is nothing but a condition that Ang Bansing shall pay the
expenses for the registration of his land and for Juan Cruz to shoulder the expenses for the
registration of the land sold to him. The stipulation does not categorically create an obligation on the
part of Ang Bansing to hold the property in trust for Juan Cruz. Hence, there is no express trust. It is
essential to the creation of an express trust that the settlor presently and unequivocally make a
disposition of property and make himself the trustee of the property for the benefit of another. 16

In case of a declaration of trust, the declaration must be clear and unequivocal that the
owner holds property in trust for the purposes named. 17

While Ang Bansing had agreed in the deed of sale that he will work for the titling of "the entire area
of my land under my own expenses," it is not clear therefrom whether said statement refers to the
30-hectare parcel of land or to that portion left to him after the sale. A failure on the part of the settlor
definitely to describe the subject-matter of the supposed trust or the beneficiaries or object thereof is
strong evidence that he intended no trust. 18

The intent to create a trust must be definite and particular. It must show a desire to pass benefits
through the medium of a trust, and not through some related or similar device. 19

Clear and unequivocal language is necessary to create a trust and mere precatory language and
statements of ambiguous nature, are not sufficient to establish a trust. As the Court stated in the
case of De Leon vs. Packson,20 a trust must be proven by clear, satisfactory and convincing
evidence; it cannot rest on vague and uncertain evidence or on loose, equivocal or indefinite
declarations. Considering that the trust intent has not been expressed with such clarity and
definiteness, no express trust can be deduced from the stipulation aforequoted.

Nor will the affidavit executed by Ang Banging on April 23, 1941, 21 be construed as having
established an express trust. As counsel for the herein petitioner has stated, "the only purpose of the
Affidavit was to clarify that the area of the land sold by Ang Bansing to Juan Cruz Yap Chuy is not
only 5 hectares but 61,107 square meters or a little over six (6) hectares." 22

That no express trust had been agreed upon by Ang Bansing and Juan Cruz is evident from the fact
that Juan Cruz, the supposed beneficiary of the trust, never made any attempt to enforce the alleged
trust and require the trustee to transfer the title over Lot 1846-C in his name. Thus, the records show
that the deed of sale, covering Lot 1846-C, was executed by Ang Bansing in favor of Juan Cruz on
February 25, 1939. Two years later, or on March 31, 1941, Ang Bansing sold Lot 1846-A to the said
Juan Cruz for which TCT No. 1784 was issued in the name of Juan Cruz. Subsequently thereafter,
Lot 1848-A, with an area of 9.6508 hectares, and Lots 1846-A and 1848-B-2-D, all subdivided
portions of Lot 1846-B, were similarly conveyed to the said Juan Cruz for which TCT No. 2599 and
TCT No. 2600, respectively, were issued in the name of Juan Cruz on September 26, 1946. Then,
another portion of 'Lot 1¬846-B, designated in the subdivision plan as Lot 1848-B-2-13, was sold to
Juan Cruz for which TCT No. 184 was issued in his name on November 28, 1948. Despite these
numerous transfers of portions of the original 30-hectare parcel of land of Ang Bansing to Juan Cruz
and the issuance of certificates of title in the name of Juan Cruz, the latter never sought the transfer
of the title to Lot 1846-C in his name. For sure, if the parties had agreed that Ang Bansing shall hold
the property in trust for Juan Cruz until after the former shall have obtained a certificate of title to the
land, the latter would have asked for the reconveyance of the title to him in view of the surety bond
executed by him in favor of the Commonwealth Government wherein he warrants his title over the
property. The conduct of Juan Cruz is inconsistent with a trust and may well have probative effect
against a trust.

But, even granting, arguendo, that an express trust had been established, as claimed by the herein
petitioner, it would appear that the trustee had repudiated the trust and the petitioner herein, the
alleged beneficiary to the trust, did not take any action therein until after the lapse of 23 years. Thus,
in its Reply to the Defendant's Answer, filed on June 29, 1969, the herein petitioner admitted that
"after the last war the City Engineer's Office of Davao City made repeated demands on the
defendants for the delivery and conveyance to the Commonwealth Government, now the Republic of
the Philippines, of the title of land in question, Lot 1846-C, but the defendant ignored and evaded the
same." 23 Considering that the demand was made in behalf of the Commonwealth Government, it is
obvious that the said demand was made before July 4, 1946, when the Commonwealth Government
was dismantled and the Republic of the Philippines came into being. From 1946 to 1969, when the
action for reconveyance was filed with the Court, 23 years had passed. For sure, the period for
enforcing the rights of the alleged beneficiary over the land in question after the repudiation of the
trust by the trustee, had already prescribed.

Needless to say, only an implied trust may have been impressed upon the title of Ang Banging over
Lot 1846-C of the Davao Cadastre since the land in question was registered in his name although
the land belonged to another. In implied trusts, there is neither promise nor fiduciary relations, the
so-called trustee does not recognize any trust and has no intent to hold the property for the
beneficiary." 24 It does not arise by agreement or intention, but by operation of law. Thus, if property
is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee
of an implied trust for the benefit of the person from whom the property comes. 25
If a person obtains legal title to property by fraud or concealment, courts of equity will impress upon
the title a so-called constructive trust in favor of the defrauded party. 26

There is also a constructive trust if a person sells a parcel of land and thereafter obtains title to it
through fraudulent misrepresentation. 27

Such a constructive trust is not a trust in the technical sense and is prescriptible; it prescribes in 10
years. 28

Here, the 10-year prescriptive period began on March 31, 1941, upon the issuance of Original
Certificate of Title No. 26 in the names of Victoriana Ang Bansing Orfelina Ang Bansing and
Francisco Ang Banging. From that date up to April 11, 1969, when the complaint for reconveyance
was filed, more than 28 years had passed. Clearly, the action for reconveyance had prescribed.

Besides, the enforcement of the constructive trust that may have been impressed upon the title of
Ang Bansing over Lot 1846-C of the Davao Cadastre is barred by laches. 29 It appears that the deed
of sale in favor of the Commonwealth Government was executed by Juan Cruz on December 23,
1939, during the cadastral proceedings, and even before the cadastral survey plan was approved by
the Director of Lands on July 10, 1940. But, the vendee therein did not file an answer, much less an
opposition to the answer of Ang Bansing in the said Cadastral proceedings. The judgment rendered
in the said cadastral proceeding, awarding the lot in question to Ang Bansing is already final. After
an inexcusable delay of more than 28 years and acquiescence to existing conditions, it is now too
late for the petitioner to complain.

WHEREFORE, the petition should be, as it is hereby, DENIED. No costs.

SO ORDERED.

G.R. No. L-27294 June 28, 1983

ALFREDO ROA, JR., LETICIA ROA DE BORJA, RUBEN ROA, CORNELIO ROA and ELSIE
ROA-CACNIO (as heirs of the late Alfredo Roa, Sr.). petitioners,
vs.
HON. COURT OF APPEALS and the spouses JOAQUIN CASIÑO and CUSTODIA
VALDEHUESA, respondents.

Alberto Cacnio for petitioners.

Melecio Virgilio Law Office for respondents.

GUERRERO, J.:

Appeal by way of certiorari from the Decision of the Court of Appeals 1 in CA-G.R. No. 34746-R
entitled "Alfredo Roa, Plaintiff-Appellant, versus Joaquin Casiño et al., Defendants-Appellees," and
from the Resolution of the said Court 2 denying plaintiff-appellant's motion for reconsideration of the
said Decision.

On September 1, 1955, an action for recovery of possession of a parcel of land was filed before the
Court of First Instance of Misamis Oriental by Alfredo Roa, Sr. (now deceased and subsequently
substituted by his heirs, the herein petitioners) against respondent spouses, Joaquin Casiño and
Custodia Valdehuesa (real name appears to be Teodosia Valdehuesa), successors-in- interest of
one Pablo Valdehuesa, now deceased.

In his complaint, Alfredo Roa, Sr. alleged that the said land is agricultural; that it is situated in Bugo,
formerly within the municipality of Tagoloan, Misamis Oriental, now comprised within the limits of the
City of Cagayan de Oro; that it is registered in his name under Original Certificate of Title No. T-21D;
that he found the private respondents occupying said land. He prayed that possession of the same
be returned to him and that he be awarded actual and moral damages in the sum of P10,000.00.

In answer to the complaint, respondent spouses alleged that the land in question formerly belonged
to one Pablo Valdehuesa, father of respondent Custodia (Teodosia) Valdehuesa and now deceased;
that it was however titled in the name of Alfredo Roa, Sr., Trinidad Reyes Roa, Esperanza Roa de
Ongpin, Concepcion Roa and her husband Zosimo Roa in Land Registration Case No. 12, G.R.L.O.
Record No. 10003 of the Court of First Instance of Misamis Oriental by virtue of an agreement
entered into between the Roas and said Pablo Valdehuesa; that the conditions of the said
compromise agreement were never complied with by the Roas notwithstanding the death of Pablo
Valdehuesa in 1928 and despite repeated demands for compliance thereof; that the heirs of said
Pablo Valdehuesa sold the land in question to them on April 30, 1930, after rescinding the
aforementioned compromise agreement; and that they now enjoy the privileges of absolute
ownership over said land by reason of their continuous and adverse possession thereof since time
immemorial. By way of counterclaim, the respondents prayed for the reconveyance of the said
parcel of land contending that the compromise agreement created an implied trust between the
parties to it, and for damages in the amount of P10,000.00.

In answer to private respondent's counterclaim, Alfredo Roa, Sr. maintained that the heirs of Pablo
Valdehuesa cannot rescind the compromise agreement by their own act alone or without going to
court; and that the alleged sale of the said heirs to private respondents was null and void, in view of
the fact that respondent spouses knew that the land was then titled in the name of the Roas under
Act 496.

On December 22, 1959, the parties submitted to the Court a quo an agreed Stipulation of Facts, to
wit:

STIPULATION OF FACTS

That parties herein, assisted by their respective attorneys, have agreed on the
following facts:
1. That the plaintiff and the defendants are all of age and with capacity to sue and be
sued.

2. That the plaintiff and his brothers and sisters Trinidad Reyes Roa, Esperanza Roa
de Ongpin, Concepcion Roa and Zosimo Roa, husband of the latter, were the
owners pro-indiviso of a parcel of land located in Tagoloan, Misamis Oriental,
containing an area of several hundred hectares, and sometime in 1925, and for the
purpose of registering their title to said parcel of land, the said co- owners filed an
application with the Court of First Instance of Misamis Oriental, and said application
was docketed in said Court as Expediente No. 12, G.L.R.O. Record No. 10003.

3. That in the application as well as in the plans accompanying said application in

Expediente No. 12, G.L.R.O. No. 10003, was included a parcel of land which is now
the portion in litigation in this case.

4. That one Pablo Valdehuesa filed an opposition in said Expediente No. 12,
G.L.R.O. Record No. 10003. claiming absolute and exclusive ownership over a
portion which is now the property under litigation.

5. That sometime during the year 1925, the co-owners, said Concepcion Roa,
Esperanza Roa de Ongpin and Trinidad Reyes Roa and Zosimo Roa entered into an
agreement with the said Pablo Valdehuesa, and the terms of their agreement are
contained in the document hereto attached, made a part hereof, and marked as
Exhibit "1".

6. That in compliance with his obligation under and by virtue of said Exhibit " 1" the
said Pablo Valdehuesa withdrew the opposition filed by him in said case Expediente
No. 12, G.L.R.O. Record No. 10003, and as the result of said withdrawal, the plaintiff
and his co-owners succeeded in registering their title to their property, including the
portion owned by Pablo Valdehuesa as claimed in his opposition.

7. That the said Pablo Valdehuesa died in May of 1928, and upon his death his
estate passed to the ownership of his widow and legitimate children including all his
rights under said Exhibit " 1 " to the property in question.

8. That since then the property in question has been in the possession of the
defendants, and their possession together with the possession of their predecessors
in said property has been open, continuous and uninterrupted to this date.

9. That sometime after the issuance of title in favor of the plaintiff (Transfer
Certificate of Title No. 21-A) and his aforementioned brothers and sisters covering
the parcel of land subject matter of the application filed by them in Expediente No.
12, G.L.R.O. Record No. 10003, the said plaintiff and his brothers and sisters
partitioned among themselves said property, and plaintiff was adjudicated a share in
said property, of which the parcel of land covered by the opposition of Pablo
Valdehuesa withdrawn under the terms of Exhibit " 1" is a part or portion of said
charge, and covered by T-21-D (copy attached as Exh. "A").

10. That the portion in litigation as correctly described in paragraph 3 of the

complaint is covered by the certificate of title referred to above.
11. That in 1955 the plaintiff had a surveyor relocate the corners and boundaries of
his land as described in his title and that the portion of about 2 hectares on the
eastern end of the land is in the possession and is actually occupied by the
defendant. This is the portion in litigation described in par. 3 of the complaint .

12. That Expediente No. 12, G.L.R.O. Record No. 10003 have been totally destroyed
during the last World War, and the parties reserve the right to present additional
evidence during the hearing of this case.

Cagayan de Oro City, December 22, 1959.

(Sgd.)
ALFRE
DO
ROA
Plaintiff

(Sgd.)
HERN
ANDO
PINED
A
(Attorn
ey for
Plaintiff
)

(Sgd.) JOAQUIN
CASIÑO

(Sgd.)
CUST
ODIA
VALDE
HUES
A
(Defen
dants)

(Sgd.) MANUEL C.
FERNANDEZ

(Sgd.)
CONC
ORDIO
C.
DIEL
(Attorn
ey for
defend
ants")
The aforesaid compromise agreement mentioned in paragraph 5 of the agreed Stipulation of Facts
was thereafter ratified on May 11, 1927 as shown in Exhibit " 1" as follows:

SEPAN TODOS LOS QUE LA PRESENTE VIEREN :

Que nosotros, los abajo firmantes, mayores de edad hacemos constar:

1. Que somos los dueños mancomunados de la propiedad conocida por Terrenos de

Bugu, en el municipio de Tagoloan, provincia de Misamis.

2. Que en la tramitacion del Exp. No.12,G.L.R.O.,Record No. 10003, para el registro

de dicha propiedad, el Sr. Pablo Valdehuesa del municipio de Tagoloan, que era uno
de los opositores, consintio en retirar su oposicion contra nuestra citada solicitud de
registro a condicion de que le reconozcamos su dominio y propiedad sobre una
parcela de terreno dentro de la comprension de Bugu que el ocupaba, o se le
compre, y de otro modo se le compense al reintegrarnos dicha parcela en tiempo
oportuno. La descripcion del terreno referido cuya extension es de una hectares,
cuarenta y nueve areas y cincuenta y nueve centiareas, aparece en el escrito de
oposicion que obra en el referido Exp. 12, y que luego fue retirado por convenio de
partes.

3. Por tanto, en complimiento de dicho convenio y como consecuencia del mismo,

ratificamos lo que tenemos prometido, para lo cual autorizamos al Sr. Zosimo Roa a
que busque y adquiera otro pedazo de terreno fuera de la comprension de Bugu, de
una hectarea, cuarenta y nueve areas y cincuenta y nueve centiareas, poco mas o
menos, y que sea acceptable para el Sr. Pablo Valdehuesa, como canje or permuta
con la parcela que el ocupa; en la inteligencia de que el valor de compra no exceda
de P400.00 en su defecto, si no se encuentra un terreno que sea satisfactorio para
el Sr. Pablo Valdehuesa, se le compensara el reintegro arriba citado en la
mencionada cantidad de P400.00.

4. Por su parte, el Sr. Pablo Valdehuesa, acepta todo lo establecido en este

documento, obligandose a respetarlo y acatarlo.

En testimonio de todo lo cual, firmamos el presente documento en Cagayan de

Misamis, hoy, 11 de Mayo de 1927.

(Sgd.) Trinidad Roa de Reyes (Sgd.) Esperanza Roa de Ongpin

(Sgd.) Concepcion Roa (Sgd.) Zosimo Roa

__________________________

Alfredo Roa

___________________________

Pablo Valdehuesa

Pursuant to said Exhibit "1", Concepcion, Esperanza, Trinidad and Zosimo, all surnamed Roa,
agreed to replace the land of Pablo Valdehuesa with another parcel of land with an area of 1.4959
hectares to be given to Pablo Valdehuesa in exchange for the land occupied by him, or if said land
was not acceptable to him, to pay him the amount of P400.00. Neither of these undertakings was
complied with by the Roas and Pablo Valdehuesa continued in possession of the land occupied by
him until the same was sold by the heirs of Pablo Valdehuesa to the respondent spouses on April
30, 1930.

On March 6, 1964, the lower court rendered the decision ordering the plaintiff Alfredo Roa to
reconvey the land in dispute to the defendants, now the respondent spouses, on the ground that
same could not have been registered in the name of the plaintiff and his brother and sisters if not for
the compromise agreement aforestated and further to pay said defendants the amount of P1,000.00
as attorney's fees plus costs.

On appeal taken by Alfredo Roa, the appellate court affirmed the decision of the lower court and
declared that (a) the compromise agreement created an express trust between the Roa brothers and
sisters, including Alfredo, Sr., (b) that the respondent spouses' action for reconveyance was
imprescriptible on the authority of Mirabiles, et al. v. Quito, et al., L- 14008, October 18, 1956; and
(c) that Alfredo Roa cannot invoke the indefeasibility and imprescriptibility of the Torrens title issued
in his name for the land in dispute since the said title was secured by him in breach of an express
trust, and thus, the Court ordered the reconveyance of the property within fifteen (15) days from the
finality of the decision.

Alfredo Roa, now substituted by his heirs, the herein petitioners Alfredo Roa, Jr., Leticia Roa de
Borja, Ruben Roa, Cornelio Roa and Elsie Roa-Cacnio, moved to reconsider the adverse decision.
Acting on this motion for reconsideration, the Court of Appeals in a majority resolution denied the
said motion, and while conceding that "the creation of an express trust leaves room for doubt," the
said Court ruled that the compromise agreement, at the least gave rise to an implied trust under Art.
1456 of the New Civil Code. Hence, petitioners filed this present petition on the following assignment
of errors:

I. The respondent Court of Appeals erred when it ruled that Alfredo Roa, the
petitioners' predecessor-in-interest, was bound by the compromise agreement (Exh.
"I") in the execution of which, according to the Stipulation of Facts, said Alfredo Roa
neither participated nor signed.

II. On the assumption that the aforementioned compromise agreement was binding
upon Alfredo Roa, the respondent Court of Appeals erred when it held the said
agreement, which stipulated the conveyance of the property in dispute for a
consideration, as having established a trust relationship between the parties to it.

III. The respondent Court of Appeals erred when it held that the ruling in the case of
Gerona, et al. va. De Guzman, G.R. No. L-19060, May 29, 1964, is inapplicable to
the case at bar.

On the first assigned error, We reject the contention of the petitioners that Alfredo Roa, Sr. was not
bound by the compromise agreement for not being a participant or signatory thereto. It may be true
that Alfredo Roa, Sr. did not sign the compromise agreement, Exh. " 1 ", for he was then in Manila
working as a newspaperman but he certainly benefited from the effects of the compromise
agreement which obliged Pablo Valdehuesa to withdraw, as he did withdraw his opposition to the
registration of the Roa property under the Torrens system. The Roa property was subsequently
registered without opposition and title was issued thereto in the name of Alfredo Roa, his brother
Zosimo and his sisters Trinidad, Esperanza and Concepcion, all surnamed Roa as co-owners
thereof. Certainly, the Roas may not escape compliance from their obligation under the compromise
agreement by partitioning the property and assigning the property in dispute as part of the share of
the petitioners. Moreover, it will be a pure and simple case of unjust enrichment for petitioners to
acquire and own the property of Pablo Valdehuesa, without paying the value thereof or exchanging
the land with another with an equal area as originally agreed.

With respect to the second assignment of error, We do not agree with the holding of the respondent
appellate court that an express trust was created between the parties by reason of the compromise
agreement entered into between them. Express trusts are created by the intention of the trustor or
one of the parties (Article 1441, New Civil Code). While no particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended (Article 1444, New Civil
Code), in the case at bar, We find no direct and positive intent to create a trust relationship between
the parties to the compromise agreement under which Pablo Valdehuesa agreed to withdraw his
opposition to the application for registration upon the commitment of the Roas to give Valdehuesa
another piece of land of equal area or pay its price of P 400.00. It seems clear to Us that the Roas
under the compromise agreement did not commit themselves to hold the lot claimed by Pablo
Valdehuesa for Pablo Valdehuesa and in Pablo Valdehuesa's name.

If the compromise agreement did not result to an express trust relationship, did it, however, give rise
to an implied trust? Private respondents claim that under the terms of the compromise agreement,
the land claimed by Pablo Valdehuesa should be deemed held in trust by the Roas when the latter
failed to relocate him or pay the price therefor. The respondent appellate court took private
respondents' position, and opined, 3 thus —

It could thus be gleaned that had it not been for the promise of the Roas contained in
Exhibit 1, Valdehuesa would not have been induced to withdraw his opposition in the
land registration case. When, therefore, the Roas turned their back to a solemn
agreement entered in a court proceedings, they were guilty of fraud.

Fraud is every kind of deception, whether in the form of insidious

machinations, manipulations, concealments or misrepresentations,
for the purpose of leading another party into error and then execute a
particular act. It must have a determining influence on the consent of
the victim." (4 Tolentino, Civil Code, p. 462)

It results from the foregoing that although the creation of an express trust leaves
room for doubt, by operation of law, an implied trust is created,

Art. 1456. If property is acquired through mistake or fraud, the person

obtaining it is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property comes.
(N.C.C)".

We cannot sustain the holding of the respondent appellate court in its Resolution denying petitioners'
motion for reconsideration that by operation of law an implied trust was created under the terms of
the compromise agreement in the light of Article 1456 of the New Civil Code cited above. We rule
that Art. 1456 is not applicable because it is quite clear that the property of Pablo Valdehuesa was
acquired by the Roas not through mistake or fraud but by reason of the voluntary agreement of
Valdehuesa to withdraw his opposition to the registration of the land under the Torrens system.

There is incontrovertible evidence that the Roas intended to abide by the compromise agreement at
the time of the execution of the same. The private respondents themselves introduced additional
evidence which showed that on May 11, 1927, Trinidad Roa, Esperanza Roa de Ongpin,
Concepcion Roa and Zosimo Roa confirmed in writing the terms and conditions of the agreement
they had entered into with Pablo Valdehuesa in the land registration proceedings. Even the
respondent appellate court expressly determined the aforesaid failure of the Roas to comply with the
terms of the compromise agreement to be an afterthought; thus,

The change of mind of the plaintiff-appellant later is of no moment in the case at bar. 4

While it is Our ruling that the compromise agreement between the parties did not create an express
trust nor an implied trust under Art. 1456 of the New Civil Code, We may, however, make recourse
to the principles of the general law of trusts, insofar as they are not in conflict with the New Civil
Code, Code of Commerce, the Rules of Court and special laws which under Art. 1442 of the New
Civil Code are adopted. While Articles 1448 to 1456 of the New Civil Code enumerates cases of
implied trust, Art. 1447 specifically stipulates that the enumeration of the cases of implied trust does
not exclude others established by the general law of trusts, but the limitations laid down in Art 1442
shag be applicable.

In American law and jurisprudence, We find the following general principles:

A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust

de son tort, an involuntary trust, or an implied trust, is a trust by operation of law
which arises contrary to intention and in invitum, against one who, by fraud, actual or
constructive, by duress or abuse of confidence, by commission of wrong, or by any
form of unconscionable conduct, artifice, concealment, or questionable means, or
who in any way against equity and good conscience, either has obtained or holds the
legal right to property which he ought not, in equity and good conscience, hold and
enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive
trust does not arise on every moral wrong in acquiring or holding property or on every
abuse of confidence in business or other affairs; ordinarily such a trust arises and will
be declared only on wrongful acquisitions or retentions of property of which equity, in
accordance with its fundamental principles and the traditional exercise of its
jurisdiction or in accordance with statutory provision, takes cognizance. It has been
broadly ruled that a breach of confidence, although in business or social relations,
rendering an acquisition or retention of property by one person unconscionable
against another, raises a constructive trust. (76 Am. Jur. 2d, Sec. 221, pp. 446-447).

And specifically applicable to the case at bar is the doctrine that "A constructive trust is substantially
an appropriate remedy against unjust enrichment. It is raised by equity in respect of property, which
has been acquired by fraud, or where, although acquired originally without fraud, it is against equity
that it should be retained by the person holding it." (76 Am. Jur. 2d, Sec. 222, p. 447).

The above principle is not in conflict with the New Civil Code, Code of Commerce, Rules of Court
and special laws. And since We are a court of law and of equity, the case at bar must be resolved on
the general principles of law on constructive trust which basically rest on equitable considerations in
order to satisfy the demands of justice, morality, conscience and fair dealing and thus protect the
innocent against fraud. As the respondent court said, "It behooves upon the courts to shield fiduciary
relations against every manner of chickanery or detestable design cloaked by legal technicalities."

The next point to resolve is whether the counterclaim of private respondents for the reconveyance of
the property in dispute has already prescribed in the light of established jurisprudence that the right
to enforce an implied trust prescribes in ten years.
Admittedly, Pablo Valdehuesa and his heirs remained in possession of the property in question in
1925 when by reason of the compromise agreement Valdehuesa withdrew his opposition to the
registration applied for by the Roas for which reason the latter were able to obtain a Torrens title to
the property in their name. However, Valdehuesa and his heirs continued their possession of the
land until he sold the property in question to private respondents herein on April 30, 1930 and the
latter remained in possession and were never disturbed in their occupancy until the filing of the
original complaint for recovery of possession on Sept. 1, 1955 after demand was made upon them
when a relocation survey initiated by petitioners established that private respondents were actually
occupying about 2 hectares on the eastern end of the property. Upon these facts, the prescriptive
period may only be counted from the time petitioners repudiated the trust relation in 1955 upon the
filing of the complaint for recovery of possession against private respondents so that the
counterclaim of the private respondents contained in their amended answer of June 12, 1956
wherein they asserted absolute ownership of the disputed realty by reason of their continuous and
adverse possession of the same is well within the ten-year prescriptive period.

Finally, the case at bar is quite similar to the case of Dolores Pacheco vs. Santiago Arro, 85 Phil.
505, wherein the claim to the lots in the cadastral case was withdrawn by the respondents relying
upon the assurance and promise made in open court by Dr. M. Y. in behalf of J. Y. y R., the
predecessor-in-interest of the petitioners and the Court held that a trust or a fiduciary relation
between them arose, or resulted therefrom, or was created thereby and the trustee cannot invoke
the statute of limitations to bar the action and defeat the right of the cestuis que trustent. (Cited in
Tolentino, Civil Code of the Philippines, Vol. IV, p. 627).

WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED.

SO ORDERED.
December 11, 1967

G.R. No. L-21616

GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants,
vs.
LUIS D. CUAYCONG, ET AL., defendants-appellees.

Benito C. Jalandoni and M. S. Gomez for plaintiffs-appellants.

Hilado and Hilado for defendants-appellees.

, J.:

Eduardo Cuaycong, married to Clotilde de Leon, died on June 21, 1936 without issue but with three brothers
and a sister surviving him: Lino, Justo, Meliton and Basilisa. Upon his death, his properties were distributed
to his heirs as he willed except two haciendas in Victorias, Negros Occidental, devoted to sugar and other
crops — the Haciendas Sta. Cruz and Pusod both known asHacienda Bacayan. Hacienda Bacayan is
comprised of eight (8) lots — No. 28, covered by T.C.T. No. T-22130; Nos. 8, 17, 18 & 135, covered by
T.C.T. No. T-22131; Nos. 21, 22, 23, covered by T.C.T. No. 22132 — all of which are titled in the name of
Luis D. Cuaycong, son of Justo Cuaycong.

Lino Cuaycong died on May 4, 1937 and was survived by his children Paz, Carolina, Gertrudes, Carmen,
Virgilio, Benjamin, Praxedes and Anastacio. Praxedes Cuaycong, married to Jose Betia, is already deceased
and is survived by her children Jose Jr., Jesus, Mildred, Nenita and Nilo, all surnamed Betia. Anastacio
Cuaycong, also deceased, is survived by his children Ester, Armando, Lourdes, Luis T., Eva and Aida, all
surnamed Cuaycong.

Meliton and Basilisa died without any issue.

On October 3, 1961, the surviving children of Lino Cuaycong: Gertrudes, Carmen, Paz, Carolina, Virgilio; the
surviving children of Anastacio: Ester, Armando, Lourdes, Luis T., Eva and Aida; as well as Jose, Jr., Jesus,
Mildred, Nenita, Nilo, all surnamed Betia, children of deceased Praxedes Cuaycong Betia, filed as pauper
litigants, a suit against Justo, Luis and Benjamin Cuaycong1 for conveyance of inheritance and accounting,
before the Court of First Instance of Negros Occidental (Civil Case No. 6314), alleging among others that:

1. Eduardo Cuaycong had on several occasions, made known to his brothers and sisters that he and his wife
Clotilde de Leon (died in 1940) had an understanding and made arrangements with Luis Cuaycong and his
father Justo Cuaycong, that it was their desire to divide Haciendas Sta. Cruz and Pusod among his brothers
and sister and his wife Clotilde.

2. With the consent of his wife, Eduardo had asked his brothers and sister to pay his wife P75,000 (the
haciendas were worth P150,000) and then divide equally the remaining one-half share of Eduardo.

3. The brothers and sister failed to pay the 1/2 share of Clotilde over the two haciendas which were later
acquired by Luis Cuaycong thru clever strategy, fraud, misrepresentation and in disregard of Eduardo's
wishes by causing the issuance in his name of certificates of title covering said properties.

4. As the two haciendas were the subject of transactions between the spouses and Justo and Luis Cuaycong,
Eduardo told Justo and Luis, and the two agreed, to hold in trust what might belong to his brothers and
sister as a result of the arrangements and deliver to them their share when the proper time comes.

5. That as far back as 1936 Lino demanded from Justo and Luis his share and especially after Eduardo's and
Clotilde's death, the plaintiffs demanded their shares.

6. That their demands had been refused and in 1960 during the estate proceedings of Praxedes Escalon,
deceased wife of Luis D. Cuaycong, the latter fraudulently made it appear that the plaintiffs had nothing to
do with the land; that Luis Cuaycong had possessed the lands since June 21, 1936 from which time he
should be made to account for the plaintiffs' share; and that P1,500 attorney's fees should be paid in their
favor.

Luis D. Cuaycong on October 20, 1961 moved to dismiss the complaint on the grounds of unenforceability of
the claim under the statute of frauds, no cause of action (Rule 8, Sec. 1 [f] of the Rules of Court), and bar of
causes of action by the statute of limitations (Rule 8, Sec. 1[e]). Subsequently, opposition thereto, answer
and reply were filed; the plaintiffs also sought to have Benjamin Cuaycong declared in default for his failure
to answer XcE594Qp6f.

On December 16, 1961, the Court of First Instance ruled that the trust alleged, particularly in paragraph 8
of the complaint, refers to an immovable which under Article 1443 of the Civil Code may not be proved by
parole evidence. Plaintiffs were given 10 days to file an amended complaint mentioning or alleging therein
the written evidence of the alleged trust, otherwise the case would be dismissed.

Later, on December 23, 1961, the court decreed that since there was no amended complaint filed, thus, no
enforceable claim, it was useless to declare Benjamin Cuaycong in default.

Plaintiff thereafter manifested that the claim is based on an implied trust as shown by paragraph 8 of the
complaint. They added that there being no written instrument of trust, they could not amend the complaint
to include such instrument.

On January 13, 1962, the court dismissed the case for failure to amend the complaint; it further refused to
reconsider its order denying the motion to declare Benjamin Cuaycong in default, stating that such a default
declaration would be of no purpose.

Failing in their efforts to have the dismissal reconsidered, plaintiffs appealed to Us. The resolution of the
appeal hinges on whether the trust is express or implied.
Paragraph 8 of the complaint state:

That as the said two haciendas were then the subject of certain transactions between the spouses Eduardo
Cuaycong and Clotilde de Leon on one hand, and Justo and Luis D. Cuaycong on the other, Eduardo
Cuaycong told his brother Justo and his nephew, defendant Luis D. Cuaycong, to hold in trust what might
belong to his brothers and sister as a result of the arrangements and to deliver to them their shares when
the proper time comes, to which Justo and Luis D. Cuaycong agreed.

The plaintiffs claim that an inplied trust is referred to in the complaint which, under Article 1457 of the Civil
Code, may be proved by parole evidence.

Our Civil Code defines an express trust as one created by the intention of the trustor or of the parties, and
an implied trust as one that comes into being by operation of law.2 Express trusts are those created by the
direct and positive acts of the parties, by some writing or deed or will or by words evidencing an intention to
create a trust. On the other hand, implied trusts are those which, without being expressed, are deducible
from the nature of the transaction by operation of law as matters of equity, in dependently of the particular
intention of the parties.3 Thus, if the intention to establish a trust is clear, the trust is express; if the intent
to establish a trust is to be taken from circumstances or other matters indicative of such intent, then the
trust is implied. From these and from the provisions of paragraph 8 of the complaint itself, We find it clear
that the plaintiffs alleged an express trust over an immovable, especially since it is alleged that the trustor
expressly told the defendants of his intention to establish the trust. Such a situation definitely falls under
Article 1443 of the Civil Code.

Appellants point out that not only paragraph 8 should be considered but the whole complaint, in which case
they argue that an implied trust should be construed to exist. Article 1453, one of the cases of implied trust,
is also cited: "When property is conveyed to a person in reliance upon his declared intentions to hold it for or
transfer it to another or the grantor, there is an implied trust in favor of the person whose benefit is
contemplated." Said arguments are untenable, even considering the whole complaint. The intention of the
trustor to establish the alleged trust may be seen in paragraphs 5 and 6.4 Article 1453 would apply if the
person conveying the property did not expressly state that he was establishing the trust, unlike the case at
bar where he was alleged to have expressed such intent. Consequently, the lower court did not err in
dismissing the complaint.

Besides, even assuming the alleged trust to be an implied one, the right alleged by plaintiffs Would have
already prescribed since starting in 1936 When the trustor died, plaintiffs had already been allegedly refused
by the aforesaid defendants in their demands over the land, and the complaint was filed only in 1961 —
more than the 10-year period of prescription for the enforcement of such rights under the trust. It is settled
that the right to enforce an implied trust in one's favor prescribes in ten (10) years.5 And even under the
Code of Civil Procedure, action to recover real property such as lands prescribes in ten years (Sec. 40, Act
190).

And for the above reasons, We agree that it was pointless to declare Benjamin Cuaycong in default,
considering that without a written instrument as evidence of the alleged trust, the case for the plaintiffs
must be dismissed.

WHEREFORE, the order of dismissal of the lower court appealed from is hereby affirmed, without costs. So
ordered.
G.R. No. L-59879 May 13, 1985

PATRICIO SINAON and MARIA, FRANCISCA and JOSE, all surnamed SINAON, petitioners,
vs.
ANDRES SOROÑGON, ANASTACIA PARREÑO, SOLEDAD PARREÑO, ANA PARREÑO,
MARCELINA, CLARITA, RUFINO and MANUEL, all surnamed ARELLANO, SIMPLICIO
SOMBLINGO and BRIGIDA SOMBLINGO and COURT OF APPEALS, respondents.

Neil D. Hechanova for petitioners.

Benjamin P. Sorongon for respondents.

AQUINO, J.:

The issue in this case is whether an action for reconveyance of a registered five-hectare land, based
on implied trust, would lie after the supposed trustees had held the land for more than forty years.

According to the documentary evidence consisting of public documents and tax records, Judge (later
Justice) Carlos A. Imperial in a decree dated March 4, 1916 adjudicated to Canuta Soblingo
(Somblingo), a widow, Lot No. 4781 of the Sta. Barbara, Iloilo cadastre with an area of 5.5 hectares.
OCT No. 6178-A was issued in 1917 to Canuta (Exh. 6 and 7 or B).
In 1923 Canuta sold the lot to the spouses Patricio Sinaon and Julia Sualibio for P2,000 (Exh. 8).
TCT No. 2542 was issued to the Sinaon spouses (Exh. 9 or C). It is still existing and uncancelled up
to this time, Julia was the granddaughter of Canuta.

The lot was declared for tax purposes in Sinaon's name (Exh. 3). The Sinaon spouses and their
children paid the realty taxes due thereon (Exh. 1 to 5-C). They have possessed the land as owners
from 1923 up to this time or for more than half a century.

Canuta was one of the five children of Domingo Somblingo, the alleged original owner of the lot
when it was not yet registered. His other four children were Felipe, Juan, Esteban and Santiago. The
theory of respondents Soroñgon, et al.,

which they adopted in their 1968 second amended complaint (they filed the action in 1964) is that
Canuta and the Sinaons were trustees of the lot and that the heirs of Domingo's four children are
entitled to a 4/5 share thereof.

That theory was sustained by the trial court and the Appellate Court. The trial court ordered the
Sinaons to convey 4/5 of Lot No. 4781 to respondents Soroñgon, et al. It decreed partition of the lot
in five equal parts. The Sinaons appealed to this Court. The respondents did not file any brief.

We hold that after the Sinaons had appeared to be the registered owners of the lot for more than
forty years and had possessed it during that period, their title had become indefeasible and their
possession could not be disturbed. Any pretension as to the existence of an implied trust should not
be countenanced.

The trustors. who created the alleged trust, died a long time ago. An attempt to prove the trust was
made by unreliable oral evidence. The title and possession of the Sinaons cannot be defeated by
oral evidence which can be easily fabricated and contradicted. The contradictory oral evidence
leaves the court sometimes bothered and bewildered.

There was no express trust in this case. Express trusts concerning real property cannot be proven
by parol evidence (Art. 1443, Civil Code). An implied trust "cannot be established, contrary to the
recitals of a Torrens title, upon vague and inconclusive proof" (Suarez vs. Tirambulo, 59 Phil. 303;
Salao vs. Salao, L-26699, March 16,1976, 70 SCRA 65, 83).

Even assuming that there was an implied trust, plaintiffs' action was clearly barred by prescription
(Salao vs. Salao, supra, p. 84).

Prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent and
stale claims from springing up at great distances of time and surprising the parties or their
representatives when the facts have become obscure from the lapse of time or the defective
memory or death or removal of witnesses (53 C.J.S. 903). See Teves Vda. de Bacong vs.
Teves and CA, G.R. No. 50143, October 24, 1983, 125 SCRA 137; Ramos vs. Ramos, L-19872,
December 3, 1974, 61 SCRA 284; Gallanosa vs. Arcangel, L-29300, June 21, 1978, 83 SCRA 676
and Sinco vs. Longa 51 Phil. 507.

It was not necessary for the Sinaons to plead prescription as a defense because there is no dispute
as to the dates. There was no factual issue as to prescription (Chua Lamko vs. Dioso, 97 Phil. 821,
824; Ferrer vs. Ericta, L-41767, August 23, 1978, 84 SCRA 705).
At any rate, the Sinaons invoked in the lower court the ruling laid down in Gerona vs. De Guzman,
120 Phil. 149, 153 that an action for reconveyance of realty, based upon a constructive or implied
trust resulting from fraud, may be barred by prescription. The prescriptive period is reckoned from
the issuance of the title which operates as a constructive notice (Diaz vs. Gorricho and Aguado, 103
Phil. 261, 266-267; J.M. Tuason & Co., Inc. vs. Magdangal, 114 Phil. 42, 46-47; Lopez vs. Gonzaga,
119 Phil. 424, 437).

The supposed trust in this case, which is neither an express nor a resulting trust, is a constructive
trust arising by operation of law (Art. 1456, Civil Code). It is not a trust in the technical sense
(Gayondato vs. Treasurer of the P.I., 49 Phil. 244). *

WHEREFORE, the judgment of the Court of Appeals is reversed and the complaint is dismissed.
The receivership is terminated. The receiver is directed to wind up his accounts. No costs.

SO ORDERED.

HEIRS OF TRANQUILINO LABISTE G.R. No. 162033

(also known as Tranquilino Laviste)
represented by: (1) GERARDO LABISTE,
representing the Heirs of Gregorio Labiste; Present:
(2) OBDULLIA LABISTE GABUAN,
representing the heirs of Juan Labiste; QUISUMBING, J.,
(3) VICTORIA G. CHIONG, representing Chairperson,
the Heirs of Eulalia Labiste; (4) APOLINARIA CARPIO MORALES,
LABISTE YLAYA, representing the TINGA,
Heirs of Nicolasa Labiste; (5) DEMOSTHENES VELASCO, JR., and
LABISTE, representing the Heirs of Gervacio BRION, JJ.
Labiste; (6) ALEJANDRA LABISTE;
representing the Heirs of SINFROCIO
LABISTE, and (7) CLOTILDE LABISTE CARTA,
representing the Heirs of Andres Labiste,
Petitioners,
 - versus –

HEIRS OF JOSE LABISTE, survived by his Promulgated:

children, (1) ZACARIAS LABISTE, deceased
and survived by his children, namely: CRESENCIA
LABISTE and EUFRONIO LABISTE; (2) May 8, 2009
BERNARDINO LABISTE, deceased and survived
by his children, namely: POLICARPIO LABISTE,
BONIFACIO LABISTE, FELIX LABISTE,
GABINA LABISTE, CAYETANA LABISTE and
ISABEL LABISTE; (3) LUCIA LABISTE,
deceased and survived by her children, namely:
ISAAC LABISTE, GENARO LABISTE,
BRAULIA LABISTE, BRAULIO LABISTE,
ASUNCION LABISTE, ALFONSO LABISTE
and CLAUDIA LABISTE; (4) EPIFANIO
LABISTE and CLAUDIA LABISTE;
deceased and survived by his children,
namely SILVESTRE LABISTE,
PAULA LABISTE and GERARDA LABISTE;
(5) ANA LABISTE, deceased and survived by her
children, namely: MAXIMO LABISTE, MOISES
LABISTE, GERVACIO LABISTE, SATURNINA
LABISTE and QUIRINO LABISTE; (6) SEVERO
LABISTE, deceased and survived by his children,
Namely: FELIX LABISTE, RUFINA
LABISTE, SIMPLICIO LABISTE,
VICENTE LABISTE and PATRICIO
LABISTE,
Respondents.

x-------------------------------------------------------------------------------------x

DECISION

TINGA, J.:

This is a petition for review[1] under Rule 45 of the Rules of Court of the
Court of Appeals’ Decision dated 30 June 2003[2]in CA-G.R. CV No. 65829.
reversing the decision of the Regional Trial Court (RTC) of Cebu City, Branch 9.
The appellate court denied petitioners’[3] motion for reconsideration in a Resolution
dated 15 January 2004.

The factual antecedents are as follows:

On 29 September 1919, the late Epifanio Labiste (Epifanio), on his own and
on behalf of his brothers and sisters who were the heirs of Jose Labiste (Jose),
purchased from the Bureau of Lands Lot No. 1054 of the Banilad Friar Lands
Estate, with an area of 13,308 square meters, located at Guadalupe, Cebu City
for P36.00.[4] Subsequently, on 9 June 1924, then Bureau of Lands Director Jorge
B. Vargas executed Deed of Conveyance No. 12536 selling and ceding Lot No.
1054 to Epifanio and his brothers and sisters who were the heirs of Jose.[5]

After full payment of the purchase price but prior to the issuance of the deed
of conveyance, Epifanio executed an Affidavit[6](Affidavit of Epifanio) in Spanish
on 10 July 1923 affirming that he, as one of the heirs of Jose, and his uncle and
petitioners’ predecessor-in-interest, Tranquilino Labiste (Tranquilino), then co-
owned Lot No. 1054 because the money that was paid to the government came
from the two of them. Tranquilino and the heirs of Jose continued to hold the
property jointly.

Sometime in 1928, the Register of Deeds of Cebu City issued Original

Certificate of Title No. 3878 for Lot No. 1054. On 2 May 1928, Engineer Espiritu
Bunagan (Engr. Bunagan), Deputy Public Land Surveyor, subdivided Lot No.
1054 into two lots: LotNo. 1054-A with an area of 6,664 square meters for
Tranquilino and Lot No. 1054-B with an area of 6,664 square meters for
Epifanio. The subdivision plan prepared by Engr. Bunagan was approved by Jose
P. Dans, Acting Director of Lands on 28 October 1928.[7]

Subsequently, on 18 October 1939, the heirs of Tranquilino[8] purchased the

one-half (1/2) interest of the heirs of Jose[9] over Lot No. 1054 for P300.00, as
evidenced by the Calig-onan sa Panagpalit[10] executed by the parties in
the Visayan dialect. The heirs of Tranquilino immediately took possession of the
entire lot.

When World War II broke out, the heirs of Tranquilino fled Cebu City and
when they came back they found their homes and possessions destroyed. The
records in the Office of the Register of Deeds, Office of the City Assessor and
other government offices were also destroyed during the war. Squatters have
practically overrun the entire property, such that neither petitioners nor respondents
possess it.

In October 1993, petitioners learned that one of the respondents,[11] Asuncion

Labiste, had filed on 17 September 1993 a petition for reconstitution of title
over Lot No. 1054. Petitioners opposed the petition at first but by a compromise
agreement between the parties dated 25 March 1994, petitioners withdrew their
opposition to expedite the reconstitution process. Under the compromise
agreement, petitioners were to be given time to file a complaint so that the issues
could be litigated in an ordinary action and the reconstituted title was to be
deposited with the Clerk of Court for a period of sixty (60) days to allow
petitioners to file an action for reconveyance and to annotate a notice of lis
pendens. The Register of Deeds of Cebu City issued the reconstituted title, TCT
No. RT-7853,[12] in the name of “Epifanio Labiste, married to Tomasa Mabitad, his
brothers and sisters, heirs of Jose Labiste” on 14 December 1994. However,
respondents did not honor the compromise agreement.

Petitioners filed a complaint[13] for annulment of title seeking the

reconveyance of property and damages on 13 January 1995, docketed as Civil Case
No. CEB-16943, with the RTC of Cebu City. Respondents claimed that the
Affidavit of Epifanio and theCalig-onan sa Panagpalit were forgeries and that
petitioners’ action had long prescribed or barred by laches.[14]

The RTC in a Decision dated 23 August 1999[15] ruled in favor of petitioners.

After evaluating the documents presented by petitioners, the RTC found that they
are genuine and authentic as ancient documents and that they are valid and
enforceable.[16]Moreover, it held that the action had not prescribed as the complaint
was filed about a year after the reconstitution of the title by respondents. The
judicial reconstitution was even opposed by petitioners until a compromise
agreement was reached by the parties and approved by the RTC which ordered the
reconstitution. The RTC further held that the reconstituted title did not give any
more right to respondents than what their predecessors-in-interest actually had as it
is limited to the reconstitution of the certificate as it stood at the time of its loss or
destruction.[17]

On appeal, the Court of Appeals, while affirming petitioners’ right to the

property, nevertheless reversed the RTC’s decision on the ground of prescription
and laches. It affirmed the RTC’s findings that the Affidavit and the Calig-onan sa
Panagpalit are genuine and authentic, and that the same are valid and enforceable
documents.[18] Citing Article 1144 of the Civil Code, it held that petitioners’ cause
of action had prescribed for the action must be brought within ten (10) years from
the time the right of action accrues upon the written contract which in this case was
when petitioners’ predecessors-in-interest lost possession over the property after
World War II. Also, the lapse of time to file the action constitutes neglect on
petitioners’ part so the principle of laches is applicable.[19]

Hence, the present petition.

The genuineness and authenticity of the Affidavit of Epifanio and the Calig-
onan sa Panagpalit are beyond cavil. As we have ruled in a litany of cases, resort
to judicial review of the decisions of the Court of Appeals under Rule 45 is
confined only to errors of law.[20] The findings of fact by the lower court are
conclusive absent any palpable error or arbitrariness.[21] The Court finds no reason
to depart from this principle. Moreover, it is a long settled doctrine that findings of
fact of the trial court, when affirmed by the Court of Appeals, are binding upon the
Court. It is not the function of the Supreme Court to weigh anew the evidence
already passed upon by the Court of Appeals for these are deemed final and
conclusive and may not be reviewed on appeal.[22]

The sole issue that the Court has to resolve is whether or not petitioners’
cause of action has prescribed.

The Court of Appeals erred in applying the rules on prescription and the
principle of laches because what is involved in the present case is an express trust.

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.[23] 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.[24]

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.[25] 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." The Affidavit of Epifanio is in the nature of a trust
agreement. Epifanio affirmed that the lot brought in his name was co-owned by
him, as one of the heirs of Jose, and his uncle Tranquilino. And by agreement, each
of them has been in possession of half of the property. Their arrangement was
corroborated by the subdivision plan prepared by Engr. Bunagan and approved by
Jose P. Dans, Acting Director of Lands.

As such, prescription and laches will run only from the time the express trust
is repudiated. The Court has held that for acquisitive prescription to bar the action
of the beneficiary against the trustee in an express trust for the recovery of the
property held in trust it must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b)
such positive acts of repudiation have been made known to the cestui que trust, and
(c) the evidence thereon is clear and conclusive.[26] Respondents cannot rely on the
fact that the Torrens title was issued in the name of Epifanio and the other heirs of
Jose. It has been held that a trustee who obtains a Torrens title over property held
in trust by him for another cannot repudiate the trust by relying on the registration.
[27]
The rule requires a clear repudiation of the trust duly communicated to the
beneficiary. The only act that can be construed as repudiation was when
respondents filed the petition for reconstitution in October 1993. And since
petitioners filed their complaint in January 1995, their cause of action has not yet
prescribed, laches cannot be attributed to them.

It is hornbook doctrine that laches is a creation of equity and its application

is controlled by equitable considerations. Lachescannot be used to defeat justice or
perpetrate fraud and injustice.[28] Neither should its application be used to prevent
the rightful owners of a property from recovering what has been fraudulently
registered in the name of another.[29] The equitable remedy of laches is, therefore,
unavailing in this case.

However, to recover the other half of the property covered by the

private Calig-onan sa Panagpalit and to have it registered on the title of the
property, petitioners should have filed an action to compel[30] respondents, as heirs
of the sellers in the contract,[31] to execute a public deed of sale. A conveyance of
land made in a private document does not affect its validity. Article 1358,like its
forerunner Article 1280 of the Civil Code of Spain, does not require the
accomplishment of the acts or
contracts in a public instrument in order to validate the act or contract but only to
insure its efficacy,[32] so that after the existence of said contract has been admitted,
the party bound may be compelled to execute the proper document.[33] But even
assuming that such action was filed by petitioners, the same had already
prescribed.

It is settled that only laws existing at the time of the execution of a contract
are applicable thereto and not later statutes, unless the latter are specifically
intended to have retroactive effect.[34] Consequently, it is the Old Code of Civil
Procedure (Act No. 190) which applies in this case since the Calig-onan sa
Panagpalit was executed on 18 October 1939 while the New Civil Code took
effect only on 30 August 1950. And section 43 of Act No. 190, like its counterpart
Article 1144 of the New Civil Code, provides that action upon a written contract
must be filed within ten years.[35]

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of

the Court of Appeals dated 30 June 2003 inCA-G.R. CV No.
65829 is REVERSED and SET ASIDE and the Decision of
the Regional Trial Court of Cebu City, Branch 9dated 23 August 1999 is
REINSTATED with MODIFICATION in petitioners are
hereby DECLARED the absolute owners of one-half of Lot No. 1054 or Lot No.
1054-A under TCT No. RT-7853. The Register of Deeds of Cebu City is
hereby ORDERED to CANCEL TCT No. RT-7853 in part and issue a new
Transfer Certificate of Title to petitioners, heirs of Tranquilino Labiste, covering
Lot No. 1054-A. No costs.
SOLEDAD CAÑEZO, substituted by WILLIAM
CAÑEZO and VICTORIANO CAÑEZO G.R. No. 148788
Petitioners, Present:

- versus - YNARES-SANTIAGO, J.,

Chairperson,
CONCEPCION ROJAS,
AUSTRIA-MARTINEZ,
Respondent.
CHICO-NAZARIO,

NACHURA, and

REYES, JJ.

Promulgated:

November 23, 2007

x-----------------------------------------------------------------------------------------x

DECISION
NACHURA, J.:

This is a petition for review on certiorari from the Decision1 of the Court of Appeals,
dated September 7, 2000, in CA-G.R. SP No. 53236, and Resolution dated May 9,
2001.

On January 29, 1997, petitioner Soledad Cañezo filed a Complaint2 for the recovery of
real property plus damages with the Municipal Trial Court (MTC) of Naval, Biliran,
against her father’s second wife, respondent Concepcion Rojas. The subject property
is an unregistered land with an area of 4,169 square meters, situated at Higatangan,
Naval, Biliran. Cañezo attached to the complaint a Joint Affidavit3 executed on May
10, 1979 by Isidro Catandijan and Maximina Cañezo attesting to her acquisition of the
property.

In her complaint, the petitioner alleged that she bought the parcel of land in 1939 from
Crisogono Limpiado, although the transaction was not reduced into writing.
Thereafter, she immediately took possession of the property. When she and her
husband left for Mindanao in 1948, she entrusted the said land to her father,
Crispulo4 Rojas, who took possession of, and cultivated, the property. In 1980, she
found out that the respondent, her stepmother, was in possession of the property and
was cultivating the same. She also discovered that the tax declaration over the
property was already in the name of Crispulo Rojas.5

In her Answer, the respondent asserted that, contrary to the petitioner’s claim, it was
her husband, Crispulo Rojas, who bought the property from Crisogono Limpiado in
1948, which accounts for the tax declaration being in Crispulo’s name. From then on,
until his death in 1978, Crispulo possessed and cultivated the property. Upon his
death, the property was included in his estate, which was administered by a special
administrator, Bienvenido Ricafort. The petitioner, as heir, even received her share in
the produce of the estate. The respondent further contended that the petitioner ought to
have impleaded all of the heirs as defendants. She also argued that the fact that
petitioner filed the complaint only in 1997 means that she had already abandoned her
right over the property.6

On July 3, 1998, after hearing, the MTC rendered a Decision in favor of the petitioner,
thus:

WHEREFORE, premises considered, the Court finds a preponderance of evidence in

favor of plaintiff Soledad Cañezo and against defendant Concepcion Rojas by
declaring plaintiff the true and lawful owner of the land more particularly described
under paragraph 5 of the complaint and hereby orders defendant Concepcion Rojas:
a) To vacate and surrender possession of the land to

plaintiff;

b) To pay plaintiff the sum of P34,000.00 actual

damages, P10,000.00 for attorney’s fees

and litigation expenses; and

c) To pay the costs.

SO ORDERED.7

Despite the respondent’s objection that the verbal sale cannot be proven without
infringing the Statute of Frauds, the MTC gave credence to the testimony of the
petitioners’ two witnesses attesting to the fact that Crisogono Limpiado sold the
property to the petitioner in 1939. The MTC also found no evidence to show that
Crispulo Rojas bought the property from Crisogono Limpiado in 1948. It held that the
1948 tax declaration in Crispulo’s name had little significance on respondent’s claim,
considering that in 1948, the "country was then rehabilitating itself from the ravages
of the Second World War" and "the government was more interested in the increase in
tax collection than the observance of the niceties of law."8

The respondent appealed the case to the Regional Trial Court (RTC) of Naval, Biliran.
On October 12, 1998, the RTC reversed the MTC decision on the ground that the
action had already prescribed and acquisitive prescription had set in. The dispositive
portion of the Decision reads:

WHEREFORE, premises considered, the decision of the Municipal Trial Court of

Naval, Biliran awarding ownership of the disputed land to the plaintiff and further
allowing recovery of damages is hereby REVERSED in toto. There is no award of
damages.

The said property remains as the legitime of the defendant Concepcion Rojas and her
children.

SO ORDERED.9

However, acting on petitioner’s motion for reconsideration, the RTC amended its
original decision on December 14, 1998.10 This time, it held that the action had not yet
prescribed considering that the petitioner merely entrusted the property to her father.
The ten-year prescriptive period for the recovery of a property held in trust would
commence to run only from the time the trustee repudiates the trust. The RTC found
no evidence on record showing that Crispulo Rojas ever ousted the petitioner from the
property. The dispositive portion of the amended decision reads as follows:

WHEREFORE, in view of the foregoing considerations, the decision of this Court

dated October 12, 1998 is hereby set aside and another is hereby entered modifying
the decision of the Court a quo and declaring Soledad Rojas Vda. De Cañezo as the
true and lawful owner of a parcel of land, more particularly described and bounded as
follows:

A parcel of land situated at Higatangan, Naval, Biliran, bounded on the North by

Policarpio Limpiado; on the South by Fidel Limpiado; on the East by Seashore; and
on the West by Crispolo (sic) Limpiado with an approximate area of 4,169 square
meters per Tax Declaration No. 2258, later under Tax Declaration No. 4073 in the
name of Crispolo Rojas and later in the name of the Heirs of Crispolo Rojas.

Further, ordering defendant-appellant Concepcion Rojas and all persons claiming

rights or interest under her to vacate and surrender possession of the land aforecited to
the plaintiff or any of her authorized representatives, Ordering the Provincial and/or
Municipal Assessor’s Office to cancel the present existing Tax Declaration in the
name of Heirs of Crispolo Rojas referring to the above-described property in favor of
the name of Soledad Rojas Vda. De Cañezo, Ordering the defendant-appellant
Concepcion Rojas to pay the plaintiff-appellee the sum of P34,000.00 in actual
damages, and to pay for the loss of her share in money value of the products of the
coconuts of said land from 1979 to 1997 and to pay further until the case is terminated
at the rate of P200.00 per quarter based on the regular remittances of the late Crispolo
Rojas to the plaintiff-appellee, and to pay the costs.

SO ORDERED.11

The respondent filed a motion to reconsider the Amended Decision but the RTC
denied the same in an Order dated April 25, 1999.

She then filed a petition for review with the Court of Appeals (CA), which reversed
the Amended Decision of the RTC on September 7, 2000, thus:

WHEREFORE, the amended decision dated December 14, 1998 rendered in Civil
Case No. B-1041 is hereby REVERSED and SET ASIDE. The complaint filed by
Soledad Cañezo before the Municipal Trial Court of Naval, Biliran is hereby
DISMISSED on grounds of laches and prescription and for lack of merit.
SO ORDERED.12

The CA held that the petitioner’s inaction for several years casts a serious doubt on
her claim of ownership over the parcel of land. It noted that 17 years lapsed since she
discovered that respondent was in adverse possession of the property before she
instituted an action to recover the same. And during the probate proceedings, the
petitioner did not even contest the inclusion of the property in the estate of Crispulo
Rojas. 13

The CA was convinced that Crispulo Rojas owned the property, having bought the
same from Crisogono Limpiado in 1948. Supporting this conclusion, the appellate
court cited the following circumstances: (1) the property was declared for taxation
purposes in Crispulo’s name and he had been paying the taxes thereon from 1948 until
his death in 1978; (2) Crispulo adversely possessed the same property from 1948 until
his death in 1978; and (3) upon his death in 1978, the property was included in his
estate, the proceeds of which were distributed among his heirs.14

The CA further held that, assuming that there was an implied trust between the
petitioner and her father over the property, her right of action to recover the same
would still be barred by prescription since 49 years had already lapsed since Crispulo
adversely possessed the contested property in 1948.15

On May 9, 2001, the CA denied the petitioner’s motion for reconsideration for lack of
merit.16

In this petition for review, the petitioner, substituted by her heirs, assigns the
following errors:

That the Court of Appeals committed grave abuse of discretion in setting aside
petitioner’s contention that the Petition for Review filed by respondent
CONCEPCION ROJAS before the Court of Appeals was FILED OUT OF TIME;

That the Court of Appeals erred and committed grave abuse of discretion amounting
to lack or excess of jurisdiction when it decided that the filing of the case by
SOLEDAD CAÑEZO for Recovery of Real Property was already barred by
PRESCRIPTION AND LACHES.17

The petitioner insists that the respondent’s petition for review before the CA was filed
out of time. The petitioner posits that the CA may not grant an additional extension of
time to file the petition except for the most compelling reason. She contends that the
fact that respondent’s counsel needed additional time to secure the certified copy of
his annexes cannot be considered as a compelling reason that would justify an
additional period of

extension. She admits, though, that this issue was raised for the first time in their
motion for reconsideration, but insists that it can be raised at any time since it
concerns the jurisdiction of the CA over the petition.

The petitioner further posits that prescription and laches are unavailing because there
was an express trust relationship between the petitioner and Crispulo Rojas and his
heirs, and express trusts do not prescribe. Even assuming that it was not an express
trust, there was a resulting trust which generally does not prescribe unless there is
repudiation by the trustee.

For her part, the respondent argues that the petitioners are now estopped from
questioning the CA Resolution granting her second motion for extension to file the
petition for review. She notes that the petitioner did not raise this issue in the
comment that she filed in the CA. In any case, the grant of the second extension of
time was warranted considering that the certified true copy of the assailed RTC orders
did not arrive at the office of respondent’s counsel in Cebu City in time for the filing
of the petition.

On the merits, the respondent asserts that the complaint is barred by prescription,
laches and estoppel. From 1948 until his death in 1978, Crispulo cultivated the
property and was in adverse, peaceful and continuous possession thereof in the
concept of owner. It took the petitioner 49 years from 1948 before she filed the
complaint for recovery of the property in 1997. Granting that it was only in 1980 that
she found out that the respondent adversely possessed the property, still petitioner
allowed 17 years to elapse before she asserted her alleged right over the property.

Finally, the respondent maintains that the other co-owners are indispensable parties to
the case; and because they were not impleaded, the case should be dismissed.

The petition has no merit.

On the procedural issue raised by the petitioner, we find no reversible error in the
grant by the CA of the second motion for extension of time to file the respondent’s
petition. The grant or denial of a motion for extension of time is addressed to the
sound discretion of the court.18 The CA obviously considered the difficulty in securing
a certified true copy of the assailed decision because of the distance between the
office of respondent’s counsel and the trial court as a compelling reason for the
request. In the absence of any showing that the CA granted the motion for extension
capriciously, such exercise of discretion will not be disturbed by this Court.
On the second issue, the petitioner insists that her right of action to recover the
property cannot be barred by prescription or laches even with the respondent’s
uninterrupted possession of the property for 49 years because there existed between
her and her father an express trust or a resulting trust. Indeed, if no trust relations
existed, the possession of the property by the respondent, through her predecessor,
which dates back to 1948, would already have given rise to acquisitive prescription in
accordance with Act No. 190 (Code of Civil Procedure).19 Under Section 40 of Act
No. 190, an action for recovery of real property, or of an interest therein, can be
brought only within ten years after the cause of action accrues. This period coincides
with the ten-year period for acquisitive prescription provided under Section 4120 of the
same Act.

Thus, the resolution of the second issue hinges on our determination of the existence
of a trust over the property --- express or implied --- between the petitioner and her
father.

A trust is the legal relationship between one person having an equitable ownership of
property and another person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain duties and the
exercise of certain powers by the latter.21 Trusts are either express or
implied.22 Express trusts are those which are created by the direct and positive acts of
the parties, by some writing or deed, or will, or by words evincing an intention to
create a trust.23 Implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or, independently, of the
particular intention of the parties, as being superinduced on the transaction by
operation of law basically by reason of equity.24 An implied trust may either be a
resulting trust or a constructive trust.

It is true that in express trusts and resulting trusts, a trustee cannot acquire by
prescription a property entrusted to him unless he repudiates the trust.25 The following
discussion is instructive:

There is a rule that a trustee cannot acquire by prescription the ownership of property
entrusted to him, or that an action to compel a trustee to convey property registered in
his name in trust for the benefit of the cestui que trust does not prescribe, or that the
defense of prescription cannot be set up in an action to recover property held by a
person in trust for the benefit of another, or that property held in trust can be
recovered by the beneficiary regardless of the lapse of time.

That rule applies squarely to express trusts. The basis of the rule is that the possession
of a trustee is not adverse. Not being adverse, he does not acquire by prescription the
property held in trust. Thus, Section 38 of Act 190 provides that the law of
prescription does not apply "in the case of a continuing and subsisting trust."

The rule of imprescriptibility of the action to recover property held in trust may
possibly apply to resulting trusts as long as the trustee has not repudiated the trust.

xxxx

Acquisitive prescription may bar the action of the beneficiary against the trustee in an
express trust for the recovery of the property held in trust where (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui que
trust; (b) such positive acts of repudiation have been made known to the cestui que
trust, and (c) the evidence thereon is clear and conclusive.26

As a rule, however, the burden of proving the existence of a trust is on the party
asserting its existence, and such proof must be clear and satisfactorily show the
existence of the trust and its elements.27 The presence of the following elements must
be proved: (1) a trustor or settlor who executes the instrument creating the trust; (2) a
trustee, who is the person expressly designated to carry out the trust; (3) the trust res,
consisting of duly identified and definite real properties; and (4) thecestui que trust, or
beneficiaries whose identity must be clear.28 Accordingly, it was incumbent upon
petitioner to prove the existence of the trust relationship. And petitioner sadly failed to
discharge that burden.

The existence of express trusts concerning real property may not be established by
parol evidence.29 It must be proven by some writing or deed. In this case, the only
evidence to support the claim that an express trust existed between the petitioner and
her father was the self-serving testimony of the petitioner. Bare allegations do not
constitute evidence adequate to support a conclusion. They are not equivalent to proof
under the Rules of Court.30

In one case, the Court allowed oral testimony to prove the existence of a trust, which
had been partially performed. It was stressed therein that what is important is that
there should be an intention to create a trust, thus:

What is crucial is the intention to create a trust. While oftentimes the intention is
manifested by the trustor in express or explicit language, such intention may be
manifested by inference from what the trustor has said or done, from the nature of the
transaction, or from the circumstances surrounding the creation of the purported trust.

However, an inference of the intention to create a trust, made from language, conduct
or circumstances, must be made with reasonable certainty. It cannot rest on vague,
uncertain or indefinite declarations. An inference of intention to create a trust,
predicated only on circumstances, can be made only where they admit of no other
interpretation.31

Although no particular words are required for the creation of an express trust, a clear
intention to create a trust must be shown; and the proof of fiduciary relationship must
be clear and convincing. The creation of an express trust must be manifested with
reasonable certainty and cannot be inferred from loose and vague declarations or from
ambiguous circumstances susceptible of other interpretations.32

In the case at bench, an intention to create a trust cannot be inferred from the
petitioner’s testimony and the attendant facts and circumstances. The petitioner
testified only to the effect that her agreement with her father was that she will be
given a share in the produce of the property, thus:

Q: What was your agreement with your father Crispulo Rojas when you left this
property to him?

A: Every time that they will make copra, they will give a share.

Q: In what particular part in Mindanao [did] you stay with your husband?

A: Bansalan, Davao del Sur.

Q: And while you were in Bansalan, Davao del Sur, did Crispolo Rojas comply with
his obligation of giving your share the proceeds of the land?

A: When he was still alive, he gave us every three months sometimes P200.00 and
sometimes P300.00.33

This allegation, standing alone as it does, is inadequate to establish the existence of a

trust because profit-sharing per se, does not necessarily translate to a trust relation. It
could also be present in other relations, such as in deposit.

What distinguishes a trust from other relations is the separation of the legal title and
equitable ownership of the property. In a trust relation, legal title is vested in the
fiduciary while equitable ownership is vested in a cestui que trust. Such is not true in
this case. The petitioner alleged in her complaint that the tax declaration of the land
was transferred to the name of Crispulo without her consent. Had it been her intention
to create a trust and make Crispulo her trustee, she would not have made an issue out
of this because in a trust agreement, legal title is vested in the trustee. The trustee
would necessarily have the right to transfer the tax declaration in his name and to pay
the taxes on the property. These acts would be treated as beneficial to the cestui que
trust and would not amount to an adverse possession.34

Neither can it be deduced from the circumstances of the case that a resulting trust was
created. A resulting trust is a species of implied trust that is presumed always to have
been contemplated by the parties, the intention as to which can be found in the nature
of their transaction although not expressed in a deed or instrument of conveyance. A
resulting trust is based on the equitable doctrine that it is the more valuable
consideration than the legal title that determines the equitable interest in property.35

While implied trusts may be proved by oral evidence, the evidence must be
trustworthy and received by the courts with extreme caution, and should not be made
to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated.36 In order to establish an implied trust
in real property by parol evidence, the proof should be as fully convincing as if the
acts giving rise to the trust obligation are proven by an authentic document. An
implied trust, in fine, cannot be established upon vague and inconclusive proof.37 In
the present case, there was no evidence of any transaction between the petitioner and
her father from which it can be inferred that a resulting trust was intended.

In light of the disquisitions, we hold that there was no express trust or resulting trust
established between the petitioner and her father. Thus, in the absence of a trust
relation, we can only conclude that Crispulo’s uninterrupted possession of the subject
property for 49 years, coupled with the performance of acts of ownership, such as
payment of real estate taxes, ripened into ownership. The statutory period of
prescription commences when a person who has neither title nor good faith, secures a
tax declaration in his name and may, therefore, be said to have adversely claimed
ownership of the lot.38 While tax declarations and receipts are not conclusive evidence
of ownership and do not prove title to the land, nevertheless, when coupled with
actual possession, they constitute evidence of great weight and can be the basis of a
claim of ownership through prescription.39 Moreover, Section 41 of Act No. 190
allows adverse possession in any character to ripen into ownership after the lapse of
ten years. There could be prescription under the said section even in the absence of
good faith and just title.40

All the foregoing notwithstanding, even if we sustain petitioner’s claim that she was
the owner of the property and that she constituted a trust over the property with her
father as the trustee, such a finding still would not advance her case.

Assuming that such a relation existed, it terminated upon Crispulo’s death in 1978. A
trust terminates upon the death of the trustee where the trust is personal to the trustee
in the sense that the trustor intended no other person to administer it.41 If Crispulo was
indeed appointed as trustee of the property, it cannot be said that such appointment
was intended to be conveyed to the respondent or any of Crispulo’s other heirs.
Hence, after Crispulo’s death, the respondent had no right to retain possession of the
property. At such point, a constructive trust would be created over the property by
operation of law. Where one mistakenly retains property which rightfully belongs to
another, a constructive trust is the proper remedial device to correct the situation.42

A constructive trust is one created not by any word or phrase, either expressly or
impliedly, evincing a direct intention to create a trust, but one which arises in order to
satisfy the demands of justice. It does not come about by agreement or intention but in
the main by operation of law, construed against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in equity
and good conscience, to hold.43

As previously stated, the rule that a trustee cannot, by prescription, acquire ownership
over property entrusted to him until and unless he repudiates the trust, applies to
express trusts and resulting implied trusts. However, in constructive implied trusts,
prescription may supervene even if the trustee does not repudiate the relationship.
Necessarily, repudiation of the said trust is not a condition precedent to the running of
the prescriptive period.44 A constructive trust, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary
and a trustee are linked by confidential or fiduciary relations, in a constructive trust,
there is neither a promise nor any fiduciary relation to speak of and the so-called
trustee neither accepts any trust nor intends holding the property for the
beneficiary.45 The relation of trustee and cestui que trust does not in fact exist, and the
holding of a constructive trust is for the trustee himself, and therefore, at all times
adverse.

In addition, a number of other factors militate against the petitioner’s case. First, the
petitioner is estopped from asserting ownership over the subject property by her
failure to protest its inclusion in the estate of Crispulo. The CA, thus, correctly
observed that:

Even in the probate proceedings instituted by the heirs of Crispulo Rojas, which
included her as a daughter of the first marriage, Cañezo never contested the inclusion
of the contested property in the estate of her father. She even participated in the
project of partition of her father’s estate which was approved by the probate court in
1984. After personally receiving her share in the proceeds of the estate for 12 years,
she suddenly claims ownership of part of her father’s estate in 1997.

The principle of estoppel in pais applies when -- by one’s acts, representations,

admissions, or silence when there is a need to speak out -- one, intentionally or
through culpable negligence, induces another to believe certain facts to exist; and the
latter rightfully relies and acts on such belief, so as to be prejudiced if the former is
permitted to deny the existence of those facts.46 Such a situation obtains in the instant
case.

Second, the action is barred by laches. The petitioner allegedly discovered that the
property was being possessed by the respondent in 1980.47 However, it was only in
1997 that she filed the action to recover the property. Laches is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the
party entitled to it has either abandoned or declined to assert it.48

Finally, the respondent asserts that the court a quo ought to have dismissed the
complaint for failure to implead the other heirs who are indispensable parties. We
agree. We note that the complaint filed by the petitioner sought to recover ownership,
not just possession of the property; thus, the suit is in the nature of an action for
reconveyance. It is axiomatic that owners of property over which reconveyance is
asserted are indispensable parties. Without them being impleaded, no relief is
available, for the court cannot render valid judgment. Being indispensable parties,
their absence in the suit renders all subsequent actions of the trial court null and void
for want of authority to act, not only as to the absent parties but even as to those
present. Thus, when indispensable parties are not before the court, the action should
be dismissed.49 At any rate, a resolution of this issue is now purely academic in light
of our finding that the complaint is already barred by prescription, estoppel and
laches.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the

Court of Appeals, dated September 7, 2000, and Resolution dated May 9, 2001, are
AFFIRMED.
October 30, 1967

G.R. No. L-19012

VICTORIA JULIO, plaintiff-appellant,
vs.
EMILIANO DALANDAN and MARIA DALANDAN, defendants-appellees.

Pedro Magsalin and O.M. Herrera for plaintiff-appellant.

Cornelio R. Magsarili for defendants-appellees.

Sanchez, J.:

Disputing the correctness of the lower court's order of April 29, 1961 dismissing the complaint, plaintiff
elevated the case1 to this Court on appeal.

Plaintiff's complaint — which defendants, by a motion to dismiss, successfully overturned in the court below
— is planted upon a document Annex "A" of the complaint, labeled in the national language "SALAYSAY"
(Statement). It was in the form of an affidavit subscribed and sworn to by one Clemente Dalandan on
September 8, 1950. By the terms of this writing, Clemente Dalandan, deceased father of defendants
Emiliano and Maria Dalandan, acknowledged that a four-hectare piece of riceland in Las acknowledged that a
four-hectare piece of riceland in Las Piñas, Rizal belonging to Victoriana Dalandan, whose only child and heir
is plaintiff Victoria Julio, was posted as security for an obligation which he, Clemente Dalandan, assumed
but, however, failed to fulfill. The result was that Victoriana's said land was foreclosed. The key provisions of
said document are:2

3. Na ang lupang palayang ito na pagaari ni VICTORIANA DALANDAN at sa kasalukuyan ay walang ibang
tagapagmana kung di si VICTORIA JULIO, ay napafianza sa akin nuong bago pa dumating ang huling
digmaan at dahil sa hindi ako nakatupad sa aking pananagutang na sasagutan ng bukid niyang ito ay
naembargo ang nasabi niyang lupa;

[That this riceland owned by VICTORIANA DALANDAN whose sole heir is VICTORIA JULIO was posted as
security for an obligation assumed by me even before the outbreak of the last war and because I failed to
fulfill the obligation secured by her said farm the same was foreclosed;]

4. Na dahil dito ay ako samakatuwid ay nanagot sa kanya (VICTORIA JULIO), sa pagkakaembargo ng lupa
niyang iyong kung kaya't nagkasundo kami na ako ay nanagot sa kanya sa pagkaembargong iyon at
ipinangako ko sa kanya na ang lupa niyang iyon na naembargo ng dahil sa aking pananagutan ay aking
papalitan ng bukid din na may mahigit na APAT (4) na hectarea (o humigit kumulang sa APAT NA KABANG
BINHI);

[That because of this, and as agreed upon between us, I accordingly held myself liable to Victoria Julio for
the foreclosure of her said land, and I promised her that I would replace her aforesaid land which was
foreclosed because of my obligation with another farm of more than four; (4) hectares, that is, one planted
to four cavanes of seedlings, more or less;]

5. Na hindi maaring pilitin ang aking mga anak (EMILIANO AT MARIA DALANDAN), na hingin ang ani ng
bukid na nabangit sa itaas ng salaysay na ito;

[That my children (EMILIANO AND MARIA DALANDAN) may not be forced to give up the harvest of the farm
herein above mentioned;]

6. Na hindi rin maaring hingin kaaggad sa lalong madaling panahon ang kapalit ng bukid na may apat na
kabang binhi;

[That neither may the land — which was exchanged for the farm with four cavanes of seedlings — be
demanded immediately;]

Victoria Julio, in turn, joined Clemente Dalandan in the execution of, and also swore to, the said document,
in this wise:

Na, ako VICTORIA JULIO, na binabanggit sa itaas nito sa salaysay ni CLEMENTE DALANDAN, ay
nagpapatunay na tutoong lahat ang kanyang salaysay na iyon at tinatanggap ko ang kanyang mga sinasabi.

[That I, VICTORIA JULIO, mentioned in the above statement of CLEMENTE DALANDAN, attest to the truth
of, and accept, all that he stated therein.]

Back to the complaint herein. Plaintiff went on to aver that the land of Clemente Dalandan set forth in the
document, Annex "A" of the complaint, referred to six small parcels described in paragraph 4 thereof with a
total area of barely two hectares — "the only land owned by Clemente Dalandan at the time of the execution
of the document" — except fifty plots or "banigan" (saltbeds), which were previously conveyed to plaintiff's
mother by mean of pacto de retro sale and title to which had already been vested in the latter; that after
the death of Clemente Dalandan, plaintiff requested from defendants, Clemente's legitimate and surviving
heirs who succeeded in the possession of the land thus conveyed, to deliver the same to her; that
defendants "insisted that according to the agreement", neither delivery of the land nor the fruits thereof
could immediately be demanded, and that "plaintiff acceded to this contention of defendants and allowed
them to continue to remain in possession" thereof; that demands have "been made upon defendants to fix
the period within which they would deliver to the herein plaintiff the above-described parcels of land but
defendants have refused and until now still refuse to fix a specific time within which they would deliver to
plaintiff the aforementioned parcels of land." Predicated upon the foregoing allegations, plaintiff prayed for
judgment against defendants:

(a) Adjudging the herein plaintiff as owner of the land described in paragraph 4 hereof;

(b) Fixing a time within which defendants should deliver the said parcels of land to the herein plaintiff as
well as the fruits thereof;

(c) Adjudging that upon the expiration of the said time defendants convey and deliver to the herein plaintiff
the said parcels of land as well as the fruits thereof;
(d) Ordering the defendants to pay the plaintiff the sum of P2,000.00 as attorneys' fees;

(e) Ordering the defendants to pay the costs of the suit; and granting such other relief and remedy as may
be just and equitable in the premises.

Defendants met the complaint with a motion to dismiss grounded on: (1) prescription of plaintiff's action;
(2) pendency of another suit between the same parties for the same cause; and (3) release and/or
abandonment of the claim set forth in plaintiff's complaint.

By its order of April 29, 1961, the lower court ruled that plaintiff's suit, viewed either as an action for
specific performance or for the fixing of a term, had prescribed. Reason: the 10-year period from the date of
the document had elapsed. The lower court found it unnecessary to pass upon the other grounds for the
motion to dismiss. Hence, this appeal.

1. The threshold problem, basic to an understand of the issues herein involved, is the meaning to be
attached to the document now under review. Undoubtedly, bad more felicitous terms been employed, the
intention of the parties could easily be read. Unfortunately, ineptness of expression exacts of us an
examination of the document. Familiar rules of interpretation of documents tell us that in ascertaining the
intention of the parties, the contents thereof should not be interpreted piecemeal; all parts, provisions or
terms are to be considered; each paragraph clause or phrase must be read not in isolation, but in the light
of the entire writing; doubtful ones should be given that sense which may result from all of them,
considered as a whole. Such construction will be adopted as will result from an overall view of the document
itself.

It is, in this perspective that we now look into the writing. Adverting to paragraph 4 of the deed, defendants
take the position that the deceased Clemente Dalandan simply "promised" to Victoria Julio a farm of about
four hectares to replace the land of Victoriana Dalandan (mother of Victoria Julio) which was foreclosed. But
this view loses sight of the later provisions thereof. By paragraph 5, Clemente's children may not be forced
to give up the harvest of the farm mentioned in the deed. This was followed by paragraph 6 which states
that Victoria Julio may not immediately demand the substitute (kapalit) for the forfeited land. These last two
statements in the deed express the dominant purpose of the instrument. They convey the idea that the
naked ownership of the land in substitution was, indeed, transferred to Victoria Julio. Else there would have
been no sense in the proviso that the fruits as well as the physical possession of the land could not
immediately be demanded by Victoria Julio from Clemente's children, the herein defendants. For, the right
to demand fruits and physical possession of property has been known to be attributes of ownership.

The disputed complaint in paragraphs 6 and 7 thereof, in essence, avers plaintiff's request for the delivery of
the real property; defendants' answer that "according to the agreement" neither land nor fruits thereof could
immediately be taken away from them, and plaintiff's conformity thereto; and plaintiff's demands that the
period for delivery be fixed and defendants' refusal.

The allegations of the complaint just noted carry us to another aspect of the document: defendants' rights
over the land vis-a-vis plaintiff's. What rights were transmitted to defendants by their father, Clemente
Dalandan? Paragraphs 6 and 7 of the document supply the answer. They are usufructuaries for an
undetermined length of time. For so long as that period has not been fixed and has not elapsed, they hold
the property. Theirs is to enjoy the fruits of the land and to hold the same as trustees of Victoria Julio. And
this because, by the deed, Clemente Dalandan divested himself of the ownership — qualified solely by
withholding enjoyment of the fruits and physical possession. In consequence, Clemente Dalandan cannot
transmit to his heirs, the present defendants, such ownership.3 Nemo dat quod non habet. And then, the
document is a declaration by Clemente Dalandan, now deceased, against his own proprietary interests. Such
document is binding upon his heirs.4

2. But, defendants aver that recognition of the trust may not be proved by evidence aliunde. They argue
that by the express terms of Article 1443 of the Civil Code, "[n]o express trusts concerning an immovable or
any interest therein may be proved by parol evidence." This argument overlooks the fact that no oral
evidence is necessary. The express trust imposed upon defendants by their predecessor appears in the
document itself. For, while it is true that said deed did not in definitive words institute defendants as
trustees, a duty is therein imposed upon them — when the proper time comes — to turn over both the fruits
and the possession of the property to Victoria Julio. Not that this view is without statutory support. Article
1444 of the Civil Code states that: "No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended." In reality, the development of the trust as a method of
disposition of property, so jurisprudence teaches, "seems in large part due to its freedom from formal
requirements."5 This principle perhaps accounts for the provisions in Article 1444 just quoted. For,
"technical or particular forms of words or phrases are not essential to the manifestation of intention to
create a trust or to the establishment thereof."6 Nor would the use of some such words as "trust" or
"trustee" essential to the constitution of a trust as we have held in Lorenzo vs. Posadas, 64 Phil. 353, 368.
Conversely, the mere fact that the word "trust" or "trustee" was employed would not necessarily prove an
intention to create a trust. What is important is whether the trustor manifested an intention to create the
kind of relationship which in law is known as a trust. It is unimportant that the trustor should know 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."7 Here, that trust is effective as against defendants
and in favor of the beneficiary thereof, plaintiff Victoria Julio, who accepted it in the document itself.8

3. Plaintiff is not to be handicapped by a lack of a clear statement as to the actual description of the land
referred to in the trust deed, basis of plaintiff's cause of action. Obviously, the document was not prepared
by a learned scrivener. It imperfectly speaks of a "farm of more than four (4) hectares." But averment in the
complaint is not lacking to clear the uncertainty as to the identity of the land mentioned in that document.
Plaintiff points out in paragraph 4 of her complaint that while said deed does not specifically define its
boundaries "the parties to the said document actually refer" to the land which was "the only land owned by
Clemente Dalandan at the time of the execution" thereof, and which is set forth in small parcels under said
paragraph. This allegation in the complaint does not add any new term or stipulation to the writing. Rather,
it explains an obscurity occasioned by lack of precision in a clumsily prepared document. Thus it is, that
authorities are not wanting in support of the view that "in so far as the identity of land involved" in a trust is
concerned, "it has also been held that the writings, in being considered for the purpose of satisfying the
statute of frauds, are to be considered in their setting, and that parol evidence is admissible to make clear
the terms of a trust the existence of which is established by a writing, . . ."9

4. This case having been brought before us on a motion to dismiss, we need but stress that we are to be
guided solely by the averments of the complaint. So guided, we must say that there is sufficient showing in
the complaint that there is an acknowledgment on the part of defendants that they hold the property not as
their own, but in trust. There is no statement in the complaint intimating disavowal of such trust; the
complaint alleges refusal to deliver possession. In the sense in which we understand the complaint to be, it
cannot be said that plaintiff's action to recover the property thus held in trust has prescribed. Given the
fiduciary relation which according to the complaint is recognized by defendants, the latter may not invoke
the statute of limitations as a bar to plaintiff's action.10

5. Even on the assumption that defendants have not been constituted as trustees under the document in
question, still we arrive at the same conclusion. For, plaintiff's action is aimed, by an alleged owner of real
property at recovery of possession thereof, conditioned upon the fixing of the period therefor. Since plaintiff
claims ownership, possession, in the words of this Court "is a mere consequence of ownership."11 It may
not be said that plaintiff's suit is barred by the statute of limitations. She is protected by Article 1141 of the
Civil Code, which reads: "Real actions over immovables prescribe after thirty years." We take this view for
the obvious reason that defendants' motion to dismiss on this score is directed at the prescription of
plaintiff's action — not on acquisitive prescription 2tyvl.

6. Defendants in their brief draw attention, by way of counter-assignment of error, to their claim that this
case should also be dismissed upon the ground that there exists another action pending between the same
parties for the same cause, and on the further ground of release and/or abandonment.

The facts bearing on this issue are: In Land Registration Case N-706, G.L.R.O. Record No. N-7014, Court of
First Instance of Rizal, defendants are applicants. That case — so defendants aver — covers the very same
land set forth in plaintiff's complaint. In their opposition to that application, herein plaintiff prayed that the
same land — the subject of this suit — (covered by Plan PSU 129514) be registered "in the names of the
herein applicants and oppositor with the specific mention therein that the herein oppositor owns fifty salt
beds therein and having an absolute right to the use of the depositories." Defendants argue that if plaintiff
was the real owner of the entire area, opposition should have been presented on the whole, not merely as to
fifty salt beds.

Parenthetically, the question of ownership over the portion of fifty salt beds had already been resolved by
this Court in a decision promulgated on February 29, 1964 in L-19101 (Emiliano Dalandan and Maria
Dalandan, plaintiffs, vs. Victoria Julio, et al., defendants). There, this Court affirmed the order dismissing
the complaint filed by defendants herein, plaintiffs therein, for the repurchase of fifty salt beds which were
the subject of a sale with pacto de retro executed on September 24, 1932 by Clemente Dalandan in favor of
Victoriana Dalandan, predecessor of plaintiff kEVlO2CwK.
There is no point in the argument that an action is pending between plaintiff and defendants. Because, with
the exception of the fifty salt beds — which according to the complaint is not included in the deed — plaintiff
filed no opposition to defendants' application for land registration. Failure to so object in reference to the
registration of a bigger portion of the land, simply means that there is no case between the parties in
reference thereto in the land registration proceeding.

Not that plaintiff released or abandoned the claim to that bigger portion. For, there is an averment in the
complaint that an agreement exists between plaintiff and defendants to defer delivery thereof; and that
defendants thereafter refused to fix the period for such delivery. So that, on the assumption that defendants
should succeed in obtaining title to the property in the land registration case, such would not bar Victoria
Julio from requiring them to execute a conveyance of the property in her favor, in the event she (plaintiff
herein) prevails in the present case. And this, because defendants could here be declared as mere trustees
of plaintiff, if the averments of the complaint are found to be true."12

For the reasons given, the order of the Court of First Instance of Rizal dated April 29, 1961 dismissing the
complaint is hereby reversed and set aside, with instructions to remand the case to the court below for
further proceedings.

Costs against defendants-appellees. So ordered.

G.R. No. L-48090 February 16, 1950

DOLORES PACHECO, in her capacity as guardian of the minors Concepcion, Alicia,

and Herminia Yulo, petitioner,
vs.
SANTIAGO ARRO ET AL., respondents.
DEMETRIA FIRMEZA, accompanied by her husband, Basilio Rivera, respondent-movant.

Vicente Hilado for petitioner.

Rodolfo R. Reyes for respondents.

PADILLA, J.:

On 13 October 1947, this Court declared the record of this case reconstituted. As
reconstituted it shows that on 31 January 1941, a petition for a writ of certiorari was filed by
Dolores Pacheco, as guardian of the minors Concepcion, Alicia and Herminia surnamed Yulo,
daughters of the late Jose Yulo y Regalado, for the review of a judgment rendered by the
Court of Appeals which affirmed the one rendered on 21 March 1939 by the Court of First
Instance of Occidental Negros, ordering Jose Yulo y Regalado to execute deeds of
assignment in favor of the plaintiffs for each and every lot claimed by them, the numbers of
which appear opposite their names in the complaint filed by them.

The decision of the Court of Appeals reads as follows:

Los demandantes interpusieron la demanda de autos para que el demandado

otorgue una escritura de donacion a su favor de los lotes que aparecen a
continuacion de sus respectivos numbres y que son como siguien:

Santiago Arro Lot No. 237

Juan Balidio Lot No. 150
Ruperto Caballero Lot No. 208
Domingo Ciriaco Lot No. 147
Filomeno Echanova Lot No. 121
Florentino Granada Lot No. 148
Dorotea Firmesa Lot No. 224
Agustin Sarap Lot No. 207
Atanacio Jordan Lot No. 230
Fortunato Lambatin Lot No. 213
Fausto Leal Lot No. 118
Dionisia Crelo Lot No. 235
Martin Quinanola Lot No. 238
Florencia Rosales Lot No. 124
Basilio Salino Lot No. 153
Magdaleno Salvo Lot No. 155
Pascual Sibug Lot No. 215
Pedro Tan Lot No. 122
Teodora Caalaman Lot No. 112
Maria Torillo Lot No. 135
Pedro Tajanlangit Lot No. 209
Silverio Toala Lot No. 149
Pablo Tayson Lot No. 212
Maria Villanueva Lot No. 236
and Lot No. 228
Inocencio Viva Lot No. 120
Fortunato Siasat Lot No. 151
and Lot No. 152

El demandado alego, como defensa especial, que las alegaciones de la demanda no

constituyen motivo de accion y que el plazo para entablarla ha trascurrido; y, por via
de contrademanda, pide que los demandantes sean condenados a desalojar sus
respectivos lotes.

Habiendo fallecido el demandado, se enmendo la demanda para la sustitucion del

mismo por sus hijos, los cuales eran todos menores de edad, representados por su
tutora Dolores Pacheco, la cual tambien presento contestaciones enmendadas.

El Juzgado decidio el asunto a favor de los demandantes y contra la parte

demandada, y en su citada decision hizo el siguiente relato de hechos:

Los demandates eran los reclamantes de los lotes mencionados en la

demanda situados todos en las Calles Zamora y Quennon del municipio de
Isabela de esta provincia, con la oposicion del demandado Jose Yulo y
Regalado que tambien los reclamaba para si; pero habiendo llegado este y
los primeros a una inteligencia en el sentido de que si los nombres de dichas
calles se cambiaban de Zamora y Quennon a T. Yulo y G. Regalado,
respectivamente, que eran los nombres de los padres del demandado, a
saber: Teodoro Yulo y Gregoria Regalado; dicho demandado estaria
dispuesto a ceder dichos lotes a sus respectivos reclamantes, convenio que
se hizo en Corte abierta, presidida por el Honorable Juez Norberto
Romualdez, habiendo tomado nota de ello el taguigrafo Sr. Tanjuequiao,
segun consta en el Exhibit "B", los demandantes, que estaban asistidos
entonces de su abogado Don Agustin P. Seva, retiraron sus respectivas
reclamaciones asi como las pruebas que ya habian practicado ante el Juez
Arbitro en apoyo de sus citadas reclamaciones, dando asi lugar a que los
citados lotes se adjudicaran a nombre del citado demandado, librandose
despues a su favor los correspondientes decretos y titulos y estos ultimos
estuvieron largo tiempo en poder del tesorero municipal de Isabela sin que los
recogiera el citado demandado.

Despues de hechas muchas gestiones, pues hubo necesidad de que se

dictara una ley autorizando a los municipios para cambiar los nombres de las
calles que se hallan dentro de sus respectivos terminos jurisdiccionales, se
dicto por el Concejo Municipal de Isabela una resolucion ordenando el cambio
de los nombres de las calles ya citadas y una vez aprobada dicha resolucion
por la Honorable Junta Provincial de Negros Occidental, se procedio al
cambio mediante orden ejecutiva del Presidente de dicho municpio en febrero
de 1934.

El demandado por primera vez cumplio en parte con el convenio arriba

mencionado, otorgando en los meses de mayo y junio de 1928 los Exhibits D,
E, F, G, H e I a favor de los reclamantes mencionados en los mismos,
donandoles los lotes que les correspondian, y por virtud de dichas escrituras
los reclamantes favorecidos consiguieron el traspaso del titulo de dichos lotes
a su favor en el Registro de la Propiedad de esta provincia. Los otros
reclamantes siguieron el ejemplo y fueron a verse con el citado demandado
para pedir que se les cediera tambien los lotes que cada uno de ellos
reclamaba, y este les indico que mandaran preparar la escritura
correspondiente al abogado Don Hugo P. Rodriguez que habia estado
representado al citado demandado Jose Yulo y Regalado en vida en esta
causa, y a su muerte lo ha sido tambien y hasta ahora lo es de sus
herederos, pero dicho demandado no quiso firmar las tales escrituras hasta
 que paso a mejor vida, alegando que los demandantes se habian portado
ingratos para con el, ingratitud que segun estos ultimos declararon consistio
en que ellos no favorecieron a un candidato del demandado en una de las
elecciones pasadas.

Los demandantes entablaron la presente accion para obligar al demandado o

a sus herederos a respectar el convenio habido entre ellos y el citado
demandado y a otorgar las escrituras correspondientes de donacion de sus
respectivos lotes.

La representacion del citado demandado o sus herederos invoca como

primera defensa la prescripcion que no ha sido interrumpida, segun dicha
representacion, por el otorgamiento de los Exhibits D al I, ademas de otras
defensas basadas en tecnicismos que seria prolijo enumerar, precisamente
porque, a juicio del Juzgado, es innecesario hacer pronunciamientos sobre
las cuestiones asi suscitadas por la defensa para los fines de esta decision.

A continuacion hizo las siguientes consideraciones:

Sin tener en cuenta para nada los meritos de las alegaciones y pruebas aportadas
por los demandantes de que con anterioridad a la medicion catastral y a la vista de
los lotes mencionados en la demanda ellos eran los dueños y poseedores de los
mismos, pues de hecho continuan poseyendolos, habiendo pagado desde el
comienzo las contribuciones territoriales correspondientes; y sin tener tampoco en
cuenta el valor de los decretos y certificados de titulo expedidos a favor del
demandado que logro adquerirlos en virtud de la retirada de las reclamaciones de los
demandantes, asi como de las pruebas por ellos practicadas en virtud de la promesa
del demandado de cederles o donarles dichos lotes tan pronto se cumpliese la
condicion de que ya se ha hecho merito arriba, el juzgado es de opinion que el
demandado se ha constituido en un mero depositario de dichos titulos adjudicados a
el con la obligacion expresa de cederlos a sus respectivos dueños tan pronto se
consiguiese la realizacion de la condicion impuesta por el y aceptada por estos, y
cuando existe un deposito con caracter fiduciario, no cabe la prescripcion, pues
tenemos varias decisiones de la Honorable Corte Suprema de Filipinas en que se ha
sentado la doctrina que el derecho de los beneficiarios que por confianza permitieron
a uno a modo de depositario, que adquiriese el titulo de un terreno con la obligacion
de traspasarlo a ellos nunca prescribe a favor del que de este modo llega a adquirir el
titulo en virtud del deposito con caracter fiduciario.

Pues seria altamente injusto, ilegal y constituiria un despojo inaudito que unos pobres
labriegos fueran desposeidos de terrenos heredados de sus causantes que los
adquirieron por desmonte, roturacion en o con el producto de su trabajo y del sudor
de su frente, solamente porque tuvieron confianza en la persona del demandado que,
a juicio de ellos, era digno de ella, confianza respaldada por el convenio habido entre
ellos y el citado demandado en presencia del Juzgado, y en virtud del cual retiraron
sus reclamaciones, en la inteligencia de que se les cederia los terrenos qued
reclamaban sin necesidad de un pleito si se cumplia la condicion que el demandado
les impuso, si se permite ahora al demandado, por medio de tecnicismos quedarse
con los terrenos adjudicados a su favor y de que serian privados sus actuales
poseedores, cuando al juzgado le consta que a dichos proseedores no se les dio
oportunidad de probar sus reclamaciones mediante la promesa de una cesion o
donacion a su favor.

Es verdad que aparentemente toda accion que tuviesen los demandantes de

reclamar la propiedad de los citados lotes que hasta ahora continuan ocupando en
concepto de dueños en virtud de las disposiciones claras de la ley del Registro de
Propiedad ha prescrito si se diera valor a la defensa fundada exclusivamente en
tecnicismos que el demandado interpone en su informe, pero el Juzgado cree que
esas defensas no tienen aplicacion alguna al presente caso que cae perfectamente
dentro de lo que en derecho americano se llama "Trust."

Aun suponiendo que los reclamantes no tenian derecho a ser declarados dueños de
los lotes en controversia, el demandado no puede ahora alegar esa falta de derecho
para dejar de cumplir el compromiso contraido por el que se ha constituido en una
mero depositario del titulo que adquiriera sobre dichos lotes.

"An agreement entered into upon a supposition of a right or of a doubtful right

though it afterwards comes out that the right was on the other side, shall be
binding, and the right shall not prevail against the agreement of the parties; for
the right must always be on one side or the other, and therefore the
compromise or a doubtful right is a sufficient foundation for an agreement.

"Stapleton vs. Stapleton, 1 Atl., 2; Bishop, Cont., S., 27;

Ronayman vs. Jarves, 79 Ill., s 19; Parker vs. Runslow, 102 Ill., 272; 40 Am.
Rep., 558; McKinley vs. Watkins, 13 Ill., 140; Pool vs. Becker, 92 Ill., 601;
Wray vs. Chandler, 64 Ind., 154; United States Mortg. Co. vs. Henderson, 111
Ind., 24; Jones vs. Hittenhouse, 87 Ind., 348."

En su consecuencia, el Juzgado dicta sentencia ordenando al demandado o a los

herederos de este a otorgar a favor de todos y cada uno de los demandantes una
escritura de cesion de los lotes que cada uno de ellos reclama, con las costas al
demandado.

Se arguye, en primer termino, en esta apelacion que el Exhibit B, es una prueba

incompetente por no estar certificado ni por el Escribano ni por el Juez. Dicho
Exhibito es como sigue:

Exhibit B

ESTADOA UNIDOS DE AMERICA

ISLA FILIPINAS

EN EL JUZGADO DE PRIMERA INSTANCIA DE NEGROS OCCIDENTAL

VIGESIMO SEGUNDO DISTRITO JUDICIAL

[Expediente No. 11, G. L. R. O. Record No. 100, Catastro de Isabela,

Lote No. 109]

El Director de Terrenos, contra Tomas Abaniel y Otros.

En una sesion del Juzgado de Primera Instancia de Bacolod, Negros Occ. celebrada
el dia 3 de diciembre de 1917, a las 8:00 a.m.

Presentes ......... El Hon. Norberto Romualdez,

....... Juez del Vigesimo Segundo Distrito Judicial

El Escribano Sr. Mariano Cuadra de dicho Juzgado

Comparecencia El Taquigrafo Oficial Lorenzo Tanjuaquiao
s El abogado Sr. Agustin P. Seva, por los opositores y;
El abogado Sr. Serafin P. Hilado, por los reclamantes.

Llamada a vista el lote arriba numerado, tuvieron lugar las siguientes actuaciones:

El Sr. Pablo Garcia de Isabela, manifesto que el ha hablado con todos y cada uno de
los concejales de Isabela, y que ellos se han comprometido a aprobar yna resolucion
de poner el nombre del Sr. Teodoro Yulo a la calle Zamora y el de Gregoria Regalado
a la calle Quennon, ambas calles del casco de la poblacion de Isabela.

En vista de estas manifestaciones del abogado de los reclamantes de los cuarenta y

tantos lotes, poco mas o manos, situados en dichas calles y controvertidos entre el
Sr. Yulo y los ocupantes de dichos lotes, el Sr. Jose Yulo, representado por el Dr.
Mariano Yulo, se compromete a donar estas parcelas de terreno a los reclamantes
tan pronto como se apruebe una resolucion por la Junta Municipal de Isabela y
aprobada debidamente por la Junta Provincial, a poner los nombres de Teodoro Yulo
y Gregoria Regalado a las calles arriba mencionadas; Entendiendose, Que si algun
Concejo Municipal posterior resolviese cambiar de nuevo los nombres de dichas
calles y que esta ultima resolucion llegase a ponerse en practica, entonces la
propiedad que rige a cada uno de los lotes a que aqui se hacen referencia, revertira
al donante. Teniendo en cuenta todas estas manifestaciones, el abogado de los
reclamantes renuncia presentar sus pruebas.

El abogado de los opositores, en vista de este arreglo, hace constar que retira todas
las pruebas practicadas por sus representados ante el Juez arbitro de Isabela sobre
los lotes a que dicha transaccion se refiere.

Conviene hacer la aclaracion de que el compromiso del Sr. Yulo es el de hacer una
donacion de todos y cada uno de estos lotes a sus actuales ocupantes, no
necesariamente por toda la extension del lote, sino de aquella parte que el
determinara ulteriormente, y que al hacerlo asi, se obliga a no destruir edificios ni
siembras de los ocupantes de esos lotes. Entendiendose, Que en caso de
disminucion, esta tendra lugar no precisamente al frente de los lotes que miran a la
calle Zamora sino al lado contrario al Sur.

Certifico:

Que lo que precede es transcripcion fiel y exacta de las notas taquigraficas tomadas
por mi durante la sesion arriba mencionada.
 Bacolod, Negros Occidental, enero 4 de 1918.

LORENZO TANJUAQUIAO
Taquigrafo Oficial

Habiendose presentado dicha prueba ante el mismo Juzgado que vio el Catastro de
Isabela, y ante quien tuvo lugar lo que consta en el Exhibit B, somos de opinion que
dicha certificacion era innecesaria, puesto que el Juzgado podia tomar conocimiento
judicial del contenido del citado documento.

Tambien se alega que no constituyendo dicho Exhibit B un contrato firmado por la

parte demandada no puede presentarse como prueba en virtud de la ley de fraudes y
no puede probarse su contenido mediante prueba oral. Entendemos que la ley de
Fraudes solamente es aplicable a los contratos ratos y no a los consumados, como
son parcialmente los celebrados en Corte abierta y en virtud de los cuales Jose Yulo
y Regalado obtuvo el titulo de los lotes correspondientes a los demandantes, pues
estos son los que los poseen y siempre los han poseido. Cuando se trata de probar
un fraude, la prueba oral es admisible. (Yacapin versus Neri, 40 Phil., 61.) Habiendo
los demandantes retirado su oposicion en el expediente catastral en virtud de la
promesa hecha por el demandado en Corte abierta, este esta ahora en estoppel para
negar la existencia de dicho convenio.

En cuanto a la prescripcion de la accion de los demandantes, creemos que el

Juzgado inferior estuvo acertado al concluir que el titulo de los referidos lotes habia
sido expedido a nombre del demandado en su concepto de fideicomisario y, por lo
tanto, que el esta obligado a traspasar los mismos a favor de aquellos, en cualquier
tiempo. Este caso es parecido al asunto de Bantigui versus Platon, R. G. No. 31317.
Alli los opositores retiraron su oposicion en vista, segun el Juzgado, de las pruebas
de la parte solicitante. Mas tarde, sin embargo, presentaron una demanda para
obligar al solicitante a que traspase ciertas porciones del terreno decretado a su
favor, habiendo declarado en la vista el abogado de los opositores de que la
oposicion fue retirada por la promesa del solicitante de traspasar despues las
porciones reclamadas por los opositores. El Juzgado accedio a lo pedido en la
demanda, y dicha decision fue confirmada por la Corte Suprema.

En meritos de todo lo expuesto, y no hallando ningun error de hecho ni de derecho

en la decision apelada, la confirmamos en todas sus partes con las costas a la
apelante.

The foregoing discloses that the respondents, the plaintiffs in civil case No. 6088 of the Court
of First Instance of Occidental Negros and the appellees in CA-G.R. No. 5700 of the Court of
Appeals, filed answers in the cadastral case No. 11, G.L.R.O. cadastral record No. 100,
claiming lots as their property and began to present evidence before a referee appointed by
the court in support of their respective claims. Upon the assurance and promise made in open
court by Dr. Mariano Yulo, who represented the late predecessor-in-interest of the petitioners
in the cadastral case, the defendant in civil case No. 6088 and the appellant in CA-G.R. No.
5700, that after the change of Zamora and Quennon Streets of the municipality of Isabela,
province of Occidental Negros, into T. Yulo and G. Regalado Streets, respectively, the names
of the deceased parents of the defendant Jose Yulo y Regalado, the latter would convey and
assign the lots to the claimants, the herein respondents withdrew their claims, and the
cadastral court confirmed the title to the lots and decreed their registration in the name of the
defendant Jose Yulo y Regalado. In other words, the plaintiffs and appellees in the courts
below and now respondents asserted title to each lot claimed by them and began to present
evidence to prove title thereto in the cadastral case, but because of the promise referred to
made in open court by the representative of the defendant-appellant, the predecessor-in-
interest of the petitioners, the respondents withdrew their claims relying upon such promise.
That finding is of fact and cannot be reviewed by this Court.1 It does not appear — it is not
even hinted — that the admission as evidence of the copy of the transcript of the
stenographic notes taken by the official stenographer, upon which that finding is predicated,
was objected to by the predecessor-in-interest of the petitioners. The original transcript was
part of the record of the cadastral case and the trial court admitted it as evidence and based
the judgment rendered in the case upon it. The fact that the copy of the transcript (Exhibit B)
attached to the record of this case is not certified or authenticated by the clerk of court who is
the legal keeper thereof is no reason for disregarding it as evidence, for the original transcript
attached to the record of the cadastral case must have been read and taken into
consideration by the judge of the trial court. At any rate, there having been no objection to the
admission of the unauthenticate copy of the transcript, the question of its admissibility cannot
now be raised. The uncontroverted and undisputed finding of the trial court, confirmed by the
Court of Appeals, that the predecessor-in-interest of the petitioners had complied with the
promise by executing deeds of donation or assignment to some of the claimants, as shown in
or by Exhibits D, E, F, G, H, and I, is a strong proof or corroboration of the truth or authenticity
of the contents of the unauthenticated copy of the transcript of the stenographic notes
referred to marked Exhibit B. In these circumstances, its probative value cannot be
disregarded much less assailed.

Counsel asserts that a trustee does not have title to the property which is the subject of the
trust, because title to such property is vested in the cestui que trust. Hence — he argues — if
the predecessor-in-interest of the petitioners was a trustee, he or his successors-in-interest
could not and cannot be compelled in an action for specific performance to convey or assign
the property — the subject of the trust — because in an action for specific performance —
counsel contends — the party to be compelled to perform is the owner or has the title to the
property sought to be conveyed or assigned.

The juridical concept of a trust, which in a broad sense involves, arises from, or is the result
of, a fiduciary relation between the trustee and the cestui que trust as regards certain property
— real, personal, funds or money, or choses in action — must not be confused with an action
for specific performance. When the claim to the lots in the cadastral case was withdrawn by
the respondents relying upon the assurance and promise made in open court by Dr. Mariano
Yulo in behalf of Jose Yulo y Regalado, the predecessor-in-interest of the petitioners, a trust
or a fiduciary relation between them arose, or resulted therefrom, or was created thereby. The
trustee cannot invoke the statute of limitations to bar the action and defeat the right of
the cestui que trust. If the pretense of counsel for the petitioners that the promise above
adverted to cannot prevail over the final decree of the cadastral court holding the
predecessor-in-interest of the petitioners to be the owner of the lots claimed by the
respondents were to be sustained and upheld, then actions to compel a party to assign or
convey the undivided share in a parcel of land registered in his name to his co-owner or co-
heir could no longer be brought and could no longer succeed and prosper.

It is contended that lot 224 was claimed in the cadastral case by the predecessor-in-interest
of the petitioners alone, and not as adjudged in this case by the trial court and confirmed by
the Court of Appeals that it was also claimed by one of the respondents, one of the plaintiffs
in the court below. This also is a question of fact which cannot be reviewed in these
proceedings.

The judgment under review is affirmed, with costs against the petitioners.

G.R. No. 178645 January 30, 2009

LINA PEÑALBER, Petitioner,

vs.
QUIRINO RAMOS, LETICIA PEÑALBER, and BARTEX INC., Respondents.

DECISION
CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the
Decision1 dated 15 December 2006 of the Court of Appeals in CA-G.R. CV No. 69731. Said Decision
reversed and set aside the Decision2 dated 19 January 2000 of the Regional Trial Court (RTC) of
Tuguegarao City, Branch 2, in Civil Case No. 3672, which declared petitioner Lina Peñalber the
owner of the Bonifacio property subject of this case and ordered respondent spouses Quirino Ramos
and Leticia Peñalber to reconvey the same to petitioner.

The factual and procedural antecedents of the case are set forth hereunder.

Petitioner is the mother of respondent Leticia and the mother-in-law of respondent Quirino, husband
of Leticia. Respondent Bartex, Inc., on the other hand, is a domestic corporation which bought from
respondent spouses Ramos one of the two properties involved in this case.

On 18 February 1987, petitioner filed before the RTC a Complaint for Declaration of Nullity of Deeds
and Titles, Reconveyance, Damages, [with] Application for a Writ of Preliminary Prohibitory
Injunction against the respondents.3 It was docketed as Civil Case No. 3672.

First Cause of Action

Firstly, petitioner alleged in her Complaint that she was the owner of a parcel of land situated in
Ugac Norte, Tuguegarao, Cagayan, with an area of 1,457 sq.m. and covered by Transfer Certificate
of Title (TCT) No. T-433734 of the Register of Deeds for the Province of Cagayan, registered in
petitioner’s name. A residential house and a warehouse were constructed on the said parcel of land
which petitioner also claimed to own (the land and the improvements thereon shall be hereinafter
referred to as the Ugac properties). Petitioner averred that in the middle part of 1986, she
discovered that TCT No. T-43373 was cancelled on 13 May 1983 and TCT No. T-580435was issued
in its stead in the name of respondent spouses Ramos. Upon verification, petitioner learned that the
basis for the cancellation of her title was a Deed of Donation of a Registered Land, Residential
House and Camarin,6 which petitioner purportedly executed in favor of respondent spouses Ramos
on 27 April 1983. Petitioner insisted that her signature on the said Deed of Donation was a forgery
as she did not donate any property to respondent spouses Ramos. When petitioner confronted the
respondent spouses Ramos about the false donation, the latter pleaded that they would just pay for
the Ugac properties in the amount of P1 Million. Petitioner agreed to the proposition of the
respondent spouses Ramos.

Subsequently, around 10 January 1987,7 petitioner found out that the respondent spouses Ramos
were selling the Ugac properties to respondent Bartex, Inc. Petitioner then sent her son, Johnson
Paredes (Johnson),8 to caution respondent Bartex, Inc. that respondent spouses Ramos were not
the lawful owners of the said properties. Johnson was allegedly able to convey petitioner’s caveat to
a representative of respondent Bartex, Inc. Petitioner also warned respondent spouses Ramos not
to sell the Ugac properties anymore, otherwise, she would file the necessary action against them.
The respondent spouses Ramos then assured her that they would do no such thing. As a
precaution, petitioner executed an Affidavit of Adverse Claim over the Ugac Properties on 19
January 1987 and caused the same to be annotated on TCT No. T-58043 on the same day. Despite
petitioner’s warnings, respondent spouses Ramos still executed in favor of respondent Bartex, Inc. a
Deed of Absolute Sale9 over the Ugac properties on 12 January 1987 for a total price
of P150,000.00. As a result, TCT No. T-58043 in the name of respondent spouses Ramos was
cancelled and TCT No. T-6882510 in the name of respondent Bartex, Inc. was issued on 20 January
1987.
Petitioner contended that the Deed of Absolute Sale executed by respondent spouses Ramos in
favor of respondent Bartex, Inc. did not convey any valid title, not only because respondent Bartex,
Inc. was a buyer in bad faith, but also because respondent spouses Ramos did not own the Ugac
properties. Thus, petitioner prayed for the declaration of nullity of (1) the Deed of Donation of a
Registered Land, Residential House and Camarin purportedly executed by petitioner in favor
respondent spouses Ramos; (2) TCT No. T-58043, issued in the name of respondent spouses
Ramos; (3) the Deed of Absolute Sale executed by the respondent spouses Ramos in favor of
respondent Bartex, Inc.; and (4) TCT No. T-68825, issued in the name of respondent Bartex, Inc.
Should petitioner’s prayer not be granted, petitioner sought in the alternative that respondent
spouses Ramos be ordered to pay the assessed value of the Ugac properties, which was about P1.5
Million. Petitioner further prayed that TCT No. T-43373, in her name, be declared valid and active.

Second Cause of Action

Secondly, petitioner claimed that for many years prior to 1984, she operated a hardware store in a
building she owned along Bonifacio St., Tuguegarao, Cagayan. However, the commercial lot
(Bonifacio property) upon which the building stood is owned by and registered in the name of Maria
Mendoza (Mendoza), from whom petitioner rented the same.

On 22 March 1982, petitioner allowed respondent spouses Ramos to manage the hardware store.
Thereafter, in 1984, Mendoza put the Bonifacio property up for sale. As petitioner did not have
available cash to buy the property, she allegedly entered into a verbal agreement with respondent
spouses Ramos with the following terms:

[1.] The lot would be bought [by herein respondent spouses Ramos] for and in behalf of
[herein petitioner];

[2.] The consideration of P80,000.00 for said lot would be paid by [respondent spouses
Ramos] from the accumulated earnings of the store;

[3.] Since [respondent spouses Ramos] have the better credit standing, they would be made
to appear in the Deed of Sale as the vendees so that the title to be issued in their names
could be used by [them] to secure a loan with which to build a bigger building and expand
the business of [petitioner].

In accordance with the above agreement, respondent spouses Ramos allegedly entered into a
contract of sale11with Mendoza over the Bonifacio property,12 and on 24 October 1984, TCT No. T-
6276913 covering said property was issued in the names of respondent spouses Ramos.

On 20 September 1984, respondent spouses Ramos returned the management of the hardware
store to petitioner. On the bases of receipts and disbursements, petitioner asserted that the
Bonifacio property was fully paid out of the funds of the store and if respondent spouses Ramos had
given any amount for the purchase price of the said property, they had already sufficiently
reimbursed themselves from the funds of the store. Consequently, petitioner demanded from
respondent spouses Ramos the reconveyance of the title to the Bonifacio property to her but the
latter unjustifiably refused.

Petitioner insisted that respondent spouses Ramos were, in reality, mere trustees of the Bonifacio
property, thus, they were under a moral and legal obligation to reconvey title over the said property
to her. Petitioner, therefore, prayed that she be declared the owner of the Bonifacio property; TCT
No. T-62769, in the name of respondent spouses, be declared null and void; and the Register of
Deeds for the Province of Cagayan be directed to issue another title in her name.
On 2 March 1987, respondent spouses Ramos accordingly filed before the RTC their Answer14 to
petitioner’s Complaint. As regards the first cause of action, respondent spouses Ramos alleged that
petitioner, together with her son, Johnson, and the latter’s wife, Maria Teresa Paredes, mortgaged
the Ugac properties to the Development Bank of the Philippines (DBP) on 19 August 1990 for the
amount of P150,000.00. When the mortgage was about to be foreclosed because of the failure of
petitioner to pay the mortgage debt, petitioner asked respondent spouses Ramos to redeem the
mortgaged property or pay her mortgage debt to DBP. In return, petitioner promised to cede, convey
and transfer full ownership of the Ugac properties to them. Respondent spouses Ramos paid the
mortgage debt and, in compliance with her promise, petitioner voluntarily transferred the Ugac
properties to the former by way of a Deed of Donation dated 27 April 1983. After accepting the
donation and having the Deed of Donation registered, TCT No. T- 58043 was issued to respondent
spouses Ramos and they then took actual and physical possession of the Ugac properties.
Respondent spouses Ramos asserted that petitioner had always been aware of their intention to sell
the Ugac properties as they posted placards thereon stating that the said properties were for sale.
Respondent spouses Ramos further averred that petitioner also knew that they finally sold the Ugac
properties to respondent Bartex, Inc. for P150,000.00. Thus, respondent spouses Ramos maintained
that petitioner was not entitled to any reimbursement for the Ugac properties.

With regard to petitioner’s second cause of action involving the Bonifacio property, respondent
spouses Ramos contended that they were given not only the management, but also the full
ownership of the hardware store by the petitioner, on the condition that the stocks and merchandise
of the store will be inventoried, and out of the proceeds of the sales thereof, respondent spouses
Ramos shall pay petitioner’s outstanding obligations and liabilities. After settling and paying the
obligations and liabilities of petitioner, respondent spouses Ramos bought the Bonifacio property
from Mendoza out of their own funds.

Lastly, even if petitioner and respondent spouses Ramos belonged to the same family, the spouses
Ramos faulted petitioner for failing to exert efforts to arrive at an amicable settlement of their dispute.
Hence, respondent spouses Ramos sought, by way of a counterclaim against petitioner, moral and
exemplary damages and attorney’s fees, for allegedly filing a false, flimsy and frivolous complaint.

On 27 April 1987, respondent Bartex, Inc. filed before the RTC its own Answer to petitioner’s
Complaint, alleging, inter alia, that when a representative of the corporation inquired about the Ugac
properties for sale, respondent spouses Ramos presented their owner’s duplicate copy of TCT No.
T-58043, together with the tax declarations covering the parcel of land and the buildings thereon.
Respondent Bartex, Inc. even verified the title and tax declarations covering the Ugac properties with
the Register of Deeds and the Office of the Municipal Assessor as to any cloud, encumbrance or lien
on the properties, but none were found. Respondent spouses Ramos were then actually occupying
the Ugac properties and they only vacated the same after the consummation of the sale to
respondent Bartex, Inc. Respondent Bartex, Inc. claimed that the sale of the Ugac properties by
respondent spouses Ramos to the corporation was already consummated on 12 January 1987, and
the documents conveying the said properties were by then being processed for registration, when
petitioner caused the annotation of an adverse claim at the back of TCT No. T-58043 on 19 January
1987. As respondent Bartex, Inc. was never aware of any imperfection in the title of respondent
spouses Ramos over the Ugac properties, it claimed that it was an innocent purchaser in good faith.

Trial of the case thereafter ensued.

On 19 January 2000, the RTC promulgated its decision, ruling on petitioner’s first cause of action in
this wise:
On the first cause of action, the Court finds the testimony of [herein petitioner] Lina Penalber (sic)
denying her execution of the deed of donation over the Ugac property in favor of [herein respondent
spouses] Quirino Ramos and Leticia Penalber-Ramos (sic) insufficient to support the said cause of
action. A notarial document is, by law, entitled to full faith and credit upon its face (Arrieta v. Llosa,
282 SCRA 248) and a high degree of proof is needed to overthrow the presumption of truth in the
recitals contained in a public document executed with all legal formalities (People vs. Fabro, 277
SCRA 19). Hence, in order to contradict the facts contained in a notarial document and the
presumption of regularity in its favor, these (sic) must be evidence that is clear, convincing and more
than merely preponderant (Calahat vs. Intermediate Appellate Court, 241 SCRA 356). In the case at
bench, [petitioner] claims that she did not execute the deed of donation over the Ugac property in
favor of [respondent spouses Ramos]. Such denial, by itself, is not sufficient to overcome the
presumption of regularity of the notarial deed of donation and its entitlement to full faith and credit.
While it is true that, generally, the party who asserts the affirmative side of a proposition has the
burden of proof, which in this instance is (sic) the [respondent spouses Ramos] who are asserting
the validity of the deed of donation, [respondent spouses Ramos] can merely rely on the above-
stated presumption given to notarial documents and need not present any evidence to support their
claim of validity and due execution of the notarized deed of donation. On the other hand, [petitioner],
in addition to her allegation that she did not execute any such deed of donation in favor of
[respondent spouses Ramos] should have had her allegedly falsified signature on the deed of
donation examined by qualified handwriting experts to prove that, indeed, she did not execute the
same. Her failure to do so results in the failure of her cause.15(Emphasis ours.)

With respect to petitioner’s second cause of action, the RTC adjudged that:

On the second cause of action, the Court finds the evidence preponderantly in favor of the [herein
petitioner]. The evidence on record shows that when [petitioner] allowed [herein respondent spouses
Ramos] full management of the hardware store located on the Bonifacio property in March, 1982
(sic) an inventory of the stocks in trade in the said store was made showing stocks
worth P226,951.05* and when she got back the store from [respondent spouses Ramos] on
September 1984, another inventory was made [on] the stocks in trade in the said store showing,
stocks worth P110,005.88* or a difference of P116,946.17.* The only reason for an inventory having
been made when the hardware store was turned over to [respondent spouses Ramos] was, to the
mind of the Court, for the latter to account for the sales of such stocks. And to arrive at the net
amount due to [petitioner], all that is needed to be done is to deduct the value of the stocks present
at the store when management was returned to [petitioner] in September 1984 from the value of the
stocks found in the hardware store when said management was given to [respondent spouses
Ramos] in 1982. [Petitioner] claims that the purchase price for the Bonifacio property was to be
taken from the proceeds of sales from the hardware store which, as the evidence on record stands[,]
shows a balance in her favor of more than P116,000.00. [Respondent spouses Ramos] contend that
said amount was expended to pay off [petitioner’s] obligations to her suppliers. The record, however,
is totally silent on how much and when [respondent spouses Ramos] paid said alleged obligations of
[petitioner] or even who were the said suppliers thus paid. That [petitioner] and [respondent spouses
Ramos] agreed that the amount due [petitioner] from the proceeds of the sales of her stocks in the
hardware store would be applied to the purchase price of the Bonifacio property is supported by the
fact that [petitioner] did not ever ask for an accounting of said proceeds, despite the fact that as early
as September, 1984 (sic) she already knew that her stocks left by her in March, 1982 (sic) was
already sold by [respondent spouses Ramos] and that there was a difference of P116,000.00 plus
which was due to her.16 (Emphasis ours.)

Thus, the RTC decreed:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

 1. Finding the evidence on record insufficient to prove the [herein petitioner’s] first cause of
action, and, hence, dismissing the same;

2. On the second cause of action, in favor of the [petitioner] and against the [herein
respondent spouses Ramos];

2.1 Declaring the [petitioner] the owner of Lot 2-B of subdivision plan PST-2-01-
019316 (sic) with an area of 195 square meters situated along Bonifacio Street,
Tuguegarao, Cagayan; and

2.2 Ordering the [respondent spouses Ramos] to reconvey to the [petitioner] the said
property (Bonifacio property).

With costs de oficio.17 (Emphasis ours.)

On 22 February 2000, respondent spouses Ramos filed with the RTC a Motion for
Reconsideration18 of the afore-mentioned decision, assailing the ruling of the RTC on petitioner’s
second cause of action on the ground that the alleged express trust created between them and
petitioner involving the Bonifacio property could not be proven by parol evidence. In an Order19 dated
17 July 2000, the RTC denied respondent spouses Ramos’ Motion for Reconsideration for lack of
merit, ratiocinating that respondent spouses Ramos failed to interpose timely objections when
petitioner testified on their alleged verbal agreement regarding the purchase of the Bonifacio
property. As such, respondent spouses Ramos were deemed to have waived such objections, which
cannot be raised anymore in their Motion for Reconsideration. The RTC then reiterated its finding
that petitioner’s evidence clearly established her second cause of action. Additionally, the RTC held
that the requirement that the parties exert earnest efforts towards an amicable settlement of the
dispute had likewise been waived by the respondents as they filed no motion regarding the same
before the trial.

On 24 July 2000, respondent spouses Ramos elevated their case to the Court of Appeals, insofar as
the ruling of the RTC on petitioner’s second cause of action was concerned.20 The appeal was
docketed as CA-G.R. CV No. 69731.

On 15 December 2006, the Court of Appeals rendered the assailed Decision in favor of respondent
spouses Ramos.

Finding merit in the appeal, the appellate court observed that the second cause of action involved
not only the petitioner and her daughter, but also her son-in-law, who was not covered by the term
"family relations" under Article 15021 of the Family Code. Therefore, Article 15122 of the Family Code,
requiring the exertion of earnest efforts toward a compromise, did not apply as the impediment
arising from the said provision was limited only to suits between members of the same family or
those encompassed in the term "family relations" under Article 150.

The Court of Appeals also declared that petitioner failed to prove her claim with the required
quantum of evidence. According to the Court of Appeals:

It appears that before management of the store was transferred to [herein respondent spouses
Ramos], a beginning inventory of the stocks of the hardware store was made by [herein petitioner’s]
other children showing stocks amounting to Php226,951.05. After management of the hardware
store was returned to [petitioner], a second inventory was made with stocks amounting to
Php110,004.88 showing a difference of Php116,946.15. Contrary, however, to the finding of the trial
court, We find that said inventory showing such difference is not conclusive proof to show that the
said amount was used to pay the purchase price of the subject lot. In fact, as testified by Johnson
Paredes, son of [petitioner] who made the computation on the alleged inventories, it is not known if
the goods, representing the amount of Php116,946.17, were actually sold or not. It may have been
taken without actually being sold.

It is a basic rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to
proof. As between [petitioner’s] bare allegation of a verbal trust agreement, and the deed of absolute
sale between Maria Mendoza and [respondent spouses Ramos], the latter should prevail.

Although oral testimony is allowed to prove that a trust exists, contrary to the contention of
[respondent spouses Ramos], and the court may rely on parol evidence to arrive at a conclusion that
an express trust exists, what is crucial is the intention to create a trust. While oftentimes the intention
is manifested by the trustor in express or explicit language, such intention may be manifested by
inference from what the trustor has said or done, from the nature of the transaction, or from the
circumstances surrounding the creation of the purported trust.

However, an inference of the intention to create a trust, made from language, conduct or
circumstances, must be made with reasonable certainty. It cannot rest on vague, uncertain or
indefinite declarations. An inference of intention to create a trust, predicated only on circumstances,
can be made only where they admit of no other interpretation. Here, [petitioner] failed to establish
with reasonable certainty her claim that the purchase of the subject lot was pursuant to a verbal trust
agreement with [respondent spouses Ramos].23 (Emphasis ours.)

Thus, the Court of Appeals disposed of the case as follows:

WHEREFORE, in view of the foregoing, the instant appeal is hereby GRANTED and the Decision
dated 19 January 2000 of the Regional Trial Court (RTC) of Tuguegarao City, Branch 2, with respect
to the second cause of action or the Bonifacio Property in Civil Case No. 3672 is hereby
REVERSED and SET ASIDE and a new one entered DISMISSING the second cause of action of
[herein petitioner’s] complaint.24

On 12 January 2007, petitioner sought reconsideration25 of the foregoing Decision, but it was denied
by the appellate court in a Resolution26 dated 31 May 2007.

To have the ruling of the Court of Appeals overturned, petitioner brought her case before us through
the instant Petition, raising the following issues: (1) whether the existence of a trust agreement
between her and respondent spouses Ramos was clearly established, and (2) whether such trust
agreement was valid and enforceable.

At the outset, it is apparent that petitioner is raising questions of fact in the instant Petition. Be it
noted that in a petition for review under Rule 45 of the Rules of Court, only questions of law must be
entertained. A question of law arises when there is doubt as to what the law is on a certain state of
facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts.27 When the doubt or difference arises as to the truth or falsehood of alleged facts or when the
query necessarily solicits calibration of the whole evidence considering mostly the credibility of
witnesses, existence and relevancy of specific surrounding circumstances, their relation to each
other and to the whole and probabilities of the situation, questions or errors of fact are raised. 28 The
rule that only questions of law may be raised in a petition for review under Rule 45, however, admits
of certain exceptions,29 among which is when the findings of the trial court are grounded entirely on
speculation, surmise and conjecture. As will be discussed further, we find the afore-mentioned
exception to be applicable in the present Petition, thus, warranting a departure from the general rule.
In its technical legal sense, a trust is defined as the right, enforceable solely in equity, to the
beneficial enjoyment of property, the legal title to which is vested in another, but the word "trust" is
frequently employed to indicate duties, relations, and responsibilities which are not strictly technical
trusts.30 A person who establishes a trust is called the trustor; one in whom confidence is reposed is
known as the trustee; and the person for whose benefit the trust has been created is referred to as
the beneficiary.31 There is a fiduciary relation between the trustee and the beneficiary (cestui que
trust) as regards certain property, real, personal, money or choses in action.32

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of
the parties. Implied trusts come into being by operation of law.33 Express trusts are those which are
created by the 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.34 No particular words are required
for the creation of an express trust, it being sufficient that a trust is clearly intended. 35 However, in
accordance with Article 1443 of the Civil Code, when an express trust concerns an immovable
property or any interest therein, the same may not be proved by parol or oral evidence. 36

In the instant case, petitioner maintains that she was able to prove the existence of a trust
agreement between her and respondent spouses Ramos. She calls attention to the fact that
respondent spouses Ramos could not account for the P116,946.15 difference in the beginning
inventory and the second inventory of the stocks of the hardware store, and they failed to present
proof to support their allegation that the amount was used to pay the other obligations of petitioner.
As respondent spouses Ramos never denied the existence of the P116,946.15 difference, petitioner
contends that they have the burden of proving where this amount had gone, if indeed they did not
use the same to buy the Bonifacio property. Petitioner asserts that given the respondent spouses
Ramos’ failure to discharge such burden, the only conclusion would be that they did use the amount
to purchase the Bonifacio property.

Petitioner further alleges that based on the verbal agreement between her and respondent spouses
Ramos, a trust agreement was created and that the same is valid and enforceable. Petitioner claims
that she is the trustor for it was she who entrusted the Bonifacio property to respondent spouses
Ramos as the trustees, with the condition that the same be used to secure a loan, the proceeds of
which would be used to build a bigger building to expand petitioner’s business. Petitioner maintains
that a trust agreement was clearly intended by the parties when petitioner left the management of
the hardware store to respondent spouses Ramos, with the agreement that the proceeds from the
sales from said store be used to buy the lot upon which the store stands. The respondent spouses
Ramos’ assumption of the management of the hardware store and their eventual purchase of the
Bonifacio property indubitably shows that respondent spouses Ramos honored their obligation under
the verbal agreement. Such being the case, it behooved for the respondent spouses Ramos to hold
the Bonifacio property for petitioner’s benefit.

Petitioner’s arguments fail to persuade.

It bears stressing that petitioner has the burden of proving her cause of action in the instant case
and she may not rely on the weakness of the defense of respondent spouses Ramos. Burden of
proof is the duty of any party to present evidence to establish his claim or defense by the amount of
evidence required by law, which is preponderance of evidence in civil cases. Preponderance of
evidence37 is the weight, credit, and value of the aggregate evidence on either side and is usually
considered to be synonymous with the term "greater weight of the evidence" or "greater weight of
the credible evidence. It is evidence which is more convincing to the court as worthy of belief than
that which is offered in opposition thereto.38 Therefore, the party, whether plaintiff or defendant, who
asserts the affirmative of the issue has the burden of proof to obtain a favorable judgment. For the
plaintiff, the burden of proof never parts.39 For the defendant, an affirmative defense is one which is
not a denial of an essential ingredient in the plaintiff’s cause of action, but one which, if established,
will be a good defense i.e., an avoidance of the claim.40

From the allegations of the petitioner’s Complaint in Civil Case No. 3672, the alleged verbal trust
agreement between petitioner and respondent spouses Ramos is in the nature of an express trust
as petitioner explicitly agreed therein to allow the respondent spouses Ramos to acquire title to the
Bonifacio property in their names, but to hold the same property for petitioner’s benefit. Given that
the alleged trust concerns an immovable property, however, respondent spouses Ramos counter
that the same is unenforceable since the agreement was made verbally and no parol evidence may
be admitted to prove the existence of an express trust concerning an immovable property or any
interest therein.

On this score, we subscribe to the ruling of the RTC in its Order dated 17 July 2000 that said
spouses were deemed to have waived their objection to the parol evidence as they failed to timely
object when petitioner testified on the said verbal agreement. The requirement in Article 1443 that
the express trust concerning an immovable or an interest therein be in writing is merely for purposes
of proof, not for the validity of the trust agreement. Therefore, the said article is in the nature of a
statute of frauds. The term statute of frauds is descriptive of statutes which require certain classes of
contracts to be in writing. The statute does not deprive the parties of the right to contract with respect
to the matters therein involved, but merely regulates the formalities of the contract necessary to
render it enforceable.41 The effect of non-compliance is simply that no action can be proved unless
the requirement is complied with. Oral evidence of the contract will be excluded upon timely
objection. But if the parties to the action, during the trial, make no objection to the admissibility of the
oral evidence to support the contract covered by the statute, and thereby permit such contract to be
proved orally, it will be just as binding upon the parties as if it had been reduced to writing.42

Per petitioner’s testimony,43 the Bonifacio property was offered for sale by its owner Mendoza.
Petitioner told respondent spouses Ramos that she was going to buy the lot, but the title to the same
will be in the latter’s names. The money from the hardware store managed by respondent spouses
Ramos shall be used to buy the Bonifacio property, which shall then be mortgaged by the
respondent spouses Ramos so that they could obtain a loan for building a bigger store. The
purchase price of P80,000.00 was paid for the Bonifacio property. On 20 September 1984, the
respondent spouses Ramos returned the management of the store to petitioner. Thereafter,
petitioner allowed her son Johnson to inventory the stocks of the store. Johnson found out that the
purchase price ofP80,000.00 for the Bonifacio property was already fully paid. When petitioner told
the respondent spouses Ramos to transfer the title to the Bonifacio property in her name, the
respondent spouses Ramos refused, thus, prompting petitioner to file a complaint against them.

Similarly, Johnson testified44 that on 22 March 1982, petitioner turned over the management of the
hardware store to respondent spouses Ramos. During that time, an inventory45 of the stocks of the
store was made and the total value of the said stocks were determined to be P226,951.05. When
respondent spouses Ramos returned the management of the store to petitioner on 20 September
1984, another inventory46 of the stocks was made, with the total value of the stocks falling
to P110,004.88. The difference of P116,946.16 was attributed to the purchase of the Bonifacio
property by the respondent spouses Ramos using the profits from the sales of the store.

A careful perusal of the records of the case reveals that respondent spouses Ramos did indeed fail
to interpose their objections regarding the admissibility of the afore-mentioned testimonies when the
same were offered to prove the alleged verbal trust agreement between them and petitioner.
Consequently, these testimonies were rendered admissible in evidence. Nevertheless, while
admissibility of evidence is an affair of logic and law, determined as it is by its relevance and
competence, the weight to be given to such evidence, once admitted, still depends on judicial
evaluation.47 Thus, despite the admissibility of the said testimonies, the Court holds that the same
carried little weight in proving the alleged verbal trust agreement between petitioner and respondent
spouses.

Petitioner’s allegations as to the existence of an express trust agreement with respondent spouses
Ramos, supported only by her own and her son Johnson’s testimonies, do not hold water. As
correctly ruled by the Court of Appeals, a resulting difference of P116,946.15 in the beginning
inventory of the stocks of the hardware store (before management was transferred to respondent
spouses Ramos) and the second inventory thereof (after management was returned to petitioner),
by itself, is not conclusive proof that the said amount was used to pay the purchase price of the
Bonifacio property, such as would make it the property of petitioner held merely in trust by
respondent spouses Ramos. Such a conclusion adopted by the RTC is purely speculative and non
sequitur. The resulting difference in the two inventories might have been caused by other factors and
the same is capable of other interpretations (e. g., that the amount thereof may have been written off
as business losses due to a bad economic condition, or that the stocks of the store might have been
damaged or otherwise their purchase prices have increased dramatically, etc.), the exclusion of
which rested upon the shoulders of petitioner alone who has the burden of proof in the instant case.
This petitioner miserably failed to do. The fact that respondent spouses Ramos never denied
the P116,946.15 difference, or that they failed to present proof that they indeed used the said
amount to pay the other obligations and liabilities of petitioner is not sufficient to discharge
petitioner’s burden to prove the existence of the alleged express trust agreement.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari under Rule 45 of
the Rules of Court is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. CV
No. 69731 dated 15 December 2006 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 165696 April 30, 2008

ALEJANDRO B. TY, petitioner,

vs.
SYLVIA S. TY, in her capacity as Administratrix of the Intestate Estate of Alexander
Ty, respondent.

DECISION
AZCUNA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court against the Decision1 of
the Court of Appeals (CA) in CA-G.R. No. 66053 dated July 27, 2004 and the Resolution therein
dated October 18, 2004.

The facts are stated in the CA Decision:

On May 19, 1988, Alexander Ty, son of Alejandro B. Ty and Bella Torres, died of cancer at
the age of 34. He was survived by his wife, Sylvia Ty, and his only daughter, Krizia Katrina
Ty. A few months after his death, a petition for the settlement of his intestate estate was filed
by Sylvia Ty in the Regional Trial Court of Quezon City.

Meanwhile, on July 20, 1989, upon petition of Sylvia Ty, as Administratrix, for settlement and
distribution of the intestate estate of Alexander in the County of Los Angeles, the Superior
Court of California ordered the distribution of the Hollywood condominium unit, the
Montebello lot, and the 1986 Toyota pick-up truck to Sylvia Ty and Krizia Katrina Ty.

On November 23, 1990, Sylvia Ty submitted to the intestate Court in Quezon City an
inventory of the assets of Alexander’s estate, consisting of shares of stocks and a schedule
of real estate properties, which included the following:

1. EDSA Property – a parcel of land with an area of 1,728 square meters situated in EDSA,
Greenhills, Mandaluyong, Metro Manila, registered in the name of Alexander Ty when he
was still single, and covered by TCT No. 0006585;

2. Meridien Condominium – A residential condominium with an area of 167.5 square meters

situated in 29 Annapolis Street, Greenhills, Mandaluyong, Metro Manila, registered in the
name of the spouses Alexander Ty and Sylvia Ty, and covered by Condominium Certificate
of Title No. 3395;

3. Wack-Wack Property – A residential land with an area of 1,584 square meters situated in
Notre Dame, Wack-Wack, Mandaluyong, Metro Manila, registered in the name of the
spouses Alexander Ty and Sylvia Ty, and covered by TCT No. 62670.

On November 4, 1992, Sylvia Ty asked the intestate Court to sell or mortgage the properties
of the estate in order to pay the additional estate tax of P4,714,560.02 assessed by the BIR.

Apparently, this action did not sit well with her father-in-law, the plaintiff-appellee, for on
December 16, 1992, Alejandro Ty, father of the deceased Alexander Ty, filed a complaint for
recovery of properties with prayer for preliminary injunction and/or temporary restraining
order. Docketed as Civil Case No. 62714, of the Regional Trial Court of Pasig, Branch 166,
the complaint named Sylvia Ty as defendant in her capacity as [Administratrix] of the
Intestate Estate of Alexander Ty.

Forthwith, on December 28, 1992, defendant Sylvia Ty, as Administratrix of the Intestate
Estate of Alexander Ty, tendered her opposition to the application for preliminary injunction.
She claimed that plaintiff Alejandro Ty had no actual or existing right, which entitles him to
the writ of preliminary injunction, for the reason that no express trust concerning an
immovable maybe proved by parole evidence under the law. In addition, Sylvia Ty argued
that the claim is barred by laches, and more than that, that irreparable injury will be suffered
by the estate of Alexander Ty should the injunction be issued.

To the aforementioned opposition, plaintiff filed a reply, reiterating the arguments set forth in
his complaint, and denying that his cause of action is barred by laches.

In an order dated February 26, 1993, the Regional Trial Court granted the application for a
writ of preliminary injunction.

As to the complaint for recovery of properties, it is asserted by plaintiff Alejandro Ty that he

owns the EDSA property, as well as the Meridien Condominium, and the Wack-Wack
property, which were included in the inventory of the estate of Alexander Ty. Plaintiff alleged
that on March 17, 1976, he bought the EDSA property from a certain Purificacion Z. Yujuico;
and that he registered the said property in the name of his son, Alexander Ty, who was to
hold said property in trust for his brothers and sisters in the event of his (plaintiffs) sudden
demise. Plaintiff further alleged that at the time the EDSA property was purchased, his son
and name-sake was still studying in the United States, and was financially dependent on
him.

As to the two other properties, plaintiff averred that he bought the Meridien Condominium
sometime in 1985 and the Wack-Wack property sometime in 1987; that titles to the
aforementioned properties were also placed in the name of his son, Alexander Ty, who was
also to hold these properties in trust for his brothers and sisters. Plaintiff asserted that at [the]
time the subject properties were purchased, Alexander Ty and Sylvia Ty were earning
minimal income, and were thus financially incapable of purchasing said properties. To
bolster his claim, plaintiff presented the income tax returns of Alexander from 1980-1984,
and the profit and loss statement of defendant’s Joji San General Merchandising from 1981-
1984.

Plaintiff added that defendant acted in bad faith in including the subject properties in the
inventory of Alexander Ty’s estate, for she was well aware that Alexander was simply holding
the said properties in trust for his siblings.

In her answer, defendant denied that the subject properties were held in trust by Alexander
Ty for his siblings. She contended that, contrary to plaintiff’s allegations, Alexander
purchased the EDSA property with his own money; that Alexander was financially capable of
purchasing the EDSA property as he had been managing the family corporations ever since
he was 18 years old, aside from the fact that he was personally into the business of
importing luxury cars. As to the Meridien Condominium and Wack-Wack property, defendant
likewise argued that she and Alexander Ty, having been engaged in various profitable
business endeavors, they had the financial capacity to acquire said properties.

By way of affirmative defenses, defendant asserted that the alleged verbal trust agreement
over the subject properties between the plaintiff and Alexander Ty is not enforceable under
the Statute of Frauds; that plaintiff is barred from proving the alleged verbal trust under the
Dead Man’s Statute; that the claim is also barred by laches; that defendant’s title over the
subject properties cannot be the subject of a collateral attack; and that plaintiff and counsel
are engaged in forum-shopping.

In her counterclaim, defendant prayed that plaintiff be sentenced to pay attorney’s fees and
costs of litigation.
 On November 9, 1993, a motion for leave to intervene, and a complaint-in-intervention were
filed by Angelina Piguing-Ty, legal wife of plaintiff Alejandro Ty. In this motion, plaintiff-
intervenor prayed that she be allowed to intervene on the ground that the subject properties
were acquired during the subsistence of her marriage with the plaintiff, hence said properties
are conjugal. On April 27, 1994, the trial court issued an Order granting the aforementioned
motion.

During the hearing, plaintiff presented in evidence the petition filed by defendant in Special
Proceedings No. Q-88-648; the income tax returns and confirmation receipts of Alexander Ty
from 1980-1984; the profit and loss statement of defendant’s Joji San General
Merchandising from 1981-1984; the deed of sale of the EDSA property dated March 17,
1976; the TCT’s and CCT of the subject properties; petty cash vouchers, official receipts and
checks to show the plaintiff paid for the security and renovation expenses of both the
Meridien Condominium and the Wack-Wack property; checks issued by plaintiff to defendant
between June 1988 – November 1991 to show that plaintiff provided financial support to
defendant in the amount ofP51,000.00; and the articles of incorporations of various
corporations, to prove that he, plaintiff, had put up several corporations.

Defendant for her presented in evidence the petition dated September 6, 1988 in Special
Proceedings No. Q-88-648; the TCTs and CCT of the subject properties; the deed of sale of
stock dated July 27, 1988 between the ABT Enterprises, Incorporated, and plaintiff; the
transcript of stenographic notes dated January 5, 1993 in SEC Case No. 4361; the minutes
of the meetings, and the articles of incorporation of various corporations; the construction
agreement between the defendant and the Home Construction, for the renovation of the
Wack-Wack property; the letters of Home Construction to defendant requesting for payment
of billings and official receipts of the same, to show that defendant paid for the renovation of
the Wack-Wack property; the agreement between Drago Daic Development International,
Incorporated, and the spouses Alexander Ty and Sylvia Ty, dated March, 1987, for the sale
of the Wack-Wack property covered by TCT No. 55206 in favor of the late Alexander Ty and
the defendant; a photograph of Krizia S. Ty; business cards of Alexander Ty; the Order and
the Decree No. 10 of the Superior Court of California, dated July 20, 1989; the agreement
between Gerry L. Contreras and the Spouses Alexander Ty and Sylvia Ty, dated January 26,
1988, for the Architectural Finishing and Interior Design of the Wack-Wack property; official
receipts of the Gercon Enterprises; obituaries published in several newspapers; and a letter
addressed to Drago Daic dated February 10, 1987.2

Furthermore, the following findings of facts of the court a quo, the Regional Trial Court of Pasig City,
Branch 166 (RTC), in Civil Case No. 62714, were adopted by the CA, thus:

We adopt the findings of the trial court in respect to the testimonies of the witnesses who
testified in this case, thus:

"The gist of the testimony of defendant as adverse witness for the plaintiff:

"Defendant and Alexander met in Los Angeles, USA in 1975. Alexander was then only 22
years old. They married in 1981. Alexander was born in 1954. He finished high school at the
St. Stephen High School in 1973. Immediately after his graduation from high school,
Alexander went to the USA to study. He was a full-time student at the Woodberry College
where he took up a business administration course. Alexander graduated from the said
college in 1977. He came back to the Philippines and started working in the Union
Ajinomoto, Apha Electronics Marketing Corporation and ABT Enterprises. After their
marriage in 1981, Alexander and defendant lived with plaintiff at the latter’s residence at 118
Scout Alcaraz St.[,] Quezon City. Plaintiff has been engaged in manufacturing and trading
business for almost 50 years. Plaintiff has established several corporations. While in the
USA, Alexander stayed in his own house in Montebello, California, which he acquired during
his college days. Alexander was a stockholder of companies owned by plaintiff’s family and
got yearly dividend therefrom. Alexander was an officer in the said companies and obtained
benefits and bonuses therefrom. As stockholder of Ajinomoto, Royal Porcelain, Cartier and
other companies, he obtained stock dividends. Alexander engaged in buy and sell of cars.
Defendant cannot give the exact amount how much Alexander was getting from the
corporation since 1981. In 1981, defendant engaged in retail merchandising i.e., imported
jewelry and clothes. Defendant leased two (2) units at the Greenhills Shoppesville.
Defendant had dividends from the family business which is real estate and from another
corporation which is Perway. During their marriage, defendant never received allowance
from Alexander. The Wack-Wack property cost P5.5 million. A Car Care Center was
established by Alexander and defendant was one of the stockholders. Defendant and
Alexander spent for the improvement of the Wack-Wack property. Defendant and Alexander
did not live in the condominium unit because they followed the Chinese tradition and lived
with plaintiff up to the death of Alexander. Defendant and Alexander started putting
improvements in the Wack-Wack property in 1988, or a few months before Alexander died.

"The gist of the testimony of Conchita Sarmiento:

"In 1966, Conchita Sarmiento was employed in the Union Chemicals as secretary of plaintiff
who was the president. Sarmiento prepared the checks for the school expenses and
allowances of plaintiff’s children and their spouses. Sarmiento is familiar with the Wack-Wack
property. Plaintiff bought the Wack-Wack property and paid the architect and spent for the
materials and labor in connection with the construction of the Wack-Wack property (Exhs. ‘M’
to ‘Z’ inclusive; Exhs. ‘AA’ to ‘ZZ,’ inclusive; Exhs. ‘AAA’ to ‘ZZZ,’ inclusive; Exhs. ‘AAAA’ to
‘FFFF,’ inclusive). Plaintiff entrusted to Alexander the supervision of the construction of the
Wack-Wack property, so that Exhibit ‘M’ shows that the payment was received from
Alexander. Plaintiff visited the Wack-Wack property several times and even pointed the room
which he intended to occupy. Sarmiento was told by plaintiff that it was very expensive to
maintain the house. The documents, referring to the numerous exhibits, were in the
possession of plaintiff because they were forwarded to him for payment. Sarmiento knows
the residential condominium unit because in 1987 plaintiff purchased the materials and
equipments for its renovation, as shown by Exhs. ‘GGGG’ to ‘QQQQ’ inclusive. Plaintiff
supported defendant after the death of Alexander, as shown by Exhs. ‘RRRR’ to ‘TTTT’
inclusive. Sarmiento was plaintiff’s secretary and assisted him in his official and personal
affairs. Sarmiento knew that Alexander was receiving a monthly allowance in the amount
of P5,000.00 from Alpha.

"The gist of the testimony of the plaintiff:

Plaintiff is 77 years old and has been engaged in business for about 50 years. Plaintiff
established several trading companies and manufacturing firms. The articles of incorporation
of the companies are shown in Exhs. ‘UUUUU’ (Manila Paper Mills, Inc.); ‘UUUUU-1’ (Union
Chemicals Inc.); ‘UUUUU-2’ (Starlight Industrial Company Inc.); ‘UUUUU-3’ (Hitachi Union,
Inc.); ‘UUUUU-4’ (Philippine Crystal Manufacturing Corp.). Alexander completed his
elementary education in 1969 at the age of 15 years and finished high school education in
1973. Alexander left in 1973 for the USA to study in the Woodberry College in Los Angeles.
Alexander returned to the Philippines in 1977. When Alexander was 18 years old, he was
still in high school, a full-time student. Alexander did not participate in the business
operation. While in High School Alexander, during his free time attended to his hobby about
cars – Mustang, Thunderbird and Corvette. Alexander was not employed. Plaintiff took care
of Alexander’s financial needs. Alexander was plaintiff’s trusted son because he lived with
him from childhood until his death. In 1977 when Alexander returned to the Philippines from
the USA, he did not seek employment. Alexander relied on plaintiff for support. After
Alexander married defendant, he put up a Beer Garden and a Car Care Center. Plaintiff
provided the capital. The Beer Garden did not make money and was closed after
Alexander’s death. Defendant and Alexander lived with plaintiff in Quezon City and he spent
for their needs. Plaintiff purchased with his own money the subject properties. The EDSA
property was for investment purposes. When plaintiff accompanied Alexander to the USA in
1973, he told Alexander that he will buy some properties in Alexander’s name, so that if
something happens to him, Alexander will distribute the proceeds to his siblings. When the
EDSA property was bought, Alexander was in the USA. Plaintiff paid the real estate taxes.
With plaintiff’s permission, Alexander put up his Beer Garden and Car Care Center in the
EDSA property. It was Alexander who encouraged plaintiff to buy the condominium unit
because Alexander knew the developer. The condominium unit was also for investment
purposes. Plaintiff gave Alexander the money to buy the condominium unit. After sometime,
Alexander and defendant asked plaintiff’s permission for them to occupy the condominium
unit. Plaintiff spent for the renovation of the condominium unit. It was Alexander who
encouraged plaintiff to buy the Wack-Wack property. Plaintiff spent for the renovation of the
condominium unit. It was Alexander who encouraged plaintiff to buy the Wack-Wack
property. Plaintiff paid the price and the realty taxes. Plaintiff spent for the completion of the
unfinished house on the Wack-Wack property. Plaintiff bought the Wack-Wack property
because he intended to transfer his residence from Quezon City to Mandaluyong. During the
construction of the house on the Wack-Wack property plaintiff together with Conchita
Sarmiento, used to go to the site. Plaintiff even told Sarmiento the room which he wanted to
occupy. Alexander and defendant were not in a financial position to buy the subject
properties because Alexander was receiving only minimal allowance and defendant was only
earning some money from her small stall in Greenhills. Plaintiff paid for defendant’s and
Alexander income taxes (Exhs. ‘B,’ ‘C,’ ‘D,’ ‘E,’ and ‘F’). Plaintiff kept the Income Tax Returns
of defendant and Alexander in his files. It was one of plaintiff’s lawyers who told him that the
subject properties were included in the estate of Alexander. Plaintiff called up defendant and
told her about the subject properties but she ignored him so that plaintiff was saddened and
shocked. Plaintiff gave defendant monthly support of P 51, 000.00 (Exhs. ‘RRRR’ to
‘TTTTT," inclusive) P 50,000.00 for defendant andP1,000.00 for the yaya. The Wack-Wack
property cost about P5.5 million.

"The gist of the testimony of Robert Bassig:

"He is 73 years old and a real estate broker. Bassig acted as broker in the sale of the EDSA
property from Purificacion Yujuico to plaintiff. In the Deed of Sale (Exh. ‘G’) it was the name
of Alexander that was placed as the vendee, as desired by plaintiff. The price was paid by
plaintiff. Bassig never talked with Alexander. He does not know Alexander.

"The gist of the testimony of Tom Adarne as witness for defendant:

Adarne is 45 years old and an architect. He was a friend of Alexander. Adarne was engaged
by defendant for the preparation of the plans of the Wack-Wack property. The contractor who
won the bidding was Home Construction, Inc. The Agreement (Exh. ‘26’) was entered into by
defendant and Home Construction Inc. The amount of P955,555.00 (Exh. ’26-A’) was for the
initial scope of the work. There were several letter-proposals made by Home Construction
(Exhs. ‘27-34-A,’ inclusive). There were receipts issued by Home Construction Inc. (Exhs.
’35,’ ‘36’ and ‘37’). The proposal were accepted and performed. The renovation started in
1992 and was finished in 1993 or early 1994.

"The gist of the testimony of Rosanna Regalado:

"Regalado is 43 years old and a real estate broker. Regalado is a close friend of defendant.
Regalado acted as broker in the sale of the Wack-Wack property between defendant and
Alexander and the owner. The sale Agreement (Exh. ‘38’) is dated March 5, 1987. The price
is P5.5 million in Far East Bank and Trust Company manager’s checks. The four (4) checks
mentioned in paragraph 1 of the Agreement were issued by Alexander but she is not sure
because it was long time ago.

"The gist of the testimony of Sylvia Ty:

"She is 40 years old, businesswoman and residing at 675 Notre Dame, Wack-Wack Village,
Mandaluyong City. Sylvia and Alexander have a daughter named Krizia Katrina Ty, who is
16 years old. Krizia is in 11thgrade at Brent International School. Alexander was an executive
in several companies as shown by his business cards (Exhs. ’40,’ ‘40-A,’ ’40-B,’ ‘40-C,’ ‘40-
D,’ ‘40-E,’ ‘40-F,’ and ‘40-G’). Before defendant and Alexander got married, the latter
acquired a condominium unit in Los Angeles, USA, another property in Montebello,
California and the EDSA property. The properties in the USA were already settled and
adjudicated in defendant’s favor (Exhs. ‘41’ and ‘41-A’). Defendant did not bring any property
into the marriage. After the marriage, defendant engaged in selling imported clothes and
eventually bought four (4) units of stall in Shoppesville Greenhills and derived a monthly
income of P50,000.00. the price for one (1) unit was provided by defendant’s mother. The
other three (3) units came from the house and lot at Wack-Wack Village. The P3.5 million
manager’s check was purchased by Alexander. The sale Agreement was signed by
Alexander and defendant (Exhs. ’38-A’ and ‘38-B’). After the purchase, defendant and
Alexander continued the construction of the property. After Alexander’s death, defendant
continued the construction. The first architect that defendant and Alexander engaged was
Gerry Contreras (Exhs. ’42,’ ‘42-A’ and ‘42-A-1’ to ‘42-A-7’). The post-dated checks issued
by Alexander were changed with the checks of plaintiff. After the death of Alexander,
defendant engaged the services of Architect Tom Adarne. Home Construction, Inc. was
contracted to continue the renovation. Defendant and Alexander made payments to
Contreras from January to May 1998 (Exhs. ’43,’ ‘43-A’ to ‘43-H,’ inclusive). A general
contractor by the name of Nogoy was issued some receipts (Exhs. ’43-J’ and ‘43-K’). a
receipt was also issued by Taniog (Exh. ‘43-L’). the payments were made by defendant and
Alexander from the latter’s accounts. The Agreement with Home Construction Inc. (Exhs.
‘26’) shows defendant’s signature (Exh. ‘26-A’). the additional works were covered by the
progress billings (Exhs. ‘27’ to ‘34-A’). Defendant paid them from her account. The total
contract amount was P5,049,283.04. The total expenses, including the furnishings, etc.
reached the amount of P8 to 10 million and were paid from defendant’s and Alexander’s
funds. After the death of Alexander, plaintiff made payments for the renovation of the house
(Exh. ‘M’) which plaintiff considered as advantages but plaintiff did not make any claim for
reimbursement from the estate of Alexander. Defendant’s relationship with plaintiff became
strained when he asked her to waive her right over the Union Ajinomoto shares. Alexander
was a friend of Danding Cojuangco and was able to import luxury cars. Alexander made a
written offer to purchase the Wack-Wack property. Alexander graduated from the Woodberry
College in 1978 or 1979 and returned to the Philippines in 1979 defendant returned to the
Philippines about six (6) months later. Plaintiff was financially well off or wealthy. Alexander
was very close to plaintiff and he was the most trusted son and the only one who grew up in
plaintiff’s house. Plaintiff observed Chinese traditions. Alexander was not totally dependent
 on plaintiff because he had his own earnings. Upon his return from the USA, Alexander
acquired the properties in the USA while studying there. At the time of his death, Alexander
was vice president of Union Ajinomoto. Defendant could not say how much was the
compensation of Alexander from Union Ajinomoto. Defendant could not also say how much
did Alexander earn as vice president of Royal Porcelain Corporation. Alexander was the
treasurer of Polymark Paper Industries. Alexander was the one handling everything for
plaintiff in Horn Blower Sales Enterprises, Hi-Professional Drilling, Round Consumer, MVR
Picture Tubes, ABT Enterprises. Plaintiff supported defendant and her daughter in the
amount of P51,000.00 per month from 1988-1990. Defendant did not offer to reimburse
plaintiff the advances he made on the renovation of the Wack-Wack property because their
relationship became strained over the Ajinomoto shares. Defendant could not produce the
billings which were indicated in the post-dated checks paid to Architect Contreras. After the
birth of her child, defendant engaged in the boutique business. Defendant could not recall
how much she acquired the boutique (for). In 1983 or 1984 defendant started to
earn P50,000.00 a month. The properties in the USA which were acquired by Alexander
while still single were known to plaintiff but the latter did not demand the return of the titles to
him. The Transfer Certificates of Title of the Wack-Wack and EDSA properties were given to
defendant and Alexander. The Condominium Certificate of Title was also given to defendant
and Alexander. The plaintiff did not demand the return of the said titles.

"The gist of the testimony of Atty. Mario Ongkiko:

"Atty. Ongkiko prepared the Deed of Sale of the EDSA property. There was only one Deed of
Sale regarding the said property. The plaintiff was not the person introduced to him by
Yujuico as the buyer.3

On January 7, 2000, the RTC rendered its decision, disposing as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring plaintiff as the true and lawful owner of the subject properties, as follows:

A. A parcel of land with an area of 1728 square meters, situated along EDSA
Greenhills, Mandaluyong City, covered by TCT No. 006585.

B. A residential land with an area of 1584 square meters, together with the
improvements thereon, situated in Notre Dame, Wack-Wack Village, Mandaluyong
City, covered by TCT No. 62670.

C. A residential condominium unit with an area of 167.5 square meters, situated in 29

Annapolis St., Greenhills, Mandaluyong City, covered by Condominium Certificate
Title No. 3395.

2. Ordering the defendant to transfer or convey the subject properties in favor of plaintiff and
the Register of Deeds for Mandaluyong City to transfer and issue in the name of plaintiff the
corresponding certificates of title.

3. Ordering the defendant to pay plaintiff the amount of P100,000.00, as moral damages
and P200,000.00, as attorney’s fees plus the cost of the suit.

SO ORDERED.4
Respondent herein, Sylvia S. Ty, appealed from the RTC Decision to the CA, assigning the following
as errors:

I.

THE TRIAL COURT ERRED IN HOLDING THAT APPELLEE PURCHASED THE EDSA
PROPERTY BUT PLACED TITLE THERETO IN THE NAME OF ALEXANDER T. TY, SO
THAT AN EXPRESS TRUST WAS CREATED BETWEEN APPELLEE, AS TRUSTOR AND
ALEXANDER AS TRUSTEE IN FAVOR OF THE LATTER’S SIBLINGS, AS
BENEFICIARIES EVEN WITHOUT ANY WRITING THEREOF; ALTERNATIVELY, THE
TRIAL COURT ERRED IN ANY CASE IN HOLDING THAT AN IMPLIED TRUST EXISTED
BETWEEN APPELLEE AND ALEXANDER TY IN FAVOR OF APPELLEE UNDER THE
SAME CIRCUMSTANCES.

II.

THE TRIAL COURT ERRED IN HOLDING THAT APPELLEE PURCHASED THE WACK-
WACK AND MERIDIEN CONDOMINIUM PROPERTIES BUT PLACED ITS TITLES
THERETO IN THE NAMES OF SPOUSES ALEXANDER AND APPELLANT BECAUSE HE
WAS FINANCIALLY CAPABLE OF PAYING FOR THE PROPERTIES WHILE ALEXANDER
OR HIS WIFE, APPELLANT SYLVIA S. TY, WERE INCAPABLE. HENCE, A RESULTING
TRUST WAS CREATED BETWEEN APPELLEE AND HIS SON, ALEXANDER, WITH THE
FORMER, AS OWNER-TRUSTOR AND BENEFICIARY AND THE LATTER AS TRUSTEE
CONCERNING THE PROPERTIES.

III.

THE TRIAL COURT ERRED IN AWARDING MORAL DAMAGES OF P100,000 AND

ATTORNEY’S FEES OFP200,000 IN FAVOR OF APPELLEE AND AGAINST DEFENDANT-
APPELLANT IN HER CAPACITY AS ADMINISTRATRIX OF THE INTESTATE ESTATE OF
ALEXANDER TY, INSTEAD OF AWARDING APPELLANT IN HER COUNTERCLAIM
ATTORNEY’S FEES AND EXPENSES OF LITIGATION INCURRED BY HER IN
DEFENDING HER HUSBAND’S ESTATE AGAINST THE UNJUST SUIT OF HER FATHER-
IN-LAW, HEREIN APPELLEE, WHO DISCRIMINATED AGAINST HIS GRAND DAUGHTER
KRIZIA KATRINA ON ACCOUNT OF HER SEX.

The arguments in the respective briefs of appellant and appellee are summarized by the CA
Decision, as well as other preliminary matters raised and tackled, thus:

In her Brief, defendant-appellant pointed out that, based on plaintiff-appellee’s testimony, he

actually intended to establish an express trust; but that the trial court instead found that an
implied trust existed with respect to the acquisition of the subject properties, citing Art. 1448
of the Civil Code of the Philippines.

It is defendant-appellant’s contention that the trial court erred: In applying Art. 1448 on
implied trust, as plaintiff-appellee did not present a shred of evidence to prove that the
money used to acquire said properties came from him; and in holding that both she and her
late husband were financially incapable of purchasing said properties. On the contrary,
defendant-appellant claimed that she was able to show that she and her late husband had
the financial capacity to purchase said properties.
Defendant-appellant likewise questioned the admission of the testimony of plaintiff-appellee,
citing the Dead Man’s Statute; she also questioned the admission of her late husband’s
income tax returns, citing Section 71 of the NIRC and the case of Vera v. Cusi, Jr.

On July 10, 2001, plaintiff-appellee filed his appellee’s Brief, whereunder he argued: That the
trial court did not err in finding that the subject properties are owned by him; that the said
properties were merely registered in Alexander’s name, in trust for his siblings, as it was
plaintiff-appellee who actually purchased the subject properties he having the financial
capacity to acquire the subject properties, while Alexander and defendant-appellant had no
financial capacity to do so; that defendant-appellant should be sentenced to pay him moral
damages for the mental anguish, serious anxiety, wounded feelings, moral shock and similar
injury by him suffered, on account of defendant-appellant’s wrongful acts; and that defendant
appellant should also pay for attorney’s fees and litigation expenses by him incurred in
litigating this case.

In a nutshell, it is plaintiff-appellee’s thesis that in 1973, when he accompanied his son,

Alexander, to America, he told his son that he would put some of the properties in
Alexander’s name, so that if death overtakes him (plaintiff-appellee), Alexander would
distribute the proceeds of the property among his siblings. According to plaintiff-appellee, the
three properties subject of this case are the very properties he placed in the name of his son
and name-sake; that after the death of Alexander, he reminded his daughter-in-law, the
defendant appellant herein, that the subject properties were only placed in Alexander’s name
for Alexander to hold trust for his siblings; but that she rejected his entreaty, and refused to
reconvey said properties to plaintiff-appellee, thereby compelling him to sue out a case for
reconveyance.

On September 5, 2001, defendant-appellant filed her reply Brief and a motion to admit
additional evidence. Thereafter, several motions and pleadings were filed by both parties.
Plaintiff-appellee filed a motion for early resolution dated May 17, 2002 while defendant-
appellant filed a motion to resolve dated August 6, 2003 and a motion to resolve incident
dated August 12, 2003.

Plaintiff-appellee then filed a comment on the motion to resolve incident, to which defendant-
appellant tendered a reply. Not to be outdone, the former filed a rejoinder.

Thus, on February 13, 2004, this Court issued a resolution, to set the case for the reception
of additional evidence for the defendant-appellant.

In support of her motion to admit additional evidence, defendant-appellant presented

receipts of payment of real estate taxes for the years 1987 to 2004, obviously for the
purpose of proving that she and her late husband in their own right were financially capable
of acquiring the contested properties. Plaintiff-appellee however did not present any
countervailing evidence.

Per resolution of March 25, 2004, this Court directed both parties to submit their respective
memorandum of authorities in amplification of their respective positions regarding the
admissibility of the additional evidence.

Defendant-appellant in her memorandum prayed that the additional evidence be considered

in resolving the appeal in the interest of truth and substantial justice. Plaintiff-appellee, on the
other hand, in his memorandum, argued that the additional evidence presented by the
defendant-appellant is forgotten evidence, which can lo longer be admitted, much less
considered, in this appeal. Thereafter, the case was submitted for decision.

Before taking up the main issue, we deem it expedient to address some collateral issues,
which the parties had raised, to wit: (a) the admissibility of the additional evidence presented
to this Court, (b) the admissibility of plaintiff’s testimony, (c) the admissibility of the income
tax return, and (d) laches.

On the propriety of the reception of additional evidence, this Court falls backs (sic) upon the
holding of the High Court in Alegre v. Reyes, 161 SCRA 226 (1961) to the effect that even as
there is no specific provision in the Rules of Court governing motions to reopen a civil case
for the reception of additional evidence after the case has been submitted for decision, but
before judgment is actually rendered, nevertheless such reopening is controlled by no other
principle than that of the paramount interest of justice, and rests entirely upon the sound
judicial discretion of the court. At any rate, this Court rules that the tax declaration receipts
for the EDSA property for the years 1987-1997, and 1999; for the Wack-Wack property for
the years 1986-1987, 1990-1999; and for the Meridien Condominium for the years 1993-
1998 cannot be admitted as they are deemed forgotten evidence. Indeed, these pieces of
evidence should have been presented during the hearing before the trial court.

However, this Court in the interest of truth and justice must hold, as it hereby holds, that the
tax declaration receipts for the EDSA property for the years 2000-2004; the Wack-Wack
property for the years 2000-2004; and the Meridien Condominium for the years 2000-2001
may be admitted to show that to this date, it is the defendant-appellant, acting as an
administratrix, who has been paying the real estate taxes on the aforestated properties.

As regards the admissibility of plaintiff-appellee’s testimony, this Court agrees with the trial
court that:

"Defendant’s argument to the effect that plaintiff’s testimony proving that the
deceased Alexander Ty was financially dependent on him is inadmissible in evidence
because he is barred by the Dead Man’s Statute (Rule 130, Sec. 20, Rules of Court)
for making such testimony, is untenable. A reading of pages 10 to 45 of the TSN,
taken on November 16, 1998, which contain the direct-examination testimony of
plaintiff, and pages 27, 28, 30, 34, 35, 37, 39, 40 of the TSN, taken on January 15,
1999; page 6 of the TSN taken on December 11, 1998, pages 8, 10, 11, 12, 14, 23
24 of TSN, taken on taken on February 19, 1999; and pages 4,5,6,7,8,11,25 and 27
of the TSN taken on March 22, 1999, will show that defendant’s lawyer did not object
to the plaintiff as witness against defendant, and that plaintiff was exhaustively cross-
examined by defendant’s counsel regarding the questioned testimony, hence, the
same is not covered by the Dead Man’s Statute (Marella v. Reyes, 12 Phil.
1; Abrenica v. Gonda and De Gracia, 34 Phil. 739; Tongco v. Vianzon, 50 Phil. 698).

A perusal of the transcript of stenographic notes will show that counsel for defendant-
appellant was not able to object during the testimony of plaintiff-appellee. The only time that
counsel for defendant-appellant interposed his objection was during the examination of
Rosemarie Ty, a witness (not a party) to this case. Thus the Dead Man’s Statute cannot
apply.

With regard to the income tax returns filed by the late Alexander Ty, this Court holds that the
same are admissible in evidence. Neither Section 71 of the NIRC nor the case of Vera v.
Cusi applies in this case. The income tax returns were neither obtained nor copied from the
 Bureau of Internal Revenue, nor produced in court pursuant to a court order; rather these
were produced by plaintiff-appellee from his own files, as he was the one who kept custody
of the said income tax returns. Hence, the trial court did not err in admitting the income tax
returns as evidence.

Anent the issue of laches, this Court finds that the plaintiff-appellee is not guilty of laches.
There is laches when: (1) the conduct of the defendant or one under whom he claims, gave
rise to the situation complained of; (2) there was delay in asserting a right after knowledge
defendant’s conduct and after an opportunity to sue; (3) defendant had no knowledge or
notice that the complainant would assert his right; and (4) there is injury or prejudice to the
defendant in the event relief is accorded to the complainant. These conditions do not obtain
here.

In this case, there was no delay on the part of plaintiff-appellee in instituting the complaint for
recovery of real properties. The case was files four years after Alexander’s death; two years
after the inventory of assets of Alexander’s estate was submitted to the intestate court; and
one month after defendant-appellant filed a motion to sell or mortgage the real estate
properties. Clearly, such length of time was not unreasonable.5

The CA then turned to "the critical, crucial and pivotal issue of whether a trust, express or implied,
was established by the plaintiff-appellee in favor of his late son and name-sake Alexander Ty."

The CA proceeded to distinguish express from implied trust, then found that no express trust can be
involved here since nothing in writing was presented to prove it and the case involves real property.
It then stated that it disagrees with the court a quo’s application of Art. 1448 of the Civil Code on
implied trust, the so-called purchase money resulting trust, stating that the very Article provides the
exception that obtains when the person to whom the title is conveyed is the child, legitimate or
illegitimate, of the one paying the price of the sale, in which case no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.

The CA therefore reasoned that even assuming that plaintiff-appellee paid at least part of the price
of the EDSA property, the law still presumes that the conveyance was a discretion (a gift of devise)
in favor of Alexander.

As to plaintiff-appellee’s argument that there was no donation as shown by his exercise of dominion
over the property, the CA held that no credible evidence was presented to substantiate the claim.

Regarding the residence condominium and the Wack-Wack property, the CA stated that it did not
agree either with the findings of the trial court that an implied trust was created over these
properties.

The CA went over the testimonies of plaintiff-appellee and the witness Conchita Sarmiento
presented to show that spouses Alexander and Sylvia S. Ty were financially dependent of plaintiff-
appellee and did not have the financial means or wherewithals to purchase these properties. It
stated:

Consider this testimony of plaintiff-appellee:

Q During the time that Alex was staying with you, did you ever come to know that
Alexander and his wife did go to the States?
A Yes, sir. But I do not know the exact date. But they told me they want to go to America
for check up.

Q Was that the only time that Alexander went to the States?

A Only that time, sir. Previously, he did not tell me. That last he come (sic) to me and tell
[sic] me that he will go to America for check up. That is the only thing I know.

Q Would you say for the past five years before his death Alex and his wife were going to
the States at least once a year?

A I cannot say exactly. They just come to me and say that I [sic] will go to "bakasyon."
They are already grown people. They don’t have to tell me where they want to go.

Q You are saying that Alexander did not ask you for assistance whenever he goes to the
States?

A Sometimes Yes.

Q In what form?

A I gave him peso, sir.

Q For what purpose?

A Pocket money, sir.

There is no evidence at all that it was plaintiff-appellee who spent for the cancer treatment
abroad of his son. Nor is there evidence that he paid for the trips abroad of Alexander and
the defendant-appellant. Admittedly, he only gave his son Alexander pocket money once in a
while. Simply put, Alexander was not financially dependent upon the plaintiff-appellee, given
that Alexander could afford the costs of his cancer treatment abroad, this on top of the trips
he made to the United States at least once a year for five successive years without the
support of his father.

The fact that Alexander stayed with his father, the plaintiff-appellee in this case, even after
he married Sylvia and begot Krizia, does not at all prove that Alexander was dependent on
plaintiff-appellee. Neither does it necessarily mean that it was plaintiff-appellee who was
supporting Alexander’s family. If anything, plaintiff-appellee in his testimony admitted that
Alexander and his family went to live with him in observance of Chinese traditions.

In addition, the income tax returns of Alexander from 1980-1984, and the profit and loss
statement of defendant-appellant’s Joji San General Merchandising from 1981-1984, are not
enough to prove that the spouses were not financially capable of purchasing the said
properties. Reason: These did not include passive income earned by these two, such as
interests on bank deposits, royalties, cash dividends, and earnings from stock trading as well
as income from abroad as was pointed out by the defendant-appellant. More importantly, the
said documents only covered the years 1980-1984. The income of the spouses from 1985 to
1987 was not shown. Hence, it is entirely possible that at the time the properties in question
were purchased, or acquired, Alexander and defendant-appellant had sufficient funds,
considering that Alexander worked in various capacities in the family corporations, and his
 own business enterprises, while defendant-appellant had thriving businesses of her own,
from which she acquired commercial properties.

And this is not even to say that plaintiff-appellee is this case failed to adduce conclusive,
incontrovertible proof that the money use to purchase the two properties really came from
him; or that he paid for the price of the two properties in order to have the beneficial interest
or estate in the said properties.

A critical examination of the testimony of plaintiff-appellee’s witness, Conchita Sarmiento,

must also show that this witness did not have actual knowledge as to who actually
purchased the Wack-Wack property and the Meridien Condominium. Her testimony that
plaintiff-appellee visited the Wack-Wack property and paid for the costs of the construction of
the improvements over the said property, in the very nature of things, does not prove that it
was the plaintiff-appellee who in fact purchased the Wack-Wack property.6

On the other hand, the CA found defendant-appellant’s evidence convincing:

In contrast, Rosana Regalado had actual knowledge of the transaction she testified to,
considering that she was the real estate broker who negotiated the sale of the Wack-Wack
property between its previous owner Drago Daic and the spouses Alexander and Sylvia Ty.
In her testimony, she confirmed that the checks, which were issued to pay for the purchase
price of the Wack-Wack property, were signed and issued by Alexander, thereby
corroborating the testimony of defendant-appellant on this point.

Significantly, during the trial, Conchita Sarmiento identified some receipts wherein the payor
was the late Alexander Ty. Apparently, prior to the death of Alexander, it was Alexander
himself who was paying for the construction of the Wack-Wack property; and that the only
time plaintiff-appellee paid for the costs of the construction was when Alexander died.

Quite compelling is the testimony of defendant-appellant in this respect:

Q And after the death and burial of your husband, will you tell this Honorable Court what
happened to the construction of this residence in Wack-Wack?

A Well, of course, during the period I was mourning and I was reorganizing myself and my
life, so I was not mainly focused on the construction, so it took a couple of months before I
realized that the post-dated checks issued by my husband was changed through checks by
my father-in-law Mr. Alejandro Ty.

Q And did you had [sic] any conversation with Mr. Alejandro Ty regarding as to why he did
that?

A Yes, sir, that was the beginning of our misunderstanding, so I decided to hire a lawyer
and that is Atty. Ongkiko, to be able to settle my estate and to protect myself from with the
checks that they changed that my husband issued to Architect Gerry Contreras.

Q Was there any point in time that you yourself took over the construction?

A Yes, sir, right after a year of that property after I was more settled.
 Q And did you engaged [sic] the services of any professional or construction company for
the purpose?

A Yes, sir.

Q Who was that?

A Architect Tom Adarme.

Q What is his first name, if you recall?

A Architect Tommy Adarme.

Q And was there any company or office which helped Architect Adarme in the continuation
of the construction?

A Yes, I also signed a contract with Architect Adarme and he hired Home Construction to
finish the renovation and completion of the construction in Wack-Wack, sir.

Q Do you have any document to show that you yourself overtook personally the
continuation of the construction of your residence?

A Yes, sir I have the whole construction documents and also the documents through Arch.
Gerry Contreras, that contract that we signed.

In other words, plaintiff-appellee took over the management of the construction of the Wack-
Wack property only because defendant-appellant was still in mourning. And, If ever plaintiff-
appellee did pay for the costs of the construction after the death of Alexander, it would be
stretching logic to absurd proportions to say that such fact proved that he owns the subject
property. If at all, it only shows that he is entitled to reimbursement for what he had spent for
the construction.7

Accordingly, the CA concluded, as follows:

Going by the records, we hold that plaintiff-appellee in this case was not able to show by
clear preponderance of evidence that his son and the defendant-appellant were not
financially capable of purchasing said property. Neither was plaintiff-appellee able to prove
by clear preponderance of evidence (i.e., credible documentary evidence) that the money
used to purchase the said properties really came from him. (And even if we assume that it
came from him, it would still not establish an implied trust, as it would again be considered a
donation, or a gift, by express mandate of the saving clause of Art. 1448 of the Civil Code, as
heretofore stated).

If anything, what is clear from the evidence at bench is that Alexander and the defendant-
appellant were not exactly bereft of the means, the financial capability or resources, in their
own right, to purchase, or acquire, the Meridien Condominium and the Wack-Wack property.

The evidence on record shows that Alexander Ty was 31 years old when he purchased the
Meridien Condominium and was 33 years old when he purchased the Wack-Wack property.
In short, when he purchased these properties, he had already been working for at least nine
years. He had a car care business and a beer garden business. He was actively engaged in
the business dealings of several family corporations, from which he received emoluments
and other benefits. As a matter of fact, Alexander and plaintiff-appellee had common interest
in various family corporations of which they were stockholders, and officers and directors,
such as: International Paper Industries, Inc.; Agro-Industries Specialists Services, Inc.; Hi-
Professional Drillings and Manufacturing, Inc.; MVR-TV Picture Tube, Inc.; Crown Consumer
Products, Inc.; Philippine Crystal Manufacturing Corporation; and Union Emporium, Inc.

Furthermore, at the time of his death, the son Alexander was Vice-President of Union
Ajinomoto (Exh. "40"); Executive Vice-President of Royal Porcelain Corporation (Exh. "40-
A"); Treasurer of Polymart Paper Industries, Inc. (Exh. "40-B"); General Manager of
Hornblower Sales Enterprises and Intercontinental Paper Industries, Inc. (Exh. "40-C");
President of High Professional Drilling and Manufacturing, Inc. (Exh. "40-D"); President of
Crown Consumer Products, Inc. (Exh. "40-E"); (Executive Vice-President of MVR-TV Picture
Tube, Inc. (Exh."40-F"); and Director of ABT Enterprise, Inc. (Exh. "40-G"). He even had a
controlling interest in ABT Enterprises, which has a majority interest in Union Ajinomoto, Inc.

What is more, the tax declaration receipts for the Wack-Wack property covering the years
2000-2004, and the tax declaration receipts for the Meridien Condominium covering the
years 2000-2001, showed that to his date it is still the estate of Alexander that is paying for
the real estate taxes thereon.

In the context of this formidable circumstances, we are constrained to overturn the judgment
of the trial court, which made these findings:

Based on the facts at hand and the applicable law, the ineluctable conclusion is that
a fiduciary relationship or an implied trust existed between plaintiff and Alexander Ty
with the former as the owner, trustor and beneficiary and the latter as the trustee,
concerning the subject real properties. The death of Alexander automatically
extinguished the said fiduciary relationship, hence, plaintiff’s instant action to recover
the subject properties from the intestate estate of Alexander Ty is meritorious.

We do not agree. To belabor a point, we are not persuaded that an implied trust was created
concerning the subject properties. On the assumption, as elsewhere indicated, the plaintiff-
appellee at the very least, paid for part of its purchase price, the EDSA property is presumed
to be a gift, or donation, in favor of Alexander Ty, defendant-appellant’s late husband,
following the saving clause or exception in Art. 1448 of the Civil Code. To repeat, it is the
saving clause, or exception, not the general rule, that should here apply, the late Alexander
Ty being the son of Plaintiff-appellee.

Nor are we convinced, given the state of the evidence on record, that the plaintiff-appellee
paid for the price of the Meridien Condominium and the Wack-Wack property. Therefore, the
general rule announced in the first sentence of Art. 1448 of the Civil Code has no application
in this case. Or, if the article is to be applied at all, it should be the exception, or the saving
clause, that ought to apply here, the deceased Alexander Ty being the son, as stated, of
plaintiff-appellee.

To sum up: Since plaintiff-appellee has erected his case upon Art. 1448 of the Civil Code, a
prime example of an implied trust, viz.: that it was he who allegedly paid for the purchase
price of some of the realties subject of this case, legal title or estate over which he allegedly
granted or conveyed unto his son and namesake, Alexander Ty, for the latter to hold these
realties in trust for his siblings in case of his (plaintiff-appellee’s) demise, plaintiff-appellee is
charged with the burden of establishing the existence of an implied trust by evidence
 described or categorized as "sufficiently strong," "clear and satisfactory," or "trustworthy." As
will be presently discussed. Sad to say, plaintiff-appellee has miserably failed to discharge
that burden. For, if the records are any indication, the evidence adduced by plaintiff-appellee
on this score, can hardly merit the descriptive attributes "sufficiently strong," or "clear and
satisfactory," or "trustworthy."

If only to emphasize and reiterate what the Supreme Court has in the past declared about
implied trusts, these case law rulings are worth mentioning –

Where a trust is to be established by oral proof, the testimony supporting it must be

sufficiently strong to prove that the right of the alleged beneficiary with as much
certainty as if a document were shown. A trust cannot be established, contrary to the
recitals of a Torrens title, upon vague and inconclusive proof.

As a rule, the burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily show the existence of the
trust and its elements. While implied trusts may be proved by oral evidence, the
evidence must be trustworthy and received by the courts with extreme caution and
should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy
evidence is required because oral evidence can easily be fabricated.

The route to the reversal of the trial court’s finding that an implied trust had been constituted
over the subject realties is, thus, indubitably clear.

As a final point, this Court finds that the plaintiff-appellee is not entitled to moral damages,
attorney’s fees and costs of litigation, considering that the instant case is clearly a vexatious
and unfounded suit by him filed against the estate of the late Alejandro Ty. Hence, all these
awards in the judgment a quo are hereby DELETED.8

The CA therefore reversed and set aside the judgment appealed from and entered another one
dismissing the complaint.

On October 18, 2004 the CA resolved to deny therein plaintiff-appellee’s motion for reconsideration.9

Hence, this petition.

Petitioner submits the following grounds:

IN REVERSING THE TRIAL COURT’S JUDGMENT, THE COURT OF APPEALS –

1. MADE FACTUAL FINDINGS GROUNDED ON MANIFESTLY MISTAKEN INFERENCES,

SPECULATIONS, SURMISES, OR CONJECTURES OR PREMISED ON THE ABSENCE
OF, OR ARE CONTRADICTED BY, THE EVIDENCE ON RECORD, AND WITHOUT
CITATIONS OF THE SPECIFIC EVIDENCE ON WHICH THEY ARE BASED.

2. RULED THAT THERE WAS A "PRESUMED DONATION", WHICH IS A MATTER NEVER

RAISED AS AN ISSUE IN THE CASE AS IT, IN FACT, CONFLICTS WITH THE PARTIES’
RESPECTIVE THEORIES OF THE CASE, AND THUS DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR THIS
HONORABLE COURT’S EXERCISE OF ITS POWER OF SUPERVISION.
 3. APPLIED THE PROVISION ON PRESUMPTIVE DONATION IN FAVOR OF A CHILD IN
ARTICLE 1448 OF THE CIVIL CODE DESPITE AB TY’S EXPRESS DECLARATION THAT
HE DID NOT INTEND TO DONATE THE SUBJECT PROPERTIES TO ALEXANDER AND
THUS DECIDED A QUESTION OF SUBSTANCE NOT THERETOFORE DETERMINED BY
THIS HONORABLE COURT.

4. REQUIRED THAT THE IMPLIED TRUST BE PROVEN WITH DOCUMENTARY

EVIDENCE AND THUS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
ACCORD WITH LAW AND JURISPRUDENCE.10

The Court disposes of the petition, as follows:

The EDSA Property

Petitioner contends that the EDSA property, while registered in the name of his son Alexander Ty, is
covered by an implied trust in his favor under Article 1448 of the Civil Code. This, petitioner argues,
is because he paid the price when the property was purchased and did so for the purpose of having
the beneficial interest of the property.

Article 1448 of the Civil Code provides:

Art. 1448. There 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. The former is the trustee, while the latter is the beneficiary. However, if the
person to whom the title is conveyed is a child, legitimate or illegitimate, of one paying the
price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in
favor of the child.

The CA conceded that at least part of the purchase price of the EDSA property came from petitioner.
However, it ruled out the existence of an implied trust because of the last sentence of Article 1448: x
x x However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the
one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is
a gift in favor of the child.

Petitioner now claims that in so ruling, the CA departed from jurisprudence in that such was not the
theory of the parties.

Petitioner, however, forgets that it was he who invoked Article 1448 of the Civil Code to claim the
existence of an implied trust. But Article 1448 itself, in providing for the so-called purchase money
resulting trust, also provides the parameters of such trust and adds, in the same breath, the proviso:
"However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale, NO TRUST IS IMPLIED BY LAW, it being disputably presumed that
there is a gift in favor of the child." (Emphasis supplied.)

Stated otherwise, the outcome is the necessary consequence of petitioner’s theory and argument
and is inextricably linked to it by the law itself.

The CA, therefore, did not err in simply applying the law.
Article 1448 of the Civil Code is clear. If the person to whom the title is conveyed is the child of the
one paying the price of the sale, and in this case this is undisputed, NO TRUST IS IMPLIED BY
LAW. The law, instead, disputably presumes a donation in favor of the child.

On the question of whether or not petitioner intended a donation, the CA found that petitioner failed
to prove the contrary. This is a factual finding which this Court sees no reason the record to reverse.

The net effect of all the foregoing is that respondent is obliged to collate into the mass of the estate
of petitioner, in the event of his death, the EDSA property as an advance of Alexander’s share in the
estate of his father,11 to the extent that petitioner provided a part of its purchase price.

The Meridien Condominium and the Wack-Wack property.

Petitioner would have this Court overturn the finding of the CA that as regards the Meridien
Condominium and the Wack-Wack property, petitioner failed to show that the money used to
purchase the same came from him.

Again, this is clearly a factual finding and petitioner has advanced no convincing argument for this
Court to alter the findings reached by the CA.

The appellate court reached its findings by a thorough and painstaking review of the records and has
supported its conclusions point by point, providing citations from the records. This Court is not
inclined to reverse the same.

Among the facts cited by the CA are the sources of income of Alexander Ty who had been working
for nine years when he purchased these two properties, who had a car care business, and was
actively engaged in the business dealings of several family corporations, from which he received
emoluments and other benefits.12

The CA, therefore, ruled that with respect to the Meridien Condominium and the Wack-Wack
property, no implied trust was created because there was no showing that part of the purchase price
was paid by petitioner and, on the contrary, the evidence showed that Alexander Ty had the means
to pay for the same.

WHEREFORE, the petition is PARTLY GRANTED in that the Decision of the Court of Appeals dated
July 27, 2004 and its Resolution dated October 18, 2004, in CA-G.R. No. 66053, are AFFIRMED,
with the MODIFICATION that respondent is obliged to collate into the mass of the estate of
petitioner, in the event of his death, the EDSA property as an advance of Alexander Ty’s share in the
estate of his father, to the extent that petitioner provided a part of its purchase price.
G.R. No. L-29556 December 22, 1928

PETRONA GAMBOA, ET AL., plaintiffs-appellees,

vs.
MODESTA GAMBOA, ET AL., defendants-appellants.

Vicente Nepomuceno and Jesus Barrera for appellants.

Aurelio Pineda and Eligio G. Lagman for appellees.

STREET, J.:

This action was instituted in the Court of First Instance of the Province of Pampanga by various plaintiffs of the surname or connection of
Gamboa, for the purpose of enforcing partition of some ten parcels of real property located in the municipality of Santa Ana, in the province
of Pampanga, of which, it is asserted, the plaintiffs are coowners with the defendants Modesta, Pedro and Rafael, of the same name. At the
same time the plaintiffs seek to obtain an accounting from Modesta Gamboa of the plaintiffs' shares in the procedure taken from the land in
the past.

To this complaint Modesta Gamboa answered with a general denial, supplemented by an admission that the single parcel constituting the
last item specified in the complaint and identified as tax No. 6247, is in fact common property of herself and the plaintiffs who are her coheirs,
and asserting, as to the rest, that she is the owner of the same and has been in adverse possession thereof for more than ten years. The
defendant Rafael and Pedro Gamboa answered with a formal general denial, but at the trial they admitted the claim to Modesta Gamboa as
owner of the contested properties.

Upon hearing the cause the trial court found in all respects favorably to the contention of the plaintiffs and ordered that partition be made of
all the properties among the interested parties in the following proportions: To Petrona, Feliciana, Serapion and Balbina, of the surname
Gamboa, and to Mercedes de Jesus, widow of Marcelo Gamboa, one-ninth each; to Andres, Francisco, Juan, Africa and Regino, children of
Regino Gamboa, conjointly, another ninth, or the one forty-fifth part each; and to Modesta Gamboa, three-ninths, in view of the fact that
Pedro and Rafael had admitted her right. His Honor also ordered that the defendant Modesta Gamboa should account to the plaintiffs for
their respective shares of the produce obtained from the property since from the year 1910 upon a basis of an income of P1,400 per annum,
and that she should pay the costs. In this partition his Honor ordered that the lot identified as tax No. 6502 should be alloted to Modesta, in
view of the fact that she had already sold this lot. From this judgment the defendant Modesta Gamboa appealed.

All of the properties that are the subject of this action once belonged to Juan Gamboa and Ana Manago, the parents of the first set of
Gamboa plaintiffs of the three defendants of the same name. There is no controversy over the further fact that on August 27, 1987, Juan
Gamboa and wife sold all of the properties which are the subject of this action, except the parcel identified by the tax assessment No. 6247,
under contract of sale with pacto de retro for two years to one Felipe Javier, the vendors, however, remaining in possession in the character
of lessees. The period of redemption having been effected, and the property consolidated in Javier. But Juan Gamboa, and after his death,
his family, continued in possession as tenants under Javier. This arrangement continued until 1910, the year of the death of Ana Manag,
widow of Juan Gamboa. On June 18, 1910, Javier then absolute owner of the properties which he had purchased as above stated, conveyed
the same to the sisters Feliciana and Modesta Gamboa for the price of P1,700, an amount less by the sum of P20 than the price for which he
had originally purchased them. Of the stipulated price P600 was paid in cash, proceeding from the sisters Feliciana and Modesta in equal
parts. It was agreed that the balance of P1,100 might be paid in four annual installments, subject to an extension of the periods if the
purchasers should be unable to meet the payments. To secure these deferred payments the parties declared that a mortgage was created
upon the property which was the subject of conveyance. About three years thereafter, or on May 21, 1913, Regino P. Gamboa, brother of the
two sisters, paid the sum of P1,100 to Felipe Javier and received from him a document transferring to him all of the interest in the mortgage
which had been created in Javier's favor. By this means Regino P. Gamboa was subjugated to the credit and became owner of the debt of
P1,100, which had not yet been satisfied by the two women. 1awphi1.net

The proof shows that Modesta Gamboa is a shifty and intelligent woman, always active in a small way in some form or other as of trading;
and she says that in course of time she paid off the P1,100 due to her brother Regino. The document by which the transfer of the credit had
been made to Regino remained, however, in possession of Regino P. Gamboa until he died in the year 1920, and it remained thereafter in
the hands of Regino's widow, by whom it was produced in evidence in this case. Nevertheless, Modesta produced in evidence a document
purporting to be a receipt dated May 21, and signed with the name of Felipe Javier, wherein he states that he had upon that day received
P1,100 from Regino P. Gamboa as recited in the document of transfer above referred to, of the same date. The document has been made
the subject of criticism as an apparent forgery, and it must be admitted that the name of Felipe Javier signed thereto does not bear much
resemblance to his admittedly genuine signature signed to the assignment of the mortgage. But even supposing that this receipt is not
genuine, we have no doubt that the P1,100 had been paid by Modesta to her brother Regino in life; and we see no reason to doubt her good
faith. In this connection it will be noted that Regino died in 1920; and his widow testified that, although she subsequently had many financial
transactions with Modesta that had been terminated to the satisfaction of both parties, no payment of the amount stated had ever been made
to her by Modesta. We may add that no claim has ever been made by anybody that the credit acquired by Regino had not been satisfied. It is
incredible that, if this debt had remained unpaid, no step should have been taken by Regino's widow to collect the same after his death. No
doubt she was well aware that, as Modesta claims, the debt had been paid. This conclusion is made more secure by the fact now to be
noted.

On December 11, 1922, Modesta Gamboa and her sister Feliciana entered into a written partition of the parcels of property which had been
purchased by them from Javier. In this partition Feliciana was content with a much smaller portion than Modesta, and this is explained by the
fact that Feliciana had never advanced more than P300 upon the purchase of the property, which amount had been paid by her at the time
the property was acquired; while Modesta had not only made her first payment of P300 but had satisfied the unpaid installments by taking up
the mortgage credit from her brother Regino in the manner already described. This circumstance is fully set out in the document now referred
to and in connection with this point it is declared in said document that the deferred installments had been "totally paid by the other
purchaser, Modesta Gamboa." From this it may be inferred that the payment of the P1,100 by Modesta to Regino was a matter of common
knowledge in the family. And at any rate we believe that such payment had been made.

The proof shows that ever since the property in question was conveyed by Javier to the Gamboa sisters in 1910, the same has been
continuously in the possession of Modesta, except for the two years 1912 and 1913 when, by some arrangement or other, one of her
brothers had charge as manager. During this period Modesta exercised all the rights of ownership, accounting of course to Feliciana for the
latter's share of the produce during the term of their ownership.

The case for the plaintiffs proceeds upon the idea that the purchase effected by Feliciana and Modesta Gamboa in 1910 from Javier was a
redemption from the sale with pacto de retro which had taken place thirteen years previously; and some oral testimony was given for the
plaintiffs had been admitted at various times by Modesta Gamboa. This theory of the case, in our opinion, is untenable. The sale of the
property by Javier to the two sisters in 1910 was an unconditional transfer of title to them, inasmuch as Javier had been undisputed owner of
the property for fully eleven years. Of course if it had really been agreed that the sisters were purchasing the property in a trust character,
that agreement might have been enforced, but the nature of the title held by the sisters and the inconclusive character of the proof of
trusteeship refute this theory. We attribute little importance to the form in which the property was assessed for taxation, in view of the
explanation which Modesta gives of the obstructions which she encountered in straightening that matter out. The situation, as we see it, is
that Modesta Gamboa, during the period in which she has been part owner of the property and during the later period in which she has held
title in her own name, has been surrounded by kinsfolk who were anxious to insinuate themselves into a coownership of the property, and
this litigation was undoubtedly promoted chiefly by her brother Serapion Gamboa. But it is noteworthy that at least two brothers have
admitted her title.

The trial judge seems to have entertained the idea that the case must turn upon the character of the possession exercised by Modesta
Gamboa during the period allowed by law for prescription; and he assumed that it was necessary for her to show adverse possession during
that period. This idea is not of correct application, because Modesta Gamboa, either cojointly with her sister Feliciana or exclusively in her
own right, has held the legal title since 1910; and the fact that her brother and sisters may have questioned her right during the ten years
next preceding the institution of this action does not have the effect of impairing her right.

From what has been said it follows that the judgment appealed from must be modified to the end that the defendants be absolved from the
complaint, except as to the lot identified as tax No. 6247, as to which lot alone partition, if not made by mutual agreement within the period of
thirty days from the return of this record to the lower court, shall be effected in the matter prescribed by law. So ordered, without express
pronouncement as to costs.
 .R. No. L-38810 November 6, 1933

TAN SENGUAN & CO., INC., Plaintiff-Appellant, vs. PHILIPPINE TRUST COMPANY, Defendant-Appellee.

HULL, J.: virtual law library

Plaintiff brought suit in the Court of First Instance of Manila for the sum of P10,000 based on the following agreement:

Know all men by these presents: virtual law library

That on this 27th day of June, 1924, and in this City of Manila, Tan Sen Guan & Co., a mercantile partnership
registered in accordance with the laws of the Philippine Islands and the Philippine Trust Company, a corporation
properly organized and with principal place of business in this City of Manila, have entered into the following:

AGREEMENT

Whereas Tan Sen Guan & Co. on September 21, 1923, secured a judgment for the sum of twenty-one thousand four
hundred twenty-six (P21,426) pesos against the Mindoro Sugar Co., of which the Philippine Trust is the Trustee; virtual law library

Whereas the Tan Sen Guan & Co., desires to convey to said Philippine Trust Company as such trustee the amount of
said judgment, and the Philippine Trust Company, Trustee, offers satisfactory consideration therefor; virtual law library

Wherefore, Tan Sen Guan & Co., hereby assigns, conveys, transfers and sells to said Philippine Trust
Company, Trustee, the full amount of said judgment against the Mindoro Sugar Co., together with all its rights thereto,
said Philippine Trust Company, Trustee, hereafter to have the full use and benefit of said judgment to the same extent
and in the same manner as if originally entered in favor of said Company; and in connection for the covenants and
stipulations following: virtual law library

1. Upon the signing of this Agreement, the Philippine Trust Company, Trustee, shall pay to Tan Sen Guan & Co., the
sum of five thousand (P5,000) pesos. virtualawlibrary virtual law library

2. The Philippine Trust Company, Trustee, agrees that should the Mindoro Sugar Co., be sold, assigned or its
ownership transferred in any manner whatsoever to any person or entity including the Philippine Trust
Company, Trustee, itself, it shall pay to Tan Sen Guan & Co., an additional sum of ten thousand (10,000) pesos, said
amount to be paid immediately upon the perfection of said sale or transfer and irrespective to the amount which might
be paid for it.
virtualawlibrary virtual law library

3. In case any other creditor of the Mindoro Sugar Company obtains in the payment of his credit, a greater proportion
than the price hereby paid to Tan Sen Guan & Co. which is fifteen thousand (15,000) pesos for a debt of P21,426, or
seventy per cent (70%) thereof, the Philippine Trust Company, Trustee, shall pay to Tan Sen Guan & Co., whatever
sum may be necessary in order that the amount received by Tan Sen Guan & Co. be equal, the proportion to its claim,
to that received by the said other creditor, in proportion to his claim. virtualawlibrary virtual law library

4. In case, however, that the Mindoro Sugar Company is sold any person or entity which pays nothing to the creditor or
pay to them in satisfaction of their credits an amount equal or less than 70 per cent of their respective claims; or, should
said creditors from whatever source obtain in payment of their credits an amount equal or less than 70 per cent of their
respective claims, then the Philippine Trust Company, Trustee, will only pay to Tan Sen Guan & Co., the above-
mentioned additional sum of P10,000 upon the sale or transfer of the Mindoro sugar Co., as above stated. virtualawlibrary virtual law library

In witness whereof, the Philippine Trust Company Trustee thru its Vice-President and the Tan Sen Guan & Co., thru its
Manager, have hereunto set their hand in the date and year above noted.

PHILIPPINE TRUST COMPANY

Trustee for Mindoro Sugar Co
 By (Sgd.) W.D.. CLIFFORD
Vice-President

TAN SEN GUAN & COMPANY

By (Sgd.) CHUA CHO CHING
Manager

After trial on an agreed statement of facts which had been entered into by the respective attorneys, the court absolved the
defendant on two grounds, first, that in the contract it was bound only as a trustee and not as an individual and second, that it had
not been proved that all the properties of the Mindoro Sugar Company had been sold. virtualawlibrary virtual law library

The stipulation of facts relative to the second point reads:

(9) That, pursuant to the attached copy of notice of sale, marked Exhibit C, which is made a part hereof, on November
4, 1929, Modesto Manahan, Justice of the peace of the Municipality of San Jose, Province of Mindoro, sold at public
auction to the Roman Catholic Archbishop of Manila, a corporation sole, all the properties belonging to the Mindoro
sugar Company which appears described in the certificate of sale executed by the said justice of the peace Modesto
Manahan in favor of the said the Roman Catholic Archbishop of Manila, a copy of which certificate is herein attached,
marked Exhibit D, and made a part hereto.

Defendant claims that the omission of a comma between the words "Mindoro Sugar Company" and the words "which appear
described" shows that only a portion of the Mindoro Sugar Company's properties were sold. virtualawlibrary virtual law library

From this decision plaintiff appeals. The first two errors assigned read:

1. The lower court erred in holding that the defendant is not personally responsible for the claim of the plaintiff based
on the deed of assignment Exhibit B because of having executed the same in its capacity as Trustee of the properties of
the Mindoro Sugar Company. virtualawlibrary virtual law library

2. The lower court erred in holding that it has not been stipulated that all the properties of the Mindoro Sugar Company
were sold at public auction to the Roman Catholic Archbishop of Manila.

It appears from Exhibit A, being a deed of trust from the Mindoro Sugar Company to the Philippine Trust Company as trustee,
that to protect certain bonds to be issued by the Mindoro Sugar Company and to be purchased by the Philippine Trust Company
as Trustee, the real estate, franchises, and personal property of the Mindoro Sugar Company were made over assigned to the
Philippine Trust Company as trustee. That indenture was dated the 21st of December, 1917. virtualawlibrary virtual law library

While the legal title of the properties of the Mindoro Sugar Company were in the Philippine Trust Company as trustee, appellant
secured a judgment against the Mindoro Sugar Company and sold, transferred, and assigned that judgment to appellee by the
contract which is known in this record as Exhibit B above quoted. Whether all the properties of the Mindoro Sugar Company
were sold by the justice of the peace as recited in paragraph 9 of the stipulation of facts, is not controlled by the insertion or
omission of a comma in the stipulation of facts. An examination of any of the standard dictionaries will show that the relative
pronoun "which" is descriptive and not restricted. If a restrictive relative pronoun were desired, the word "that" should have been
used. But a real interpretation of the stipulation of facts need not rely upon either the rules of punctuation or the rules of
grammar, because if we go to Exhibit D, we will find that all the properties transferred to the appellee as trustee were included in
the sale. The sale apparently included all the real and personal properties which the sugar company held, as even the accounts
receivable by the sugar company were included. The only thing reserved from the sale was the standing crops, and it is
reasonable to presume that they had also been sold between the date of the sale by the justice of the peace and the institution of
this action. Where the real estate, the personal property including animals, and all the bills receivable are sold, it would be a
forced construction of the contract Exhibit B to hold that the assets of the Mindoro Sugar Company had not been sold. virtualawlibrary virtual law library

The trial court was therefore in error in holding that the condition contemplated in paragraph 2 of the contract between the
parties, Exhibit B, had not taken place.virtualawlibrary virtual law library

While in the contract in question the Philippine Trust Company was usually referred to as trustee, it must be noted that nowhere
in Exhibit A, the deed of trust from the Mindoro Sugar Company to the Philippine Trust Company, was any authority given to
enter into a contract such as is here presented. The Philippine Trust Company held the legal title to the properties of the Mindoro
Sugar Company to protect the bond holders. So far as the Philippine Trust Company was concerned, it was not authorized to
manage the affairs of the Mindoro Sugar Company or to enter into contracts in its behalf. But even if the contract had been
authorized by the trust indenture, the Philippine Trust Company in its individual capacity would still be responsible for the
contract as there was no express stipulation that the true estate and not the true trustee should be held liable on the contract in
question. (26 R.L.C., 1316-1318; 39 Cyc., 338; 47 Am. Dig., sec. 300, and cases therein cited.) virtual law library

Not only is there no express stipulation that the trustee should not be held responsible but in the "Wherefore" clause of the
contract, the judgment was expressly assigned in favor of the Philippine Trust Company, not the Philippine Trust Company,
trustee.
virtualawlibrary virtual law library

If therefore follows that appellant had a right to proceed directly against the Philippine Trust Company on its contract and has no
claim against either the Mindoro Sugar Company or the trust estate. virtualawlibrary virtual law library

The judgment of the Court of First Instance is therefore reversed, and a judgment will be entered in favor of plaintiff- appellant
and against defendant-appellee in the sum of P10,000, with legal interest from the 8th of October, 1931, until paid, and with costs
in both instances against defendant-appellee. So ordered.