Business Trust CA - Affirmed.

It held that the Fund is distinct from RMCs

account in petitioner bank and may not be used except for the
I. Introduction benefit of the members of RMCPRF. Citing Paragraph 13 of the
Plan
Cases:
ISSUE: Whether or not the proceeds of the RMCPRF may be
applied to satisfy RMC’s debt to Philbank.
101. MBTC v. Board of Trustees of Riverside Mills Corp.
Provident and Retirement Fund
METROPOLITAN BANK & TRUST COMPANY, INC. (as successor-in-interest of the RULING: The petition has no merit.
banking operations of Global Business Bank, Inc. formerly known as PHILIPPINE
BANKING CORPORATION),
RATIO: A trust is a "fiduciary relationship with respect to
Petitioner,
vs. THE BOARD OF TRUSTEES OF RIVERSIDE MILLS CORPORATION PROVIDENT property which involves the existence of equitable duties
AND RETIREMENT FUND, represented by ERNESTO TANCHI, JR., CESAR imposed upon the holder of the title to the property to deal
SALIGUMBA, AMELITA SIMON, EVELINA OCAMPO and CARLITOS Y. LIM, RMC with it for the benefit of another." A trust is either express or
UNPAID EMPLOYEES ASSOCIATION, INC., and THE INDIVIDUAL BENEFICIARIES
implied. Express trusts are those which the direct and positive
OF THE PROVIDENT AND RETIREMENT FUND OF RMC,
Respondents. acts of the parties create, by some writing or deed, or will, or by
words evincing an intention to create a trust.
FACTS: RMC established a Provident and Retirement Plan Here, the RMC Provident and Retirement Plan created
(RMCPRF) for its regular employees. In 1979, the Board of an express trust to provide retirement benefits to the regular
Trustees of RMCPRF (the Board) entered into an Investment employees of RMC. RMC retained legal title to the Fund but
Management Agreement with the petitioner where the latter held the same in trust for the employees-beneficiaries. Thus,
shall act as an agent of the Board and shall hold, manage, invest the allocation under the Plan is directly credited to each
and reinvest the Fund in Trust Account No. 1797 in its behalf. member’s account:
The Agreement shall be in force for one (1) year and shall be The trust was likewise a revocable trust as RMC
deemed automatically renewed unless sooner terminated reserved the power to terminate the Plan after all the liabilities
either by petitioner bank or by the Board. Paragraph 13 of the of the Fund to the employees under the trust had been paid.
Plan likewise provided that: Paragraph 13 of the Plan provided that "[i]n no event shall any
part of the assets of the Fund revert to the Company before all
“...but no such action shall operate to permit any part of the assets of liabilities of the Plan have been satisfied."
the Fund to be used for, or diverted to purposes other than for the Employees’ trusts or benefit plans are intended to
exclusive benefit of the members of the Plan and their beneficiaries. In provide economic assistance to employees upon the occurrence
no event shall any part of the assets of the Fund revert to [RMC] before
of certain contingencies, particularly, old age retirement, death,
all liabilities of the Plan have been satisfied...”
sickness, or disability. They give security against certain hazards
to which members of the Plan may be exposed. They are
In 1984, RMC ceased business operations but the
independent and additional sources of protection for the
petitioner continued to render investment services to
working group and established for their exclusive benefit and
respondent Board. Petitioner then informed respondent Board
for no other purpose.18 Here, while the Plan provides for a
that petitioner’s BOD had decided to apply the remaining trust
reversion of the Fund to RMC, this cannot be done until all the
assets held by it in the name of RMCPRF against part of the
liabilities of the Plan have been paid. And when RMC ceased
outstanding obligations of RMC.
operations in 1984, the Fund became liable for the payment not
Subsequently, respondent RMC Unpaid Employees
only of the benefits of qualified retirees at the time of RMC’s
Association, Inc. (Association), representing the terminated
closure but also of those who were separated from work as a
employees of RMC, learned of Trust Account No. 1797. Through
consequence of the closure.
counsel, they demanded payment of their share. When such
A member who is separated for cause shall not be
demand went unheeded, the Association, along with the
entitled to withdraw the total amount representing his
individual members of RMCPRF, filed a complaint for
contribution and that of the Company including the earned
accounting against the Board and its officers as well as
interest thereon, and the employer’s contribution shall be
petitioner bank.
retained in the fund.
On June 2, 1998, during the trial, the Board passed a
To be sure, the cessation of business by RMC is an
Resolution in court declaring that the Fund belongs exclusively
authorized cause for the termination of its employees. Hence,
to the employees of RMC. It authorized petitioner to release the
not only those qualified for retirement should receive their total
proceeds of Trust Account No. 1797 through the Board, as the
benefits under the Fund, but those laid off should also be
court may direct.
entitled to collect the balance of their account as of the last day
of the month prior to RMC’s closure. In addition, the Plan
RTC - declared invalid the reversion and application of the
provides that the separating member shall be paid a maximum
proceeds of the Fund to the outstanding obligation of RMC to
of 40% of the amount representing the Company’s contribution
petitioner bank.
and its income standing to his credit. Until these liabilities shall • The amount contributed by plaintiffs constituted as liens and
have been settled, there can be no reversion of the Fund to encumbrances on the properties as annotated in the titles of
RMC. said lots
It must be stressed that the RMC Provident and - Such annotation was made pursuant to the Minutes of the
Retirement Plan was primarily established for the benefit of Special Meeting of the Board of Directors of RISCO on
regular and permanent employees of RMC. As such, the Board March 14, 1961, and a part of it says:
may not unilaterally terminate the Plan without due regard to - “And that the respective contributions above-mentioned (Aznar
any accrued benefits and rightful claims of members- et al.) shall constitute as their lien or interest on the property
employees. Besides, the Board is bound by the prohibition on described above, if and when said property are titled in the name
the reversion of the Fund to RMC before all the liabilities of the of RISCO, subject to registration as their adverse claim in
pursuance of the Provision of Land Registration Act, until such
Plan have been satisfied.
time their respective contributions are refunded to them
As to the contention that the functions of the Board of
completely”
Trustees ceased upon with RMC’s closure, the same is likewise
• Thereafter, various subsequent annotations were made on
untenable.
the same titles, including the Notice of Attachment and Writ of
Under Section 12227 of the Corporation Code, a dissolved
Execution both dated August 3, 1962 in favor of Philippine
corporation shall nevertheless continue as a body corporate for three
(3) years for the purpose of prosecuting and defending suits by or
National Bank (PNB)
against it and enabling it to settle and close its affairs, to dispose and • As a result, a Certificate of Sale was issued in favor of PNB,
convey its property and to distribute its assets, but not for the purpose being the lone and highest bidder of the 3 parcels of land
of continuing the business for which it was established. Within those - This prompted Aznar et al. to file the instant case seeking
three (3) years, the corporation may appoint a trustee or receiver who the quieting of their supposed title to the subject
shall carry out the said purposes beyond the three (3)-year winding-up properties
period. Thus, a trustee of a dissolved corporation may commence a • Trial court ruled against PNB on the basis that there was an
suit which can proceed to final judgment even beyond the three (3)-
express trust created over the subject properties whereby
year period of liquidation.
RISCO was the trustee and the stockholders, Aznar, et al., were
In the same manner, during and beyond the three (3)-year
the beneficiaries
winding-up period of RMC, the Board of Trustees of RMCPRF may do
no more than settle and close the affairs of the Fund. The Board retains • Court of Appeals opined that the monetary contributions
its authority to act on behalf of its members, albeit, in a limited made by Aznar, et al. to RISCO can only be characterized as a
capacity. It may commence suits on behalf of its members but not load secured by a lien on the subjected lots, rather than an
continue managing the Fund for purposes of maximizing profits. Here, expressed trust
the Board’s act of issuing the Resolution authorizing petitioner to
release the Fund to its beneficiaries is still part of the liquidation ISSUE: Whether or not there was a trust contract between
process, that is, satisfaction of the liabilities of the Plan, and does not
RISCO and Aznar, et al.
amount to doing business. Hence, it was properly within the Board’s
power to promulgate.
RULING: No. There was no trust contract created.

RATIO: At the outset, the Court agrees with the Court of

102. PNB v. Aznar
G.R. No. 171805 Appeals that the agreement contained in the Minutes of the
PHILIPPINE NATIONAL BANK, Petitioner, Special Meeting of the RISCO Board of Directors held on March
vs. MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased),
14, 1961 was a loan by the therein named stockholders to
represented by his heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA;
JOSE B. ENAD (deceased), represented by his heirs; and RICARDO GABUYA
RISCO. Careful perusal of the Minutes relied upon by plaintiffs-
(deceased), represented by his heirs, Respondents. appellees in their claim, showed that their contributions shall
constitute as “lien or interest on the property.” The term lien as
G.R. No. 172021
used in the Minutes is defined as "a discharge on property
MERELO B. AZNAR and MATIAS B. AZNAR III, Petitioners,
vs. PHILIPPINE NATIONAL BANK, Respondent.
usually for the payment of some debt or obligation. Hence,
from the use of the word "lien" in the Minutes, we find that the
FACTS: money contributed by plaintiffs-appellees was in the nature of a
• This case is consolidated with G.R. 172021, Merelo and loan, secured by their liens and interests duly annotated on the
Matias Aznar v. PNB titles. The annotation of their lien serves only as collateral and
• 1958: Rural Insurance and Surety Company, Inc. (RISCO) does not in any way vest ownership of property to plaintiffs.
ceased operation due to business reverses
- In plaintiffs’ (Anzar et al.) desire to rehabilitate RISCO, We are not persuaded by the contention of Aznar, et al., that
they contributed a total amount of P212,720.00 the language of the subject Minutes created an express trust.
- This was used to purchase 3 parcels of land in Cebu
- Two in the Municipality of Talisay and One in the District Trust is the right to the beneficial enjoyment of property, the
of Lahug, Cebu City legal title to which is vested in another. It is a fiduciary
• After the purchase of the lots, titles were issued in the name relationship that obliges the trustee to deal with the property
of RISCO for the benefit of the beneficiary. Express trusts are
intentionally created by the direct and positive acts of the The Torbela siblings filed before the RTC for recovery of
settlor or the trustor - by some writing, deed, or will or oral ownership and possession of the lot. Subsequently the
declaration. It is created not necessarily by some written words, complaint was amended to implead Banco Filipino. In relation
but by the direct and positive acts of the parties. The creation of to the extrajudicial foreclosure, the siblings filed a case for
an express trust must be manifested with reasonable certainty annulment of extrajudicial foreclosure. Failing to redeem the
and cannot be inferred from loose and vague declarations or property, the siblings filed for the annulment of the Certificate
from ambiguous circumstances susceptible of other of Final Sale to Banco Filipino.
interpretations. At most, what Aznar, et al., had was merely a
right to be repaid the amount loaned to RISCO. Unfortunately, RTC – The mortgage executed by Sps. Rosario to Banco Filipino
the right to seek repayment or reimbursement of their and the extrajudicial foreclosure of the subject property are
contributions used to purchase the subject properties is already both valid, and that Banco Filipino the rightful owner of the
barred by prescription 10 Years because it was based on a same.
written contract (the minutes by the Board of Directors) in 1961 CA – Affirmed with modification, deleting attorney’s fees to
and the quieting of the title suit was brought only in 1998. Banco Filipino and giving the right of first refusal to the Torbela
siblings.

103. Torbela v. Rosario ISSUE: Whether or not there was an express trust between the
This is a consolidated case:
Torbela siblings and Dr. Rosario.
The petitioners in G.R. No. 140528 are siblings Maria Torbela, Pedro Torbela,
Eufrosina Torbela Rosario, Leonila Torbela Tamin, Fernando Torbela, Dolores RULING: Yes. There was an express trust between them.
Torbela Tablada, Leonora Torbela Agustin, and Severina Torbela Ildefonso
(Torbela siblings).
RATIO: Indeed, the Torbela siblings executed a Deed of
Absolute Quitclaim on December 12, 1964 in which they
The petitioner in G.R. No. 140553 is Lena Duque-Rosario (Duque-Rosario), who
was married to, but now legally separated from, Dr. Andres T. Rosario (Dr.
transferred and conveyed Lot No. 356-A to Dr. Rosario for the
Rosario). Dr. Rosario is the son of Eufrosina Torbela Rosario and the nephew of consideration of P9.00. However, the Torbela siblings explained
the other Torbela siblings. that they only executed the Deed as an accommodation so that
Dr. Rosario could have Lot No. 356-A registered in his name and
FACTS: The Torbela siblings executed a deed of absolute use said property to secure a loan from DBP.
quitclaim on December 9, 1964 for P9.00 over Lot No. 356-A
(the property) in favor of Dr. Rosario. Four days after, a TCT was Considering the foregoing, the Court agrees with the RTC and
issued in Dr. Rosario’s name covering the property. Another the Court of Appeals that Dr. Rosario only holds Lot No. 356-A
deed of absolute quitclaim was subsequently executed on in trust for the Torbela siblings.
December 28, 1964 by Dr. Rosario, for a consideration of P1.00,
acknowledging that he only borrowed the lot from the Torbela Trust is the right to the beneficial enjoyment of property, the
siblings and was already returning the same. This deed was legal title to which is vested in another. It is a fiduciary
notarized but not immediately annotated. Dr. Rosario used the relationship that obliges the trustee to deal with the property
land as mortgage for a loan he obtained through DBP for for the benefit of the beneficiary. Trust relations between
P70,000.00. He used the proceeds of the loan to build a 4 story parties may either be express or implied. An express trust is
building which was initially used as a hospital but later created by the intention of the trustor or of the parties, while
converted into a commercial space. Dr. Rosario fully paid the an implied trust comes into being by operation of law.
loan from DBP and the mortgage was cancelled and ratified by a
notary public. However, Dr. Rosario took another loan from Express trusts are created by direct and positive acts of the
PNB. He later acquired a third loan from Banco Filipino and parties, by some writing or deed, or will, or by words either
bought out the loan from PNB cancelling the mortgage with expressly or impliedly evincing an intention to create a trust.
PNB. Rosario failed to pay their loan in Banco Filipino and the Under Article 1444 of the Civil Code, [n]o particular words are
property was extrajudicially foreclosed, where Banco Filipino required for the creation of an express trust, it being sufficient
was the lone bidder thereof. that a trust is clearly intended. It is possible to create a trust
without using the word trust or trustee. Conversely, the mere
Meanwhile, back in 1965, the Torbela siblings sought to register fact that these words are used does not necessarily indicate an
their ownership over the lot and to perfect their title but intention to create a trust. The question in each case is whether
couldn’t because the title was still with DBP. They showed as the trustor manifested an intention to create the kind of
proof the deed of absolute quitclaim presented executed by relationship which to lawyers is known as trust. It is immaterial
Rosario himself. In 1986, they filed a civil case for recovery of whether or not he knows that the relationship which he intends
ownership and possession and damages. They tried to redeem to create is called a trust, and whether or not he knows the
the lot from Banco Filipino but failed. TCT was issued to Banco precise characteristics of the relationship which is called a trust.
FIlipino. The Torbela’s claim they have right over the rents of
the building through accession because they are the land In Tamayo v. Callejo, the Court recognized that a trust may have a
owners. constructive or implied nature in the beginning, but the registered
owners subsequent express acknowledgement in a public document of prescription as the same had accrued way back in 1968 upon
a previous sale of the property to another party, had the effect of the execution of the affidavit of transfer by virtue of which an
imparting to the aforementioned trust the nature of an express trust. implied trust had been created. In this regard, they emphasized
The same situation exists in this case. When Dr. Rosario was able to
that the law allowed only a period of ten (10) years within
register Lot No. 356-A in his name under TCT No. 52751 on December
which an action to recover ownership of real property or to
16, 1964, an implied trust was initially established between him and
enforce an implied trust thereon may be brought, but Margarita
the Torbela siblings under Article 1451 of the Civil Code, which
provides: merely let it pass.

ART. 1451. When land passes by succession to any person and he RTC - No express trust. There was no evidence of another
causes the legal title to be put in the name of another, a trust is document showing Robertos undertaking to return the subject
established by implication of law for the benefit of the true owner. properties. Instead, there was an implied trust.

CA - Affirmed dispositive portion. But dismissed the petitioner’s

Dr. Rosarios execution of the Deed of Absolute Quitclaim on claim that Roberto was merely a trustee.
December 28, 1964, containing his express admission that he
only borrowed Lot No. 356-A from the Torbela siblings, ISSUE: Whether or not there was an implied trust was created.
eventually transformed the nature of the trust to an express
one. The express trust continued despite Dr. Rosario stating in RULING: Yes. There is an implied trust.
his Deed of Absolute Quit Claim that he was already returning
Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained RATIO: The Court held that “A trust is the legal relationship
registered in Dr. Rosarios name under TCT No. 52751 and Dr. between one person having an equitable ownership of property
Rosario kept possession of said property, together with the and another person owning the legal title to such property, the
improvements thereon. equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain
powers by the latter. Trusts are either express or implied.”
104. Estate of Margarita D. Cabacungan v. Laigo
ESTATE OF MARGARITA D. CABACUNGAN, represented by LUZ The Court also held that “Express or direct trusts are created by
LAIGO-ALI, Petitioner, the direct and positive acts of the parties, by some writing or
vs. MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT and deed, or will, or by oral declaration in words evincing an
SPOUSES MARIO B. CAMPOS AND JULIA S. CAMPOS, intention to create a trust.”
Respondents.
The Court, moreover, held that “Implied trusts—also called
FACTS: Margarita Cabacungan owned three parcels of “trusts by operation of law,” “indirect trusts” and “involuntary
unregistered land in La Union which are covered by tax trusts”—arise by legal implication based on the presumed
declaration all in her name. Sometime in 1968, Margarita’s son, intention of the parties or on equitable principles independent
Roberto Laigo, Jr. applied for a non-immigrant visa to the of the particular intention of the parties. They are those which,
United States, and to support his application, he allegedly asked without being expressed, are deducible from the nature of the
Margarita to transfer the tax declarations of the properties in transaction as matters of intent or, independently of the
his name. For said purpose, Margarita, unknown to her other particular intention of the parties, as being inferred from the
children, executed an Affidavit of Transfer of Real Property transaction by operation of law basically by reason of equity.”
whereby the subject properties were transferred by donation to
Roberto. In addition, the Court held that “Implied trusts are further
classified into constructive trusts and resulting trusts.
Roberto adopted respondents Pedro Laigo and Marilou Laigo. In Constructive trusts, on the one hand, come about in the main
July 1990, Roberto sold the aforementioned three parcel of by operation of law and not by agreement or intention. They
land. One parcel of land was sold to spouses Mario and Julia arise not by any word or phrase, either expressly or impliedly,
Campos and the rest were sold to Pedro Laigo and Marilou evincing a direct intention to create a trust, but one which
Laigo. These sales were not known to Margarita and her other arises in order to satisfy the demands of justice.”
children. The Court further held that “Resulting trusts arise from the
nature or circumstances of the consideration involved in a
Spouses Campos advanced that they were innocent purchasers transaction whereby one person becomes invested with legal
for value and in good faith. Further, they noted that Margarita’s title but is obligated in equity to hold his title for the benefit of
claim was already barred by prescription and laches owing to another. This is based on the equitable doctrine that valuable
her long inaction in recovering the subject properties. consideration and not legal title is determinative of equitable
Marilou and Pedro contends to be buyers in good faith and for title or interest and is always presumed to have been
value. They also believed that Margarita’s cause of action had contemplated by the parties.”
already been barred by laches, and that even assuming the
contrary, the cause of action was nevertheless barred by
Finally, the Court held that “A trust will follow the property— of the Portfolio or a minimum annual fee of P5,000.00, whichever is
through all changes in its state and form as long as such higher. The said trust or management fee shall automatically be
property, its products or its proceeds, are capable of deducted from the Portfolio at the end of each calendar quarter. The
TRUSTEE shall likewise be reimbursed for all reasonable and necessary
identification, even into the hands of a transferee other than a
expenses incurred by it in the discharge of its powers and duties under
bona fide purchaser for value, or restitution will be enforced at
this Agreement, and in all cases, the TRUSTEE shall have a first lien on
the election of the beneficiary through recourse against the the Portfolio for the payment of the trust fees and other reimbursable
trustee or the transferee personally. This is grounded on the expenses
principle in property law that ownership continues and can be
asserted by the true owner against any withholding of the Accordingly Advent Capital could automatically deduct its
object to which the ownership pertains, whether such object of management fees from the portfolio.
the ownership is found in the hands of an original owner or a
transferee, or in a different form, as long as it can be However, the trust fees claimed by Conception was for past
identified.” quarters, these should have been deducted as they became
due. At the time Advent Capital made its move to collect its
supposed management fees, it neither had possession nor
105. Advent Capital and Finance Corp. v. Alcantara control of the money it wanted to apply to its claim. For banks,
ADVENT CAPITAL AND G.R. FINANCE CORPORATION, Petitioner,
their trust agreement authorizes the automatic collection.
vs. NICASIO I. ALCANTARA and EDITHA I. ALCANTARA, Respondents.

Here Advent Capital did not exercise its right to cause the
FACTS: On July 16, 2001 Advent Capital filed a petition for
automatic deduction at the end of every quarter of its supposed
rehabilitation with the RTC. The RTC named Atty. Danilo
management fee when it had full control of the dividends. The
Conception (Conception) as rehabilitation receiver. Upon audit,
Alcantaras can assume that the management fee has already
Conception found that respondents Nicasio and Editha
been deducted, hence, the burden of proof is on Advent Capital
Alcantara (the Alcantaras) owed Advent Capital P27,398,026.59,
to prove otherwise. Advent Capital merely managed in trust for
representing trust fees. Conception then requested Belson
the benefit of the Alcantaras the latter’s portfolio, which under
Securities, Inc. (Belson)to deliver to him the P7,635,597.50 in
Paragraph 2 of the Trust Agreement, includes not only the
cash dividends that Belson held under the Alcantaras’ trust
principal but also its income or proceeds. The trust property is
account. Conception claimed that the dividends, as trust fees,
only fictitiously attributed by law to the trustee to the extent
formed part of Advent Capital assets which Belson refused,
that the rights and powers vested in a nominal owner shall be
citing the Alcantaras’ objections and the absence of an
used by him on behalf of the real owner.
appropriate order from the rehabilitation court.

The real owner of the trust property is the trustor-beneficiary.

Rehabilitation Court – (Advent v. Alcantara) Consequently,
In this case, the trustors-beneficiaries are the Alcantaras. Thus,
Conception filed a motion for the rehabilitation court to direct
Advent Capital could not dispose of the Alcantaras portfolio on
Belson to release the money to him. The Alcantaras appeared
its own. The income and principal of the portfolio could only be
to oppose. This court granted this motion, to which Belson
withdrawn upon the Alcantaras written instruction or order to
complied.
Advent Capital. The latter could not also assign or encumber the
portfolio or its income without the written consent of the
CA – (Alcantara v. Advent) Annuled the rehabilitation court’s
Alcantaras. All these are stipulated in the Trust Agreement.
order. Ruling that the Alcantaras owned those dividends and
did not form part of Advent’s Capital assets. Rehabilitation
proceedings referred only to the assets and liabilities of the
106. Goyanko v. UCPB
company proper, not to those belonging to the Trust
JOSEPH GOYANKO, JR., as administrator of the Estate of Joseph
Department which held assets belonging to other people. Goyanko, Sr., Petitioner,
vs. UNITED COCONUT PLANTERS BANK, MANGO AVENUE BRANCH,
ISSUE: Whether or not the cash dividends held by Belson are Respondent.
required to be conveyed to the rehabilitation receiver for his
disposition. Trustor – PALII
Trustee – UCPB
RULING: No. Beneficiary – the HEIRS (as contended by the petitioner)

RATIO: Advent Capital asserts that the cash dividends in Belsons FACTS: In 1995, the late Joseph Goyanko, Sr. (Goyanko)
possession formed part of its assets based on paragraph 9 of its invested Two Million Pesos (P2,000,000.00) with Philippine Asia
Trust Agreement with the Alcantaras, which states: Lending Investors, Inc. family, represented by the petitioner,
and his illegitimate family presented conflicting claims to PALII
9. Trust Fee: Other Expenses As compensation for its services for the release of the investment. Pending the investigation of
hereunder, the TRUSTEE shall be entitled to a trust or management fee the conflicting claims, PALII deposited the proceeds of the
of 1 (one) % per annum based on the quarterly average market value investment with UCPB on October 29, 19965 under the name
"Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko, Sr." in the future. It is essential, too, that the purpose be an active one to
(ACCOUNT). On September 27, 1997, the deposit under the prevent trust from being executed into a legal estate or interest, and
ACCOUNT was P1,509,318.76. 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
On December 11, 1997, UCPB allowed PALII to withdraw One
third party beneficiary. A declaration of terms is essential, and these
Million Five Hundred Thousand Pesos (P1,500,000.00) from the must be stated with reasonable certainty in order that the trustee
Account, leaving a balance of only P9,318.76. When UCPB may administer, and that the court, if called upon so to do, may
refused the demand to restore the amount withdrawn plus enforce, the trust.
legal interest from December 11, 1997, the petitioner filed a
complaint before the RTC. In its answer to the complaint, UCPB Contrary to petitioner’s contention, the letters and records
admitted, among others, the opening of the ACCOUNT under established UCPB’s participation as a mere depositary only.
the name "ITF (In Trust For) The Heirs of Joseph Goyanko, Sr.," PALII manifested its intention to pursue an active role in and up
(ITF HEIRS) and the withdrawal on December 11, 1997. to the turnover of the proceeds to their rightful owners, while
in November 15, 1996, in a letter PALII begged the Petitioner to
RTC – Dismissed the petitioner’s complaint. RTC did not trust it with the safekeeping of the investment proceeds and
consider the words “ITF HEIRS” sufficient to charge UCPB with documents. Had it been PALII’s intention to create a trust in
knowledge of any trust relation between PALII and Goyankos’s favor of the HEIRS, it would have relinquished any right or claim
heirs. over the proceeds in UCPB’s favor as the trustee. As matters
stand, PALII never did. While the words "ITF HEIRS" may have
CA – partially granted the petitioner’s appeal. Affirmed the RTC created the impression that a trust account was created, a
but deleted the award of attorney’s fees and litigation closer scrutiny reveals that it is an ordinary savings account. the
expenses. Holding that no express or implied trust was created. word "ITF" was merely used to distinguish the ACCOUNT from
The words “ITF HEIRS” insufficient to establish the existence of PALII’s other accounts with UCPB. A trust can be created
a trust. without using the word "trust" or "trustee," but the mere use of
these words does not automatically reveal an intention to
Petitioner: There is a trust relation. The naming of the cestui create a trust. If at all, these words showed a trustee-
que trust is not necessary as it suffices that they are adequately beneficiary relationship between PALII and the HEIRS.
certain or identifiable.
Since the records and the petitioner’s own admission showed
Respondent: No trust relation. The account only involves and that the ACCOUNT was opened by PALII, UCPB’s receipt of the
ordinary deposit which created a debtor-creditor relationship. deposit signified that it agreed to pay PALII upon its demand
and only upon its order. Thus, when UCPB allowed PALII to
ISSUE: Whether or not a trust was established. withdraw from the ACCOUNT, it was merely performing its
contractual obligation under their savings deposit agreement.
RULING: No. No negligence or bad faith can be imputed to UCPB for this
action. As far as UCPB was concerned, PALII is the account
RATIO: A trust, either express or implied, is the fiduciary holder and not the HEIRS.
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 107. Morales v. CA
entitling him to the performance of certain duties and the RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES,
petitioners,
exercise of certain powers by the latter." Express or direct trusts
Vs. COURT OF APPEALS (Former Seventeenth Division), RANULFO
are created by the direct and positive acts of the trustor or of
ORTIZ, JR., and ERLINDA ORTIZ, respondents.
the parties. No written words are required to create an express
trust. This is clear from Article 1444 of the Civil Code, but, the Celso Avelino – Seller
creation of an express trust must be firmly shown; it cannot be Ranulfo & Erlinda Ortiz – Spouses-Buyers
assumed from loose and vague declarations or circumstances Rodolfo Morales – Nephew-Builder
capable of other interpretations. Priscila Morales – Seller’s Other Sister / Mother of Builder

In Rizal Surety & Insurance Co. v. CA, we laid down the FACTS: Seller owns two adjoining parcels of land on which he
requirements before an express trust will be recognized: constructed a house where he let his parents and sister lived
while he worked as City Fiscal of Calbayog, then Immigration
Basically, these elements include a competent trustor and trustee, an Officer, and, later on, as Judge of CFI Cebu. While in Cebu,
ascertainable trust res, and sufficiently certain beneficiaries. xxx each without the Seller’s knowledge, his Nephew built a beauty shop
of the above elements is required to be established, and, if any one of on his property. When he was offering to sell the property to
them is missing, it is fatal to the trusts (sic). Furthermore, there must prospective buyer Spouses, the latter did an ocular inspection
be a present and complete disposition of the trust property, and was able to talk with the Nephew, who encouraged them
notwithstanding that the enjoyment in the beneficiary will take place
to buy the property and assured them that he will vacate the ownership in property and another person owning the legal
premises if notified by the seller to do so. The sale was title to such property, the equitable ownership of the former
consummated and the Spouses paid the purchase price. entitling him to the performance of certain duties and the
Unfortunately, despite due notice from the Seller, the Nephew exercise of certain powers by the latter. The characteristics of
refused to vacate or demolish the beauty shop unless he is a trust are: (a) it is a relationship; (b) it is a relationship of
reimbursed for P35k. The Spouses also subsequently found out fiduciary character; (c) It is a relationship with respect to
that the Nephew also then occupied the dilapidated residential property, not one involving merely personal duties; (d) it
building, which the former had sought to repair. The Spouses involves the existence of equitable duties imposed upon the
then filed a case to recover the property against the Nephew holder of the title to the property to deal with it for the
(later substituted by his heirs). benefit of another; and (e) it arises as a result of a
manifestation of intention to create the relationship.
According to the Nephew’s mother, sister of the Seller, (aside
from the one who live in the house constructed) who also A resulting trust, also sometimes referred to as a PURCHASE
intervened in the case, the property was inherited by her MONEY RESULTING TRUST, is exemplified by Article 1448 of the
together with their other siblings, except for the Seller who was Civil Code, which reads: Art. 1448. There is an implied trust
away for 30 years because of his job. The Seller, being the only when property is sold, and the legal estate is granted to one
son, was allowed by their father to acquire the property with party but the price is paid by another for the purpose of having
money coming from the father. She further alleged that the the beneficial interest of the property. The former is the trustee,
constructed house was built by their parents and that the built while the latter is the beneficiary. However, if the person to
beauty shop was with the knowledge and consent of the Seller. whom the title is conveyed is a child, legitimate or illegitimate,
She intervened arguing that the sale was fraudulent for of the one paying the price of the sale, no trust is implied by
including her share and the beauty shop of her son. The Trial law, it being disputably presumed that there is a gift in favor
Court ruled in favor of the Spouses and ordered the Nephew to of the child. To give rise to a purchase money resulting trust, it
vacate and remove the beauty shop. The court noted that the is essential that there be: (1) an actual payment of money,
seller’s siblings and their descendants had not disputed the property or services, or an equivalent, constituting valuable
Seller’s ownership of the property nor the extra judicial- consideration, (2) and such consideration must be furnished by
partition effected on the property, even though two of the the alleged beneficiary of a resulting trust.
Sister-Intervenor’s children were lawyers. It further noted that
the claim of ownership by the buyer Spouses were based on The Court agreed with the lower courts that the current
documentary evidence (Deed of Conveyance, tax declarations situation falls within the exception under the third sentence of
transferred to the wife-buyer, etc.), as against the evidence Article 1448.
presented by the Seller’s Sister and Nephew which were only
testimonial. Furthermore, the other sisters did not join them Also fatal to the case of the Sister and the Nephew is the
and intervened in the case. The court further ruled that their declaration of their other sister, Concepcion, who disclaimed
claim of implied trust is untenable, because in order for implied any interest on the property and executed a Confirmation that
trust to exist there must be evidence of an equitable obligation their brother bought the property using his own funds. If indeed
of the trustee to convey, which was absent in this case. The CA the property was merely held in trust by Celso for his parents,
affirmed the decision of the trial court. Concepcion would have been entitled to a proportionate part
thereof as co-heir. However, by her Confirmation, Concepcion
RTC - In favor of Sps. Ortiz. Celso, not his parents, is the true made a solemn declaration against interest. Furthermore, the
owner of the premises in question. Seller’s sisters did not do anything to have their respective
shares in the property conveyed to them after the death of
CA - Affirmed RTC. their father. Neither is there any evidence that during his
lifetime, their father demanded from the Seller that the latter
ISSUE: Whether or not the Seller was a mere trustee (implied) convey the land, which was mute and eloquent proof of the
for his parents and siblings. father’s recognition that the Seller was the to be the absolute
owner of the property.
RULING: No.

RATIO: As a rule, the burden of proving the existence of a trust 108. Government v. Abadilla
is on the party asserting its existence, and such proof must be THE GOVERNMENT OF THE PHILIPPINE ISLANDS, petitioner,
clear and satisfactorily show the existence of the trust and its vs. ANASTASIA ABADILLA, ET AL., claimants. THE MUNICIPALITY OF
TAYABAS, ET AL., claimants-appellees, MARIA PALAD, ET AL.,
elements. While implied trusts may be proved by oral
claimants-appellants.
evidence, the evidence must be trustworthy and received by
the courts with extreme caution, and should not be made to
FACTS: A school teacher originally owned three parcels of land,
rest on loose, equivocal or indefinite declarations. A trust is
by composicion gratuita. Before dying, he executed a
the legal relationship between one person having an equitable
holographic will party in Spanish and partly in Tagalog, leaving
their possession to his widow. The will contained a Tagalog claimants’ counsel argue that there is neither in the present
clause which translated read: That the coconut land in case; that there is no ayuntamiento, no Gobernador Civil of the
Colongcolong, which I have put under cultivation, be used by my province, and no secondary school in the town of Tayabas.
wife after my death during her life or until she marries, but from
this cocoanut land shall be taken what is to be lent to the An ayuntamiento corresponds to what in English is termed a
persons who are to plant cocoanut trees and that which is to be municipal corporation. But in the Philippines, provincial
paid to them as their share of the crop if any should remain; governors are the chief executives of their respective provinces,
and that she try to earn with the product of the cocoanut trees and as the successor of the civil governor of the province under
of which those bearing fruit are annually increasing; and if the the Spanish regime, may act as trustee in the present case. In
times aforementioned should arrive, I prepare and donate it to regard to private trust, it is not always necessary that the
secondary college to be erected in the capital of Tayabas; so cestui que trust should be named, or even be in esse (“to be”)
this will be delivered by my wife and the executors to the at the time the trust is created in his favor. Thus a devise to a
Ayuntamiento of this town, should there be any, and if not, to father in trust for accumulation for his children lawfully
the civil governor of this province in order to cause the begotten at the time of his death has been held to be good
manager thereof to comply with my wishes for the good of although the father had no children at the time of the vesting
many and the welfare of the town. of the funds in him as trustees. In charitable trust such as the
one here under discussion, the rule is still further relaxed.
After the school teacher died, the widow remained in
possession of the land and remarried. Subsequently, collateral While the collateral heirs argue that assuming all this to be true
heirs of the deceased brought an action against the widow for they would nevertheless be entitled to the income of the land
the partition of the lands arguing that she, by reason of her until the cestui que trust is actually in esse. The court however
second marriage, had lost the right to their exclusive use and disagreed. If the trustee holds the legal title and the devise is
possession. The municipality of Tayabas intervened claiming the valid, the natural heirs of the deceased have no remaining
land based on the said clause in the will. During the pendency interest in the land except their right to the reversion in the
of the action, an agreement was arrived at by the parties, event the devise for some reason should fail, an event which
where two lots were turned over to the municipality as its share has not as yet taken place. From a reading of the testamentary
of the inheritance under the will, and the remaining lot left in clause under discussion it seems quite evident that the
the possession of the widow. Based on the agreement, the intention of the testator was to have income of the property
action was dismissed with the concurrence of all the parties, accumulate for the benefit of the proposed school until the
but reserving to the collateral heirs the right to bring another same should be established.
action. The municipality of Tayabas the widow had
uninterrupted possession of their respective lots. The court also For the property in possession of the widow, she was able to
ordered registration of the three lots in the name of the acquire the property through prescription.
governor of Tayabas in trust for the secondary school to be
established. The widow and the collateral heirs appealed. CONCURRING & DISSENTING OPINION (MALCOLM, J.)
His view is that the property should not have been awarded to
Lower Court - Ordered the registration of the three lots in the the widow. The school teacher, in his will, transmitted the
name of the governor of the Province of Tayabas in trust for a usufructuary rights to the land to his widow "during her life or
secondary school to be established in the municipality of until she marries," after which the property was to be delivered
Tayabas. to the ayuntamiento or if there should not be any, to the civil
governor of the Province of Tayabas, for the benefit of a
ISSUE: Whether or not the property should be given to the secondary college. The widow having remarried, the property
collateral heirs should have been turned over to the municipality of Tayabas.
The alleged agreement between the parties cannot alter the
RULING: NO. A trust can be created even when the cestui que facts. The possession by the widow has been in contravention
trust be in esse. of the terms of the trust and in bad faith.

RATIO: According to the court, the clause in the will reveals the
intent of testator which must be given effect, which is to create 109. Panlilio v. Citibank
a trust for the benefit of a secondary school to be established in FACTS: Amalia Panlilio (Amalia) visited respondent's Makati City
the town of Tayabas, naming as trustee the ayuntamiento of office and deposited one million pesos (PhP1 million) in the
the town or if there be no ayuntamiento, then the civil governor bank's "Citihi" account, a fixed-term savings account with a
of the Province of Tayabas. higher-than-average interest. On the same day, Amalia also
opened a current or checking account with respondent, to
Drawing on American precedents, the court notes that in order which interest earnings of the Citihi account were to be
that a trust may become effective there must, of course, be a credited. Respondent assigned one of its employees, Jinky
trustee and a cestui que trust. On the other hand, the Suzara Lee (Lee), to personally transact with Amalia and to
handle the accounts. Amalia opened the accounts as ITF or "in contracts have the force of law between the parties and must
trust for" accounts, as they were intended to benefit her minor be complied with in good faith.47 In particular, petitioner
children, in case she would meet an untimely death. Amalia's Amalia affixed her signatures on the DIMA, Directional Letter
initial intention was to invest the money in a Citibank product and TIA, a clear evidence of her consent which, under Article
called the Peso Repriceable Promissory Note (PRPN), a product 1330 of the same Code, she cannot deny absent any evidence
which had a higher interest. However, as the PRPN was not of mistake, violence, intimidation, undue influence or fraud.48
available that day, Amalia put her money in the Citihi savings As the documents have the effect of law, an examination is in
account. More than a month later, or on November 28, 1997, order to reveal what underlies petitioners' zeal to exclude these
Amalia phoned Citibank saying she wanted to place an from consideration.
investment, this time in the amount of three million pesos
(PhP3 million). During the visit, Amalia instructed Lee on what Under the DIMA, the following provisions appear:
to do with the PhP3 million. Later, she learned that out of the
said amount, PhP2,134,635.87 was placed by Citibank in a Long- Nature of Agreement – THIS AGREEMENT IS AN AGENCY AND
Term Commercial Paper (LTCP), a debt instrument that paid a NOT A TRUST AGREEMENT. AS SUCH, THE PRINCIPAL SHALL AT
high interest, issued by the corporation Camella and Palmera ALL TIMES RETAIN LEGAL TITLE TO THE FUNDS AND PROPERTIES
Homes (C&P Homes). The rest of the money was placed in two SUBJECT OF THE ARRANGEMENT.
PRPN accounts, in trust for each of Amalia's two children.
The DIMA, Directional Letter, TIA and COIs, read together,
Allegations differ between petitioners and respondent as to establish the agreement between the parties as an investment
whether Amalia instructed Lee to place the money in the LTCP management agreement, which created a principal-agent
of C&P Homes. Amalia claims to have called Lee as soon as she relationship between petitioners as principals and respondent
received the first COI in December 1997, and demanded that as agent for investment purposes. The agreement is not a trust
the investment in LTCP be withdrawn and placed in a PRPN. or an ordinary bank deposit; hence, no trustor-trustee
Respondent, however, denies this, claiming that Amalia merely beneficiary or even borrower-lender relationship existed
called to clarify provisions in the COI and did not demand a between petitioners and respondent with respect to the DIMA
withdrawal. Amalia, through counsel, sent her first formal, account. Respondent purchased the LTCPs only as agent of
written demand to respondent "for a withdrawal of her petitioners; thus, the latter assumed all obligations or inherent
investment as soon as possible. Respondent noted that the risks entailed by the transaction under Article 1910 of the Civil
investment had a 2003 maturity, was not a deposit, and thus, Code, which provides:
its return to the investor was not guaranteed by respondent;
however, it added that the LTCP may be sold prior to maturity Article 1910. The principal must comply with all the obligations
and had in fact been put up for sale, but such sale as "subject to which the agent may have contracted within the scope of his
the availability of buyers in the secondary market." At that time, authority.
respondent was not able to find a buyer for the LTCP. Thus,
petitioners filed with the RTC their complaint against As for any obligation wherein the agent has exceeded his power, the
respondent for a sum of money and damages. principal is not bound except when he ratifies it expressly or tacitly.

RTC - ruled in favor of plaintiffs. 2) It is clear that since the money is committed to C&P Homes
via LTCP for five years, or until 2003, petitioners may not seek
CA - reversed the decision of the trial court. its recovery from respondent prior to the lapse of this period.
Petitioners must wait and meanwhile just be content with
ISSUES: (1) whether petitioners are bound by the terms and receiving their interest regularly. If petitioners want the
conditions of the Directional Investment Management immediate return of their investment before the maturity date,
Agreement (DIMA), Term Investment Application (TIA), their only way is to find a willing buyer to purchase the LTCP at
Directional Letter/Specific Instructions, and Confirmations of an agreed price, or to go directly against the issuer C&P Homes,
Investment (COIs); (2) and whether petitioners are entitled to not against the respondent.
take back the money they invested from respondent bank; or
stated differently, whether respondent is obliged to return the
money to petitioners upon their demand prior to maturity. II. Kinds of Trust

110. Ramos v. Ramos

RULING: (1) yes (2) no EMILIANO B. RAMOS, ET AL., plaintiffs-appellants,
vs. GREGORIA T. RAMOS, ET AL., defendants-appellants.
RATIO:
1) The DIMA, Directional Letter and COIs are evidence of the FACTS: Spouses Martin Ramos and Candida Tanate died on
contract between the parties and are binding on them, October 4, 1906 and October 26, 1880, respectively. They were
following Article 1159 of the Civil Code which states that survived by their 3 children. Moreover, Martin was survived by
his 7 natural children. In December 1906, a special proceeding and uncertain evidence or on loose, equivocal or indefinite
for the settlement of the intestate estate of said spouses was declarations. As already noted, an express trust cannot be
conducted. Rafael Ramos, a brother of Martin, administered the proven by parol evidence.
estate for more than 6 years. Eventually, a partition project was Neither have the plaintiffs specified the kind of implied trust
submitted which was signed by the 3 legitimate children and 2 contemplated in their action. We have stated that whether it is
of the 7 natural children. A certain Timoteo Zayco signed in a resulting or constructive trust, its enforcement may be barred
representation of the other 5 natural children who were by laches.
minors. The partition was sworn to before a justice of peace. There is a rule that a trustee cannot acquire by prescription the
The conjugal hereditary estate was appraised at P74,984.93, ownership of property entrusted to him, or that an action to
consisting of 18 parcels of land, some head of cattle and the compel a trustee to convey property registered in his name in
advances to the legitimate children. ½ thereof represented the trust for the benefit of the cestui que trust does not prescribed,
estate of Martin. 1/3 thereof was the free portion or or that the defense of prescription cannot be set up in an action
P12,497.98. The shares of the 7 natural children were to be to recover property held by a person in trust for the benefit of
taken from that 1/3 free portion. Indeed, the partition was another, or that property held in trust can be recovered by the
made in accordance with the Old Civil code. Thereafter, Judge beneficiary regardless of the lapse of time. That rule applies
Richard Campbell approved the partition project. The court squarely to express trusts. The basis of the rule is that the
declared that the proceeding will be considered closed and the possession of a trustee is not adverse. Not being adverse, he
record should be archived as soon as proof was submitted that does not acquire by prescription the property held in trust.
each heir had received the portion adjudicated to him. Thus, section 38 of Act 190 provides that the law of prescription
On February 3, 1914, Judge Nepumoceno asked the does not apply "in the case of a continuing and subsisting trust.”
administrator to submit a report showing that the shares of the The rule of imprescriptibility of the action to recover property
heirs had been delivered to them as required by the previous held in trust may possibly apply to resulting trusts as long as the
decision. Nevertheless, the manifestation was not in strict trustee has not repudiated the trust. The rule of
conformity with the terms of the judge’s order and with the imprescriptibility was misapplied to constructive trusts.
partition project itself. 8 lots of the Himamaylan Cadastre were Acquisitive prescription may bar the action of the beneficiary
registered in equal shares in the names of Gregoria (widow of against the trustee in an express trust for the recovery of the
Jose Ramos) and her daughter, when in fact the administrator property held in trust where (a) the trustee has performed
was supposed to pay the cash adjudications to each of them as unequivocal acts of repudiation amounting to an ouster of the
enshrined in the partition project. Plaintiffs were then cestui que trust; (b) such positive acts of repudiation have been
constrained to bring the suit before the court seeking for the made known to the cestui que trust and(c) the evidence
reconveyance in their favor their corresponding participations thereon is clear and conclusive (Laguna vs. Levantino, supra;
in said parcels of land in accordance with Article 840 of the old Salinas vs. Tuason, 55 Phil. 729. Compare with the rule
Civil Code. Note that 1/6 of the subject lots represents the 1/3 regarding co-owners found in the last paragraph of article 494,
free portion of martin’s shares which will eventually redound to Civil Code; Casanas vs. Rosello, 50 Phil. 97; Gerona vs. De
the shares of his 7 legally acknowledged natural children. The Guzman, L- 19060, May 29, 1964, 11 SCRA 153,157). With
petitioners’ action was predicated on the theory that their respect to constructive trusts, the rule is different. The
shares were merely held in trust by defendants. Nonetheless, prescriptibility of an action for reconveyance based on
no Deed of Trust was alleged and proven. Ultimately, the lower constructive trust is now settled. Prescription may supervene in
court dismissed the complaint on the grounds of res judicata, an implied trust. And whether the trust is resulting or
prescription and laches. constructive, its enforcement may be barred by laches.

Lower Court - Dismissed the complaint on the ground of res Note: Cestui Que Trust - He who has a right to a beneficial
judicata. interest in and out of an estate the legal title to which is vested
in another. The person who possesses the equitable right to
ISSUE: Whether or not the plaintiff’s shares were held in trust property and receives the rents, issues, and profits thereof, the
by the defendants. legal estate of which is vested in a trustee. It has been proposed
to substitute for this uncouth term the English word
RULING: NO. “beneficiary,” and the latter, though still far from universally
adopted, has come to be quite frequently used. It is equal in
RATIO: The plaintiffs did not prove any express trust in this precision to the antiquated and unwieldy Norman phrase, and
case. The expediente of the intestate proceeding, particularly far better adapted to the genius of our language.
the project of partition, the decision and the manifestation as to
the receipt of negatives the existence of an express trust. Those
public documents prove that the estate of Martin Ramos was 111. Torbela v. Rosario
settled in that proceeding and that adjudications were made to
his seven natural children. A trust must be proven by clear, SEE #103
satisfactory, and convincing evidence. It cannot rest on vague
 112. Chu, Jr. v. Caparas different from the subject property. The petitioners were
RICARDO CHU, JR. AND DY KOK ENG, PETITIONERS, presumed to have knowledge of the spouses Perez's registered
VS. MELANIA CAPARAS AND SPOUSES RUEL AND HERMENEGILDA title over the subject property.
PEREZ, RESPONDENTS.

CA – RTC affirmed.
FACTS: At the root of the case is a parcel of land located at
Maguyam, Silang, Cavite, originally owned and registered in the
ISSUE: Whether or not the parcel of land sold to the petitioners
name of Miguela Reyes. The petitioners filed a complaint to
is the subject property included in the consolidated parcels of
recover possession of the subject property against the
land sold to the spouses Perez.
respondents, with a prayer to annul the sale of the subject
property executed between the respondents. In the complaint,
RULING: NO.
the petitioners alleged that they are the successors-in-interest
of Miguela over the subject property, which Caparas held in
RATIO: The petitioners’ action against Caparas and the spouses
trust for Miguela. The petitioners also averred that the subject
Perez for reconveyance, based on trust, must fail for lack of
property was erroneously included in the sale of land between
basis. An action for reconveyance is a legal and equitable
the respondents.
remedy that seeks to transfer or reconvey property, wrongfully
registered in another person’s name, to its rightful owner. To
The petitioners’ evidence showed that the subject property was
warrant reconveyance of the land, the plaintiff must allege and
previously part of the tract of land owned by Miguela at
prove, among others, ownership of the land in dispute and the
Maguyam, Silang, Cavite. Miguela sold to Caparas the eastern
defendant’s erroneous, fraudulent or wrongful registration of
portion of the land. Miguela retained for herself the rest of the
the property.
subject property, located at the western portion of the original
property. Further, the deed of conveyance executed between
In the present petition, the petitioners failed to prove that the
Miguela and Caparas described the boundaries of the parcel of
parcel of land they owned was the subject property. Logically,
land purchased by Caparas as: "sa ibaba ay Faustino Amparo, sa
there is nothing to reconvey as what the spouses Perez
silangan ay Silang at Carmona boundary, sa ilaya ay Aquilino
registered in their names did not include the parcel of land
Ligaya, at sa kanluran ay ang natitirang lupa ni Miguela Reyes."
which the petitioners, by their evidence, own.

The petitioners asserted that more than fourteen years later,

We also see no trust, express or implied, created between the
Caparas caused the preparation of a consolidated survey plan
petitioners and the spouses Perez over the subject property. A
(Caparas survey plan) under her name for several parcels of
trust by operation of law is the right to the beneficial enjoyment
land (consolidated parcels of land) located at Silang-Carmona,
of a property whose legal title is vested in another. A trust
Cavite, with a total land area of 40,697 square meters. Under
presumes the existence of a conflict involving one and the same
the Caparas survey plan, the parcel of land supposedly retained
property between two parties, one having the rightful
by Miguela was erroneously transferred to the eastern portion
ownership and the other holding the legal title. There is no trust
of the original land and now allegedly owned by Caparas.
created when the property owned by one party is separate and
distinct from that which has been registered in another’s name.
The petitioners also alleged that Caparas sold to the spouses
Perez the consolidated parcels of land in a deed. Considering
In this case, the Caparas survey plan and the deed of sale
the alleged error in the Caparas survey plan, the petitioners
between the petitioners and Miguela showed that the parcel of
demanded the reconveyance of the subject property from
land sold to the petitioners is distinct from the consolidated
Caparas and the spouses Perez, who refused to reconvey the
parcels of land sold by Caparas to the spouses Perez.
subject property.

After an ex parte hearing, the RTC ruled in the petitioners’

Even granting that the Caparas survey plan did erroneously
favor. The RTC, however, refused to approve, for lack of
switch the positions of the petitioners’ and the spouses Perez’s
authority, the new survey plan for the subject property that the
respective landholdings, we agree with the RTC that
petitioners submitted.
reconveyance was still an inappropriate remedy. The
petitioners’ recourse should have been to file the proper action
The spouses Perez averred that the parcel of land sold to the
before the Department of Environment and Natural Resources-
petitioners was not the subject property whose title had been
Land Management Bureau for the cancellation of the Caparas
confirmed in their (spouses Perez’s) names. In the alternative,
survey plan and for the approval of a new survey plan that
the spouses Perez claimed that they bought the subject
correctly reflects the position of their respective landholdings.
property in good faith and for value and had been in open,
For until the Caparas survey plan has been cancelled, the
continuous, public and adverse possession of it since 1991.
petitioners’ claim of encroachment has no basis.

RTC – Dismissed. The RTC found that Chu admitted during

cross-examination that the parcel of land sold to them was
Another perspective, too, that must be considered is Miguela’s and cannot be compelled in an action for specific
act in selling to the petitioners Lot No. 3 using the Caparas performance to convey or assign the property –
survey plan, which can be regarded as a ratification of any the subject of the trust – because in an action for
perceived error under the circumstances.
specific performance the party to be compelled to
perform is the owner of has title to the property
III. Express Trusts sought to be conveyed or assigned.

113. Pacheco v. Arro ISSUE:

● Whether or not the SUCCESSORS-IN-INTEREST
PETITIONERS: Dolores Pacheco, in her capacity as may be compelled in an action for specific
guardian of the minors Concepcion, Alicia, and Herminia performance to convey or assign the property.
Yulo (SUCCESSORS-IN-INTEREST)
RULING:
RESPONDENTS: Santiago Arro et al. (CLAIMANTS) YES. Judgment affirmed.
***Jose Yulo y Regalado (PREDECESSOR IN INTEREST)
The juridical concept of a trust, which in a broad sense
FACTS: involves, arises from, or is the result of, a fiduciary
● Arro et al filed answers in a cadastral case, relation between the trustee and the cestui que trust as
claiming lots as their property and began to regards certain property – real, personal, funds or money,
present evidence before a referee. Dr. Mariano or choses in action – must not be confused with an action
Yulo, who represented the late Jose Yulo y for specific performance.
Regalado in the cadastral case, assured and
promised that after the change of the street When the claim to the lots in the cadastral case was
names from Zamora and Quennon streets to T. withdrawn by the CLAIMANTS relying upon the assurance
Yulo and G. Regalado streets, Jose Yulo y and promise made in open court by Dr. Mariano Yulo in
Regalado would convey and assign the lots to the behalf of the PREDECESSOR-IN-INTEREST, a trust or a
claimants (Arro et al). fiduciary relation between them arose, or resulted
therefrom, or was created thereby.
● Because of this, Arro et al withdrew their claims
and the cadastral court confirmed the title to the The trustee cannot invoke the statute of limitations to bar
lost and decreed their registration in the name of the action and defeat the right of the cestui que trust. If
Jose Yulo y Regalado. the pretense of counsel for the SUCCESSORS-IN-INTEREST
that the promise above adverted to cannot prevail over
● The representative of Jose Yulo complied with the the final decree of the cadastral court holding the
promise by executing deeds of donation or PREDECESSOR-IN-INTEREST of the SUCCESSORS-IN-
assignment to some of the claimants. INTEREST to be the owner of the lots claimed by the
***2/3 of this case is in Spanish; I’m guessing that CLAIMANTS were to be sustained and upheld, then
the part where the CLAIMANTS filed a complaint actions to compel a party to assign or convey the
was explained there. undivided share in a parcel of land registered in his name
to his co-owner or co-heir could no longer be brought and
CFI ordered the PREDECESSOR-IN-INTEREST to execute could no longer succeed and prosper.
deeds of assigned in favour of the CLAIMANTS for each
and every lot claimed by them. 114. Guy v. CA 165849
Parties: Gilbert Guy v CA (NORTHERN ISLANDS CO.,
INCORPORATED, SIMNY G. GUY, GERALDINE G. GUY, GLADYS G.
CA affirmed. YAO, and EMILIA TABUGADIR)
NATURE:
● Pacheco contend that since a trustee does not The petition composed five (5) consolidated cases
which stemmed from Civil Case No. 04-109444 filed with the Regional
have title to the property which is the subject of Trial Court. But the focus of the case with respect to trust is GR 176650.
the trust, because title to such property is vested The petition filed by Gilbert Guy (Gilbert) and Lincoln Continental
Development Corporation, Inc. (Lincoln Continental) questioning the
in the cestui que trust, if the PREDECESSOR-IN- decision of the Court of Appeals (CA) in affirming the Regional Trial Court
INTEREST of the SUCCESSORS-IN-INTEREST was a (RTC) in dismissing their complaint against the respondents.

trustee, he or his successors-in-interest could not FACTS:

 Gilbert, petitioner, is the son of only entrusted to hold the disputed shares of
Francisco and Simny Guy. Respondents, Geraldine, stock in his name for the benefit of the other
Gladys and Grace are his sisters. The family feud family members; and that it was only when Gilbert
involves the ownership and control of 20,160 shares started to dispose of the assets of the family’s
of stock of Northern Islands Co., Inc. (Northern corporations without their knowledge that respondent
Islands). sisters caused the registration of the shares in their
Northern Islands is a family-owned respective names.
corporation. In November 1986, they incorporated
Lincoln Continental as a holding company of the 50% CA- On appeal, the Court of Appeals affirmed the
shares of stock of Northern Islands in trust for their Trial Court. Hence this petition.
daughters, respondents. In December 1986, upon
instruction of spouses Guy, Atty. Andres Gatmaitan, Thus, on October 10, 2005, Gilbert, filed with this Court a
president of Lincoln Continental, indorsed in blank Supplemental Petition for Certiorari, Prohibition, and Mandamus
with Urgent Application for a Writ of Preliminary Mandatory
Stock Certificate No. 132 (covering 8,400 shares) Injunction challenging the Decision of the Court of Appeals in
and Stock Certificate No. 133 (covering 11,760 CA-G.R. SP No. 87104. This Decision set aside the Order dated
shares) and delivered them to Simny. October 13, 2004 of the RTC, Branch 46 granting the writ of
In 1984, spouses Guy found that their preliminary injunction in favor of Lincoln Continental.
son Gilbert has been disposing of the assets of their
corporations without authority. In order to protect ISSUES:
the assets of Northern Islands, the 20,160 shares Whether or not Gilbert was merely trust for the Guy
covered by the two Stock Certificates were then sisters
registered in the names of respondent sisters,
thus enabling them to assume an active role in the Held:
management of Northern Islands. Yes.
Thereafter, Simny was elected One thing is clear. It was established before
President; Grace as Vice-President for Finance; the trial court, affirmed by the Court of Appeals, that
Geraldine as Corporate Treasurer; and Gladys as Lincoln Continental held the disputed shares of
Corporate Secretary. Gilbert retained his position as stock of Northern Islands merely in trust for the
Executive Vice President. This development started Guy sisters. In fact, the evidence proffered by
the warfare between Gilbert and his sisters. Lincoln Lincoln Continental itself supports this conclusion. It
Continental filed a Complaint for Annulment of the bears emphasis that this factual finding by the trial
Transfer of Shares of Stock against respondents. court was affirmed by the Court of Appeals, being
The complaint basically alleges that: Lincoln supported by evidence, and is, therefore, final and
Continental owns 20,160 shares of stock of Northern conclusive upon this Court.
Islands; and that respondents, in order to oust Gilbert Article 1440 of the Civil Code provides that:
from the management of Northern Islands, falsely ART. 1440. A person who
transferred the said shares of stock in respondent establishes a trust is called the trustor; one in
sisters’ names and that respondents, in order to oust whom confidence is reposed as regards property
Gilbert from the management of Northern Islands, for the benefit of another person is known as the
falsely transferred the said shares of stock in trustee; and the person for whose benefit the
respondent sisters’ names. Lincoln Continental then trust has been created is referred to as the
prayed for an award of damages and that the beneficiary.
management of Northern Islands be restored to In the early case of Gayondato v.
Gilbert. Lincoln also prayed for the issuance of a Treasurer of the Philippine Islands, this Court defines
temporary restraining order (TRO) and a writ of trust, in its technical sense, as a right of property,
preliminary mandatory injunction to prohibit real or personal, held by one party for the benefit
respondents from exercising any right of ownership of another. Differently stated, a trust is a fiduciary
over the shares. relationship with respect to property, subjecting
Note: Petitioners filed a writ of preliminary the person holding the same to the obligation of
injunction against private respondents. It was dealing with the property for the benefit of
granted then was set aside later on. another person.
Both Lincoln Continental and Gilbert
RTC- The trial court held that the complaint was claim that the latter holds legal title to the shares in
baseless and an unwarranted suit among family question. But record shows that there is no evidence
members. That based on the evidence, Gilbert was to support their claim. Rather, the evidence on record
clearly indicates that the stock certificates
representing the contested shares are in respondents agree to work for the titling of the entire area of
possession. Significantly, there is no proof to support my land under my own expenses and the
his allegation that the transfer of the shares of stock expenses for the titling of the portion sold to me
to respondent sisters is fraudulent. As aptly held by shall be under the expenses of the said Juan Cruz
the Court of Appeals, fraud is never presumed but Yap Chuy.”
must be established by clear and convincing 3. After sale, the land of Ang Bansing was surveyed
evidence. Gilbert failed to discharge this burden.
wherein lot sold to Juan Cruz was designated as
We, agree with the Court of Appeals that respondent
Lot 1846-C of Davao cadastre.
sisters own the shares of stocks, Gilbert being their
4. On December 23, 1939, Juan Cruz sold Lot 1846-C
mere trustee. Verily, we find no reversible error in
to the Commonwealth of the Philippines for the
the challenged Decision of the Court of Appeals
(Special Second Division) in CA-G.R. CV No. 85937. amount of P6,347.50. On that same day, Juan
WHEREFORE, we DISMISS the Cruz, as vendor, and C.B. Cam and Miguel N.
petitions in G.R. Nos. 165849, 170185, 170186 and Lansona as sureties, executed a surety bond in
176650; and DENY the petitions in G.R. Nos. 171066 favor of the vendee (Commonwealth of the
and 176650. The Resolutions of the Court of Appeals Philippines) to guarantee the vendor's absolute
(Eighth Division), dated October 28, 2004 and title over the land sold.
November 4, 2004, as well as the Decision dated 5. Ang Bansing sold other lots to Juan Cruz and some
October 10, 2005 of the Court of Appeals (Seventh other buyers. All the lots sold, were transferred to
Division) in CA-G.R. SP No. 87104 are AFFIRMED. respective buyer’s name except lot 1846-C, which
We likewise AFFIRM IN TOTO the Decision of the was sold to Juan Cruz before the survey of lot and
Court of Appeals (Special Second Division), dated which remained in the possession of Ang Bansing.
November 27, 2006 in CA-G.R. CV No. 85937. Costs
6. On February 25, 1965, the President of the
against petitioners.
Philippines issued Proclamation No. 459,
transferring ownership of certain parcels of land
situated in Sasa Davao City, to the Mindanao
115. Goyanko v. UCPB
Development Authority, now the Southern
Philippines Development Administration, subject
See case #106 to private rights, if any. Lot 1846-C, the disputed
parcel of land, was among the parcels of land
116. Mindanao Dev. Authority v. CA transferred to the Mindanao Development
Authority in said proclamation.
Parties (of Express Trust):
7. On March 31, 1969, Atty. Hector L. Bisnar counsel
for the Mindanao Development Authority, wrote
Petitioner - Minadanao dev authority - alleged beneficiary
Ang Bansing requesting the latter to surrender the
Private respondent - Francisco Ang Bansing (Ang Bansing)
Owner's duplicate copy of TCT No. 2601 so that
is the purported trustee
Lot 1846-C could be formally transferred to his
Juan Cruz Yap Chuy (Juan Cruz) - trustor for lot 1846-C.
client but Ang Bansing refused.
8. Thus Mindanao Development Authority filed a
Purported Express Deed of Trust is the Deed of Sale
complaint against Ang Bansing before CFI of
executed between Ang Bansing and Juan Cruz over the
Davao City for the reconveyance of the title over
sale of lot 1846-C which contained proviosion: “That I
Lot 1846-C.
hereby agree to work for the titling of the entire area of
9. After trial, the Court of First Instance found that
my land under my own expenses and the expenses for the
an express trust had been established and
titling of the portion sold to me shall be under the
ordered the reconveyance of the title to Lot 1846-
expenses of said Juan Cruz Yap Chuy”
C of the Davao Cadastre to Mindanao
Development Authority.
FACTS
10. On appeal, the Court of Appeals ruled that no
express trust has been created and, accordingly, k
1. Ang Bansing is the owner of a 30-hectare/300,000
the judgment and dismissed the complaint.
sqm. land in Barrio Panacan Davao City.
11. Hence this petition for certiorari.
2. On February 25, 1939, Ang Bansing sold a portion
12. SC - petition denied. Affirmed CA decision.
of the land, about 5 hectares to Juan Cruz, the
contract provided among others: “That I hereby
ISSUE to shoulder the expenses for the registration of the land
sold to him. The stipulation does not categorically create
WON an express trust was created between Ang Bansing an obligation on the part of Ang Bansing to hold the
and Juan Cruz over the lot 1846-C. property in trust for Juan Cruz. Hence, no express trust.

HELD While Ang Bansing had agreed in the deed of sale that he
will work for the titling of "the entire area of my land
No. There was no express trust created between Ang under my own expenses," it is not clear therefrom
Bansing and Juan Cruz over Lot 1846-C of the Davao whether said statement refers to the 30-hectare parcel of
Cadastre. land or to that portion left to him after the sale. A failure
on the part of the settlor definitely to describe the
"Trusts are either express or implied. Express trusts are subject-matter of the supposed trust or the beneficiaries
created by the intention of the trustor or of the parties. or object thereof is strong evidence that he intended no
Implied trusts come into being by operation of law." trust.

It is fundamental in the law of trusts that certain Nor will the affidavit executed by Ang Banging be
requirements must exist before an express trust will be construed as having established an express trust. As
recognized. If any one of them is missing, it is fatal to the counsel for the herein petitioner has stated, "the only
trusts. Basically, these elements include: purpose of the Affidavit was to clarify that the area of the
a. competent trustor and trustee; land sold by Ang Bansing to Juan Cruz Yap Chuy is not only
b. an ascertainable trust res; 5 hectares but 61,107 square meters or a little over six (6)
c. and sufficiently certain beneficiaries. hectares."

Furthermore, there must be ***Supplementary

a. a present and complete disposition of the trust (constructive trust;prescription;laches)***
property, notwithstanding that the enjoyment in
the beneficiary will take place in the future. It is But, even granting, arguendo, that an express trust had
essential to the creation of an express trust that been established, it would appear that the trustee (Ang
the settlor presently and unequivocally make a Bansing) had repudiated the trust and the petitioner
disposition of property and make himself the herein (Minadanao Dev), the alleged beneficiary to the
trustee of the property for the benefit of another; trust, did not take any action therein until after the lapse
b. the purpose be an active one to prevent trust of 23 years (prescriptive period is for 10 years).
from being executed into a legal estate or
interest, and one that is not in contravention of Only an implied trust may have been impressed upon the
some prohibition of statute or rule of public title of Ang Banging over Lot 1846-C of the Davao
policy. Cadastre since the land in question was registered in his
c. There must also be some power of administration name although the land belonged to another. In implied
other than a mere duty to perform a contract trusts, there is neither promise nor fiduciary relations, the
although the contract is for a third-party so-called trustee does not recognize any trust and has no
beneficiary. intent to hold the property for the beneficiary." It does
d. A declaration of terms is essential, and these must not arise by agreement or intention, but by operation of
be stated with reasonable certainty in order that law. Thus, if property is acquired through mistake or
the trustee may administer, and that the court, if fraud, the person obtaining it is, by force of law,
called upon so to do, may enforce, the trust. The considered a trustee of an implied trust for the benefit of
intent to create a trust must be definite and the person from whom the property comes.
particular. It must show a desire to pass benefits
through the medium of a trust, and not through If a person obtains legal title to property by fraud or
some related or similar device. concealment, courts of equity will impress upon the title a
so-called constructive trust in favor of the defrauded
The stipulation in the contract of sale (see above) is party.
nothing but a condition that Ang Bansing shall pay the
expenses for the registration of his land and for Juan Cruz
There is also a constructive trust if a person sells a parcel equity in the gratuity fund and to invest it in a profitable
of land and thereafter obtains title to it through investment or undertaking. The earnings of the
fraudulent misrepresentation. investment shall then be applied to pay for the interest
due on the gratuity loan. The excess or balance of the
Such a constructive trust is not a trust in the technical interest earnings shall then be distributed to the investor-
sense and is prescriptible; it prescribes in 10 years. members.

Here, the 10-year prescriptive period began on March 31, Pursuant to the investment scheme, DBP-TSD paid to the
1941, upon the issuance of Original Certificate of Title No. investor-members a total of P11,626,414.25 representing
26. From that date up to April 11, 1969, when the the net earnings of the investments for the years 1991
complaint for reconveyance was filed, more than 28 years and 1992. The payments were disallowed by the Auditor
had passed. Clearly, the action for reconveyance had under Audit Observation Memorandum No. 93-2 dated
prescribed. March 1, 1993, on the ground that the distribution of
income of the Gratuity Plan Fund (GPF) to future retirees
Besides, the enforcement of the constructive trust that of DBP is irregular and constituted the use of public funds
may have been impressed upon the title of Ang Bansing for private purposes which is specifically proscribed under
over Lot 1846-C of the Davao Cadastre is barred by laches. Section 4 of P.D. 1445.
It appears that the deed of sale in favor of the
Commonwealth Government was executed by Juan Cruz AOM No. 93-2 did not question the authority of the Bank
on December 23, 1939, during the cadastral proceedings, to set-up the Gratuity Plan Fund and have it invested in
and even before the cadastral survey plan was approved the Trust Services Department of the Bank. Apart from
by the Director of Lands on July 10, 1940. But, the vendee requiring the recipients of the P11,626,414.25 to refund
therein did not file an answer, much less an opposition to their dividends, the Auditor recommended that the DBP
the answer of Ang Bansing in the said Cadastral record in its books as miscellaneous income the income of
proceedings. The judgment rendered in the said cadastral the Gratuity Plan Fund (Fund). The Auditor reasoned that
proceeding, awarding the lot in question to Ang Bansing is the Fund is still owned by the Bank, the Board of Trustees
already final. After an inexcusable delay of more than 28 is a mere administrator of the Fund in the same way that
years and acquiescence to existing conditions, it is now the Trust Services Department where the fund was
too late for the petitioner to complain. invested was a mere investor and neither can the
employees, who have still an inchoate interest in the Fund
be considered as rightful owner of the Fund.
117. Development Bank of the Phils. V. COA COA: affirmed AOM No. 93-2
The Gratuity Plan Fund is supposed to be accorded
FACTS: On February 20, 1980, the Development Bank of separate personality under the administration of the
the Philippines (DBP) Board of Governors adopted Board of Trustees but that concept has been effectively
Resolution No. 794 creating the DBP Gratuity Plan and eliminated when the Special Loan Program was adopted.
authorizing the setting up of a retirement fund to cover Retirement benefits may only be availed of upon
the benefits due to DBP retiring officials and employees. retirement. During employment, the prospective retiree
shall only have an inchoate right over the benefits. There
On February 26, 1980, a Trust Indenture was entered into can be no partial payment or enjoyment of the benefits,
by and between the DBP and the Board of Trustees of the in whatever guise, before actual retirement.
Gratuity Plan Fund, vesting in the latter the control and
administration of the Fund. The trustee, subsequently, ISSUE: whether the income of the Fund is income of DBP
appointed the DBP Trust Services Department (DBP-TSD)
as the investment manager thru an Investment RULING: COA Decision AFFIRMED with MODIFICATION.
Management Agreement, with the end in view of making The income of the Gratuity Plan Fund, held in trust for the
the income and principal of the Fund sufficient to meet benefit of DBP employees eligible to retire under RA 1616,
the liabilities of DBP under the Gratuity Plan. should not be recorded in the books of account of DBP as
the income of the latter.
In 1983, the Bank established a Special Loan Program
where a prospective retiree is allowed the option to RATIO: A trust is a fiduciary relationship with respect to
utilize in the form of a loan a portion of his outstanding property which involves the existence of equitable duties
imposed upon the holder of the title to the property to On 18 February 1987, petitioner filed before the RTC a
deal with it for the benefit of another. A trust is either Complaint for Declaration of Nullity of Deeds and Titles,
express or implied. Express trusts are those which the Reconveyance, Damages, with Application for a Writ of
Preliminary Prohibitory Injunction against the respondents.
direct and positive acts of the parties create, by some
writing or deed, or will, or by words evincing an intention
First cause of action:
to create a trust.
Petitioner alleged on her complaint that she was the
In the present case, the DBP Board of Governors (now owner of a parcel of land referred to as Ugac properties. She
Board of Directors) Resolution No. 794 and the averred that in the middle part of 1986, she discovered her title
Agreement executed by former DBP Chairman Rafael to the said parcel of land was cancelled because a new transfer
Sison and the trustees of the Plan created an express of certificate of title was issued in its stead in the name of
trust, specifically, an employees trust. An employees trust respondent spouses Ramos. The basis of cancellation of her title
is a trust maintained by an employer to provide was a Deed of Donation which petitioner purportedly executed
retirement, pension or other benefits to its employees. It in favor of respondent spouses Ramos on April 27, 1983.
Petitioner insisted that her signature on the said Deed of
is a separate taxable entity established for the exclusive
Donation was a forgery When petitioner confronted the
benefit of the employees.
respondent spouses Ramos about the false donation, the latter
Resolution No. 794 shows that DBP intended to establish
pleaded that they would just pay for the Ugac properties in the
a trust fund to cover the retirement benefits of certain amount of P1 Million. Petitioner agreed.
employees under RA 1616. The principal and income of Petitioner found out around January 10 1987 that
the Fund would be separate and distinct from the funds of respondent Sps. Ramos were selling the Ugac properties to
DBP. respondent Bartex Inc. Petitioner then sent her son Johnson
DBP, as the trustor, vested in the trustees of the Fund Paredes to caution reapondent Bartex Inc that Sps. Ramos were
legal title over the Fund as well as control over the not the owners. Petitioner also warned respondent Sps. Ramos
investment of the money and assets of the Fund. The not to sell said properties or otherwise she will file the
necessary action against them. Petitioner executed an Affidavit
powers and duties granted to the trustees of the Fund
of Adverse Claim over the Ugac Properties on January 19, 1987
under the Agreement were plainly more than just
and caused the same to be annotated on TCT No. T-58043 (TCT
administrative. issued in the name of Sps. Ramos) on the same day.
The trustees received and collected any income and profit Respondent Sps. Ramos still executed a deed of absolute sale
derived from the Fund, and they maintained separate for a total price of P150,000.00 to Bartex, Inc and a new
books of account for this purpose. The principal and transfer certificate of title was issued in favor of Bartex Inc.
income of the Fund will not revert to DBP even if the trust
is subsequently modified or terminated. The Agreement Second cause of action:
states that the principal and income must be used to Petitioner claimed that for many years prior to 1984,
satisfy all of the liabilities to the beneficiary officials and she operated a hardware store in a building she owned along
Bonifacio St., Tuguegarao, Cagayan. The commercial lot
employees under the Gratuity Plan.
(Bonifacio property) is owned by and registered in the name of
The Agreement indisputably transferred legal title over
Maria Mendoza (Mendoza), from whom petitioner rented the
the income and properties of the Fund to the Funds same.
trustees. Thus, COAs directive to record the income of the March 22, 1982 – petitioner allowed respondent spouses
Fund in DBPs books of account as the miscellaneous Ramos to manage the hardware store.
income of DBP constitutes grave abuse of discretion. The 1984 – Mendoza put the Bonifacio property up for sale. As
income of the Fund does not form part of the revenues or petitioner did not have available cash to buy the property, she
profits of DBP, and DBP may not use such income for its allegedly entered into a verbal agreement with respondent
own benefit. The principal and income of the Fund spouses Ramos with the following terms:
together constitute the res or subject matter of the trust.
[1.] The lot would be bought [by herein
respondent spouses Ramos] for and in
behalf of [herein petitioner];
118. Peñalber v. Ramos
[2.] The consideration of P80,000.00 for said lot
FACTS: would be paid by [respondent spouses
Petitioner is the mother of respondent Leticia and the mother- Ramos] from the accumulated earnings of
the store;
in-law of respondent Quirino, husband of Leticia. Respondent
Bartex, Inc., on the other hand, is a domestic corporation which
[3.] Since [respondent spouses Ramos] have the
bought from respondent spouses Ramos one of the two
better credit standing, they would be made
properties involved in this case. to appear in the Deed of Sale as the vendees
 so that the title to be issued in their names It appears that before management of the store was transferred to [herein
could be used by [them] to secure a loan respondent spouses Ramos], a beginning inventory of the stocks of the
with which to build a bigger building and hardware store was made by [herein petitioners] other children showing
expand the business of [petitioner]. stocks amounting to Php226,951.05. After management of the hardware
In accordance with the above agreement, respondent spouses store was returned to [petitioner], a second inventory was made with
Ramos allegedly entered into a contract of sale with Mendoza stocks amounting to Php110,004.88 showing a difference of
Php116,946.15. Contrary, however, to the finding of the trial court, We
over the Bonifacio property, and on October 24 1984, a transfer
find that said inventory showing such difference is not conclusive proof to
certificate of title was issued in the names of respondent show that the said amount was used to pay the purchase price of the
spouses Ramos. 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
On September 20 1984, the management of the hardware store goods, representing the amount of Php116,946.17, were actually sold or
was returned to petitioner. On the bases of receipts and not. It may have been taken without actually being sold.

disbursements, petitioner asserted that the Bonifacio property

However, an inference of the intention to create a trust, made from
was fully paid out of the funds of the store and if respondent
language, conduct or circumstances, must be made with reasonable
spouses Ramos had given any amount for the purchase price of certainty. It cannot rest on vague, uncertain or indefinite declarations. An
the said property, they had already sufficiently reimbursed inference of intention to create a trust, predicated only on circumstances,
themselves from the funds of the store. Consequently, can be made only where they admit of no other interpretation. Here,
petitioner demanded from respondent spouses Ramos the [petitioner] failed to establish with reasonable certainty her claim that
reconveyance of the title to the Bonifacio property to her but the purchase of the subject lot was pursuant to a verbal trust agreement
with respondent spouses Ramos.
the latter unjustifiably refused.
Petitioner insisted that respondent spouses Ramos were, in
ISSUE: WON the existence of a trust agreement between her
reality, mere trustees of the Bonifacio property, thus, they were
and respondent spouses Ramos was clearly established, and
under a moral and legal obligation to reconvey title over the
such trust agreement was valid and enforceable.
said property to her. Petitioner, therefore, prayed that she be
RULING: NO.
declared the owner of the Bonifacio property; TCT No. T-62769,
In its technical legal sense, a trust is defined as the
in the name of respondent spouses, be declared null and void;
right, enforceable solely in equity, to the beneficial enjoyment
and the Register of Deeds for the Province of Cagayan be
of property, the legal title to which is vested in another, but the
directed to issue another title in her name.
word trust is frequently employed to indicate duties, relations,
On the first cause of action, respondent Sps. Ramos
and responsibilities which are not strictly technical trusts. A
alleged that petitioner, together with her son mortgaged the
person who establishes a trust is called the trustor; one in
Ugac properties to DBP for the amount of P150,000.00 on
whom confidence is reposed is known as the trustee; and the
August 19 , 1990. When the mortgage was about to foreclose,
person for whose benefit the trust has been created is referred
petitioner asked respondents to redeem the mortgaged
to as the beneficiary. There is a fiduciary relation between the
property or pay her mortgage debt to DBP. In return, petitioner
trustee and the beneficiary (cestui que trust) as regards certain
promised to cede, convey and transfer full ownership of the
property, real, personal, money or choses in action.
Ugac properties to them. Respondents paid the debt and in
compliance with her promise, petitioner transferred the Ugac
From the allegations of the petitioners Complaint, the alleged
properties to respondents by way of Deed of Donation. After
verbal trust agreement between petitioner and respondent
accepting the donation and having the Deed of Donation
spouses Ramos is in the nature of an express trust as petitioner
registered, TCT No. T- 58043 was issued to respondent spouses
explicitly agreed therein to allow the respondent spouses
Ramos and they then took actual and physical possession of the
Ramos to acquire title to the Bonifacio property in their names,
Ugac properties.
but to hold the same property for petitioners benefit. Given
With regard to the second cause of action, respondent
that the alleged trust concerns an immovable property,
spouses Ramos contended that they were given not only the
however, respondent spouses Ramos counter that the same is
management, but also the full ownership of the hardware store
unenforceable since the agreement was made verbally and no
by the petitioner, on the condition that the stocks and
parol evidence may be admitted to prove the existence of an
merchandise of the store will be inventoried, and out of the
express trust concerning an immovable property or any interest
proceeds of the sales thereof, respondent spouses Ramos shall
therein.
pay petitioners outstanding obligations and liabilities. After
settling and paying the obligations and liabilities of petitioner,
On this score, we subscribe to the ruling of the RTC in its Order
respondent spouses Ramos bought the Bonifacio property from
dated July 17, 2000 that said spouses were deemed to have
Mendoza out of their own funds.
waived their objection to the parol evidence as they failed to
RTC – dismissed first cause of action and ruled in favor of
timely object when petitioner testified on the said verbal
petitioner on the second cause of action
agreement. The requirement in Article 1443 that the express
CA – in so far as second cause of action is concerned, reversed
trust concerning an immovable or an interest therein be in
the decision of RTC.
writing is merely for purposes of proof, not for the validity of
According to the Court of Appeals:
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 119. Tan Senguan and Co. v. Phil. Trust Co.
writing. The statute does not deprive the parties of the right to
contract with respect to the matters therein involved, but FACTS:
merely regulates the formalities of the contract necessary to
render it enforceable. The effect of non-compliance is simply Note: The Philippine Trust Company, as trustee held
that no action can be proved unless the requirement is the legal title of the properties of Mindoro Sugar
complied with. Oral evidence of the contract will be excluded Company(trustor) to protect the bondholders of the
upon timely objection. But if the parties to the action, during latter as stipulated in the Deed of Trust.
the trial, make no objection to the admissibility of the oral
evidence to support the contract covered by the statute, and Tan Sen Guan and Co. (plaintiff) secured a
thereby permit such contract to be proved orally, it will be just judgement for the sum of P 21,426 against Mindoro
as binding upon the parties as if it had been reduced to writing. Sugar Co. The Philippine Trust (defendant) is the
Per petitioners testimony, the Bonifacio property was offered trustee of the latter. Subsequently, petitioner signed
for sale by its owner Mendoza. Petitioner told respondent an AGREEMENT with Phil. Trust on June 27, 1924.
spouses Ramos that she was going to buy the lot, but the title
In said agreement, petitioner conveyed the sum it
to the same will be in the latters names. The money from the
had won and with all its rights thereto, to Phil. Trust
hardware store managed by respondent spouses Ramos shall
for the amount of P 5,000. Among others, it was also
be used to buy the Bonifacio property, which shall then be
agreed that Phil Trust will pay an additional P 10,000
mortgaged by the respondent spouses Ramos so that they
should Mindoro Sugar Co be sold or assigned or its
could obtain a loan for building a bigger store. The purchase
ownership transferred in any manner whatsoever to
price of P80,000.00 was paid for the Bonifacio property. On
any person or entity.
September 20 1984, the respondent spouses Ramos returned
the management of the store to petitioner. Thereafter,
petitioner allowed her son Johnson to inventory the stocks of On November 4, 1929, the properties of Mindanao
the store. Johnson found out that the purchase price of Sugar Company was sold to the Roman Catholic
P80,000.00 for the Bonifacio property was already fully paid. Archbishop of Manila through a public auction
When petitioner told the respondent spouses Ramos to transfer (Exhibits C and D).
the title to the Bonifacio property in her name, the respondent
spouses Ramos refused, thus, prompting petitioner to file a Petitioner then brought a suit in the CFI of Manila for
complaint against them. the sum of P 10,000 against defendant. CFI
dismissed such action, holding Phil Trust as not
Similarly, Johnson testified that on March 22 1982, petitioner personally liable as the same executed the
turned over the management of the hardware store to agreement in its capacity as a trustee.
respondent spouses Ramos. During that time, an inventory of
the stocks of the store was made and the total value of the said Hence the appeal.
stocks were determined to be P226,951.05. When respondent
spouses Ramos returned the management of the store to ISSUE: Whether or not Phil Trust is personally liable
petitioner on 20 September 1984, another inventory of the for the AGREEMENT.
stocks was made, with the total value of the stocks falling to
P110,004.88. The difference of P116,946.16 was attributed to HELD: Yes, Phil Trust is personally liable for the
the purchase of the Bonifacio property by the respondent AGREEMENT.
spouses Ramos using the profits from the sales of the store.
A careful perusal of the records of the case reveals that RATIO:
respondent spouses Ramos did indeed fail to interpose their
objections regarding the admissibility of the afore-mentioned
Generally, the trustee does not assume personal
testimonies when the same were offered to prove the alleged
liability on the trust. However, the same will not be
verbal trust agreement between them and petitioner.
true of he acts outside the scope of the trust.
Consequently, these testimonies were rendered admissible in
evidence. Nevertheless, while admissibility of evidence is an
In the present case, the Philippine Trust Company
affair of logic and law, determined as it is by its relevance and
held the legal title of the properties of Mindoro Sugar
competence, the weight to be given to such evidence, once
admitted, still depends on judicial evaluation. Thus, despite
Company to protect the bondholders of the latter as
the admissibility of the said testimonies, the Court holds that stipulated in the Deed of Trust (Exhibit A). Nowhere
the same carried little weight in proving the alleged verbal trust in said deed gave Phil Trust the authority to manage
agreement between petitioner and respondent spouses. the affairs of its trustor nor 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 Rizal Insurance later appealed to the SC
the true estate and not the true trustee should be (separately).
held liable on the contract in question
Issue: W/N the annex building where the bulk of the
burned properties stored (containing the amusement
120. Rizal Surety & Insurance v. CA machines and spare parts), was included in the
coverage of the insurance policy.
Facts:
3/13/1980 – Rizal Insurance issued Insurance Policy Held:
NO. 45727 in favor of Transworld Knitting Mills, Inc, Yes.
initially for P1,000,000 and eventually inscreased to Rizal insurance submits that the fire insurance policy
P1,500,000 covering the period of Aug 14, 1980 to litigated upon protected only the contents of the main
Mar 13, 1981. Pertinent portions of subject policy on building and did not include those stored in the 2-
the buildings insured, and location thereof, read: storey annex building. Respondent theorized that the
"On stocks of finished and/or unfinished so called annex was not an annex but was actually
products, raw materials and supplies of every an integral part of the four-span building and
kind and description, the properties of the therefore, the goods and items stored therein were
Insured and/or held by them in trust, on covered.
commission or on joint account with others Resolution of the issue hinges on the proper
and/or for which they (sic) responsible in case interpretation of the stipulation quoted in the facts.
of loss whilst contained and/or stored during Thereforom, it can be gleaned unerringly that the fire
the currency of this Policy in the premises insurance policy in question did not limit its coverage
occupied by them forming part of the to what were stored in the four-span building.
buildings situate (sic) within own Compound Both the trial court and the CA found that the so
at MAGDALO STREET, BARRIO UGONG, called annex was not an annex building but an
PASIG, METRO MANILA, PHILIPPINES, integral and inseparable part of the four-span building
BLOCK NO. 601. described in the policy and consequently, the
The same pieces of property insured with Rizal machines and spare parts stored therein were
Insurance were also insured with New India covered by the fire insurance in dispute.
Assurance Company. Also, it stands to reason that the doubt should be
1/12/1981 – fire broke out in the comound of resolved against the petitioner whose lawyer or
Transworld, razing the middle portion of its four-span managers drafted the fire insurance policy contract
building and partly gutting the left and right sections under scrutiny (Art. 1377).
thereof. A two-storey building behind where fun and
amusement machines and spare parts were stores, 121. Lorenzo v. Posadas
was also destroyed by the fire.
Transworld filed its insurance claims with Rizal Facts:
Insurance and New India Insurance but to no avail.
5/26/1982, Transworld brought against the insurance On 27 May 1922, Thomas Hanley died in
companies action for collection of sum of money and Zamboanga, leaving a will and considerable amount
damages. of real and personal properties.
CFI of Rizal dismissed case against New India
Assurance Co; ordered Rizal Insurance to pay Hanley’s will provides the following: his money will be
Transworld P826,600 representing actual value of given to his nephew, Matthew Hanley, as well as the
losses suffered plus cost of suit. real estate owned by him. It further provided that the
CA modified the decision in 1993 – requiring New property will only be given ten years after Thomas
India to pay P1,818,604 and Rizal to pay Hanley’s death.
P470,328.67 (totaling P2,790,376).
8/20/1993, New India appealed the judgment stating Thus, in the testamentary proceedings, the Court of
that Transworld could not be compensated for the First Instance of Zamboanga appointed P.J.M. Moore
loss of the fun and amusement machines and spare as trustee of the estate. Moore took oath of office on
parts stored at the two-storey building because it had March 10, 1924, and resigned on Feb. 29, 1932.
no insurable interest in said goods or items. This Pablo Lorenzo was appointed in his stead.
was, however, denied with finality by the SC.
Juan Posadas, Collector of Internal Revenue,
assessed inheritance tax against the estate
amounting to P2,057.74 which includes penalty and a valid testamentary trust are: 1) sufficient words to
surcharge. raise a trust, 2) a definite subject, 3) a certain or
ascertained object. There is no doubt that Hanley
He filed a motion in the testamentary proceedings so intended to create a trust since he ordered in his will
that Lorenzo will be ordered to pay the amount due. that certain of his properties be kept together
undisposed during a fixed period or for a stated
Lorenzo paid the amount in protest after CFI granted purpose.
Posadas’ motion. He claimed that the inheritance tax
should have been assessed after 10 years. He asked
for a refund but Posadas declined to do so. 122. GOVERNMENT vs. ABADILLA

The latter counterclaimed for the additional amount Facts:

of P1,191.27 which represents interest due on the tax ● On January 25, 1892, Luis Palad executed a
and which was not included in the original holographic will granting his wife, Dorothea Lopez,
assessment. However, CFI dismissed this the right of exclusive use and possession of
several parcels of lands in the Province of
counterclaim. It also denied Lorenzo’s claim for
Tayabas during her lifetime or until she
refund against Posadas.
remarries. The lands shall be donated to the
Hence, both appealed. secondary school in Tayabas upon Dorothea’s
death or second marriage.
Issue: ● On December 3, 1896, the testator died.
(1) Whether or not the compensation for the services ● Sometime in 1900, Dorothea married one Calixto
of the trustee can be deducted in arriving at the net Dolendo.
value of the estate? ● On April 20, 1903, the testator’s collateral heirs
(2) Has there been delinquency in the payment of the brought an action for the partition of the lands on
inheritance tax? the ground that Dorothea lost her right over the
(3)Whether or not the word “trust” being mentioned is lands by reason of her second marriage.
necessary to create one? ● During the pendency of the action, the parties
arrived at an agreement delivering the lands with
Held: (1)No. A trustee, no doubt, is entitled to receive lot nos. 3464 and 3469 to the Municipality of
Tayabas as trustee while lot no. 3470 was left in
a fair compensation for his services. But from this it
the possession of Dorothea.
does not follow that the compensation due him may
● The testator’s collateral heirs filed a claim over the
be lawfully be deducted in arriving at the net value of
lands contending that the trust instituted in the will
the estate subject to tax. There is no statue in the was ineffective.
Philippines which requires trustees' commissions to ● The testator's collateral heirs argued there's no
be deducted in determining the net value of the trustee since there is no ayuntamiento, no
estate subject to inheritance tax. Gobernador Civil of the province, and that there's
no beneficiary since there's no secondary school
(2)Yes. It is delinquent because according to Sec. in the town of Tayabas.
1544 (b) of the Revised Administrative Code, ● They further argued that argues the collateral heirs
payment of the inheritance tax shall be made before of the deceased would nevertheless be entitled to
delivering to each beneficiary his share. This the income of the land until the cestui que trust is
payment should have been made before March 10, actually in esse.
1924, the date when P.J.M. Moore formally assumed
Issue:
the function of trustee.
Whether or not the collateral heirs are entitled to the
Although the property was only to be given after 10
income of the land until the beneficiary is already
years from the death of Hanley, the court considered identified.
that delivery to the trustee is delivery to cestui que
trust, the beneficiary within the meaning of Sec. 1544 Ruling:
(b). ● No. In order that a trust may be effective, there
must be a trustee and a cestui que trust or
(3) No. Even though there was no express mention of beneficiary.
the word “trust” in the will, the court of first instance ● The essential requisites of a Trust is found under
was correct in appointing a trustee because no Art. 1440 which states, "A person who establishes
particular or technical words are required to create a a trust is called the trustor; one in whom
testamentary trust (69 C.J.,p. 711). The requisites of 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 inventory of corporate assets on the guround that to do so
been created is referred to as the beneficiary." would contravene the New Rules on Registration and Sale
● Although it was not expressly provided for in the of Pre-Need Plans which treated trust funds as principally
law, it is said that a trust is not void for established for the exclusive purpose of guaranteeing the
indefiniteness if by its terms the whole property will delivery of benefits due to the planholders. It was added
go to the beneficiary or beneficiaries who is/are that the inclusion of the trust fund in the insolvent's estate
undetermined but will be determined at the and its being opened to claims by non-planholders would
termination of the trust, at the latest. It is not contravene the purpose for its establishment. Despite the
necessary to the creation of a trust that the cestui opposition of the SEC, respondent Judge Reynaldo M.
que trust be named or identified or even be in Laigo (Judge Laigo) ordered the insolvency Assignee to
existence at the time of its creation; and this is take possession of the trust fund. Judge Laigo viewed the
especially so in regard to charitable trust. trust fund as Legacy's corporate assets and included it in
● In this case, a liberal interpretation of the will the insolvent's estate. The SEC contended that Judge
revealed that the testator intended to create a trust Laigo gravely abused his discretion in treating the trust
for the benefit of the secondary school, naming the fund as part of the insolvency estate of Legacy. It argued
ayuntamiento of the town or the Civil Governor of that the trust fund should redound exclusively to the
the Province as trustee. benefit of the planholders, who are the ultimate beneficial
● If the trustee holds the legal title and the devise owners.
(type of will involving real properties) is valid, the RTC: ordered the insolvency Assignee to take possession
natural heirs of the deceased testator have no of the trust fund.
remaining interest in the land except their right to
the reversion in the event the devise for some ISSUE:
reason should fail, an event which has not yet WON the trust fund can be used to satisfy the claims of
taken place. The intention of the testator was to other creditors of Legacy?
have the income of the property accumulate for RULING:
the benefit of the proposed school until the same No. The contention of SEC finds support under Section 30
should be established. of the Pre-Need Code where in it clearly provides that the
● The lands with lot nos. 3464 and 3469 shall proceeds of trust funds shall redound solely to the
hereby remain in the possession of the planholders. In no case shall the trust fund assets be used
Municipality of Tayabas as trustee until the to satisfy claims of other creditors of the pre-need
secondary school is erected. However, the company.
ownership of lot no. 3470 has lawfully passed to It must be stressed that a person is considered as a
Dorothea by prescription, having held possession beneficiary of a trust if there is a manifest intention to give
of the land, adverse to all claimants, since 1904. such a person the beneficial interest over the trust
properties. This categorical declaration doubtless indicates
NOTE: It is a charitable trust. It is one designed for the that the intention of the trustor is to make the planholders
benefit of a segment of the public or of the public in the beneficiaries of the trust properties, and not Legacy. It
general. It is one created for charitable, educational, is clear that because the beneficial ownership is vested in
social, religious, or scientific purposes, or for the general the planholders and the legal ownership in the trustee,
benefit of humanity. LBP, Legacy, as trustor, is left without any iota of interest
in the trust fund.
Legacy is out of the picture and exists only as a
123. SEC v. Liago
representative of the trustee, LBP, with the limited role of
“Assets in the trust fund shall at all times remain for the
facilitating the delivery of the benefits of the trust fund to
sole benefit of the planholders. The trust fund assets
the beneficiaries -the planholders. The trust fund should
cannot be used to satisfy claims of other creditors of the
not revert to Legacy, which has no beneficial interest over
pre-need company.”
it. Not being an asset of Legacy, the trust fund is immune
FACTS:
from its reach and cannot be included by the RTC in the
Legacy Consolidated Plans, Inc. (Legacy), being a pre-
insolvency estate.
need provider, complied with the trust fund requirement of
the petitioner, Securities and Exchange Commission
(SEC), and entered into a trust agreement with the Land
Bank of the Philippines (LBP). The industry collapsed and
Legacy was unable to pay its obligation to the 124. Miguel J. Ossorio Pension Foundation, Inc v. CA
planholders.. Private respondents, as planholders, filed a
petition for involuntary insolvency against Legacy before Facts:
the the Regional Trial Court (RTC). Accordingly, Legacy - Petitioner MJOPFI, a non-stock and non-profit
was declared insolvent and was ordered to submit an corporation, was organized for the purpose of holding
title to and administering the employees’ trust or
inventory of its assets and liabilities pursuant to the
retirement funds (Employees’ Trust Fund) established for
Insolvency Law. The RTC ordered the SEC to submit the
the benefit of the employees of Victorias Milling
documents pertaining to Legacy's assets and liabilities.
Company, Inc. (VMC).
The SEC opposed the inclusion of the trust fund in the
- Petitioner, as trustee, claims that the income earned by as well as the beneficial ownership of the real owners
the Employees’ Trust Fund is tax exempt under Section because the trust is created by force of law. The fact that
53(b) of the National Internal Revenue Code (Tax Code). the title is registered solely in the name of one person is
- Petitioner bought the Madrigal Business Park (MBP lot) not conclusive that he alone owns the property. Thus,
through VMC. Petitioner alleges that its investment in the this case turns on whether petitioner can sufficiently
MBP lot came about upon the invitation of VMC and that establish that petitioner, as trustee of the Employees’
its share in the lot is 49.59%. Petitioner’s investment Trust Fund, has a common agreement with VMC and VFC
manager, the Citytrust Banking Corporation (Citytrust), that petitioner, VMC and VFC shall jointly purchase the
in submitting its Portfolio Mix Analysis, regularly reported MBP lot and put the title to the MBP lot in the name of
the Employees’ Trust Fund’s share in the MBP lot. VMC for the benefit petitioner, VMC and VFC.
- On 26 March 1997, VMC eventually sold the MBP lot to - The CTA ruled that the documents presented by
Metrobank. petitioner cannot prove its co-ownership over the MBP
- Petitioner claims that it is a co-owner of the MBP lot as lot especially that the TCT, Deed of Absolute Sale and
trustee of the Employees’ Trust Fund, based on the the Remittance Return disclosed that VMC is the sole
notarized Memorandum of Agreement. Petitioner owner and taxpayer. However, the appellate courts failed
maintains that its ownership of the MBP lot is supported to consider the genuineness and due execution of the
by the excerpts of the minutes and the resolutions of notarized Memorandum of Agreement acknowledging
petitioner’s Board Meetings. petitioner’s ownership of the MBP lot. The BIR failed to
Petitioner further contends that there is no dispute that present any clear and convincing evidence to prove that
the Employees’ Trust Fund is exempt from income tax. the notarized Memorandum of Agreement is fictitious or
Since petitioner, as trustee, purchased 49.59% of the has no legal effect. Likewise, VMC, the registered owner,
MBP lot using funds of the Employees’ Trust Fund, did not repudiate petitioner’s share in the MBP lot.
petitioner asserts that the Employees’ Trust Fund's Further, Citytrust, a reputable banking institution, has
49.59% share in the income tax paid (or P3,037,697.40 prepared a Portfolio Mix Analysis for the years 1994 to
rounded off to P3,037,500) should be refunded. 1997 showing that petitioner invested P5,504,748.25 in
Petitioner filed a Petition for tax refund before the CTA. the MBP lot. Absent any proof that the Citytrust bank
records have been tampered or falsified, and the BIR has
CTA: denied petitioner's claim for refund of withheld presented none, the Portfolio Mix Analysis should be
creditable tax of P3,037,500 arising from the sale of real given probative value.
property of which petitioner claims to be a co-owner as
trustee of the employees' trust or retirement funds. 125. CIR v. CA

CA: agreed with the CTA that pieces of documentary FACTS:

evidence submitted by petitioner are largely self-serving Private Respondent, GCL Retirement Plan (GCL) is an
and can be contrived easily. The CA ruled that these employees' trust maintained by the employer, GCL Inc.,
documents failed to show that the funds used to to provide retirement, pension, disability and death
purchase the benefits to its employees. The Plan as submitted was
MBP lot came from the Employees’ Trust Fund. approved and qualified as exempt from income tax by
Petitioner Commissioner of Internal Revenue in
accordance with Rep. Act No. 4917.1
ISSUE:
Respondent GCL made investments and earned
Whether or not petitioner, as trustee of the Employee’s
therefrom interest income from which was witheld the
Trust Fund, is the beneficial owner of 49.59% of the MBP
fifteen per centum (15%) final witholding tax imposed by
lot
Pres. Decree No. 1959,2 which took effect on 15 October
1984.
RULING:
The refund requested having been denied, Respondent
Yes.
GCL elevated the matter to respondent Court of Tax
- SC ruled that petitioner, as trustee of the Employees’
Appeals (CTA).
Trust Fund, has more than sufficiently established that it
CTA ruled in favor of GCL, holding that employees' trusts
has an agreement with VMC and VFC to purchase jointly
are exempt from the 15% final withholding tax on
the MBP lot and to register the MBP lot solely in the
interest income and ordering a refund of the tax
name of VMC for the benefit of petitioner, VMC and VFC.
withheld.
- Art. 1452. If two or more persons agree to purchase a
Court of Appeals upheld the CTA Decision.
property and by common consent the legal title is taken
Petitioner submits that the deletion of the exempting and
in the name of one of them for the benefit of all, a trust
preferential tax treatment provisions under the old law is
is created by force of law in favor of the others in
a clear manifestation that the single 15% (now 20%)
proportion to the interest of each. For Article 1452 to
rate is impossible on all interest incomes from deposits,
apply, all that a co-owner needs to show is that there is
deposit substitutes, trust funds and similar
“common consent” among the purchasing co-owners to
arrangements, regardless of the tax status or character
put the legal title to the purchased property in the name
of the recipients thereof. In short, petitioner's position is
of one co-owner for the benefit of all. Once this
that from 15 October 1984 when Pres. Decree No. 1959
“common consent” is shown, “ a trust is created by force
was promulgated, employees' trusts ceased to be
of law.”
exempt and thereafter became subject to the final
- The BIR has no option but to recognize such legal trust
withholding tax.
GCL contends that the tax exempt status of the Plaintiffs are descendants of Alejandro, Fernando and Cirila
employees' trusts applies to all kinds of taxes, including while...
the final withholding tax on interest income. That
exemption, according to GCL, is derived from Section
...defendants are descendants of Anacleto and some alleged
56(b) and not from Section 21 (d) or 24 (cc) of the Tax
descendants of Celedonio and Ana...
Code, as argued by Petitioner.
ISSUE: WON employees’ trust (GCL Plan) is exempt
from the 15% final withholding tax on interest income ...intervenors are the descendants of Valentin de los Reyes (by
HELD: Yes. In so far as employees' trusts are second marriage of Ana)...
concerned, the foregoing provision should be taken in
relation to then Section 56(b) (now 53[b]) of the Tax Plaintiff - Celedonio and Ana passed on five immovable
Code, as amended by Rep. Act No. 1983, supra, which properties to their children by operation of law. The said set of
took effect on 22 June 1957. This provision specifically properties continued to be owned by the children as co-owners,
exempted employee's trusts from income tax and is
the management of which was left entrusted to Anacleto. More
repeated hereunder for emphasis:
properties were acquired over time through the investment of
Sec. 56. Imposition of Tax. — (a) Application of
tax. — The taxes imposed by this Title upon the income of the first set of properties. When Anacleto died,
individuals shall apply to the income of estates or his children continued to manage the properties and claimed
of any kind of property held in trust. exclusive title thereof. Despite repeated demands from the
xxx xxx xxx plaintiff for the defendant to account for the income and deliver
(b) Exception. — The tax imposed by this Title the plaintiff's share there in.
shall not apply to employee's trust which forms
part of a pension, stock bonus or profit-sharing Upon the other hand, Asuncion Meneses admitted that the
plan of an employer for the benefit of some or all
properties referred to in said Paragraph 10 originally belonged
of his employees . . .
to Celedonio Meneses and Ana Asuncion, and later passed, by
The tax-exemption privilege of employees' trusts, as
distinguished from any other kind of property held in succession, to their children. She denied, however, that said
trust, springs from the foregoing provision. It is properties had been held pro indiviso, in trust and or the
unambiguous. Manifest therefrom is that the tax law has benefit of all of the parties herein.
singled out employees' trusts for tax exemption.
And rightly so, by virtue of the raison de'etre behind the Cross-claimant Leonicia Geronimo and childred, Asuncion
creation of employees' trusts. Employees' trusts or alleged that they are indebted to her in the sum of P52,928, to
benefit plans normally provide economic assistance to
guarantee the payment of which these cross-defendants had
employees upon the occurrence of certain contingencies,
constituted in her favor a first mortgage and a second mortgage
particularly, old age retirement, death, sickness, or
disability. It provides security against certain hazards to
on the fishpond "Kay Gogue" which might be adversely affected
which members of the Plan may be exposed. It is an if plaintiffs' complaint should prosper, for which reason she set
independent and additional source of protection for the up a counter-claim for damages against said plaintiffs.
working group. What is more, it is established for their
exclusive benefit and for no other purpose. Lower Court - in favor of plaintiffs.
It is evident that tax exemption is likewise to be enjoyed
by the income of the pension trust. Otherwise, taxation ISSUE: Whether or not the properties were held by Anacleto in
of those earnings would result in a diminution of
truest.
accumulated income and reduce whatever the trust
beneficiaries would receive out of the trust fund. This
would run afoul of the very intendment of the law. RULING:
Cross- claim dismissed. Decision appealed from is affirmed.
126. Morales v. CA
RATIO: It appears that, early in 1955, Maria was borrowing P875
See #107 from Tinong Meneses and Delfin Carreon, who were seemingly
reluctant to deliver any sum of money to her, until a deed of
127. Pascual v. Meneses mortgage, as security thereof, on a property 16 of the
"Komunidad ng mga Meneses" (Community of the Meneses),
FACTS: The parties are descendants of Celedonio Meneses and shall have been executed. On January 27, 1955, Ramon wrote
his wife, Ana Asuncion. The couple had four (4) children, to Tinong Meneses and Delfin Carreon the letter Exhibit D
namely, Alejandro, Anacleto, Fernando and Cirila, all of whom, urging them to meanwhile entrust P300.00 to Maria, assuring
with the exception of Alejandro, who pre-deceased his mother, the addressees that he (Ramon) would answer, if necessary, for
survived their parents. All of them are now deceased. To avoid the payment of said debt. On the back of the corresponding
unnecessary repetition, the parties herein will hereafter be deed of mortgage, Ramon, likewise, signed a memorandum in
referred to by their Christian names only, except when the Tagalog, dated September 13, 1955, stating that he authorized
surname of the person concerned is not Meneses. the mortgage of so much of the aforementioned property as
represented Hermenegildo's share therein by inheritance.
 Basilisa. Upon his death, his properties were
On February 22, 1956, Ramon wrote to Enrica the letter Exhibit distributed to his heirs as he willed except two
F, stating that the same was due to the residential lot in which haciendas the Haciendas Sta. Cruz and Pusod both
Maria had her house; that Alfredo wanted to buy their interest known as Hacienda Bacayan.
in said lot, representing one-fourth (1/4) thereof, the proceeds Lino Cuaycong died and was survived by his
of which should be divided among Enrica, Ramon, Asuncion, children.
Benito and Candelaria; that he (Ramon) was agreeable to the Praxedes Cuaycong, married to Jose Betia, is
sale, under the terms indicated in the letter, and to signing the already deceased and is survived by her children,
corresponding deed; and that the same could already be all surnamed Betia.
prepared. Anastacio Cuaycong, also deceased, is survived by
his children, all surnamed Cuaycong.
Plaintiffs lay special emphasis upon the phrase "Komunidad ng Meliton and Basilisa died without any issue.
mga Meneses," in Exhibit D, as establishing that the sixty-five On October 3, 1961, the surviving children of Lino
(65) parcels of land described in the amended complaint Cuaycong; the surviving children of Anastacio; as
constituted an undivided community of property, belonging to well as children of deceased Praxedes Cuaycong
the descendants of Celedonio Meneses and Ana Asuncion. It Betia, filed as pauper litigants, a suit against Justo,
should be noted, however, that said communication refers only Luis and Benjamin Cuaycong for conveyance of
to the residential lot in which Maria Meneses had her house. inheritance and accounting, before the Court of First
Maria is a daughter of Fernando, one of the four (4) children of Instance of Negros Occidental alleging among others
said spouses. It is obvious, however, that the co-ownership over that Luis, thru clever strategy, fraud,
this single lot does not establish condominion over the sixty-five misrepresentation and in disregard of Eduardo’s
(65) other properties in litigation. wishes by causing the issuance in his name of
certificates of title covering Hacienda Bacayan’s
As regards plaintiffs' testimonial evidence in support of the properties. They also claimed that Eduardo had an
theory that the properties enumerated in Paragraph 10 of the arrangement with Justo and Luis that the latter will
amended complaint were held by Anacleto for his benefit and hold in trust what might belong to his brothers and
that of the other children of Celedonio Meneses and Ana sister as a result of the arrangements and deliver
Asuncion, by virtue of an express trust established by said
them their share when time comes. The plaintiff
children as alleged co-owners thereof pro indiviso; that the
repeatedly demanded for their share in the property
lands described in paragraph 12 (a) of the amended complaint
after Eduardo and Clotilde’s death.
and acquired with the income derived from the former estate
Luis D. Cuaycong moved to dismiss the complaint.
of Celedonio Meneses and Ana Asuncion, were, likewise,
On December 16, 1961, the Court of First Instance
covered by said express trust and formed part of the Meneses
ruled that the trust alleged, particularly in
community; that said express trust and community were
paragraph 8 of the complaint, refers to an
maintained when, upon Anacleto's death, the administration of
immovable which under Article 1443 of the Civil
the properties covered by said Paragraphs 10 and 12 (a) passed
Code may not be proved by parole evidence.
to his son, Ramon; that the fifty (50) lots and one (1) "camarin"
Later, the court decreed that since there was no
described in Paragraph 13 (a) of the amended complaint were
amended complaint filed, it was useless to declare
thereafter purchased by Ramon with funds derived from the
Benjamin Cuaycong in default.
income of said two (2) sets of properties; and that, accordingly,
Plaintiff thereafter manifested that the claim is
said fifty (50) lots and one (1) "camarin" are, similarly,
based on an implied trust as shown by paragraph 8
encompassed by the aforementioned express trust and form
of the complaint. They added that there being no
part of the Meneses community, suffice it to note that, "no
written instrument of trust, they could not amend
express trust concerning an immovable or any interest therein
the complaint to include such instrument.
may be proved by parol evidence"
Paragraph 8 of the complaint state:
That as the said two haciendas were then the
Upon the other hand, there is sufficient evidence that the
subject of certain transactions between the
estate of Celedonio Meneses and Ana Asuncion had already
spouses Eduardo Cuaycong and Clotilde de Leon on
been partitioned among and delivered to their heirs.
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
128. Cuaycong v. Cuaycong
them their shares when the proper time comes, to
FACTS:
which Justo and Luis D. Cuaycong agreed.
Eduardo Cuaycong, married to Clotilde de Leon,
died without issue but with three brothers and a
sister surviving him: Lino, Justo, Meliton and ISSUE: Whether the trust is express or implied .
 However defendants "insisted that according to the
RULING: agreement", neither delivery of the land nor the fruits
It is an express trust. thereof could immediately be demanded. Plaintiff
Our Civil Code defines an express trust as one acceded to this contention of defendants and allowed
created by the intention of the trustor or of the them to continue to remain in possession. Plaintiff
parties, and an implied trust as one that comes also demanded to fix the period within which they
into being by operation of law. Express trusts are would deliver the above-described parcels of land but
those created by the direct and positive acts of the defendants have refused and until now still refuse to
parties, by some writing or deed or will or by words fix a specific time within which they would deliver it.
evidencing an intention to create a trust. On the other Defendants also aver that recognition of the trust
hand, implied trusts are those which, without being may not be proved by evidence aliunde or parol
expressed, are deducible from the nature of the evidence.
transaction by operation of law as matters of equity,
in dependently of the particular intention of the LC: Ruled in favor of the defendants.
parties. Thus, if the intention to establish a trust is
clear, the trust is express; if the intent to establish a ISSUE: WON there was an expressed trust.
trust is to be taken from circumstances or other
matters indicative of such intent, then the trust is HELD:
implied. Yes, Article 1444 of the Civil Code states that: "No
From these and from the provisions of paragraph 8 particular words are required for the creation of an
of the complaint itself, we find it clear that the express trust, it being sufficient that a trust is clearly
plaintiffs alleged an express trust over an intended."
immovable, especially since it is alleged that the
trustor expressly told the defendants of his intention Technical or particular forms of words or phrases are
to establish the trust. Such a situation definitely falls not essential to the manifestation of intention to
under Article 1443 of the Civil Code. create a trust or to the establishment thereof. Nor
Article 1453, one of the cases of an implied trust
would the use of some such words as "trust" or
would apply if the person conveying the property
"trustee" essential to the constitution of a trust.
did not expressly state that he was establishing the
Conversely, the mere fact that the word "trust" or
trust, unlike the case at bar where he was alleged
"trustee" was employed would not necessarily prove
to have expressed such intent.
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
129. Julio v. Dalandan that the relationship "which he intends to create is
FACTS: called a trust, and whether or not he knows the
Clemente Dalandan, deceased father of defendants precise characteristics of the relationship which is
Emiliano and Maria Dalandan, acknowledged that a called a trust."
four-hectare piece of riceland in Las Piñas, Rizal
belonging to Victoriana Dalandan, whose only child In the given case, while it is true that said deed or
and heir is plaintiff Victoria Julio, was posted as agreement did not in definitive words institute
security for an obligation which he, Clemente defendants as trustees, a duty is therein imposed
Dalandan, assumed but, however, failed to fulfill. The upon them — when the proper time comes — to turn
result was that Victoriana's said land was foreclosed. over both the fruits and the possession of the
So Clemente promised to Victoria a farm of about property to Victoria Julio. The trust is effective as
four hectares to replace the aforesaid foreclosed against defendants and in favor of the beneficiary
property. An affidavit was executed by Clemente thereof, plaintiff Victoria Julio, who accepted it in the
which herein petitioner accepted. Part of the document itself.
agreement was that his heirs (Emiliano and Maria)
may not be forced to give up the harvest of the farm
and neither may the land be demanded immediately. 130. Heirs of Tranquilino Labiste v. Heirs of Jose Labiste

FACTS: On Sept. 29, 1919, Epifanio Labiste, in his and his

After the death of Clemente Dalandan, plaintiff
siblings' behalf, who were heirs of Jose, purchased a 13,308
requested from defendants who succeeded in the
sqm lot with Lot No. 1054 in Cebu. To which a deed of
possession of the land, to deliver the same to her. conveyance was executed to the Epifanio and his siblings.
 arrangement was corroborated by the subdivision plan
After full payment of the price but prior to the issuance of the prepared by Engr. Bunagan and approved by Jose P. Dans,
deed of conveyance, Epifanio executed an affidavit affirming Acting Director of Lands.
that he, as an heir of Jose, and his uncle, petitioner's
predecessor-in-interest of Tranquilino, then co-owned the lot. As such, prescription and laches will run only from the time the
Since the money paid for the purchase came from the two of express trust is repudiated. The Court has held that for
them. Tranquilino and the heirs of Jose continued to hold the acquisitive prescription to bar the action of the beneficiary
property jointly. The lots were then subdivided into two lots of against the trustee in an express trust for the recovery of the
an area of 6,664 sqm Lot No. 1054-A for Tranquilino and Lot No. property held in trust it must be shown that: (a) the trustee has
1054-B to Epifanio. performed unequivocal acts of repudiation amounting to an
ouster of the cestui que trust; (b) such positive acts of
On Oct. 18, 1939, heirs of Tranquilino purchased the 1/2 repudiation have been made known to the cestui que trust, and
interest of Jose for P300 as evidenced by the Calig-onan sa (c) the evidence thereon is clear and conclusive. Respondents
Panagpalit. When WWII broke out, the heirs of Tranquilino fled cannot rely on the fact that the Torrens title was issued in the
Cebu, though they came back subsequently. 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
Asuncion filed for a petition for reconstitution of title over Lot trust by him for another cannot repudiate the trust by relying
No. 1054, which petitioner opposed. The Register of Deeds of on the registration. The rule requires a clear repudiation of the
Cebu City issued the reconstituted title in the name of Epifanio trust duly communicated to the beneficiary. The only act that
and his siblings, heirs of Jose. Petitioners filed a complaint for can be construed as repudiation was when respondents filed
annulment of title seeking the reconveyance of property and the petition for reconstitution in October 1993. And since
damages. Respondents claiming that the affidavit and Calig- petitioners filed their complaint in January 1995, their cause of
onan sa Panagpalit were forgeries and petitioners' actions had action has not yet prescribed, laches cannot be attributed to
long prescribed. them.

RTC - In favor of petitioners. Action has not prescribed as te

complaint was filed about a year after the reconstitution of the 131. Gamboa v. Gamboa
title by respondents.
PETRONA GAMBOA, ET AL - plaintiffs-appellees,
MODESTA GAMBOA, ET AL - defendants-
CA - Reversed RTC. though affirming petitioner's right to the
appellants.
property. Reversed on the ground of prescription and laches.
FACTS:
ISSUE: Whether or not what is involved in the case is an express
trust. An action was instituted at the Court of First
Instance of the Province of Pampanga, for the
RULING: Yes. Reversed and Set Aside CA Ruling. RTC ruling purpose of enforcing partition of some ten parcels
reinstated with modification. Petitioners declared absolute of real property located in the municipality of Santa
owners of 1/2 of lot #1054 and #1054-A Ana, in the province of Pampanga. It asserted that
the plaintiffs are co owners with the defendants
RATIO: Trust is the right to the beneficial enjoyment of Modesta, Pedro and Rafael. At the same time the
property, the legal title to which is vested in another. It is a plaintiffs seek to obtain an accounting from
fiduciary relationship that obliges the trustee to deal with the Modesta Gamboa of the plaintiffs' shares in the
property for the benefit of the beneficiary. Trust relations procedure taken from the land in the past.
between parties may either be express or implied. An express To this complaint Modesta Gamboa answered with
trust is created by the intention of the trustor or of the parties. a general denial, supplemented by an admission
An implied trust comes into being by operation of law. that the single parcel constituting the last item
specified in the complaint and identified as tax No.
Express trusts are created by direct and positive acts of the 6247, is in fact common property of herself and the
parties, by some writing or deed, or will, or by words either plaintiffs who are her coheirs, and asserting, as to
expressly or impliedly evincing an intention to create a trust. the rest, that she is the owner of the same and has
Under Article 1444 of the Civil Code, "[n]o particular words are been in adverse possession thereof for more than
required for the creation of an express trust, it being sufficient ten years. The defendant Rafael and Pedro Gamboa
that a trust is clearly intended." The Affidavit of Epifanio is in answered with a formal general denial, but at the
the nature of a trust agreement. Epifanio affirmed that the lot trial they admitted the claim to Modesta Gamboa
brought in his name was co-owned by him, as one of the heirs as owner of the contested properties.
of Jose, and his uncle Tranquilino. And by agreement, each of All of the properties that are the subject of this
them has been in possession of half of the property. Their action once belonged to the parents of the first set
of Gamboa plaintiffs of the three defendants of the nature of the title held by the sisters and the
same name. inconclusive character of the proof of trusteeship
refute this theory.
Juan Gamboa and wife sold all of the properties
which are the subject of this action, except the We attribute little importance to the form in which
parcel identified by the tax assessment No. 6247, the property was assessed for taxation, in view of
under contract of sale with pacto de retro for two the explanation which Modesta gives of the
years to one Felipe Javier, the vendors, however, obstructions which she encountered in
remaining in possession in the character of lessees. straightening that matter out. The situation, as we
The period of redemption having been effected, see it, is that Modesta Gamboa, during the period
and the property consolidated in Javier. But Juan in which she has been part owner of the property
Gamboa, and after his death, his family, continued and during the later period in which she has held
in possession as tenants under Javier. This title in her own name, has been surrounded by
arrangement continued until the death of Ana kinsfolk who were anxious to insinuate themselves
Manag, widow of Juan Gamboa. into a coownership of the property, and this
litigation was undoubtedly promoted chiefly by her
Javier then absolute owner of the properties which brother Serapion Gamboa. But it is noteworthy that
he had purchased as above stated, conveyed the at least two brothers have admitted her title.
same to the sisters Feliciana and Modesta Gamboa
for the price less than the price for which he had The trial judge seems to have entertained the idea
originally purchased them. To secure these that the case must turn upon the character of the
deferred payments the parties declared that a possession exercised by Modesta Gamboa during
mortgage was created upon the property which the period allowed by law for prescription; and he
was the subject of conveyance. assumed that it was necessary for her to show
adverse possession during that period. This idea is
Subsequently, Modesta Gamboa and her sister not of correct application, because Modesta
Feliciana entered into a written partition of the Gamboa, either cojointly with her sister Feliciana or
parcels of property which had been purchased by exclusively in her own right, has held the legal title
them from Javier. In this partition Feliciana was since 1910; and the fact that her brother and
content with a much smaller portion than Modesta. sisters may have questioned her right during the
ten years next preceding the institution of this
The proof shows that ever since the property in action does not have the effect of impairing her
question was conveyed by Javier to the Gamboa right.
sisters, the same has been continuously in the
possession of Modesta, except for the two years Clearly, the sisters bought the land as their own
when, by some arrangement or other, one of her and not in trust for their relatives.
brothers had charge as manager. During this
period Modesta exercised all the rights of
ownership, accounting of course to Feliciana for the 132. Cañezo v. Rojas
latter's share of the produce during the term of
their ownership. Alleged Trustor: Soledad Canezo
Alleged Trustee: Crispulo Rojas
For the petitioners, this buying of the land was in Second Wife of Trustee: Concepcion Rojas
effect a repurchase by Feliciana and Modesta of the
land in behalf of their ancestors. FACTS:
Soledad Canezo filed a Complaint for the recovery of real
ISSUE: Whether the purchase of the land by the property plus damages with the MTC of Naval, Biliran
Gamboa sisters was in fact, in trust only for the against her father’s second wife, respondent Concepcion
Juan Gamboa and in effect, be only co-owners as Rojas. The subject property is an unregistered land.
co-heirs with the petitioners? Canezo claims that she bought the parcel of land in 1939
from Crisogono Limpiado, although the transaction was
HELD: NO. not reduced in writing. She immediately took possession
of the property. When she and her husband left for
This theory of the case, in our opinion, is Mindanao in 1948, she entrusted the said land to her
father, Crispulo Rojas, who took possession of, and
untenable.
cultivated, the property. In 1980, she found out that the
respondent, her stepmother, was in possession of the
The sale of the property by Javier to the two sisters
property and was cultivating the same. She also
in 1910 was an unconditional transfer of title to
discovered that the tax declaration over the property
them, inasmuch as Javier had been undisputed
was already in the name of Crispulo Rojas.
owner of the property for fully eleven years. Of
Respondent asserted that, contrary to the petitioners
course if it had really been agreed that the sisters
claim, it was her husband, Crispulo Rojas, who bought
were purchasing the property in a trust character,
the property from Crisogono Limpiado in 1948, which
that agreement might have been enforced, but the
accounts for the tax declaration being in Crispulos name. created by operation of law. However, the RTC held that
From then on, until his death in 1978, Crispulo reconveyance can no longer be effected since the subject
possessed and cultivated the property. Upon his death, property had already been transferred to Wilson and
the property was included in his estate, which was Peter, whom it found to be purchasers in good. Also,
administered by a special administrator, Bienvenido Bella, Delfin, Sr., and Felimon, Sr. were unjustly
Ricafort. The petitioner, as heir, even received her share enriched at the expense of the respondents who, as
in the produce of the estate. The respondent further compulsory heirs, were also entitled to their share in the
contended that the petitioner ought to have impleaded subject property, the RTC directed Bella, et al. to pay
all of the heirs as defendants. She also argued that the plaintiffs, jointly and severally.
fact that petitioner filed the complaint only in 1997
means that she had already abandoned her right over CA: upheld the RTC's finding that an implied trust was
the property. constituted between Felisa, during her lifetime, and
MTC rendered decision in favour of the petitioner. Bella, Delfin, Sr., and Felimon, Sr. when the former sold
RTC reversed the MTC decision on the ground that the subject property to the latter, and that the present
the action had already prescribed and acquisitive action for reconveyance has not prescribe. However,
prescription had set in. Wilson and Peter were found to not be purchasers im
Petitioner filed an MR and RTC amended its original good faith due to their knowledge of the adverse claim.
decision and held that the action has not yet prescribed
considering that the petitioner merely entrusted the
property to her father. Issues: 1. Whether or not a trust was established
CA reversed the Amended Decision of the RTC between Felisa and Bella, Delfin,Sr., and Felimon, Sr.
ISSUE: WON there was a trust relationship between 2. Whether or not the action for reconveyance
Soledad Canezo and Crispulo Rojas. has prescribed.
HELD: No. As a rule the burden of proving the existence 3. Whether or not Wilson and Peter are
of a trust is on the party asserting its existence, and purchasers in good faith.
such proof must be clear and satisfactorily show the
existence of the trust and its elements. The presence of HELD:
the following elements must be proved: (1) a trustor or
settlor who executes the instrument creating the trust; 1. An express trust was created.
(2) a trustee, who is the person expressly designated to Trust is the right to the beneficial enjoyment of property,
carry out the trust; (3) the trust res, consisting of duly the legal title to which is vested in another. It is a
identified and definite real properties; and (4) the cestui fiduciary relationship that obliges the trustee to deal with
que trust, or beneficiaries whose identity must be clear. the property for the benefit of the beneficiary. Trust
Accordingly, it was incumbent upon petitioner to prove relations between parties may either be express or
the existence of the trust relationship. And petitioner implied. An express trust is created by the intention of
sadly failed to discharge that burden. the trustor or of the parties, while an implied trust
comes into being by operation of law.

133. Go v. Estate of Felisa Tamio de Buenaventura Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words
Facts: Felisa Buenaventura, the mother of the Petitioner either expressly or impliedly evincing an intention to
Bella and respondents Resurreccion, Rhea and Regina, create a trust
owned a parcel of land with a three-storey building. In From the letter executed by Felisa, it unequivocally and
1960, Felisa transferred the same to her daughter Bella, absolutely declared her intention of transferring the title
married to Delfin, Sr., and Felimon, Sr., the common- over the subject property to Bella, Delfin, Sr., and
law husband of Felisa, to assist them in procuring a loan Felimon, Sr. in order to merely accommodate them in
from the GSIS. In view thereof, her title over the securing a loan from the GSIS. She likewise stated
property, TCT No. 45951/T-233, was cancelled and a clearly that she was retaining her ownership over the
new one, TCT No. 49869, was issued in the names of subject property and articulated her wish to have her
Bella, married to Delfin, Sr., and Felimon, Sr. heirs share equally therein. Hence, while in the
beginning, an implied trust was merely created between
Upon Felisa's death in 1994, the Bihis Family, Felisa's Felisa, as trustor, and Bella, Delfin, Sr., and Felimon, Sr.,
other heirs who have long been occupying the subject as both trustees and beneficiaries, the execution of the
property, caused the annotation of their adverse claim September 21, 1970 letter settled, once and for all,
over the property. However, the annotation was the nature of the trust established between them as an
cancelled, and thereafter a new TCT over the property express one, their true intention irrefutably extant
was issued in the names of Bella, et al. Finally, by virtue thereon.
of a Deed of Sale dated January 23, 1997, the subject
property was sold to Wilson and Peter, in whose 2. Anent the issue of prescription, the Court finds that
names TCT No. 170475 currently exists. A complaint for the action for reconveyance instituted by respondents
reconveyance was then filed. has not yet prescribed, following the jurisprudential rule
that express trusts prescribe in ten (10) years from the
RTC: there was an implied trust between Felisa, on the time the trust is repudiated.
one hand, and Bella and Felimon, Sr., on the other,
In this case, there was a repudiation of the express trust novated" by the MOA, and require petitioner to
when Bella, as the remaining trustee, sold the subject pay damages, attorney’s fees and the costs. The
property to Wilson and Peter on January 23, 1997. As Cañeda spouses consigned with the trial court
the complaint for reconveyance and damages was filed the amount of P1.68 million as redemption
by respondents on October 17, 1997, or only a few payment. Petitioner insisted on his rights over
months after the sale of the subject property to Wilson the mortgaged properties. Petitioner also
and Peter, it cannot be said that the same has counterclaimed for damages and attorney’s fees
prescribed. and the turn-over of the owner’s copy of the
titles for the mortgaged properties.
3. Wilson and Peter are not purchasers in good faith.
A purchaser in good faith is one who buys the property RTC: ruled against respondent and his co-plaintiffs
of another without notice that some other person has and granted reliefs to petitioner by declaring petitioner
a right to, or an interest in, such property and the "true and real" mortgagee, ordering respondent to
pays a full and fair price for the same at the time of pay moral damages and attorney’s fees, and requiring
such purchase, or before he has notice of some other respondent to deliver the titles in question to petitioner.
person 's claim or interest i n the property. The The trial court, however, granted the Cañeda spouses’
existence of an annotation on the title covering the prayer to redeem the property and accordingly ordered
subject property and of the occupation thereof by the release of the redemption payment to petitioner. In
individuals other than the sellers negates any arriving at its ruling, the trial court gave primacy to the
presumption of good faith on the part of Wilson and terms of the Contract, rejecting respondent’s theory in
Peter when they purchased the subject property. light of his failure to assert beneficial interest over the
mortgaged properties for nearly four years.

IV. Implied Trusts Respondent appealed to CA

134. Juan v. Yap, Sr. CA: granted the petition, set aside the trial court’s
ruling, declared respondent the Contract’s mortgagee,
FACTS: directed the trial court to release the redemption
payment to respondent, and ordered petitioner to pay
● The spouses Maximo and Dulcisima Cañeda damages and attorney’s fees. The CA found the following
mortgaged to petitioner Richard Juan circumstances crucial in its concurrence with
(petitioner), employee and nephew of respondent’s theory, notwithstanding the terms of the
respondent Gabriel Yap, Sr. (respondent), two Contract: (1) Solon testified that he drew up the
parcels of land in Talisay, Cebu to secure a loan Contract naming petitioner as mortgagee upon
of P1.68 million, payable within one year. instructions of respondent; (2) Dulcisima Cañeda
acknowledged respondent as the creditor from whom she
● Petitioner, represented by Atty. Solon, sought and her husband obtained the loan the Contract secured;
the extrajudicial foreclosure of the mortgage. and (3) respondent shouldered the payment of the
Although petitioner and respondent participated foreclosure expenses. Instead, however, of annulling the
in the auction sale, the properties were sold to Contract, the CA held that reformation was the proper
petitioner for tendering the highest bid of P2.2 remedy, with the MOA "serv[ing] as the correction done
million. No certificate of sale was issued to by the parties to reveal their true intent."
petitioner, however, for his failure to pay the
sale’s commission. ISSUE:

● Respondent and the Cañeda spouses executed a Whether an implied trust arose between petitioner and
memorandum of agreement (MOA) where (1) the respondent, binding petitioner to hold the beneficial title
Cañeda spouses acknowledged respondent as over the mortgaged properties in trust for respondent
their "real mortgagee-creditor x x x while
Richard Juan [petitioner] is merely a trustee" of RULING:
respondent; (2) respondent agreed to allow the
Cañeda spouses to redeem the foreclosed Yes, there is an implied trust between the petitioner and
properties for P1.2 million; and (3) the Cañeda the respondent.
spouses and respondent agreed to initiate
judicial action "either to annul or reform the An implied trust arising from mortgage contracts is not
[Contract] or to compel Richard Juan to reconvey among the trust relationships the Civil Code enumerates.
the mortgagee’s rights" to respondent as trustor. The Code itself provides, however, that such listing "does
not exclude others established by the general law on
● Three days later, the Cañeda spouses and trust x x x." Under the general principles on trust, equity
respondent sued petitioner in the Regional Trial converts the holder of property right as trustee for the
Court of Cebu City (trial court) to declare benefit of another if the circumstances of its acquisition
respondent as trustee of petitioner vis a vis the makes the holder ineligible "in x x x good conscience [to]
Contract, annul petitioner’s bid for the foreclosed hold and enjoy [it]." As implied trusts are remedies
properties, declare the Contract "superseded or against unjust enrichment, the "only problem of great
importance in the field of constructive trusts is whether Motherland, Francisco, et al., as the children of
in the numerous and varying factual situations presented Alejandra and Balbina, filed on February 27,1984 an
x x x there is a wrongful holding of property and hence,
Amended Complaint for reconveyance, partition,
a threatened unjust enrichment of the defendant."
and/or damages against respondents, docketed as
Applying these principles, this Court recognized Civil Case No. D-6978. They anchored their claim on
unconventional implied trusts in contracts involving the the allegation that Ciriaco, with the help of his wife
purchase of housing units by officers of tenants’ Catalina, urged Balbina and Alejandra to sell the
associations in breach of their obligations, the Sabangan property. Likewise, Francisco, et al.
partitioning of realty contrary to the terms of a alleged that through deceit, fraud, falsehood, and
compromise agreement, and the execution of a sales
misrepresentation, respondent Victoriano, with
contract indicating a buyer distinct from the provider of
the purchase money. In all these cases, the formal respect to the First Accretion, and the respondents
holders of title were deemed trustees obliged to transfer collectively, with regard to the Second Accretion, had
title to the beneficiaries in whose favor the trusts were illegally registered the said accretions in their names,
deemed created. We see no reason to bar the notwithstanding the fact that they were not the
recognition of the same obligation in a mortgage riparian owners (as they did not own the
contract meeting the standards for the creation of an
Motherland to which the accretions merely
implied trust.
formed adjacent to). In this relation, Francisco, et al.
135. Heirs of Narvasa, Sr. v. Imbornal explained that they did not assert their inheritance
claims over the Motherland and the two (2)
Facts: accretions because they respected respondents’
Basilia owned a parcel of land situated at rights, until they discovered in 1983 that respondents
Sabangan, Pangasinan which she conveyed to her have repudiated their(Francisco, et al.’s) shares
three (3) daughters Balbina, Alejandra, and Catalina thereon.22Thus, bewailing that respondent shave
(Imbornal sisters) sometime in 1920. Meanwhile, refused them their rights not only with respect to the
Catalina’s husband, Ciriaco Abrio (Ciriaco), applied Motherland, but also to the subsequent accretions,
for and was granted a homestead patent over a Francisco, et al. prayed for their conveyance of said
31,367-sq. m. riparian land(Motherland) adjacent properties, or, in the alternative, the payment of their
to the Cayanga River in San value, as well as the award of moral damages in the
Fabian,Pangasinan. He was eventually awarded amount of P100,000.00, actual damages in the
Homestead Patent No.2499115 therefor, and, on amount of P150,000.00,including attorney’s fees
December 5, 1933, OCT No. 1462 was issued in his and other costs.23On
name.
Later, or on May 10, 1973, OCT No. 1462 RTC: rendered a Decision in favor of Francisco,
was cancelled, and Transfer Certificate of Title (TCT) et al. and thereby directed respondents to: (a)
No. 10149516 was issued in the name of Ciriaco’s reconvey to Francisco, et al. their respective portions
heirs, namely: Margarita Mejia; Rodrigo Abrio, in the Motherland and in the accretions thereon, or
married to Rosita Corpuz; Antonio Abrio, married to their pecuniary equivalent; and (b) pay actual
Crisenta Corpuz;Remedios Abrio, married to damages in the amount of P100,000.00, moral
Leopoldo Corpuz; Pepito Abrio; Dominador Abrio; damages in the amountofP100,000.00, and
Francisca Abrio; Violeta Abrio; and Perla Abrio (Heirs attorney’s fees in the sum ofP10,000.00, as well as
of Ciriaco).Ciriaco and his heirs had since occupied costs of suit.
the northern portion of the Motherland, while CA: reversed and set aside the RTC Decision and
respondents occupied the southern entering a new one declaring: (a)the descendants of
portion.Sometime in 1949, the First Accretion, Ciriaco as the exclusive owners of the Motherland;(b)
approximately 59,772 sq. m. in area, adjoined the the descendants of respondent Victoriano as the
southern portion of the Motherland. On August 15, exclusive owners of the First Accretion; and (c) the
1952, OCT No. P-318 was issued in the name of descendants of Pablo (i.e., respondents collectively)
respondent Victoriano, married to Esperanza as the exclusive owners of the Second Accretion. At
Narvarte, covering the First Accretion.Decades later, odds with the CA’s disposition, Francisco et al. filed a
or in 1971, the Second Accretion, which had an area motion for reconsideration which was, however
of 32,307 sq. m., more or less, abutted the First denied by the CA in a Resolution dated May
Accretion on its southern portion. 7, 2008, hence, this petition taken by the
On November 10, 1978, OCT No. 21481 was latter’s heirs as their successors-in-interest.
issued in the names of all the respondents covering
the Second Accretion. Claiming rights over the entire
Issue: homestead patent application. As such, it is highly
Whether there an implied trust between the Imbornal implausible that the Motherland had been acquired
sisters and Ciriaco. and registered by mistake or through fraud as would
create an implied trust between the Imbornal sisters
Held: No and Ciriaco, especially considering the dearth of
The main thrust of Francisco, et al.’s evidence showing that the Imbornal sisters entered
Amended Complaint is that an implied trust had into the possession of the Motherland, or a portion
arisen between the Imbornal sisters, on the one thereof, or asserted any right over the same at any
hand, and Ciriaco, on the other, with respect to the point during their lifetime. Hence, when OCT No.
Motherland. This implied trust is anchored on their 1462 covering the Motherland was issued in his
allegation that the proceeds from the sale of the name pursuant to Homestead Patent No. 24991 on
Sabangan property – an inheritance of their December 15, 1933, Ciriaco’s title to the Motherland
predecessors, the Imbornal sisters – were used for had become indefeasible. It bears to stress that the
the then-pending homestead application filed by proceedings for land registration that led to the
Ciriaco over the Motherland. As such, Francisco, et issuance of Homestead Patent No. 24991 and
al. claim that they are, effectively, co-owners of the eventually, OCT No. 1462 in Ciriaco’s name are
Motherland together with Ciriaco’s heirs. presumptively regular and proper,49 which
An implied trust arises, not from any presumption has not been overcome by the evidence
presumed intention of the parties, but by presented by Francisco, et al.
operation of law in order to satisfy the demands In this light, the Court cannot fully accept and
of justice and equity and to protect against unfair accord evidentiary value to the oral testimony offered
dealing or downright fraud.44 To reiterate, Article by Francisco, et al. on the alleged verbal agreement
1456 of the Civil Code states that "[i]f property is between their predecessors, the Imbornal sisters,
acquired through mistake or fraud, the person and Ciriaco with respect to the Motherland. Weighed
obtaining it is, by force of law, considered a against the presumed regularity of the award of the
trustee of an implied trust for the benefit of the homestead patent to Ciriaco and the lack of evidence
person from whom the property comes." showing that the same was acquired and registered
by mistake or through fraud, the oral evidence of
The burden of proving the existence of a trust Francisco, et al.would not effectively establish their
is on the party asserting its existence, and such proof claims of ownership. It has been held that oral
must be clear and satisfactorily show the existence of testimony as to a certain fact, depending as it does
the trust and its elements.45 While implied trusts may exclusively on human memory, is not as reliable as
be proven by oral evidence, the evidence must be written or documentary evidence, especially since the
trustworthy and received by the courts with extreme purported agreement transpired decades ago, or in
caution, and should not be made to rest on loose, the 1920s. Hence, with respect to the Motherland,
equivocal or indefinite declarations. Trustworthy the CA did not err in holding that Ciriaco and his heirs
evidence is required because oral evidence can are the owners thereof, without prejudice to the rights
easily be fabricated.46 of any subsequent purchasers for value of the said
In this case, it cannot be said, merely on the property.
basis of the oral evidence offered by Francisco, et al.,
that the Motherland had been either mistakenly or
fraudulently registered in favor of Ciriaco. 136. Salao v. Salao
Accordingly, it cannot be said either that he was Facts:
merely a trustee of an implied trust holding the The spouses Manuel Salao and Valentina Ignacio of Barrio
Motherland for the benefit of the Imbornal sisters or Dampalit, Malabon, Rizal begot four children named
their heirs. Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel
As the CA had aptly pointed out, a homestead Salao died in 1885. His eldest son, Patricio, died in 1886
survived by his only child. Valentin Salao.
patent award requires proof that the applicant meets
the stringent conditions set forth under After Valentina’s death, her estate was administered by
Commonwealth Act No. 141, as amended, which her daughter Ambrosia.
includes actual possession, cultivation, and
The documentary evidence proves that in 1911 or prior to
improvement of the homestead. It must be the death of Valentina Ignacio her two children, Juan Y.
presumed, therefore, that Ciriaco underwent the Salao, Sr. and Ambrosia Salao, secured a Torrens title,
rigid process and duly satisfied the strict OCT No. 185 of the Registry of Deeds of Pampanga, in
their names
conditions necessary for the grant of his
The property in question is the forty-seven-hectare Trusts; Nature of: "In its technical legal sense, a trust is
fishpond located at Sitio Calunuran, Lubao, Pampanga, defined as the right, enforceable solely in equity, to the
wherein Benita Salao-Marcelo daughter of Valentin Salao beneficial enjoyment of property, the legal title to which is
claimed 1/3 interest on the said fishpond.
vested in another, but the word 'trust' is frequently
The defendant Juan Y. Salao Jr. inherited from his father employed to indicate duties, relations, and responsibilities
Juan Y. Salao, Sr. ½ of the fishpond and the other half which are not strictly technical trust”
from the donation of his auntie Ambrosia Salao. Trust; Juridical Concept: A person who establishes a
trust is called the trustor; one in whom confidence is
It was alleged in the said case that Juan Y. Salao, Sr and reposed as regards property for the benefit of another
Ambrosia Salao had engaged in the fishpond business. person is known as the trustee; and the person for whose
Where they obtained the capital and that Valentin Salao
benefit the trust has been created is referred to as the
and Alejandra Salao were included in that joint venture,
that the funds used were the earnings of the properties beneficiary" (Art. 1440, Civil Code). There is a fiduciary
supposedly inherited from Manuel Salao, and that those relation between the trustee and the cestui que trust as
earnings were used in the acquisition of the Calunuran regards certain property, real, personal, money or choses
fishpond. There is no documentary evidence to support in action.
that theory. Trust; Express Trusts: Express trusts are created by the
intention of the trustor or of the parties. "No particular
The lawyer of Benita Salao and the Children of Victorina
Salao in a letter dated January 26, 1951 informed Juan S. words are required for the creation of an express trust, it
Salao, Jr. that his clients had a one-third share in the two being sufficient that a trust is clearly intended. Express
fishponds and that when Juani took possession thereof in trusts are those which are created by the direct and
1945, in which he refused to give Benita and Victorina’s positive acts of the parties, by some writing or deed, or
children their one-third share of the net fruits which will, or by words either expressly or impliedly evincing an
allegedly amounted to P200,000. However, there was no intention to create a trust.
mention on the deeds as to the share of Valentin and
Trust; Implied Trust: Implied trusts come into being by
Alejandra.
operation of law. Implied trusts are those which, without
Juan S. Salao, Jr. in his answer dated February 6, 1951 being expressed, are deducible from the nature of the
categorically stated that Valentin Salao did not have any transaction as matters of intent, or which are superinduced
interest in the two fishponds and that the sole owners on the transaction by operation of law as matter of equity,
thereof his father Banli and his aunt Ambrosia, as shown in independently of the particular intention of the parties.
the Torrens titles issued in 1911 and 1917, and that he
Trust; Implied Trust; Resulting Trust: A resulting trust.
Juani was the donee of Ambrosia’s one-half share.
is broadly defined as a trust which is raised or created by
Benita Salao and her nephews and niece asked for the the act or construction of law, but in its more restricted
annulment of the donation to Juan S. Salao, Jr. and for the sense it is a trust raised by implication of law and
reconveyance to them of the Calunuran fishpond as presumed to have been contemplated by the parties, the
Valentin Salao’s supposed one-third share in the 145 intention as to which is to be found in the nature of their
hectares of fishpond registered in the names of Juan Y. transaction, but not expressed in the deed or instrument of
Salao, Sr. and Ambrosia Salao.
conveyance.
RTC: dismissed complaint and counter-claim Trust; Trust may be proven by clear satisfactory and
convincing evidence: A constructive trust is -a trust
CA: elevated the case to SC for amount has exceeded "raised by construction of law, or arising by operation of
P200,000. 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
ISSUE: Is plaintiffs' massive oral evidence sufficient to
impliedly evincing a direct intension to create a trust, but
prove an implied trust, resulting or constructive, regarding
by the construction of equity in order to satisfy the
the two fishponds?
demands of justice." It does not arise "by agreement or
intention, but by operation of law." Thus, "if property is
HELD: There was no resulting trust in this case acquired through mistake or fraud, the person obtaining it
because there never was any intention on the part of is, by force of law, considered a trustee of an implied trust
Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao for the benefit of the person from whom the property
to create any trust. There was no constructive trust comes"
because the registration of the two fishponds in the Trust; Trust may be proven by clear satisfactory and
names of Juan and Ambrosia was not vitiated by fraud convincing evidence; Express and Implied Trust; Whn
or mistake. This is not a case where to satisfy the Parol Evidence Available; reasons: "No express trusts
demands of justice it is necessary to consider the concerning an immovable or any interest therein may be
Calunuran fishpond "being held in trust by the heirs of proven by parol evidence. An implied trust may be proven
Juan Y. Salao, Sr. for the heirs of Valentin Salao. And by oral evidence" (Ibid, Arts. 1443 and 1457).
even assuming that there was an implied trust,
plaintiffs' action is clearly barred by prescription or
laches 137. Municipality of Victorias v. CA
Parties (of Implied Trust):
In lieu of a Deed of Sale, petitioner Municipality of Victoria
Trustor: Simeona Jinco Vda. De Ditching presented a certificate issued by the Archives Division of the
Trustee: Norma Leuenberger Bureau of Records Management in Manila containing entries in
Beneficiary / cestui que trust: Municipality of Victoria the notarial register that clearly show: (a) the nature of the
instrument. — a deed of sale; (b) the subject of the sale — two
FACTS parcels of land, Lot Nos. 140-A and 140-B; (c) the parties of the
contract — the vendor Simeona J. Vda. de Ditching in her
1. Norma Leuenberger (Norma) inherited the whole of capacity as Administrator and the vendee, Vicente B. Ananosa,
Lot No. 140 from her grandmother, Simeona J. Vda. de Municipal Mayor of Victorias; (d) the consideration P750.00; (e)
Ditching. the names of the witnesses Esteban Jalandoni and Gregoria
2. In 1952, she donated a portion of Lot No. 140, about 3 Elizado; and the date of the sale on July 9, 1934.
ha., to the municipality for the ground of a certain high
school and had 4 ha. converted into a subdivision. At the back, the sale of a portion of the lot to the Municipality
3. In 1963, she had the remaining 21 ha. relocated by a of Victorias was clearly explained as follows: “Note: The whole
surveyor upon request of lessee Ramon Jover who Lot No. 140, belongs to Norma Leuenberger as evidenced by a
complained of being prohibited by municipal officials Transfer of Cert. of Title No. 18672. Portion of this Lot, (30,000
from cultivating the land. It was then that she sq.m. was sold to Municipality of Victories for Cemetery Site as
discovered that the parcel of land, more or less 4 ha. is evidenced by a Deed of Sale executed by Simeona Jingco Vda.
used by Municipality of Victorias, as a cemetery, since de Ditching in favor of the aforesaid Municipality and ratified by
1934, is within her property, identified as Lot 76. Notary Public Mr. Vicente Aragon.”
4. On May 20, 1963, Norma wrote the Mayor of Victorias
regarding her discovery, demanding payment of past At the lowest portion under Memoranda, it was explained that
rentals and requesting delivery of the area allegedly an area under the declaration is donated by Mrs. Simeona Jinco
illegally occupied by the Municipality. When the Mayor Vda de Ditching and used as road leading to the cemetery.
replied that the land was bought, she asked to be
shown the papers concerning the sale but was referred The evidence establishes without debate that the property was
by the Mayor to the municipal treasurer who refused originally registered in 1916. Plaintiff was born only in 1928 and
to show the same. cannot possibly be the registered owner of the original lot 140
5. Norma then, who after her death was substitued by at the time. Indeed, according to her own evidence, she became
husband Francisco Soliva, filed a complaint in the Court the registered owner only in 1963. Likewise, it is undisputed
of First Instance of Negros Occidental for recovery of that in the intestate estate of Gonzalo Ditching, the grandfather
possession of the parcel of land occupied by the of private respondent Norma Leunberger, it was her
municipal cemetery. grandmother, Simeona, the surviving spouse of Gonzalo who
6. In answer, Victoria Municipality, by way of special was named judicial administratrix. According to Norma's own
defense, alleged ownership of the lot having bought it testimony, Isabel her mother, died in 1928 while Simeona the
from Simeona Jingco Vda. de Ditching sometime in grandmother died in 1942. Therefore, as of 1934 when a
1934. document of sale was executed by Simeona in favor of the
7. CFI of Negros Occidental dismissed complaint for municipality of Victories as indubitably shown in the notarial
recovery of possession and declared the cemetery site register in question, Simeona was still the administratrix of the
on Lot No. 76 as property of the municipality of properties left by her husband, Gonzalo and of their conjugal
Victorias. partnership. Consequently, she is the only person who could
8. CA set aside CFI decision, ordered municipality officials legally dispose of by sale this particular four- hectare portion of
to return/deliver possession of the portion of Lot 76 Lot 140. And so it is, that in 1934, Simeona Ditching in her
used as cemetery or burial site, and pay damages. capacity as judicial administratrix made and executed the
9. Hence this petition for certiorari document described in the Report as Lots 140-A and 140-B,
10. SC set aside CA decision, reinstated decision of CFI. showing clearly that they are portions of the original big Lot
140. As this conveyance was executed by the judicial
ISSUE administratrix, unquestionably the party authorized to dispose
of the same, the presumption must be that she did so upon
WON the possession of Norma Leuenberger of Lot 76 is that of proper authority of the Court of First Instance. Unfortunately,
a trustee to an implied trust by her grandmother Simeona for the Municipality failed to register the Deed of Sale such that
the benefit of the municipality of Victoria. when Simeona died, Norma inherited and successfully
registered the the property under the Torrens System.
HELD
It is well-settled that under the Torrens System "Every person
Yes, the possession of Lot 76 by Norma is that of a trustee. receiving a certificate of title in pursuance of a decree of
registration, . . . shall hold the same free of all encumbrance complaint for unlawful detainer is a mere offshoot of two
except those noted on said certificate … complaints earlier filed before the Securities and
Exchange Commission (SEC) in Cagayan de Oro City by
Sheikding and his son James, the first of which is against
While an inherently defective Torrens title may not ordinarily
the board of directors of Five Star, questioning, among
be cancelled even after proof of its defect, the law
others, the validity of the election of the members of the
nevertheless safeguards the rightful party's interest in the said board; and second, a criminal complaint for
titled land from fraud and improper use of technicalities by falsification of public documents against Salvador Booc,
showing such party, in appropriate cases, to judicially seek in his capacity as the President of Five Star. The spouses
reconveyance to him of whatever he has been deprived of as Booc filed a counterclaim for damages.
long as the land has not been transferred or conveyed to a MTCC: In favor of the defendants [herein petitioners]
purchaser in good faith. and against the plaintiff [herein respondent], dismissing
the above-entitled case and ordering the plaintiff to pay
the defendants the following sum of money:
The Civil Code provides:
Decision dated April 6, 2001, the RTC of Lanao del
Art. 1456. If the property is acquired through mistake
Norte, Branch 5 affirmed with modification the assailed
or fraud, the person obtaining it is, by force of law, Decision of the MTCC. The dispositive portion of the RTC
considered a trustee of an implied trust for the benefit of the Decision reads:
person from whom the property comes. RTC: Affirmed
CA: ANNULLED and SET ASIDE
Thus, it has been held that where the land is decreed in the ISSUE: Whether there was an implied trust between the
name of a person through fraud or mistake, such person is by parties
operation of law considered a trustee of an implied trust for the
benefit of the persons from whom the property comes. The HELD: No. In claiming that the subject lot and building
were bought and constructed with the money of
beneficiary shall have the right to enforce the trust,
petitioner Sheikding and Rufino, petitioners, in effect,
notwithstanding the irrevocability of the Torrens title and the
aver that respondent is merely holding the property in
trustee and his successors-in-interest are bound to execute the trust for them.
deed of reconveyance. As a rule, the burden of proving the existence of a trust
is on the party asserting its existence and such proof
As the land in dispute is held by private respondents in trust must be clear and satisfactorily show the existence of
for the Municipality of Victorias, it is logical to conclude that the trust and its elements.
the latter can neither be deprived of its possession nor be To prove that they are co-owners of the disputed lot,
petitioners presented the Joint Affidavit of Teodora and
made to pay rentals thereof. Private respondent is in equity
Preciosa, wherein they assert that petitioner Sheikding
bound to reconvey the subject land to the cestui que trust the
and Rufino paid for the subject lot. However, aside from
Municipality of Victorias. The Torrens system was never
the Joint Affidavit, no other competent evidence was
calculated to foment betrayal in the performance of a trust. presented to support petitioners' allegation of ownership
of the lot in question.
Neither do the Official Receiptsevidencing petitioner
138. Booc v. Five Start Marketing Co., Inc. Bily's payment of electric bills prove that petitioners are
co-owners of the subject building. At best, these official
FACTS: On August 17, 1999, Five Star Marketing Co., receipts only show that petitioners are in possession of
Inc. (respondent) filed with the Municipal Trial Court in the subject property, which in this case, is undisputed.
Cities (MTCC) of Iligan City a Complaint for unlawful Further, petitioners failed to present any tax declaration
detainer against the spouses Sheikding and Bily Booc or payment of taxes due on the subject premises.
(petitioners), pertinent portions of which read as follows: On the other hand, documents, some of which were
· Respondent is the owner of the land and presented in evidence by petitioners themselves, prove
building situated in Quezon Avenue, Iligan City; respondent's ownership of the disputed properties, to
· Petitioners are the present occupants of the wit: Deed of Sale dated December 12, 1979[29],
3rd floor premises of the building, who were allowed Transfer Certificate and Tax Declaration over the subject
to live temporarily in the premises for free; lot, Tax Declaration over the subject building, and
· That on March 15, 1999 the respondent Official Receipt for the payment of real property tax, all
notified all building occupants that it had withdrawn of which are in respondent's name.
the privilege granted (rental free) to them coupled On the basis of the foregoing, the Court found no error in
with a notice of rental rates in each premises the ruling of the CA that the preponderance of evidence
concerned, and further required to any interested lies in favor of respondent's claim of ownership.
occupants to negotiate and sign a lease agreement
with the respondent;
Petitioners contended that Five Star has no cause of
139. Cañezo v. Rojas
action against them as they are actually the owners of
the portion of the building that they are occupying; that
the said property is owned in common by petitioner
140. PNB v.CA
Sheikding and his brother, Rufino Booc; that the
FACTS: be forced upon the parties to avoid a case of
Private respondent Mata is a private corporation unjust enrichment.
engaged in providing goods and services to shipping
companies including Star Kist Foods, Inc. USA. For In this case, the Supreme Court held that
the latter, Mata makes advances for the crew's constructive "trust" is as much a misnomer as
medical expenses and other fees. Subsequently, a "quasi-contract," so far removed are they
Mata sends monthly billing to Star Kist, which in turn from trusts and contracts proper, respectively.
reimburses Mata by sending a telegraphic transfer In the case of a constructive trust, as in the
through banks for credit to latter's account. case of quasi-contract, a relationship is
"forced" by operation of law upon the parties,
On February 21, 1975 Security National Bank not because of any intention on their part but
(SEPAC) transmitted a cable message to PNB to pay in order to prevent unjust enrichment, thus
US$ 14,000 to Mata per order of Star Kist. PNB giving rise to certain obligations not within the
noticed an error and was later notified by SEPAC that contemplation of the parties. Applying this
the amount should be US$ 1,400. The same was ,petitioner may indeed opt to avail of an action
sent. However, PNB subsequently effected another to enforce a constructive trust or the quasi-
payment another payment in the amount of US$ contract of solutio indebiti. However, he has
14,000. been deprived of a choice, for prescription
has effectively blocked quasi-contract as an
Six years later, PNB requested Mata for the refund of alternative, leaving only constructive trust as
US$ 14,000 after discovering its error. On Feb. 4, the feasible option.
1982, PNB filed a civil case for collection and refund
of said account arguing that based on constructive 2. While prescription is concerned with the fact of
trust under Article 1456 of the Civil Code, it has the delay, laches deals with the effect of unreasonable
right to recover the same. delay.

RTC dismissed the complaint, ruling that the case

falls under Article 2154 on solutio indebiti. CA Although only seven (7) years lapsed after petitioner
affirmed holding out that under solutio indebiti, it is erroneously credited private respondent with the said
the one making the payment that commits the error. amount and that under Article 1144, petitioner is well
Furthermore, such action has already prescribed as within the prescriptive period for the enforcement of a
the same must be commenced within 6 years. constructive or implied trust, the Supreme Court ruled
that petitioner's claim cannot prosper since it is
Hence the petition. already barred by laches. It is a well-settled rule now
that an action to enforce an implied trust, whether
ISSUES: resulting or constructive, may be barred not only by
1. Whether or not the instant case falls under prescription but also by laches. It is unbelievable for
constructive trust. a bank, and a government bank at that, which
2. Whether or not petitioner can claim refund regularly publishes its balanced financial statements
under constructive trust. annually or more frequently, by the quarter, to notice
its error only seven years later.
HELD:
1. Yes, the instant case may also fall under 141. Aznar Brothers Realty Co. v. Aying
Facts:
constructive trust.
- The disputed property is Lot No. 4399 locatd in
2. No, petitioner cannot claim refund under Dapdap, Lapu-Lapu City, owned by Crisanta Maloloy-on.
constructive trust. After her death in 1930, the Cadastral Court issued a
decree in the name of her 8 children all surnamed Aying.
RATIO The certificate of title was, however, lost during the war.
1. The Civil Code does not confine itself - Subsequently, all the heirs of the Aying siblings, except
Roberta, Emiliano, and Simeon, executed an Extra-
exclusively to the quasi-contracts enumerated
Judicial Partition of Real Estate with Deed of Absolute
from Articles 2144 to 2175 but is open to the
Sale dated 3/3/1964, conveying the subject parcel of
possibility that, absent a pre-existing land to petitioner Aznar Brothers Realty Company which
relationship, there being neither crime nor was registered with the Register of Deeds of Lapu-Lapu
quasi-delict, a quasi-contractual relation may City on 3/6/1964, and since then, petitioner had been
religiously paying real property taxes on said property.
- 1991, petitioner, claiming to be the rightful owner of above, what was conveyed to petitioner was ownership
the subject property, sent out notices to vacate, over the shares of the heirs who executed the subject
addressed to persons occupying the property. Unheeded, document.
petitioner filed a complaint for ejectment against the -Thus, the law, particularly, Article 1456 of the Civil
occupants before the MTC of Lapu-Lapu. Code, imposed the obligation upon petitioner to act as a
- MTC promulgated a decision in favor of Aznar Brothers trustee for the benefit of respondent heirs of Emiliano
in 2000 and Simeon Aying who, having brought their action
-Meanwhile, respondents, along with other persons within the prescriptive period, are now entitled to the
claiming to be descendants of the 8 Aying siblings, all in reconveyance of their share in the land in dispute.
all numbering around 220 persons, had filed a complaint -Evidence as to the date when the ten-year prescriptive
for cancellation of the Extra-Judicial Partition with period began exists only as to the heirs of Roberta
Absolute Sale, recovery of ownership, injunction, and Aying, as Wenceslao Sumalinog admitted that they
damages with RTC Lapu-Lapu City. learned of the existence of the document of sale in the
-RTC ruled that the Ayings failed to prove that the extra- year 1967.
judicial partition with deed of absolute sale was totally
simulated or fictitious. It further held that respondents
action had prescribed in that the action is considered as 142. Miguel J. Ossorio Pension Foundation, Inc. v. CA
one for reconveyance based on implied or constructive
trust, it prescribed in 10 years from the registration of See #124
the deed on March 6, 1964; and if the action is
considered as one for annulment of contract on the 143. Rosario v. CA
grond of fraud, it should have been filed within 4 years
from discovery of the fraud. CoA: Sps. Jose C. Rosario and Herminia L. Rosario filed
- CA affirmed but modified the decision finding that the an action for legal redemption against the heirs of
heirs of Emiliano Aying, Simeon Aying and Roberta Aying Paulina and Emilio.
are lawful owners of the contested proper but equivalent RTC: Rosario vs. Villahermosa; asked them to accept the
only to 3/8 since these siblings took no part in the extra- P380.00 as the purchase price of the lot and declaring
judicial partition. Herminia Rosario as the real and absolute owner.
Issue: CA: Villahermosa vs. Rosario; reversed the decision of
W/N respondents’ cause of action is imprescriptible. the RTC
Held: SC: Rosario vs. Court of Appeals & the Villahermosas
-The facts on record show that petitioner acquired the Facts:
entire parcel of land with the mistaken belief that all the Family Tree :p
heirs have executed the subject document. Thus, the A. Maxima Lariosa - predeceased Filomena (grandmother
trial court is correct that the provision of law applicable of the defendants, mother of Herminia)
to this case is Article 1456 of the Civil Code which (1) Filomena Lariosa
states: ART. 1456. If property is acquired through (2) Paulina Lariosa - predeceased Filomena m. Emilio
mistake or fraud, the person obtaining it is, by force of Villahermosa
law, considered a trustee of an implied trust for the Heirs (defendants in this case):
benefit of the person from whom the property comes. (a) Lourdes
The rule that a trustee cannot acquire by prescription (b) Aida
ownership over property entrusted to him until and (c) Rodulfo
unless he repudiates the trust, applies to express trusts (d) Natividad
and resulting implied trusts. However, in constructive (e) Jesus
implied trusts, prescription may supervene even if the (3) Herminia Lariosa m. Jose Rosario (the plaintiffs in
trustee does not repudiate the relationship. Necessarily, this case)
repudiation of said trust is not a condition precedent to No formal deed of sale was executed although a
the running of the prescriptive period. An action for consideration was received by the Villahermosas.
reconveyance based on an implied or constructive trust Subsequently, Filomena applied for a loan at GSIS for
must perforce prescribe in ten years and not otherwise. the demolition of the old house and building of a new
-A long line of decisions of this Court, and of very recent one. Since the GSIS required that the land has to be
vintage at that, illustrates this rule. Undoubtedly, it is mortgaged as a guarantee of the loan, Filomena asked
now well-settled that an action for reconveyance based the heirs of her sister Paulina to formalize the sale, but
on an implied or constructive trust prescribes in ten still acknowledging the previous agreement that it will
years from the issuance of the Torrens title over the just be held in trust by Filomena to be returned to the
property. Villahermosas. It was Emilio and his children who
-With regard to petitioner’s argument that the provision executed the deed of sale over one-half of the lot.
of Article 1104 of the Civil Code, stating that a partition Because of the further requirements imposed by the
made with preterition of any of the compulsory heirs GSIS, the other undivided portion of the land, which is
shall not be rescinded, should be applied, suffice it to say owned by Rodulfo Villahermosa, was transferred to
that the Extra-Judicial Partition of Real Estate with Deed Herminia by executing a Simulated Deed of Sale. That
of Absolute Sale is not being rescinded. In fact, its 1/2 undivided share of the land to Herminia was merely
validity had been upheld but only as to the parties who held in trust, for the benefit of Filomena, to be returned
participated in the execution of the same. As discussed to Villahermosa before Filomena's death. When Filomena
died, Herminia paid the remaining balance of the loan created by the construction of equity in order to satisfy
fearing that the land they co-owned will be foreclosed by the demands of justice and prevent unjust enrichment.
the GSIS for non-payment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or hold the
Issues: (1) Whether or not there is an implied trust that legal right to property which he ought not, in equity and
existed between Emilio Villahermosa and Filomena good conscience, to hold.
Lariosa over the subject property?
(2) Whether or not an implied trust also existed
between Filomena Lariosa and petitioner Herminia 144. Paringit v. Bajit
Rosario for the benefit of the Villahermosas? FACTS:
This case is about the existence of an implied trust in a
Held: Yes for both. transaction where a property was bought by one sibling
(1) A trust was, indeed created between Filomena, supposedly for the benefit of all. The other siblings now
Emilio Villahermosa and his children when lot 77- want to recover their share in the property by reimbursing
A was transferred in the name of Filomena. their brother for their share in the purchase price.
Where a lot was taken by a person under an During their lifetime, spouses Julian and Aurelia Paringit
agreement to hold it for, or convey it to another leased a lot on Norma Street, Sampaloc, Manila (the lot)
or to the grantor, a resulting or implied trust
from Terocel Realty, Inc. (Terocel Realty). For having
arises in favor of the person for whose benefit
occupied the lot for years, Terocel Realty offered to sell it
the property was intended. Legal basis is under
to Julian but he did not have enough money at that time to
Art. 1453.
meet the payment deadline. Julian sought the help of his
ART. 1453. When property is conveyed to a person in
reliance upon his declared intention to hold it for, or
children so he can buy the property but only his son Felipe
transfer it to another or the grantor, there is an implied and wife Josefa had the financial resources he needed at
trust in favor of the person whose benefit is that time. To bring about the purchase, on January 16,
contemplated. 1984 Julian executed a deed of assignment of leasehold
right in favor of Felipe and his wife that would enable them
(2) The trust created in favor of Emilio and his heirs to acquire the lot. On January 30, 1984 the latter bought
(private respondents) is effective or binding even upon the same from Terocel Realty for P55,500.00 to be paid in
petitioner Herminia Rosario who is the registered co- installments. On April 12, 1984 Felipe and his wife paid the
owner of the subject Lot since the transfer was only for last installment and the realty company executed a Deed
the purpose of facilitating and expediting the approval of of Absolute Sale in their favor and turned over the title to
Filomena's loan. But that was subject to a condition to them. On February 25, 1985, due to issues among Julians
return it to the Villahermosas which was also the children regarding the ownership of the lot, Julian
condition set in the sale between Emilio and Filomena. executed an affidavit clarifying the nature of Felipe and his
wifes purchase of the lot. He claimed that it was bought for
the benefit of all his children.
Trust is the legal relationship between one
Expressing their concurrence with what their father said in
person having an equitable ownership in property and
another person owning the legal title to such property, his affidavit, Felipes siblings, namely, Marciana, Rosario,
the equitable ownership of the former entitling him to and Adolio (collectively, Marciana, et al) signed the
the performance of certain duties and the exercise of same.Josefa, Felipes wife, also signed the affidavit for
certain powers by the latter. Trust relations between Felipe who was in Saudi Arabia. Only Florencio, among
parties may either be express or implied. 8 Express the siblings, did not sign. On January 23, 1987 Felipe and
trusts are those which are created by the direct and his wife registered their purchase of the lot, resulting in the
positive acts of the parties, by some writing or deed, or issuance of Transfer Certificate of Title 172313 in their
will, or by words evidencing an intention to create a names. Despite the title, however, the spouses moved to
trust. Implied trusts are those which without being another house on the same street in 1988. Marciana, et
express, are deducible from the nature of the transaction al, on the other hand, continued to occupy the lot with their
as matters of intent, or which are superinduced on the families without paying rent.
transaction by operation of law as a matter of equity, On December 18, 1995 Felipe and his wife sent a demand
independently of the particular intention of the parties. letter to Marciana, et al asking them to pay rental
Implied trusts may either be resulting or constructive arrearages for occupying the property. Marciana, et al
trusts, both coming into being by operation of law.
refused to pay or reply to the letter, believing that they had
the right to occupy the house and lot, it being their
Resulting trusts are based on the equitable
inheritance from their parents. On March 11, 1996 Felipe
doctrine that valuable consideration and not legal title
and his wife filed an ejectment suit against them.
determines the equitable title or interest and are
Marciana, et al filed the present action against Felipe and
presumed always to have been contemplated by the
parties. They arise from the nature or circumstances of
his wife for annulment of title and reconveyance of
the consideration involved in a transaction whereby one property before the Regional Trial Court (RTC) of Manila,
person thereby becomes invested with legal title but is Branch 39. In his answer, Felipe denied knowledge of the
obligated in equity to hold his legal title for the benefit of agreement among the siblings that the property would
another. On the other hand, constructive trusts are devolve to them all.
RTC: rendered a decision, finding the evidence of some P25,000 in rents for which he failed and refused to
Marciana, et al insufficient to prove by preponderance of account, and upon proceedings being instituted to
evidence that Felipe and his wife bought the subject lot for compel him to do so, he set up title in himself to the club
all of the siblings. property as well as to the rents accruing therefrom.
CA: rendered judgment reversing the decision of the RTC - Cho Jan Ling alleged that he had bought the real estate
and ordering Felipe and his wife to reconvey to Marciana, and constructed the building with his own funds, and
et al their proportionate share in the lot upon denying the claims of the members of the association
that it was their funds which had been used for that
reimbursement of what the spouses paid to acquire it plus
purpose.
legal interest.
ISSUE: WON Felipe and his wife purchased the subject lot
RTC: Ruled in favor of the members of the association,
under an implied trust for the benefit of all the children of
ordering Cho Jan Ling to convey the club house and the
Julian.
land on which it stands to the members of the
RULING: YES. association and to account for the rents he received.

The CA found that Felipe and his wife's purchase of the lot
ISSUE:
falls under the rubric of the implied trust provided in Article W/N proof of the trust was sufficient to throw down the rights
1450 of the Civil Code. Implied trust under Article 1450 which the plaintiff had by reason of the duly registered title deeds
presupposes a situation where a person, using his own
funds, buys property on behalf of another, who in the RULING: Yes. RTC Affirmed.
meantime may not have the funds to purchase it. Title to RATIO:
the property is for the time being placed in the name of the This court held that the parole proof of the trust was sufficient to
trustee, the person who pays for it, until he is reimbursed throw down the rights which the plaintiff had by reason of the duly
registered title deeds, and decreed that a conveyance be made
by the beneficiary, the person for whom the trustee bought
by the defendant to the members of the association. The proper
the land. It is only after the beneficiary reimburses the
procedure in such a case, so long as the rights of innocent third
trustee of the purchase price that the former can compel persons have not intervened, is to compel a conveyance to the
conveyance of the property from the latter. rightful owner.
Although no express agreement covered Felipe and his It is at most an attempt to substitute for the plain dictates of
wifes purchase of the lot for the siblings and their father, it reason and equity certain technical propositions of law laid down
came about by operation of law and is protected by it. The in those cases which have no proper application to the facts
nature of the transaction established the implied trust and proven in this case. In Martinez vs. Martinez (1 Phil. 647), the
this in turn gave rise to the rights and obligations provided case turned on the lack of proof of the existence of the
relationship of principal and agent or of trustee and cestui que
by law. Implied trust is a rule of equity, independent of the
trust between the parties, in addition to proof that the funds with
particular intention of the parties. In an implied trust, the
which the property was purchased had been furnished by
beneficiarys cause of action arises when the trustee another than him who secured its registry in his own name. In
repudiates the trust, not when the trust was created as that case at bar we think that the evidence clearly discloses not
Felipe and his wife would have it. The spouses of course only that the funds with which the property in question was
registered the lot in their names in January 1987 but they purchased were furnished by the members of the association, but
could not be said to have repudiated the implied trust by that Cho Jan Ling, in whose name it was registered, received
that registration. Their purchase of the land and and holds the property as the agent and trustee of the
registration of its title in their names are not incompatible association; that on at least one occasion he admitted the
with implied trust. It was understood that they did this for beneficial ownership to be in the association; and that while the
legal registered title is in his name the beneficial ownership is in
the benefit of Julian and all the children.
the association.
It is admitted that the members of the association voluntarily
obtained the inscription in the name of Cho Jan Ling and that
they have no right to have that inscription cancelled; they do not
145. Uy Aloc v. Cho Jan Jing seek such cancellation, and on the contrary they allege and
FACTS: prove that the duly registered legal title to the property is in Cho
- A number of Chinese merchants raised a fund by Jan Ling, but they maintain, and we think that they rightly
voluntary subscription with which they purchased a maintain, that he holds it under an obligation, both express and
valuable tract of land and erected a large building to be implied, to deal with it exclusively for the benefit of the members
used as a sort of club house for the mutual benefit of the of the association and subject to their will.
subscribers to the fund. The subscriber organized
themselves into an irregular association, which had no
regular articles in the commercial registry or elsewhere.
The association not having any existence as a legal 146. Ty v. Ty
entity, it was agreed to have the title to the property
placed in the name of one of the members, the FACTS: Alexander Ty, son of Alejandro Ty and husband of Sylvia
defendant, Cho Jan Ling, who on his part accepted the Ty, dies of cancer at the age of 34. Sylvia files petition for the
trust, and agreed to hold the property as the agent of settlement of Alexander’s intestate estate. She also asks court
the members of the association. to sell or mortgage properties in order to pay the estate tax
- After the club building was completed with the funds of amounting to P4,714,560.02 assessed by the BIR. The
the members of the association, Cho Jan Ling collected
properties include a parcel of land in EDSA Greenhills (exclusive CA, Hermino Mariano, presiding judge, Florencio
property of Alexander), a residential land in Wack Wack, and Nadera
the Meridien condo unit in Annapolis, Greenhills (the latter two
both conjugal properties of Alexander and Sylvia). Trustee: Padillas
Trustor: Nadera
Alejandro Ty opposed the move and filed for recovery of the
property with prayer for preliminary injunction and/or Facts;
temporary restraining order. Plaintiff Alejandro claims that he
owns the EDSA, Wack Wack and Meridien condo unit because Vicente Padilla mortgaged his property to GSIS to
he paid for them. The property was supposedly registered in secure a loan of 25k, and was foreclosed and sold at
trust for Alexander’s brothers and sisters in case plaintiff dies.
public auction for failure to pay.
Plaintiff also claimed that Alex had no financial capacity to
With misrepresentation that they still have the right of
purchase the disputed property, as the latter was only
redemption, Padilla executed an Agreement to buy
dependent on the former.
and sell to Nadera the said property for 35k which
10k was paid by Nadera on the same day and the
Sylvia countered that Alexander had purchased the property
balance is to be paid by to GSIS for the outstanding
with his money. Alexander was financially capable of purchasing
balance of the loan.
it because he had been managing the family corporations since
GSIS contemplated to sell foreclosed property thru
he was 18 years old and was also engage in other profitable
businesses.
sealed public bidding at which Vicente Padilla may
Participate.
RTC - Granted the application for preliminary injunction and Vicente Padilla being a pensioner of the GSIS, the
decides in favor of plaintiff regarding the recovery of the latter had applied the former’s pension to the credit of
property. Padilla on account of the loan afore-mentioned.
GSIS, instead of executing a deed of sale in favor of
CA – Reversed. There was no writing from which the existence Nadera, it made in favor of Padilla.
of an express trust could be proven with. Padilla executed the deed of Confirmation of Sale
which the herein petitioners question. It partly
ISSUE: Whether or not there is an implied trust. contained as:
….WHEREAS, the VENDORS had entered
RULING: No. CA affirmed. into an Agreement of Purchase and Sale on
October 8, 1961, with the herein VENDEE which was
RATIO: There was no implied trust created in relation to the acknowledged before a Manila
Notary Public Felipe G. Lubaton on December 15, 1961,
EDSA property. If the person to whom the title is conveyed is
registered in his Notarial Registry
the child of the one paying the price of the sale, no trust is
as Doc. No. 138; Page No. 100; Book No. I; Series of 1961
implied by law under Art. 1448, the so-called purchase money …"WHEREAS, the herein VENDEE has fully paid the
resulting trust. The said article provides an exception: “if the account of the VENDOR to the G.S.I.S., the
person to whom the title is conveyed is a child, legitimate or Government Service System has re-conveyed the ownership
illegitimate, of the one paying the price of the sale, NO TRUST is over the said property unto the
IMPLIED by LAW, it being disputable presumed that there is a VENDORS by virtue of the Deed of Absolute Sale executed
gift in favor of the child.” The Court also noted that plaintiff on the 19th day of September, 1963, and
acknowledged on the same date by Modesto B. Atmosphera,
failed to prove that he did not intend a donation.
registered in his Notary Registry as Doc.
No. 74; Page No. 16; Book No. I; Series of 1963;
Regarding the Meridien Condo and Wack Wack property, the …"NOW, THEREFORE, for and in consideration of
court said that plaintiff failed to prove that purchase money the AGREEMENT OF PURCHASE AND SALE, which
came from him. They also said that Alexander was capable of we undersigned VENDORS still confirm and acknowledge, we
purchasing the property as he had been working for nine years, hereby CEDE, CONVEY, SELL and
had a car care business, and was actively engaged in the TRANSFER, in favor of the herein VENDEE, his heirs,
business dealings of several family corporations from which he administrator and assign, the above-mentioned
property fully described in the two (2) documents specified
received emoluments and other benefits. Hence, no implied
above
trust created because there was no proof that plaintiff had paid
By virtue of the registration of the of Deed absolute
for said properties.
sale, TCT 116474 was issued by the Registry of
Deeds in the name of Nadera.
147. Padilla v. CA Subsequently, Abundio Padilla, atty-in-fact of his
Ines Lorbes Padilla, Veronica Padilla, Abundio parents, filed with the registry of Deeds a Notice of
Padilla, Salvador Padilla, Elena Padilla, Honorio Adverse claim. He alleged that Nadera fraudulently
Padilla, Carmen Padilla, Fe Padilla, Piedad Padilla, v compelled Vicente to sign the confirmation of sale.
 In turn, Nadera filed a petition for removal of adverse
claim on his certificate of title. 148. Gabutan v. Nacalaban
Two cases was heard, Cancellation of Certificate of Gabutan v. Nacalaban
Title issued in favor of Nadera and writ of possession Facts:
and for cancellation of adverse claim. · Godofredo purchase a property and a Transfer
CFI of Rizal- ordered the petitioner to turn over the Certificate of Title was issued in his name. He then
possession of the property to Nadera. build a house on it
Nadera filed with the CFI a motion for correction of · Godofredo died, survived by his wife
typographical error in the decision and for the Baldomera, and their 3 children
immediate issuance of writ of execution. The court
· Baldomera issued a certification, allowing her
ordered execution on a bond of 10k to be filed by the
mother Melecia to build and occupy a house on the
respondent.
CA- affirmed portion of the property, in the tax declaration it is
ISSUE: showed that Melencia owned the building on the land
Whether or not the confirmation of sale valid. owned by Godofredo
Rule: · Baldomera died, her children executed an
-it was valid- Extrajudicial settlement and sold the property to the
SC held that Vicente Padilla did not even need to Cagayan capital college and a TCT was issued In the
have executed the Confirmation of Sale since there name of the College
was already an Agreement of Purchase and Sale
· Melecia died and was survived by her children
executed by him and his wife, Ines Lorbes Padilla. it
· The college demanded the heirs of Melecia
was clearly ESTABLISHED that the plaintiff Ines
Lorbes Padilla together with her husband Vicente
who were occupying the house on the property to
Padilla, executed an Agreement of Purchase and vacate the premises
Sale over the parcel of land in question in favor of · Gabutan et al. (the heirs of Melecia) filed for a
defendant Florencio R. Nadera, Nadera paying complaint for reconveyance of real property against
Padillia’s the amount of P10,000.00 and at the same Nacalaban et al. and the college.
time ASSUMING the obligation with the GSIS arising They alleged that: (1) Melecia bought the property
from a previous mortgage on the property in favor of using her own money but Godofredo had the Deed of
the GSIS. Said Agreement of Purchase and Sale was Absolute Sale executed in his name instead of his
done in writing and signed that the right of mother-in-law; (2) Godofredo and Baldomera were
respondent Nadera to the property arose not by
only trustees of the property in favor of the real owner
virtue of the said deed of confirmation but by virtue of
and beneficiary, Melecia; (3) they only knew about
the original agreement of sale executed in his favor
by the Padilla spouses and by their daughter. The the Extrajudicial Settlement with Sale upon
resale by the GSIS upon payment of the price of verification with the Registry of Deeds; and (4) the
redemption by Nadera was made in favor of the College was a buyer in bad faith, being aware they
Padilla spouses, it was purely a matter of form since were co-owners of the property.
they were the mortgage debtors, and the least that · the College claimed that it is a buyer in good
can be said under the circumstances is that they faith and for value, having "made exhaustive
should be considered as TRUSTEES under an investigations and verifications from all reliable
implied or resulting trust for the benefit of the real sources" that Melecia and her heirs were staying in
owner, namely, respondent Nadera. Article 1448 the property by mere tolerance. It alleged that: (1) in
"there is an implied trust when property is sold, and
the tax declaration of the residential house, Melecia
the legal estate is granted to one party but the price
admitted that the lot owner is Godofredo; (2) the
is paid by another for the purpose of having the
beneficial interest of the property ..." The concept of occupancy permit of Melecia was issued only after
implied trusts is that from the facts and Godofredo issued a certification to the effect that
circumstances of a given case the existence of a Melecia was allowed to occupy a portion of the
trust relationship is inferred in order to effect the property; and (3) the Extrajudicial Settlement with
presumed (in this case it is even expressed) intention Sale was published in three consecutive issues of
of the parties or to satisfy the demands of justice or Mindanao Post, a newspaper of general circulation
to protect against fraud. · Nacalaban et al. denied the allegations They
claimed to have acquired the property by intestate
succession from their parents, who in their lifetime,
exercised unequivocal and absolute ownership over on it. On one occasion in Melecia's house, and when
the property the entire family was present, Melecia gave
· The college then filed a complaint of unlawful Godofredo the money to purchase the property.
Melecia entrusted the money to Godofredo because
detainer against Gabutan et al.
he was in Cagayan de Oro, and per Melecia's
· MTCC ruled in favour of the college instruction, the deed of sale covering the property was
· Meanwhile, in the reconveyance case, the RTC placed in his name. It was allegedly her practice to
rendered a Decision in favor of Gabutan, et al buy properties and place them in her children's name,
· The RTC found that the money of Melecia was but it was understood that she and her children co-
used in buying the property but the name of own the properties.chanrobleslaw
Godofredo was used when the title was obtained
because Godofredo lived in Cagayan de Oro City
while Melecia lived in Bornay, Gitagum, Misamis Melecia built a residential building on the property,
Oriental where her daughter Crisanta and some of her
· the RTC held that a trust was established by grandchildren resided. Godofredo also thereafter built
operation of law pursuant to Article 1448 of the Civil a house on the property. Twice, he also mortgaged the
property to secure loans. Melecia allowed him to do
Code
so because she trusted him. After Godofredo's death,
RTC Declares that the Spouses Godofredo and and when Baldomera fell ill, there were family
Baldomera Nacalaban held the land covered by discussions to transfer the title in Melecia's name so
Transfer Certificate of Title No. T-2259 issued in the Melecia's children can divide it together with the rest
name of Godofredo Nacalaban married to Baldomera of Melecia's properties. The plans, however, always
Dalondonan issued on January 13, 1959 in trust for fell through.chanrobleslaw
Melecia Vda. de Dalondonan with the Spouses as the
trustees and Melecia Vda. de Dalondonan as the
cestui que trust Both the RTC and CA found credence on these pieces
· Declares that defendant Cagayan Capitol of testimonial evidence that an implied resulting trust
College was a buyer in good faith and for value of the exists. Reliance on these testimonies will not violate
land referred to above, and, accordingly, declares that the parol evidence rule, as Nacalaban, et al. once
raised. In Tong v. Go Tiat Kun, we ruled that since an
said defendant now owns the land
implied trust is neither dependent upon an express
· Both parties appealed, The CA affirms the agreement nor required to be evidenced by writing,
RTC in toto Article 1457 of our Civil Code authorizes the
Issue: WON there is an implied trust created between admission of parol evidence to prove their existence.
Melecia and Godofredo What is crucial is the intention to create a trust. We
Ruling: Yes cautioned, however, that the parol evidence that is
required to establish the existence of an implied trust
Article 1448 of the Civil Code provides in part that
necessarily has to be trustworthy and it cannot rest on
there is an implied trust when property is sold, and the loose, equivocal or indefinite declarations. The
legal estate is granted to one party but the price is testimonies of Felisia, Crisanta, and Trifonia satisfy
paid by another for the purpose of having the these requirements. They are consistent and agree in
beneficial interest of the property. The former is the all material points in reference to the circumstances
trustee, while the latter is the beneficiary. The trust behind the arrangement between Melecia and
created here, which is also referred to as a purchase Godofredo. We agree with the RTC when it said that
this arrangement among family members is not
money resulting trust, occurs when there is (1) an
unusual, especially in the 1950s.chanrobleslaw
actual payment of money, property or services, or an
equivalent, constituting valuable consideration; (2)
and such consideration must be furnished by the
alleged beneficiary of a resulting trust.90 These two Nacalaban, et al., on the other hand, denied the
arrangement between Melecia and Godofredo, and
elements are present here
maintained that it was really the latter who purchased
Gabutan, et al., through the testimonies of Felisia, the property from its original owners, as evidenced by
Crisanta, and Trifonia, established that Melecia's their possession of the Deed of Conditional Sale and
money was used in buying the property, but its title the title being in Godofredo's name. It is telling,
was placed in Godofredo's name. She purchased the however, that Nacalaban, et al. failed to provide the
property because Felisia wanted to build a pharmacy details of the sale, specifically with regard to how
Godofredo could have been able to afford the an action for reconveyance of the
purchase price himself, which would have directly property.chnroblesvirtuallawlibrary
refuted the allegation that Melecia's money was used
in the purchase. As the RTC aptly observed, if
Godofredo really bought the property with his own The fact that the property was already titled in
money, it was surprising that Baldomera did not Godofredo's name, and later transferred to the
transfer the title of the property to her name when College, is not a hindrance to an action for
Godofredo died in 1974. Baldomera did not do so reconveyance based on an implied trust. The title did
until her death in 1994 despite being pressed by her not operate to vest ownership upon the property in
siblings to partition the property. The RTC correctly favor of the College. As held in Naval v. Court of
deduced that this only meant that Baldomera Appeals:chanrobleslaw
acknowledged that the property belongs to
Melecia.chanrobleslaw xxx Registration of a piece of land under the Torrens
System does not create or vest title, because it is not a
mode of acquiring ownership. A certificate of title is
Having established the creation of an implied merely an evidence of ownership or title over the
resulting trust, the action for reconveyance filed by particular property described therein. It cannot be
Gabutan, et al., the heirs of Melecia in whose benefit used to protect a usurper from the true owner; nor can
the trust was created, is proper. An action for it be used as a shield for the commission of fraud;
reconveyance is a legal and equitable remedy granted neither does it permit one to enrich himself at the
to the rightful landowner, whose land was wrongfully
expense of others. Its issuance in favor of a particular
or erroneously registered in the name of another, to
compel the registered owner to transfer or reconvey person does not foreclose the possibility that the real
the land to him. It will not amount to a collateral property may be co-owned with persons not named in
attack on the title, contrary to the allegation of the certificate, or that it may be held in trust for
Nacalaban, et al. We explained in Hortiznela v. another person by the registered owner.
Tagufa:chanrobleslaw
Moreover, the body of the Complaint filed by
x x x As a matter of fact, an action for reconveyance
Gabutan, et al. shows that it is not only for the
is a recognized remedy, an action in personam,
reconveyance of the property but also for the
available to a person whose property has been
annulment of TCT No. T-111846 issued in the name
wrongfully registered under the Torrens system in
of the College. Gabutan, et al. questioned the validity
another's name. In an action for reconveyance, the
of the sale to the College and claimed co-ownership
decree is not sought to be set aside. It does not seek to
over the property. Thus, we can rule on the validity of
set aside the decree but, respecting it as
TCT No. T-111846 since the Complaint is a direct
incontrovertible and no longer open to review, seeks
attack on the title of the College.
to transfer or reconvey the land from the registered
owner to the rightful owner. Reconveyance is always
available as long as the property has not passed to an
innocent third person for value. 149. PNB v. Aznar

There is no quibble that a certificate of title, like in 150. Same Darby Pilipinas v. Mendoza
the case at bench, can only be questioned through a FACTS:
direct proceeding. The MCTC and the CA, however, Petitioner Sime Darby Pilipinas, Inc. (Sime Darby)
failed to take into account that in a complaint for employed Jesus B. Mendoza (Mendoza) as sales
reconveyance, the decree of registration is respected manager. On 3 July 1987, Sime Darby bought a
as incontrovertible and is not being questioned. What Class A club share in Alabang Country Club (ACC)
is being sought is the transfer of the property from Margarita de Araneta. The share, however, was
placed under the name of Mendoza in trust for Sime
wrongfully or erroneously registered in another's
Darby since the By-Laws of ACC state that only
name to its rightful owner or to the one with a better
natural persons may own a club share. As part of the
right. If the registration of the land is fraudulent, the arrangement, Mendoza endorsed the Club Share
person in whose name the land is registered holds it Certificate in blank and executed a Deed of
as a mere trustee, and the real owner is entitled to file Assignment, also in blank, and handed over the
documents to Sime Darby. From the time of
purchase in 1987, Sime Darby paid for the monthly 151. Paringit v. Bajit
dues and other assessments on the club share.
See #144
Mendoza then retired on 1995 and Sime Darby paid
152. De Ocampo v. Zaporteza
his separation pay amounting to more than
P3,000,000. Nine years later, or sometime in July AGRIPINO DE OCAMPO, ET AL., plaintiffs-appellees,
2004, Sime Darby found an interested buyer of the JUAN ZAPORTEZA, ET AL., defendants-appellants.
club share for P1,101,363.64. The broker required
Sime Darby to secure an authorization to sell from FACTS:
The instant appeal seeks the reversal of the judgment
Mendoza since the club share was still registered in
appealed from, holding that the contract Exhibit A is a
Mendoza’s name. However, Mendoza refused to sign
mortgage rather than a sale subject to repurchase.
the required authority to sell unless Sime Darby paid The plaintiffs contend, by means of witnesses Agripino
him the amount of P300,000, his unpaid separation and Gregorio de Ocampo, that the contract between the
benefits. As a result, the sale did not push through. parties is in reality a simple mortgage, but was made to
appear as if it were a sale, subject to repurchase, at the
Sime Darby filed a complaint for damages with writ of suggestion of Nazario P. de Mesa the attorney for the
defendants, who told them that, as it was a question
preliminary injunction against Mendoza with the
between brothers, there was no objection to drawing up
Regional Trial Court. the deed in that form; whereas, if the agreement were
evidenced as a loan, the defendants might appear in a
Mendoza filed an Answer alleging ownership of the bad light if the transaction were not dissimulated, in view
club share. He stated that Sime Darby purchased the of which, the plaintiffs gave a substantially correct
Class A club share and placed it under his name as account of the conversations between the parties which
preceded the execution of the document in question, and
part of his employee benefits and bonus for past
we are of the opinion that this is supported by the
exemplary service.
evidence.
It is a fact duly proven in the proceedings that the
RTC: Rendered a Decision in favor of Sime Darby. certificate of transfer in favor of the defendants includes
not only the two parcels described in the instrument
Mendoza filed an appeal with the Court of Appeals. Exhibit A, planted with 700 coconut trees, but all of lot
No. 4210, which, according to the evidence, contains
2,000 coconut trees. Therefore, it is evident that the
CA: Ruled that Sime Darby failed to prove that it has
certificate of transfer, Exhibit 1, in so far as it includes a
a clear and unmistakable right over the club share of portion of land planted with 1,300 coconut trees, to
ACC. which the defendants are not at all entitled, should not
be given legal effect, especially when said certificate of
Sime Darby filed a Motion for Reconsideration which transfer has been obtained by the defendants during the
the Court of Appeals denied pendency of the present action wherein the value of the
instrument Exhibit A is precisely the matter in dispute.

ISSUE: WON there was an implied trust.

TC: instrument Exhibit A is a mortgage deed, and not a
deed of sale subject to repurchase, contending that the
HELD: parties herein submitted an agreed statement of facts
Yes, In Thomson v. Court of Appeals, the SC held wherein it appeared that the appellees executed the
that a trust arises in favor of one who pays the instrument Exhibit A in favor of the appellants; and
purchase price of a property in the name of another, alleging, moreover, that they received the price of the
sale, and that there was no fraud in the execution of the
because of the presumption that he who pays for a
instrument in question.
thing intends a beneficial interest for himself.
ISSUE: Whether or not the instrument Exhibit A
In the given case, Sime Darby paid for the purchase expresses the true agreement entered into by and
price of the club share, Mendoza was given the legal between the parties.
title. Mendoza’s title is only limited to the usufruct, or
HELD: NO.
the use and enjoyment of the clubs facilities and
The deed in question apparently evidences an agreement
privileges while employed with the company. Thus, a of a sale subject to repurchase; but as the plaintiffs-
resulting trust is presumed as a matter of law. The appellees have put in issue a mistake of said writing, and
burden then shifts to the transferee to show its failure to express the true intent and agreement
otherwise. of the parties.
Plaintiffs' evidence shows: (1) That the portion of land
conveyed to the defendants by the plaintiffs, added to
that conveyed to them by the deceased Alejandro de
Ocampo, only comprises an area of land planted with administrative remedies; and (c) the action has
700 coconut trees; and (2) that the conveyance by prescribed.
Alejandro de Ocampo, and that subsequently made by CFI: dismissed the case because the Court no longer had
the plaintiffs, were only to secure the amount of P1,000 jurisdiction over it since the complaint alleges fraud BUT
received by the former, and the amount of P2,000 was not brought within one (1) year from the time that
furnished by the same defendant to pay a debt of the the original certificate of title was issued to the
deceased to the National Bank (P1,604.44), and funeral defendant Tagwalan. Petitioners filed a Motion for
expenses, (P400). Reconsideration but was also denied.
ISSUE: 1. Whether or not defendant Tagwalan held the
If an absolute conveyance of property is made in property in trust for his co-heirs
order to secure the performance of an obligation of 2. Whether or not the action to recover
the grantor toward the grantee, a trust by virtue of property has prescribed.
law is established. If the fulfillment of the HELD:
obligation is offered by the grantor when it 1. Yes. The respondent court seems to be unmindful of
becomes due, he may demand the reconveyance of the fact that since respondent Tagwalan, through fraud
the property to him. was able to secure a title in his own name to the
I exclusion of his co-heirs who equally have the right to a
In the case, when a deed of sale with right of repurchase share of the land covered by the title, an implied trust
was really intended to cover a loan made by the was created in favor of said co-heirs. Respondent
purported seller from the purported buyer, then the Tagwalan is deemed to merely hold the property for their
doctrine of equitable mortgage applies. In the instant and his benefit. As we have ruled in the case of Gonzales
case in the sense that the defendants only hold the v. Jimenez, Sr. (13 SCRA 73, 82): "We believe, however,
certificate of transfer in trust for the plaintiffs as to the that this case is covered by Article 1456 of our new Civil
portion of the lot containing 1,300 coconut trees,and Code which provide: ‘If property is acquired though
therefore, said defendants are bound to execute a deed mistake of fraud, the person obtaining it is, by force of
in favor of the plaintiffs transferring said portion to them. law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.’
2. No. Since it appears that the land in question was
153. Miguel J. Ossorio Pension Foundation, Inc. v. CA obtained by defendants thru fraudulent representations
by means of which a patent and a title were issued in
their name, they are deemed to hold it in trust for the
154. Heirs of Tanak Pangaaran Patiwayon v. Martinez benefit of the person prejudiced by it. Here this person is
the plaintiff. There being an implied trust in this
FACTS: transaction, the action to recover the property prescribes
Tanak Pangawaran-Patiwayan filed a complaint against after the lapse of ten years. Here this period has not yet
private respondents for annulment of title, reconveyance elapsed. Therefore, it is clear that the prescriptive period
of successional shares, partition, accounting and which is applicable in this case is ten (10) years.
damages. The complaint, in substance, alleged that a Consequently, the action of petitioner was not yet barred
certain Pangawaran, during his lifetime married since it was filed on July 1, 1976 while the last day for
legitimately three successive times; that complainant is filing such action was on July 19, 1976, ten years after
the daughter by the second marriage; that during the the issuance of the original certificate of title.
first and second marriages, there were no liquidations of
the conjugal partnership after the death of Pangawaran’s 155. Martinez v. Graño
respective spouses; that respondent Tagwalan is the
child by the third marriage; and that since the latter was SYLLABUS:
the only son of Pangawaran, he was able to convince his 1. TRUSTS AND TRUSTEE; PURCHASE OF LAND
co-heirs that he should act as administrator of the SOLD WITH "PACTO DE RETRO." — A person who, before
properties left by Pangawaran but instead, managed to consolidation of property in the purchaser under a
obtain a patent in his own name and later an original contract of sale with pacto de retro, agrees with the
certificate of title (O.C.T.) to the complainant’s prejudice. vendors to buy the property and administer it till all
Respondents filed an answer denying the marriage of debts constituting an incumbrance thereon shall be paid,
Pangawaran to complainant Tanak’s mother alleging that after which the property shall be turned back to the
Pangawaran married only twice, the offsprings of which original owners, is bound by such agreement; and upon
are the respondents themselves. buying in the property under these circumstances such
After Tanak died and was substituted by her heirs, person becomes in effect a trustee and is bound to
respondents filed a motion to dismiss on the following administer the property in this character.
grounds: (a) the trial court has no jurisdiction to annul
the Free Patent Application and the Original Certificate of 2. ID.; RENUNCIATION OF TRUST; REMOVAL OF
Title issued in favor of respondent Tagwalan since the TRUSTEE. — When a person administering property in
complaint did not join as plaintiffs the Director of Lands the character of trustee inconsistently assumes to be
and the Secretary of Agriculture and Natural Resources holding in his own right, this operates as a renunciation
and since the prerogative to file a complaint exclusively of the trust and the persons interested as beneficiaries in
belongs to the Solicitor General under Section 101 of the the property are entitled to maintain an action to declare
Public Land Act; (b) there is non-exhaustion of their right and remove the unfaithful trustee.
 ● In view of this difficulty, the adult parties in
3. ID.; REMOVAL OF TRUSTEE; APPOINTMENT OF interest (guardians) were advised, and decided,
RECEIVER TO ADMINISTER TRUST PROPERTY. — In a to allow a single individual to effect the
case where it became necessary to deprive a trustee of redemption from Alfonso Tiaoqui, thus placing
the management of trust property, a receiver was the documentary title exclusively in this one
directed to be appointed to administer the property and person, who, as was intended, could then deal
apply the proceeds to the satisfaction of a mortgage directly with the association. The person chosen
which had been placed upon the property. as the repository of this trust was Clemencia
Graño, the widow of Apolonio Martinez and
mother and guardian of Jose.
Martinez Heirs - successors
Clementia Graño - Trustee ● In consideration of the responsibility to be
assumed by Clemencia, it was agreed that
FACTS: Clemencia should have exclusive possession
(title was under her name) of all the land
● Juan Martinez and his wife, Macaria Ticson, both pertaining to the Martinez estate and administer
now deceased, were owners of seven parcels of the same for the purpose of raising the
land, located in the municipality of San Pablo, necessary revenue to meet her obligations to "El
which property, devolved by inheritance upon Hogar Filipino." In this Contract the heirs all
their numerous living children (4 living) and the agreed that Clemencia Graño, as their attorney
descendants (9 grandchildren, all were minors in fact, should be respected by them in all
and were represented by guardians and/or matters relating to the administration of the
surviving parent) of such as were dead (4 dead). property and they obligated themselves, one and
In due time partition was effected, with the all, to abstain from interfering with her in the
approval of the CFI of Laguna, and appropriate slightest degree in said administration.
portions were assigned to the several heirs. To
this end it was necessary that the seven parcels ● There is another document, bearing the
of which the property was composed should be signatures of Isidro Martinez, Julia Martinez,
subdivided into numerous smaller parcels, as Sebastiana Martinez, Rosario Ebron, and
was in fact done. Clemencia Graño, and acknowledged before a
notary public on December 17, 1917, which
● The parcels of land of the sps. was encumbered defines in the fullest and most satisfactory way
with indebtedness, and the parties in interest the interests of all the parties in the property
had long since been compelled to resort to the derived from the Martinez estate.
dangerous expedient of selling their inheritance
under a contract of sale with pacto de retro. ● Clemencia now asserts that she is the sole and
absolute owner of all the property obtained by
● One W. W. Robinson had acquired title to the her from Tiaoqui and denies that the Martinez
property under such a contract; and on October heirs have any interest whatever therein.
11 of that year the property was again sold
under pacto de retro to Alfonso Tiaoqui, of ● Martinez heirs, who are named as plaintiffs
Manila, for the sum of P12,000, apparently in herein, instituted an action in CFI of Laguna
order to get the means to redeem the property against Clemencia Graño, both in her own right
from Robinson. and as guardian of Jose Martinez, and against "El
Hogar Filipino."
● The period for redemption specified in the sale to
Tiaoqui was three years, which expired in RTC/CFI:
October, 1914. When this date arrived it was still ● In favor of Clemencia.
found impossible for the parties in interest to ● Clemencia Graño was declared to be the sole and
redeem the property; and apparently by the exclusive owner of all the property in question,
indulgence of Tiaquio, the time for redemption subject to the mortgage to "El Hogar Filipino." As
was extended to September 28, 1916, and the a consequence she was ordered to be restored to
period for redemption was limited to one year, possession, the receivership was declared to be
"extendible to another with the consent of the dissolved, and all the defendants were absolved
parties." entirely from the complaint.

● Finding that they would still be unable to redeem ISSUE:

the property, the Matinez heirs represented by 1.) Whether or not the title vested in Clemencia is
their guardians obtained a loan from El Hogar held by her in trust
Filipino. However, it was inconvenient for El
Hogar Filipino to handle the business since the 2.) Whether or not trust may be rescinded for
parties-in-interest were numerous and were all trustee’s manifest failure to comply with the
minors. trust
RULING: as financial aid to him as a brother in view of the fact
1.) YES. that he was bedridden without any means of
A person who, before consolidation of property in
livelihood and with several children to support,
the purchaser under a contract of sale with pacto
although from 1926, when Emilio was confined at the
de retro, agrees with the vendors to buy the
property and administer it till all debts Culion Leper Colony up to his death on February 5,
constituting an incumbrance thereon shall be 1936, Lucas had been giving part of the rents to
paid, after which the property shall be turned Fortunata Bautista, the second wife of Emilio, in
back to the original owners, is bound by such accordance with the latter's wishes; that Lucas died
agreement; and upon buying in the property in August, 1942, survived by the present defendants,
under these circumstances such person becomes
who are his spouse Luisa Romero and several
in effect a trustee and is bound to administer the
property in this character. children; and that said defendants are still in
possession of the lot, having refused to reconvey it to
2.) YES. plaintiff despite repeated demands.
When a person administering property in the Appellees:
character of trustee inconsistently assumes to be - Defendants filed a motion to dismiss, alleging that
holding in his own right, this operates as a
plaintiff's cause of action is unenforceable under the
renunciation of the trust and the persons
interested as beneficiaries in the property are
new Civil Code and that the action has already
entitled to maintain an action to declare their prescribed.
right and remove the unfaithful trustee. -Lower court upheld the motion to dismiss thus this
case. The lower court held that an express and not
an implied trust was created as may be gleaned from
the facts alleged in the complaint, which is
156. Heirs of Emilio Candelaria v. Romero
unenforceable without any writing, and that since
Transfer Certificate of Title No. 9584 covering the
FACTS:
land in question had been issued to Lucas
Appellants: Ester Candelaria filed a
Candelaria way-back in 1918 or 38 years before the
complaint in her own behalf and in representation of
filing of the complaint, the action has already
the other alleged heirs of Emilio Candelaria, alleging
prescribed.
in substance - that sometime prior to 1917 the latter
SC: reversed CA
and his brother Lucas Candelaria bought each a lot
ISSUE: Whether there is an implied trust
in the Solokan Subdivision on the installment basis;
where property is taken by a person
that Lucas paid the first two installments
under an agreement to hold it for, or convey it to
corresponding to his lot, but faced with the inability of
another or the grantor, a resulting or implied trust
meeting the subsequent installments because of
arises in favor of the person for whose benefit the
sickness which caused him to be bedridden, he sold
property was intended. This rule, which has been
his interest therein to his brother Emilio, who then
incorporated in the new Civil Code in Art. 1453
reimbursed him the amount he had already paid, and
thereof, is founded upon equity. The rule is the same
thereafter continued payment of the remaining
in the United States, particularly where, on the faith
installments until the whole purchase price had been
of the agreement or the understanding, the grantee is
fully satisfied; "that although Lucas Candelaria had
enabled to gain an advantage in the purchase of the
no more interest over the lot, the subsequent
property or where the consideration or part thereof
payments made by Emilio Candelaria until fully paid
has been furnished by or for such other. Thus, it has
were made in the name of Lucas Candelaria, with the
been held that where the grantee takes the property
understanding that the necessary documents of
under an agreement to convey another on certain
transfer will be made later, the reason that the
conditions, a trust results for the benefit of such other
transaction being from brother to brother"; that in
or his heirs, which equity will enforce according to the
1918 a transfer certificate of title for said lot was
agreement. (89 C.J.S. 960.) It is also the rule there
issued by the register of deeds of Manila in the name
that an implied trust arises where a person
of "Lucas Candelaria married to Luisa Romero"; that
purchases land with his own money and takes a
Lucas held the title to said lot merely in trust for
conveyance thereof in the name of another. In such a
Emilio and that this fact was acknowledged not only
case, the property is held on a resulting trust in favor
by him but also by the defendants (his heirs) on
of the one furnishing the consideration for the
several occasions; that Lucas' possession of the lot
transfer, unless a different intention or understanding
was merely tolerated by Emilio and his heirs; that
appears. The trust which results under such
from the time Emilio bought the lot from his brother,
circumstances does not arise from contract or
Lucas had been collecting all its rents for his own use
agreement of the parties, but from the facts and 159. Adaza v. CA
circumstances, that is to say, it results because of
G.R. No. 47354 March 21, 1989
equity and arises by implication or operation of law.
HORACIO G. ADAZA and FELICIDAD MARUNDAN,
In the present case, the complaint petitioners, vs.THE HONORABLE COURT OF APPEALS and
expressly alleges that "although Lucas Candelaria VIOLETA G. ADAZA, assisted by her husband LINO
had no more interest over the lot, the subsequent AMOR, respondents.
payments made by Emilio Candelaria until fully paid
were made in the name of Lucas Candelaria, with the Victor Adaza –Deceased/Father/Donor Violeta
understanding that the necessary documents of Adaza –Donee/Daughter (RESPONDENT)
Horacio Adaza –1stBrother/Fiscal (PETITIONER)
transfer will be made later, the reason that the
transaction being brother to brother." From this
FACTS: Before dying, the Father executed a Deed of
allegation, it is apparent that Emilio Candelaria who
Donation covering a parcel of land to his daughter, then
furnished the consideration intended to obtain a single. (NOTE: a crossed out provision in the Deed of
beneficial interest in the property in question. Having Donation provided: “The donee shall share ½ of the
supplied the purchase money, it may naturally be entire property with one of her brothers or sisters after
presumed that he intended the purchase for his own the death of the donor.” The Father had five other
benefit. Indeed, it is evident from the above-quoted children.) The Deed was notarized and accepted in the
same instrument. However, the property was then still
allegation in the complaint that the property in
part of the public domain, but was held and cultivated by
question was acquired by Lucas Candelaria under the Father. The Daughter, aided by her Brother, filed a
circumstances which show it was conveyed to him on homestead application for the land which eventually lead
the faith of his intention to hold it for, or convey it to to the registration of the property under her name. After
the grantor, the plaintiff's predecessor in interest. the Daughter married, she and her spouse mortgaged
Constructive or implied trusts may, of the property to secure a loan with PNB. Meanwhile, the
Brother became a Provincial Fiscal of Davao Oriental and
course, be barred by lapse of time. The rule in such
moved to the said province. When the said Brother
trusts is that laches constitutes a bar to actions to
returned for a family gathering, he asked his sister to
enforce the trust, and repudiation is not required, sign a Deed of Waiver over the property stating that the
unless there is a concealment of the facts giving rise property was co-owned by them, including all the
to the trust. (Diaz, et al. vs. Gorricho, et al., 103 Phil., improvements thereon. The Deed also provided for the
261; 54 Off. Gaz. [37] 8429.) Continuous recognition waiver, transfer and conveyance of the said share from
of a resulting trust, however, precludes any defense Sister to Brother. A few months later, the Daughter, with
her husband, filed a complaint for annulment of the Deed
of laches in a suit to declare and enforce the trust.
of Waiver against the Brother, together with the latter’s
(See 581, 54 Am Jur. pp. 448-450.) The beneficiary wife, declaring that the Daughter signed the Deed
of a resulting trust may, therefore, without prejudice because of the Brother’s fraud, misrepresentation and
to his right to enforce the trust, prefer the trust to undue influence. Meanwhile, the Brother contended that
persist and demand no conveyance from the trustee. they were co-owners and that the Deed of Waiver was
It being alleged in the complaint that Lucas held the signed by his sister freely and voluntarily. The trial court
declared the Deed of Waiver as valid and binding and
title to the lot in question merely in trust for Emilio
that the brother and sister was co-owners of the said
and that this fact was acknowledged not only by him property. Upon the Daughter’s appeal, the CA reversed
but also by his heirs, herein defendants — which the trial court’s decision, while agreeing that the Deed of
allegation is hypothetically admitted — we are not Waiver was signed voluntarily, was without cause or
prepared to rule that plaintiff's action is already consideration, because the land had been unconditionally
barred by lapse of time. On the contrary, we think the donated to the Daughter alone. CA further held that the
interest of justice would be better served if she and Deed of Waiver could not be regarded as a gratuitous
contract or a donation as it did not comply with the
her alleged co-heirs were to be given an opportunity
requirements of Articles 749 and 1270 of the Civil Code.
to be heard and allowed to present proof in support In the brother’s petition for review with the SC, he
of their claim. argues that the fact of co-ownership was sufficient
consideration to sustain the validity of the Deed of
Waiver and testified that the intention of the deceased
157. Cuaycong v. Cuaycong father was to donate the brother to him and his Sister.
He further testified that he himself crossed out the
See #128 provision, with the Father’s consent, to facilitate the
issuance in his sister’s name.
158. Rosario v. CA
ISSUE: Whether or not the property was co-owned by
See #143 the brother and sister.
RULING: The execution of the Deed of Donation by the survey was made of the lands in the municipality of Silay and
Father created an implied trust in favor of the brother in cadastral proceedings were instituted for the registration of the
respect of half of the property donated. land titles within the surveyed area; that in the cadastral
proceedings the land here in question was described as four
RATIO: Art. 1449 There is also an implied trust when a
separate lots numbered as above stated; that Roque Hofileña,
donation is made to a person but it appears that although the
legal estate is transmitted to the donee, he nevertheless is
as lawyer for Guillermo Severino, filed answers in behalf of the
either to have no beneficial interest or only a part thereof. latter in said proceedings claiming the lots mentioned as the
property of his client; that no opposition was presented in the
The court notes that the donation was executed by the proceedings to the claims of Guillermo Severino and the court
father while the land was still public disposable land and therefore decreed the title in his favor, in pursuance of which
that the final issuance of title was still about 7 years
decree certificates of title were issued to him in the month of
later. It, found that the crossing out of the said
March, 1917.
paragraph was at least an ambiguous act and that CA
took a too literal view of the matter holding that the
It may be further observed that at the time of the cadastral
effect of the crossing-out of that paragraph was to proceedings the plaintiff Fabiola Severino was a minor; that
make the unconditional donation, thus not requiring the Guillermo Severino did not appear personally in the
daughter not obliged to share the property with her proceedings and did not there testify; that the only testimony in
brother. For the SC, if the real intent of the father was to support of his claim was that of his attorney Hofileña, who
make the two co-owners of the property, and such intent swore that he knew the land and that he also knew that
is sufficiently shown, it must be respected and Guillermo Severino inherited the land from his father and that
implemented.
he, by himself, and through his predecessors in interest, had
possessed the land for thirty years.
For the court, the said intent was evidenced: firstly, by
Plaintiff Fabiola Guillermo is the alleged natural
the Deed of Waiver executed where the Daughter
acknowledged that she owned the land in common with daughter and sole heir of Melecio Severino brought
her brother although the certificate of title bore only her this action to compel the defendant Guillermo
name. While the Sister strove to convince that she had Severino to convey to her four parcels of land
signed by reason of fraud, misrepresentation and undue described in the complaint, or in default thereof to
influence, the trial court and CA both concluded that the pay her the sum of P800,000 in damages for
signature was voluntarily made. The Deed of Waiver had wrongfully causing said land to be registered in his
been signed in the presence of their 3 other siblings. own name. Felicitas Villanueva, in her capacity as
Furthermore, the other siblings testified that the Deed of
administratrix of the estate of Melecio Severino,
Donation was executed with the understanding that the
has filed a complaint in intervention claiming the
same would be divided between the Brother and the
Sister. Also, at the same time the Deed of Waiver was same relief as the original plaintiff, except in so far
signed, another Deed of Waiver was signed between as she prays that the conveyance be made, or
another brother and another sister, who testified. The damages paid, to the estate instead of to the
trial court pointed out that four parcels of land were left plaintiff Fabiola Severino. The defendant answered
to be divided among the six children. both complaints with a general denial.
Evidently, their parents made it a practice, for reasons of Lower court rendered a judgment recognizing the
their own, to have lands acquired by them titled in the plaintiff Fabiola Severino as the acknowledged
name of one or another of their children. Three (3) of
natural child of the said Melecio Severino and
the four (4) parcels acquired by the parents were each
ordering the defendant to convey 428 hectares of
placed in the name of one of the children. For the court,
the current case was not one where an older brother is the land in question to the intervenor as
exploiting or cheating his younger sister. On the administratrix of the estate of the said Melecio
contrary, the evidence showed that the Brother took care Severino, to deliver to her the proceeds in his
of the sister and had been quite relaxed and unworried possession of a certain mortgage placed thereon by
about the title remaining in the name of his sister alone him and to pay the costs. From this judgment only
until the latter had gotten married and her husband the defendant appeals.
began to show what Brother thought was undue and ISSUE: WON the acts of GUiillermo Severino as
indelicate interest in the land.
administrator in registering the land in his name
valid?
160. Severino v. Severino
RULING: No.
It may first be observed that this is not an action under section
FACTS:
38 of the Land Registration Act to reopen or set aside a decree;
Melecio Severino owned 428 hectares of land in Silay, Province
it is an action in personam against an agent to compel him to
of Occidental Negros. During the lifetime of Melecio Severino
return, or retransfer, to the heirs or the estate of its principal,
the land was worked by the defendant, Guillermo Severino, his
the property committed to his custody as such agent, to
brother, as administrator for and on behalf of the said Melecio
execute the necessary documents of conveyance to effect such
Severino; that after Melecio's death, the defendant Guillermo
retransfer or, in default thereof, to pay damages.
Severino continued to occupy the land; that in 1916 a parcel
The defendant came into the possession of the property here in
question as the agent of the deceased Melecio Severino in the This case was instituted by the Castros against Jose
administration of the property, cannot be successfully disputed. Castro, one of their own, with the CFI. They claim
His testimony in the case of Montelibano vs. Severino (civil case ownership of an undivided one-sixth interest in a
No. 902 of the Court of First Instance of Occidental Negros and parcel of land covered by a Torrens Title issued in
which forms a part of the evidence in the present case) is, in the name of the defendant.
fact, conclusive in this respect. He there stated under oath that
from the year 1902 up to the time the testimony was given, in The land in question which was originally owned by
the year 1913, he had been continuously in charge and one Mariano Tinio was inherited by his children. One
occupation of the land as the encargado or administrator of
of which was Maximiana, the mother of the
Melecio Severino; that he had always known the land as the
defendant. Jose Castro, the defendant in question,
property of Melecio Severino; and that the possession of the
has five younger siblings. After his mother's death,
latter had been peaceful, continuous, and exclusive. In his
Jose assumed administration of the land.
answer filed in the same case, the same defendant, through his
attorney, disclaimed all personal interest in the land and
On July 28, 1912, defendant applied for registration
averred that it was wholly the property of his brother Melecio.
of said land. He claims that he is the sole heir of his
The relations of an agent to his principal are fiduciary and it is
an elementary and very old rule that in regard to property
mother. He never mentioned the fact that he has 5
forming the subject-matter of the agency, he is estopped from younger siblings. While initially successful, an appeal
acquiring or asserting a title adverse to that of the principal. His defeated his cause. Subsequently, on October 1919,
position is analogous to that of a trustee and he cannot defendant began a second proceeding to have the
consistently, with the principles of good faith, be allowed to land in his sole name. Again, he suppressed the fact
create in himself an interest in opposition to that of his principal that he had other siblings. He was successful this
or cestui que trust. Upon this ground, and substantially in time around.
harmony with the principles of the Civil Law, the English
Chancellors held that in general whatever a trustee does for As mentioned previously, plaintiffs filed a case with
the advantage of the trust estate inures to the benefit of the the CFI against defendant. The CFI ruled in favor of
cestui que trust. The same principle has been consistently said the plaintiffs,hence the current petition.
adhered to in so many American cases. The principle is well
stated in the case of Gilbert vs. Hewetson (79 Minn., 326): ISSUES:
"A receiver, trustee, attorney, agent, or any other person ● Whether or not a trust was created.
occupying fiduciary relations respecting property or persons, is ● Whether or not prescription runs in favor of
utterly disabled from acquiring for his own benefit the the defendant.
property committed to his custody for management. This rule
is entirely independent of the fact whether any fraud has HELD:
intervened. No fraud in fact need be shown, and no excuse will ● Yes, a trust was created.
be heard from the trustee. It is to avoid the necessity of any ● No, prescription does not run in favor of the
such inquiry that the rule takes so general a form. The rule defendant.
stands on the moral obligation to refrain from placing one's self
in positions which ordinarily excite conflicts between self-
RATIO
interest and integrity. It seeks to remove the temptation that
● A trust is created when one acquires a
might arise out of such a relation to serve one's self-interest at
Torrens title in his own name to property
the expense of one's integrity and duty to another, by making it
which he is administering for himself and his
impossible to profit by yielding to temptation. It applies
brothers and sisters as heirs in common by
universally to all who come within its principle."
descent from a common ancestor.

161. Castro v. Castro The actions and facts of the case speak for
themselves. A conversation between the
Note: This case was decided under the Old Civil defendant and Mariano Tinio, defendant’s
Code. The applicable provision in the New Civil Code uncle and one time Director of Lands is
would be Article 1451 (When land passes by revealing:
succession to any person and he causes the legal
title to be put in the name of another, a trust is “Catalina Tinio, was introduced as a witness
established by implication of law for the benefit of the in court and he testified to the fact that he
true owner). The instant case would fall under heard a conversation between Manuel Tinio
Resulting Trust if decided under the New Civil Code. and Jose Castro, in the course of which the
 latter informed his uncle that the petition for which were bought by them from Felix Ting Ho. In 1966,
registration of the land in Jose’s name had Felix Ting Ho executed an Affidavit of Transfer,
Relinquishment and Renouncement of Rights and
been denied, whereupon Manuel Tinio told
Interest including Improvements on Land in favor of his
him that he ought to make application for the eldest son the defendant Vicente Teng Gui. On the basis
registration of the land in "your name and the of said document he then filed a miscellaneous sales
names of your brothers and sisters’. Jose de application with the Bureau of Lands.
Castro then said that, although the property -RTC found that Felix Ting Ho, being a Chinese citizen
should be registered in his (Jose’s) name, the and the father of the petitioners and respondent,
interests of his brothers and sisters would not resorted to a series of simulated transactions in order to
preserve the right to the lot and the properties thereon
be prejudiced. Manuel Tinio assented to this
in the hands of the family. The Court believes that the
and told Jose to come to his office at the transaction was one of implied trust executed by Felix
Bureau of Lands for the execution of the Ting Ho for the benefit of his family. RTC considered the
document desired by Jose Castro.” Affidavit of Transfer, Relinquisment and Renouncement
of Rights and Interests over the land as a donation which
The Supreme Court held that when the was accepted by the done, the herein respondent. With
respect to the properties in the lot, the trial court held
defendant procured the registration of this
that although the sales were simulated, pursuant to Art
land in his own name, he was acting in a trust 1471 of the New Civil Code, it can be assumed that the
capacity and as representative of all of his intention of Felix Ting Ho in such transaction was to give
brothers and sisters. This is in consonance and donate the properties to his son. As a result, it
with the doctrine in the case of Severino v. awarded the entire conjugal share of Felix Ting Ho in the
Severino. subject lot and properties to the respondent and divided
only the conjugal share of his wife among the siblings.
- CA reversed and set aside the decision of the RTC. The
● Prescription does not run in favor of one who
appellae court held that the deceasesd Felix Ting Ho was
holds in trust for others when denial of the never the owner and never claimed ownership of the
trust made by the trustee is directed to subject lot since he is disqualified under Philippine laws
beneficiaries who was still a minor, at the time from owning public lands, and that respondent Vicente
of such repudiation. Teng Gui was the rightful owner over said lot by virtue of
the Miscellaneous Sales Patent issued in his favor. The
CA found that defendant Vicente Teng Gui acquired the
Defendant claims that, granting arguendo that
subject land by sales patent or purchase from the
trust relation did exist, he had repudiated the government and not from his father because on
same more than ten years before this action December 5, 1977 when the subject land was sold to
was begun, and it is insisted that he had him by the government and on Jan 3, 1978 when
acquired title by adverse possession. The Miscellaneous Sales Patent No. 7457 was issued, the late
Supreme Court disagreed as the supposed Felix Ting ho was already dead. However, since the sales
executed were fictitious, the CA awarded 4/5 shares of
repudiation of the trust was directed to a
the subject properties erected on the said lot to the
minor. The defendant is not entitled to the
petitioners.
benefit of prescription from his supposed Issue: Was there an implied trust between Felix Ting Ho
repudiation of the trust. and son Vicente? If so, should all the properties be
divided equally among all the siblings?
Held:
162. Ting Ho, Jr. v. Teng Gui NO.
- The father of the petitioners and respondent was a
Facts: Chinese citizen; therefore he was disqualified from
- Plaintiffs and the defendant are all brothers and sisters, acquiring and owning real property in the Philippines. On
the defendant Vincent Teng Gui being the oldest. Their the other hand, the respondent became the owner of Lot
father was a Chinese citizen although their mother was No. 418 when he was granted Miscellaneous Sales Patent
Filipino. No 7457 by the Secretary of Natural Resources by
-Sometime in 1947, the father Felix Ting Ho occupied a Authority of the President of the Philippines.
parcel of land situated in Afable St., East Bajac-Bajac, - The petitioners invoke equity considerations and claim
Olongapo City by virtue of the permission granted him that the ruling of the RTC that an implied trust was
by the then US Naval Reservation Office. The couple created between respondent and their father with
thereafter introduced improvements such as a residential respect to the subject lot should be upheld. This
house and a bakery. contention must fail because the prohibition against an
-In 1958, Felix Ting Ho executed a Deed of Absolute Sale alien from owning lands of the public domain is absolute
and sold a building to Gregorio Fontela but spouses Felix and not even an implied trust can be permitted to arise
and Leonila Cabasal remained possession of the on equity considerations.
property. Later, spouses Gregorio Fontela and Victoria - decision of the CA was affirmed
Cabasal sold to Vicente Ten Gui in 1961 the buildings
 163. Diaz v. Gorricho and Aguado enforce a constructive trust

FACTS: 2 lots originally belonged to the conjugal HELD: The judgment appealed from is affirmed
partnership of Francisco Diaz and Maria Sevilla, the
OCTs under their name. Francisco died and was YES
survived by wife and 3 children.
Article 1456 of the new Civil Code, while not
Appellee Gorricho filed an action against Maria in the retroactive in character, merely expresses a rule
CFI of Manila, and a writ of attachment was issued already recognized by our courts prior to the Code’s
upon the shares of Maria in said lots. promulgation. Appellants are, however, in error in
believing that like express trusts, such constructive
Thereafter, said parcels were sold at public auction trusts may not be barred by lapse of time. The
and purchased by Gorricho. Maria failed to redeem American law on trusts has always maintained a
within one year, whereupon the acting provincial distinction between express trusts created by
sheriff executed a final deed of sale in favor of intention of the parties, and the implied or
Gorricho. In said final deed, however, the sheriff constructive trusts that are exclusively created by
conveyed to Gorricbo the whole of the 2 parcels law, the latter not being trusts in their technical
instead of only the half-interest of Maria therein. sense.
Pursuant to said deed, Gorricho obtained a TCT in
her name and has been possessing said land is as The express trusts disable the trustee from acquiring
owner ever since. for his own benefit the property committed to his
management or custody, at least while he does not
Then, Maria died. Her 3 children filed the action in openly repudiate the trust, and makes such
CFI of Nueva Ecija against Gorricho and her repudiation known to the beneficiary or cestui que
husband Aguado to compel them to execute in their trust. For this reason, the old Code of Civil Procedure
favor a deed of reconveyance over an undivided one- declared that the rules on adverse possession do not
half interest over the lots in question (the share apply to “continuing and subsisting” (i.e.,
therein of their deceased father illegally conveyed by unrepudiated) trusts.
the provincial sheriff to Gorricho), which defendants
were allegedly holding in trust for them. In constructive trusts, as pointed out by the court
below, the rule is that laches constitutes a bar to
Defendants answered denying the allegations of the actions to enforce the trust, and repudiation is not
complaint and alleging, as a special defense, that required, unless there is concealment of the facts
plaintiffs’ action has long prescribed. giving rise to the trust

After trial, the court below rendered judgment, The reason for the difference in treatment is obvious.
holding that while a constructive trust in plaintiffs’ In express trusts, the delay of the beneficiary is
favor arose when defendant Gorricho took advantage directly attributable to the trustee who undertakes to
of the error of the provincial sheriff in conveying to hold the property for the former, or who linked to the
her the whole of the parcels in question and obtained beneficiary by confidential or fiduciary relations. The
title in herself, the action of plaintiffs was, however, trustee’s possession is, therefore, not adverse to the
barred by laches and prescription. From this beneficiary, until and unless the latter is made aware
judgment, plaintiffs appealed. that the trust has been repudiated. But in constructive
trusts (that are imposed by law), there is neither
The principal contention of appellants is that their promise nor fiduciary relation; the so-called trustee
father’s half of the disputed property was acquired by does not recognize any trust and has no intent to
Gorricho through an error of the provincial sheriff; hold for the beneficiary; therefore, the latter is not
that having been acquired through error, it was justified in delaying action to recover his property. It
subject to an implied trust, as provided by Article is his fault if he delays; hence, he may be estopped
1456 of the new Civil Code; and therefore, since the by his own laches.
trust is continuing and subsisting, the appellants may
compel reconveyance of the property despite the Of course the equitable doctrine of estoppel by
lapse of time, specially, because prescription does laches requires that the one invoking it must show,
not run against titles registered under Act 496 not only the unjustified inaction, but that some unfair
injury would result to him unless the action is held
ISSUE: WON laches constitutes a bar to actions to
barred. This requirement the appellees have not met, Held: Yes.
and they are thereby bereft of the protection of this It is essential to note that the relationship between an
attorney and his client is a fiduciary one. Canon 17 of the
rule.
Code of Professional Responsibility stresses that "a
lawyer owes fidelity to the cause of his client and he
We are of the opinion that the judgment of dismissal shall be mindful of the trust and confidence reposed in
should be upheld, because the appellants’ cause of him." Canon 16 requires a lawyer to "hold in trust all
action to attack the sheriff’s deed and cancel the monies and properties of his client that may come into
TCTs issued to the appellees accrued from the year his possession.
of issuance and recording, 1937, and appellants
The SC believe that respondent Atty. Pascua, under the
have, allowed fifteen (15) years to elapse before
circumstances of this case, must be regarded as holding
taking remedial action, notwithstanding the appellees’ the title of the property acquired by him at public sale
public assertion of title during this entire period, to under an implied trust in favor of petitioner and his
extinguish appellant’s action. Under the old Code of brothers, to the extent of one-half (1/2) of that property.
Civil Procedure, in force at the time, the longest Among the species of implied trusts recognized by our
period extinctive prescription was only ten years. Civil Code is that set forth in Article 1456. Under the
Article, the "mistake" or "fraud" that results in an implied
trust being impressed upon the property involved, may
be the mistake or fraud of a third person, and need not
be a mistake or fraud committed directly by the trustee
164. Sumaoang v. Judge, RTC
himself under the implied trust. Accordingly, in the
instant case, an implied trust was established upon the
Topic: Acquisition of property through mistake or fraud.
land acquired by Atty. Pascua even though the operative
ART. 1456. If property is acquired through mistake or
mistake was a mistake of respondent trial judge.
fraud, the person obtaining it is, by force of law,
Respondent Judge may be seen to have intended to
considered a trustee of an implied trust for the benefit of
convey only one-half (1/2) of the land involved as
the person from whom the property comes.
attorney's fees to Atty. Pascua. Atty. Pascua, however,
took advantage of the Judge's mistake in order to
Facts: Sebastian Sumaoang applied for a homestead
acquire all the 21.3445 hectares for himself. Atty.
over a parcel of land located in Isabela. Due to his
Pascua obviously knew that under his contract with his
illness, he transferred his residence to his native town in
clients, he was entitled to ask only for one-half (1/2) of
Tarlac. The Domingos (Florencio and Regino) applied
the land. When he purchased the entire land at public
also for a homestead patent over that parcel of land of
auction for P110,000.00 (leaving his clients still owing
which Sebastian had also applied for a homestead
him P1,500.00), the amount and character of his
patent. Unfortunately, the Domingos were given the
attorney's fees became unreasonable and
homestead patent, not to Sebastian. Sumaoangs
unconscionable and constituted unjust enrichment at the
engaged the services of Atty. Pascua to file a formal
expense of his clients.
protest regarding the legality of the issuance of
homestead patent to the Domingos. The CFI of Isabela
(Sumaoang v. Domingos) declared the patent as null and
void. The CA and SC affirmed the decision. 165. Vda. de Ouano v. Republic
FACTS:
However, maybe because of the overwhelming joy they
felt they forgot to pay Atty. Pascua of the compensation In 1949, the National Airport Corporation (NAC),
of professional services as counsel, the latter filed a MCIAA’s predecessor agency pursued a program to
complaint for collection of attorney's fees against the expand the Lahug Airport in Cebu City. As an assurance
Sumaoangs. CFI stated that Atty. Pascua was only from the government, there is a promise of reconveyance
entitled to 1/2 of the value of property in peso. Since the or repurchase of said property so long as Lahug ceases its
decision of the CFI became final and executory, Atty. operation or transfer its operation to Mactan – Cebu
Pascua filed a writ of execution against the Sumaoangs. Airport. Some owners refused to sell, and that the Civil
The DP Sheriff was successful in the execution since the Aeronautics Administration filed a complaint for the
entire land was levied and sold in an auction to Atty. expropriation of said properties for the expansion of the
Pascua being the highest bidder. Andres Sumaoang Lahug Airport. The trial court then declared said properties
asked for the nullification of the CFI's decision for the to be used upon the expansion of said projects and order
reason that the attorney's fees became unreasonable for just compensation to the land owners, at the same time
and unconscionable. Accordingly, in the instant case, an directed the latter to transfer certificate or ownership or title
implied trust was established upon the land acquired by in the name of the plaintiff. At the end of 1991, Lahug
Atty. Pascua even though the operative mistake was a
Airport completely ceased its operation while the Mactan-
mistake of respondent trial judge. Respondent Judge
Cebu airport opened to accommodate incoming and
may be seen to have intended to convey only one-half
outgoing commercial flights. This then prompted the land
(1/2) of the land involved as attorney's fees to Atty.
owners to demand for the reconveynace of said properties
Pascua.
being expropriated by the trial court under the power of
Issue: Whether of not there is an implied trust that
existed between Atty. Pascua and Sumaoangs when the
eminent domain. Hence these two consolidated cases
latter obtained possession of the land in dispute. arise.
RTC : Ruled in favor of the petitioners Oaunos and against
the MCIAA for the reconveynace of their properties but On the day that Sing Juco and Sing Bengco’s option to purchase
was appealed by the latter and the earlier decision was was to expire, Sunyantong called at the house of Gay and
reversed. offered to buy the estate on the terms she proposed, which
CA: affirmed the reversed decision of the RTC. were not yet accepted by Sing Juco and Sing Bengco.
ISSUE: WON there was an implied trust. Sunyantong offered to buy not for the benefit of Sing Juco and
RULING: YES.
Sing Bengco, but for the benefit of his own wife. Maria Gay
Providing added support to the Ouanos and the Inocians
informed the broker of Sing Juco and Sing Bengco that there
right to repurchase is what in Heirs of Moreno was referred
was another interested buyer and that she would like to know
to as constructive trust, one that is akin to the implied trust
immediately Sing Juco and Sing Bengco’s decision. Sing Bengco
expressed in Art. 1454 of the Civil Code,[37] the purpose
of which is to prevent unjust enrichment.[38] In the case at instructed Sotelo to inform her, "siya ang bahala". Interpreting
bench, the Ouanos and the Inocians parted with their the phrase to mean that Sing Juco and Sing Bengco waived their
respective lots in favor of the MCIAA, the latter obliging option to buy, Maria Gay closed the sale of the estate in favor
itself to use the realties for the expansion of Lahug Airport; of Sunyantong. Sing Bengco and Sing Juco then filed a case
failing to keep its end of the bargain, MCIAA can be against Sunyantong.
compelled by the former landowners to reconvey the
parcels of land to them, otherwise, they would be denied Lower Court - ordered the Sunyantong to execute a deed of
the use of their properties upon a state of affairs that was conveyance to Sing Bengco and Sing Juco of the San Antonio
not conceived nor contemplated when the expropriation Estate for the same price and with the same conditions as those
was authorized. In effect, the government merely held the of the purchase thereof from Maria Gay.
properties condemned in trust until the proposed public
use or purpose for which the lots were condemned was
actually consummated by the government. Since the
ISSUE: Whether or not Sunyantong must be held liable, by
government failed to perform the obligation that is the
virtue of an equitable trust.
basis of the transfer of the property, then the lot owners
Ouanos and Inocians can demand the reconveyance of
their old properties after the payment of the condemnation RULING: Yes.
price.
Constructive trusts are fictions of equity that courts use as RATIO: Sunyantong owed loyalty and faithfulness to his
devices to remedy any situation in which the holder of the employers, furthermore, his disloyalty was responsible for
legal title, MCIAA in this case, may not, in good Maria Gay not accepting the terms proposed by the plaintiff.
conscience, retain the beneficial interest. We add, Without such intervention on the part of the defendant it is
however, as in Heirs of Moreno, that the party seeking the presumed, taking into account all the circumstances of the case,
aid of equitythe landowners in this instance, in establishing that the sale of the estate in question would have been
the trustmust himself do equity in a manner as the court consummated between Maria Gay and the plaintiffs, perhaps
may deem just and reasonable. with such advantages to the plaintiffs, as they expected to
obtain by prolonging negotiations. The same would be true
even if the plaintiffs were to have waived all claims to the
option.

166. Juan v. Yap, Sr. Such an act of infidelity committed by a trusted employee
calculated to redound to his own benefit and to the detriment
SEE # 134
of his employers cannot pass without legal sanction. Nemo
167. Sing Juco and Sing Bengco v. Sunyantong and Llorente debet aliena jactura locupletari; nemo ex suo delicto meliorem
suam conditionem facere potest. It is an illicit act committed
FACTS: Sing Juco and Sing Bengco obtained from Maria Gay a with culpa and, therefore, its agent is liable [Art. 1089, now Art.
written option to purchase an estate known as "San Antonio 1157(5) Quasi-delict], for the damage caused (art. 1902, now
Estate". The term of the option expired, but Sing Juco and Sing Art. 2176). Not identical, but similar, to this infidelity is the
Bengco had it extended verbally. Sunyantong was an employee abuse of the confidence sanctioned in our Penal Code as a
of Sing Juco and Sing Bengco, and the evidence shows that they generic circumstance, nay as specific aggravating one, and even
reposed confidence in him and did not mind disclosing to him as an essential element of certain crimes.
their plans of purchasing the San Antonio estate and the status
of their negotiations with Gay. In one of the meetings held by This reparation provided for in the Civil Code and applied to the
Sing Juco and Sing Bengco, Sunyantong was present. At that case at bar seems to be limited to the indemnification of
time, Sunyantong remarked that it would be advisable to let damages, as we are not aware of any express provision in said
some days elapse before accepting the terms of the transfer as Code which imposes upon the person thus held liable, any
proposed by Maria Gay, in order that the Gay might not think obligation, such as that of transferring to plaintiffs the estate in
that they were desperate for the said property. question.
 An expropriation case was filed by the Republic of the
Such principle, however, in case of this nature is generally Philippines, through the DPWH, before the Regional Trial
recognized in our laws, since the case of commercial agents Court, Branch 83 (RTC Branch 83), which a judgment of
(factories) it is expressly established. Undoubtedly, formerly expropriation was given with a finding of just
under the circumstances then prevailing such sanction was not compensation of P21,964,500 or P1,500 per square meter.
necessary in the field of civil law, because is sphere of action is
the general relations of society; but even then it was deemed Owners of the Hernandez property executed a letter
necessary expressly to protect with such sanction the indicating: (1) Cecilio as the
commercial relations wherein the question of gain was representative of the owners of the land; and (2) the
involved, which is sometimes so imperatives as to ignore compensation he gets in doing such job.
everything, even the very principles of loyalty, honesty, and
fidelity.
Cecilio was appointed as one of the commissioners to
represent the defendants in the finding of just
This specific relief, however, has already come to be applied in
compensation.
this jurisdiction in similar cases, among which can be cited that
Cornelia, and her other co-owners who were also
of Camacho vs. Municipality of Baliuag (28 Phil., 466.)
signatories of the 11 November 1993 letter, executed an
irrevocable Special Power of Attorney (SPA) appointing
And in the North American law such sanction is expressly recognized,
and the transaction of this nature might be regarded as an "equitable Cecilio Hernandez as their "true and lawful
trust" by virtue of which the things acquired by an employee is deemed attorney" with respect to the expropriation of the subject
not to have been acquired for his own benefit or that of any other property. The SPA stated that the authority shall be
person but for his principal, and held in trust for the latter (21 R. C. L., irrevocable and continue to be binding all throughout the
825; 2 Corpus Juris, 353). negotiation.

DISSENTING OPINION BY VILLAMOR, J: Sunyantong is held Petitioner executed a Revocation of the SPA withdrawing
civilly liable for having purchased the land in question in behalf the authority earlier granted to Cecilio. After the
of his wife, Vicenta Llorente, with knowledge of the fact that
revocation, on 28 Cornelia, with a new lawyer, moved for
Sing Bengco and Sing Juco, by whom he was employed, were
the withdrawal of her one-third (1/3) share of the just
negotiating with the owner of the land for the purchase of the
compensation, which is equivalent to Seven Million Three
same.
Hundred Twenty-One Thousand Five Hundred Pesos – the
The liability of Sunyantong should consist in the reparation of
amount a pro-indiviso owner is to receive.
the damage caused to the Sing Bengco and Sing Juco. Has any
damage been proven to have arisen from the culpable act of
The court granted the motion of petitioner, with the
the defendant Sunyantong? I do not think that it has, and
indeed no damage could have been caused to the Sing Bengco.
condition that the money shall be released only to the
There is also no proof of Sunyantong having acquired the land attorney-in-fact, Mr. Cecilio F. Hernandez.
in question in the name or in behalf of Sing Bengco and Sing Cecilio, therefore, was able to receive the entire sum of
Juco, or at the request of the latter, or with funds furnished by ₱21,964,500.00.
them. Said defendants had legal capacity to buy (art. 1457, Civil
Code) and are not within any of the cases prohibited by article Cornelia received from Cecilio a Check amounting to
1459 of the same Code. ₱1,123,000.00, accompanied by a
Receipt and Quitclaim document in favor of Cecilio. It
168. Hernandez v. Hernandez states that: (1) the amount received will be the share of
Facts: Cornelia in the just compensation paid by the government
Republic of the Philippines, through the Department of in the expropriated property; (2) in consideration of the
Public Works and Highways (DPWH), offered to purchase payment, it will release and forever discharge Cecilio from
a portion of a parcel of land. The land is pro-indiviso any action, damages, claims or demands; and (3) Cornelia
owned by Cornelia M. Hernandez (Cornelia), petitioner will not institute any action and will not pursue her
herein, Atty. Jose M. Hernandez, deceased father of complaint or opposition to the release to Cecilio or his
respondent Cecilio F. Hernandez (Cecilio), represented by heirs or assigns, of the entire amount representing the total
Paciencia Hernandez (Paciencia) and Mena Hernandez just compensation of expropriated properties under the
(Mena), also deceased and represented by her heirs. aforementioned case.

Initial and last purchase price was P35 and P70 per square Later she learned that she was entitled to receive
meter, respectively. But still, Hernandez did not accept the ₱7,321,500.00. Cornelia demanded the accounting of the
offer. proceeds. But there was no answer. Cornelia then filed a
complaint for the Annulment of Quitclaim and
Recovery of Sum of Money and Damages was filed abovementioned which he came to know only in
before the RTC, Makati. October, 1956 when, in the absence of his
caretaker, defendant Jimenez, Sr. caused the
RTC Makati ruled in favor of the plaintiff and against the fencing of the land and asserted proprietary
defendant, declaring the receipt and quitclaim signed by rights over the same.
the plaintiff dated February 7, 2000 as null and void and · Homobono H. Gonzales filed on July 26, 1957
ordering the defendant to pay the plaintiff. against Felipe Jimenez, Sr., et al. a complaint for the
reconveyance of a parcel of land
CA- reversed and set aside the ruling of the RTC. · Defendant filed a motion to dismiss, which was
denied, after which they filed their answer. After plaintiff
Petitioner Cornelia now submits that the Court of Appeals had closed his evidence, defendants submitted a
erred in holding the validity of the receipt and quitclaim second motion to dismiss on the ground that the action,
document contrary to law and jurisprudence. She holds based on fraud, should have been presented within four
that the distribution of award that transpired is unjust and years from the issuance of the patent, and not from the
prays that the decision of the RTC Makati be reinstated. discovery of the fraud
· The court dismiss the complaint, the court said
Issue: WON Cecilio may validly create in himself an that from the issuance of the title on March 15, 1953 to
interest in opposition to that of his principal or cetui que the filing of the complaint on July 26, 1957, more than
trust. four years had already elapsed and so plaintiff's action
has already prescribed
Rule: · Appellant now contends that the court a
quo erred in dismissing the complaint by computing the
SC- reinstated the decision of the RTC Makati. prescriptive period from the registration of the title in the
office of the register of deeds.
No evidence on record would show that Cornelia agreed to Issue: WON the cause of action of the plaintiff has
give Cecilio 83.07% of the proceeds of the sale of her already prescribed
land. What is on record is that Cornelia asked for an Ruling No
accounting of the just compensation from Cecilio several We believe, that this case is covered by Article 1456 of
times, but the request remained unheeded. Right at that our new Civil Code which provides: "If property is
point, it can be already said that Cecilio violated the acquired through mistake or fraud, the person obtaining
fiduciary relationship of an agent and a principal. The it is, by force of law, considered a trustee of an implied
relation of an agent to his principal is fiduciary and it is trust for the benefit of the person from whom the
elementary that in regard to property subject matter of property comes."
the agency, an agent is estopped from acquiring or Since it appears that the land in question was obtained
asserting a title adverse to that of the principal. His by defendants thru fraudulent representations by means
position is analogous to that of a trustee and he cannot, of which a patent and a title were issued in their name,
consistently with the principles of good faith, be they are deemed to hold it in trust for the benefit of the
allowed to create in himself an interest in opposition to person prejudiced by it. Here this person is the plaintiff.
There being an implied trust in this transaction, the
that of his principal or cestui que trust.
action to recover the property prescribes after the lapse
of ten years. Here this period has not yet elapsed. . 1äwphï1.ñët

A person sells land and obtains title thru fraudulent

misrepresentation, he is deemed to hold it trust for the benefit of
the person prejudiced by it, and the action for reconveyance of
169. Gonzales v. Jimenez, Sr. the property prescribes after the lapse of 10 years
Facts: WHEREFORE, the order appealed from is set aside.
· Jimenez Sr. sold a land to Gonzales This case is ordered remanded to the court a quo for
· On August 15, 1951, Felipe Jimenez, Sr. further proceedings. No costs
caused his son to file a free patent application with the
Bureau of Lands covering the same land alleging
170. Lopez v. CA
certain fraudulent statements in his application and by
FACTS:
reason of which Free Patent No. V-2706 was issued to
Juliana Lopez executed a notarial will whereby she
his son on February 4, 1953, as well as Original
wished to constitute a trust fund for her
Certificate of Title No. 11
paraphernal properties, denominated as
· Plaintiff was totally unaware of the filing
Fideicomiso de Juliana Lopez Manzano
of the application for patent as well as the (Fideicomiso) to be administered by his husband,
issuance of the patent and the certificate of title
Jose. If her husband were to die or renounce the ART. 1456. If property is acquired through mistake
obligation, her nephew, Enrique Lopez was to or fraud, the person obtaining it is, by force of law,
become the administrator and executor of the considered a trustee of an implied trust for the
Fideicomiso. Two-thirds (2/3) of the income of her benefit of the person from whom the property
paraphernal properties were to answer for the comes.
education of deserving but needy students as
beneficiaries while 1/3 was to shoulder the
expenses and fees of the administrator.
Juliana initiated the probate of her will but she died Implied trusts are either resulting or constructive
before the petition for probate could be heard, so trusts. These two are differentiated from each
her husband, Jose, pursued the petition as the other as follows:
designated executor in the will. Jose then proposed Resulting trust are based on equitable doctrine that
a partition in the proposal, he included properties valuable consideration and not legal title
which he alleged were conjugal properties but this determines the equitable title or interest and are
includes six (6) disputed paraphernal properties of presumed always to have been contemplated by
Juliana in Batangas. The court approved the the parties. They arise from the nature of
project of partition, so they ordered new circumstances of the consideration involved in a
certificates be issued in favor of Jose as trustee of transaction whereby one person thereby becomes
the Fideicomiso covering ½ of the properties listed invested with legal title but is obligated in equity to
under the project of partition; and regarding the hold his legal title for the benefit of another.
other half, to be registered in the name of Jose as On the other hand, constructive trusts are created
heir of Juliana. The properties which Jose had by the construction of equity in order to satisfy the
alleged as registered in his land and Juliana’s demands of justice and prevent unjust enrichment.
name, including the disputed lots, were They arise contrary to intention against one who,
adjudicated to Jose as heir. These were included by fraud, duress or abuse of confidence, obtains or
from the trust (Fideicomiso). A complaint for holds the legal right to property which he ought
reconveyance was filed by the current not, in equity and good conscience, to hold.
administrator. The complaint essentially alleged A resulting trust is presumed to have been
that Jose was able to register in his name the contemplated by the parties, the intention as to
disputed properties, which were the paraphernal which is to be found in the nature of their
properties of Juliana. The disputed properties were transaction but not expressed in the deed itself.
included in the inventory as if they formed part of Specific examples of resulting trust may be found
Jose’s estate when in fact Jose was holding them in Civil Code particularly Arts. 1448/49/51/52/53.
only in trust for the trust estate of Juliana. A constructive trust is created, not by any word
The RTC dismissed the petition on the ground of evidencing a direct intention to create a trust, but
prescription. by operation of law in order to satisfy the demands
The CA denied the appeals filed by both parties. of justice and to prevent unjust enrichment. It is
ISSUE: Whether an implied trust was constituted raised by equity in respect of property, which has
over the disputed properties when Jose, the been acquired by fraud, or where although
trustee, registered them in his name. acquired originally without fraud, it is against
RULING: equity that it should be retained by the person
The disputed properties were excluded from the holding it. Constructive trusts are illustrated in
Fideicomiso at the outset. Jose registered the Arts. 1450/54/55/56.
disputed properties in his name partly as his The right to seek reconveyance based on an
conjugal share and partly as his inheritance from implied or constructive trust is not absolute. It is
his wife Juliana, which is the complete reverse of subject to extinctive prescription. An action for
the claim of the petitioner, as the new trustee, that reconveyance based on implied or constructive
the properties are intended for the beneficiaries of trust prescribes in 10 years. The period is reckoned
the Fideicomiso. Furthermore, the exclusion of the from the date of the issuance of the original
disputed properties from the Fideicomiso was certificate of title or TCT. Since such issuance
approved by the probate court and subsequently, operates as a constructive notice of the whole
by the trial court having jurisdiction over the world, the discovery of the fraud is deemed to have
Fideicomiso. The registration of the disputed taken place at that time.
properties in the name of Jose was actually The rule that the trustee cannot acquire by
pursuant to a court order. The apparent mistake in prescription ownership over property entrusted to
the adjudication of the disputed properties to Jose him until and unless he repudiates the trust applies
created a mere implied trust of the constructive only to express trusts and resulting implied trusts.
variety in favor of the beneficiaries of Fideicomiso. However, in constructive implied trusts,
prescription may supervene even if the trustee pacto de retro sale over the land in favor of Arturo
does not repudiate the relationship. Necessarily, Teves (Arturo). In 1992, Arturo sold Lot No. 2139 in
repudiation of said trust is not a condition favor of respondents father, Dr. Monterroyo, by virtue
precedent to the running of the prescriptive period. of an oral contract. On January 1995, Arturo
Thus for the purpose of counting the ten year executed a Deed of Confirmation of Absolute Sale of
prescriptive period for the action to enforce the Unregistered Land in favor of Dr. Monterroyos heirs.
constructive trust, the reckoning point is deemed So Jose was not the owner of Lot No. 2139 and as
to be on 15 September 1969 when Jose registered such, he could not sell the land to his children. They
the disputed properties in his name. alleged that petitioners OCTs were null and void for
having been procured in violation of the Public Land
Act. They further alleged that the Land Management
Bureau had no authority to issue the free patent titles
171. Pasiño v. Monterroyo
because Lot No. 2139 was a private land.
FACTS:
Laureano Pasino filed an homestead application over RTC: rendered in favor of the respondents.
a 24 hectare land Lot no. 2139 located at Panuliran,
Albumo, Iligan City. He claimed to have occupied and Petitioners appealed.
cultivated and cleared the land in 1933. After
Laureano died in April 1952, the Director of lands CA: affirmed RTC’s decision.
issued an order for the issuance of a homestead
patent in favor of him. Laureano’s heirs did not ISSUE: WON there was an Implied Constructive
receive the order and consequently, the land was not trust.
registered under Laureanos name or under that of his
heirs. In 1953, the property was covered by Tax HELD:
Declaration in the name of Laureano with Graciana YES, Under the principle of constructive trust,
Herbito (wife of Laureano) as administrator. registration of property by one person in his name,
whether by mistake or fraud, the real owner being
On October 1962, Joses Pasino co-heirs executed a another person, impresses upon the title so acquired
Deed of Quitclaim renouncing their rights and interest the character of a constructive trust for the real
over the land in favor of Jose (son of Laureano). owner, which would justify an action for
Later, Jose alienated Lot No. 2139 in favor of his reconveyance. In the action for reconveyance, the
children (petitioners in this case) who, on January decree of registration is respected as incontrovertible
1994, simultaneously filed applications for grant of but what is sought instead is the transfer of the
Free Patent Titles over their respective shares of Lot property wrongfully or erroneously registered in
No. 2139 before the Land Management Bureau of anothers name to its rightful owner or to one with a
the Department of Environment and Natural better right. If the registration of the land is
Resources (DENR). On August 1994, the DENR fraudulent, the person in whose name the land is
granted petitioners applications and issued Original registered holds it as a mere trustee, and the real
Certificate of Title (OCT). owner is entitled to file an action for reconveyance of
the property.
Petitioners alleged that their possession of Lot No.
2139 was interrupted on January 1993 when In the given case, respondents (Monterroyo) were
respondents forcibly took possession of the property. able to establish that they have a better right to Lot
So the petitioners (heirs of Pasino) filed an action for No. 2139 since they had long been in possession of
recovery of possession and damages. the property in the concept of owners, by themselves
and through their predecessors-in-interest. Hence,
Respondents Monterroyo alleged that they had been despite the irrevocability of the Torrens titles issued
in open, continuous, exclusive and notorious in their names and even if they are already the
possession of Lot No. 2139, by themselves and registered owners under the Torrens system,
through their predecessors-in-interest, since July petitioners may still be compelled under the law to
1949. They alleged that on July 1949, Rufo Larumbe reconvey the property to respondents.
(Larumbe) sold Lot No. 2139 to Petra Teves (Petra).
Then, on February 1984, Petra executed a deed of
172. Hortizuela v. Tagufa
sale over Lot No. 2139 in favor of Vicente Teves
(Vicente). On February 1985, Vicente executed a
FACTS: The property involved in this case is a parcel of land her name does not operate to vest ownership upon her of the
located at District IV, Tumauini, Isabela containing an area of subject land. Its issuance in favor of a particular person does not
539 square meters, more or less, and covered by OCT No. P- foreclose the possibility that the real property may be co-
84609 of the Registry of Deeds of Isabela. By virtue of the owned with persons not named in the certificate, or that it may
special power of attorney xxx executed by Mariflor Tagufa be held in trust for another person by the registered owner.
Hortizuela, Jovier Tagufa instituted this case against herein
defendants praying for the peaceful surrender of the above- Furthermore, respondent’s argument that the overriding reason
described property unto them and further ordering defendant why Hortizuela chose to file a complaint for reconveyance and
Gregoria Tagufa to reconvey in plaintiff’s favor the same recovery of possession was that she failed to avail of the
property which was titled under her name via fraud. remedy provided under Section 38 of Act 496 within the
prescribed period of one (1) year, counted from the issuance of
Before it was titled in the name of Defendant Tagufa, said the patent by the government, is weak. As was similarly held in
property was originally owned by plaintiff’s parents, Spouses Cervantes v. CA, with the land obtained by respondent Gregoria
Epifanio Tagufa and Godofreda Jimenez. Although untitled, the through fraudulent machinations by means of which a free
spouses mortgaged the property with the Development Bank of patent and a title were issued in her name, she was deemed to
the Philippines (DBP). For failure to redeem the property, DBP have held it in trust for the benefit of Hortizuela who was
foreclosed the same and sold it to Atty. Romulo Marquez xxx prejudiced by her actions. Article 1456 provides:
who, in turn, sold it back to Runsted Tagufa, husband of
defendant Gregoria Tagufa, on April 4, 2002 xxx using the fund ARTICLE 1456. If property is acquired through mistake or fraud, the
sent by plaintiff Hortizuela who was in America and with the person obtaining it is, by force of law, considered a trustee of an
agreement that Runsted will reconvey the said property to her implied trust for the benefit of the person from whom the property
comes.
sister when demanded.

However, plaintiff discovered that the same unregistered A fraudulently acquired free patent may only be assailed by the
property was titled in the name of Gregoria Tagufa under OCT government in an action for reversion pursuant to Section 101
No. P-84609 of the Registry of Deeds of Isabela xxx. of the Public Land Act.
Investigating further, plaintiff discovered that Gregoria Tagufa
was able to title the said property by virtue of a free patent In Sherwill Development Corporation v. Sitio Sto. Niño
application before the Department of Environment and Natural Residents Association, Inc., this Court pointed out that:
Resources (DENR) and the execution of a Deed of Extrajudicial
x x x It is to the public interest that one who succeeds in fraudulently
Settlement of the Estate of the late Spouses Leandro Tagufa and
acquiring title to a public land should not be allowed to benefit
Remedios Talosig dated May 9, 2003 xxx. Plaintiff now seeks to
therefrom, and the State should, therefore, have an even existing
recover possession of the said property which is presently
authority, thru its duly-authorized officers, to inquire into the
occupied by Gregoria Tagufa and her co-defendants and have circumstances surrounding the issuance of any such title, to the end
the same be reconveyed unto them. that the Republic, thru the Solicitor General or any other officer who
may be authorized by law, may file the corresponding action for the
MCTC – Dismissed for lack of merit. reversion of the land involved to the public domain, subject thereafter
to disposal to other qualified persons in accordance with law. In other
RTC – Reversed and Set Aside. MR Denied. words, the indefeasibility of a title over land previously public is not a
bar to an investigation by the Director of Lands as to how such title has
been acquired, if the purpose of such investigation is to determine
CA – RTC Reversed and Set Aside. Collateral attack on Torrens
whether or not fraud had been committed in securing such title in order
Title prohibited. that the appropriate action for reversion may be filed by the
Government.
ISSUE: Whether or not the property was held in trust.
The foregoing rule is, however, not without exception. A
RULING: Petition is granted. CA Reversed and Set Aside. RTC recognized exception is that situation where plaintiff-claimant
decision reinstated. seeks direct reconveyance from defendant of public land
unlawfully and in breach of trust titled by him, on the principle
RATIO: What is being sought is the transfer of the property of enforcement of a constructive trust. This was the ruling in
wrongfully or erroneously registered in another's name to its Larzano v. Tabayag, Jr., where it was written:
rightful owner or to the one with a better right. If the
registration of the land is fraudulent, the person in whose name A private individual may bring an action for reconveyance of a parcel of
the land is registered holds it as a mere trustee, and the real land even if the title thereof was issued through a free patent since
owner is entitled to file an action for reconveyance of the such action does not aim or purport to re-open the registration
property. The fact that Gregoria was able to secure a title in her proceeding and set aside the decree of registration, but only to show
that the person who secured the registration of the questioned
name does not operate to vest ownership upon her of the
property is not the real owner thereof.
subject land. The fact that Gregoria was able to secure a title in
The fact that petitioner was able to secure a title in her name Apart from the Asset Pool, the LSDC certificates were
did not operate to vest ownership upon her of the subject land. also secured by a guaranty. The guaranty was
Registration of a piece of land under the Torrens System does referenced in the Trust Agreement.
not create or vest title, because it is not a mode of acquiring
Home Insurance and Guaranty Corporation is the
ownership. A certificate of title is merely an evidence of
guarantor of the said certificates. It provides guaranty
ownership or title over the particular property described coverage in accordance with its policies and as provided
therein. It cannot be used to protect a usurper from the true for in its Contract of Guaranty executed by the parties.
owner; nor can it be used as a shield for the commission of The Trust Agreement provides that in the event that a
fraud; neither does it permit one to enrich himself at the call is made on Home Guaranty Corporation for its
expense of others. Its issuance in favor of a particular person guaranty, Planters Development Bank shall convey to the
does not foreclose the possibility that the real property may be former the Asset Pool:
co-owned with persons not named in the certificate, or that it
may be held in trust for another person by the registered Section 3.4. Conveyance to HIGC. Express authority is
hereby granted by the LANDOWNER/DEVELOPER to the
owner. [RTC]
TRUSTEE that in the event of call upon the HIGC
guaranty for unredeemed LSDCs and in order to effect
the redemption of the same by the latter, to make the
173. Home Guaranty Corp. v. La Savoje Dev. Corp. absolute conveyance to HIGC of the entire Asset Pool,
subject to the reservations regarding joint-venturers
HOME GUARANTY CORPORATION, Petitioner, v. LA
[sic] interests as defined in Section 3.1, a and b above
SAVOIE DEVELOPMENT CORPORATION, Respondent.
and subject further to the provision of the
aforementioned Contract of Guaranty.
Trustor – La Savoie Trustee – Planters Development
This conveyance shall be on the strength of the special
Bank Beneficiaries – Holders of the LSDC certificates
power of attorney executed by La Savoie in favor of
Planters Development Bank, in accordance with Section
2.1.6 of the Trust
FACTS: Section 2.1. - The LANDOWNER/DEVELOPER shall:
La Savoie Development Corporation (La Savoie) is a 2.1.6 Execute and deliver to the TRUSTEE an irrevocable
domestic corporation engaged in the business of real Special Power of Attorney a Secretary's Certificate per
estate development, subdivision and brokering. It had enclosed Annex G giving the TRUSTEE the full power and
subdivision and housing projects in several areas that authority to make the absolute conveyance of the entire
were collectively referred to as the “La Savoie Project”. LSP Asset Pool in favor of the HIGC in the event of call
upon the HIGC guaranty for unredeemed LSDCs and in
The development and implementation of the “Project” order to effect the redemption of the same by the HIGC
was to be funded through the issuance and sale of asset in accordance with the provisions of the Contract of
participation certificates known as La Savoie Guaranty.
Development Certificates. Planters Development Bank On Home Guaranty Corporation's guaranty, Section 12 of
was specified to be a nominal issuer only of all LSDCs the Contract of Guaranty entered into by Home Guaranty
and perform the functions and responsibilities of a Corporation, La Savoie and Planters Development Bank
trustee as what has been stated in the Trust Agreement. provided for the events in which Home Guaranty
Corporation may be called to pay for the LSDC
The LSDC’s are backed and secured by the asset pool certificates.
consisting of said real estate properties and the products Section 13 of the Contract of Guaranty provides for how
and results of their planned development. guaranty claims are to be processed and paid by Home
Guaranty Corporation. Likewise, it echoes Section 3.4 of
La Savoie has agreed to convey the real estate the Trust Agreement in providing for transfer of the
properties of the “Project” to a trustee to form the La Asset Pool in the event of a call on the guaranty.
Savoie Project Asset Pool which shall be held by the
trustee for the pro rata and pro indiviso benefit of the With the onset of the Asian financial crisis, La Savoie
holders of the LSDCs as defined in the trust agreement. found itself unable to pay its obligations to its creditors.
Thus, La Savoie filed before the Regional Trial Court,
La Savoie also establishes a trust, for purposes of this Makati City6 a "petition for the declaration of state of
securitization and formation of the corresponding Asset suspension of payments with approval of proposed
pool, out of the properties pertaining to the PROJECT rehabilitation plan under the Interim Rules of Procedure
development and operation, and accordingly does hereby on Corporate.
convey, assign and deliver all its rights and interests in
the real estate properties identified and described It is not disputed that La Savoie defaulted in the
through their respective transfer certificates of title redemption and in the payment of interest on the LSDC
(TCTs). certificates. It is also settled that a call was made on
Home Guaranty Corporation to pay for the LSDC
As per the trust agreement, Planters Development Bank certificates, pursuant to the provisions of the Trust
was named trustee of the Asset pool. Agreement and the Contract of Guaranty. However, as
acknowledged by Home Guaranty Corporation, any
payment that it could have made was "overtaken"79by added that, even assuming there was full payment and
the filing of La Savoie's Petition for Rehabilitation. that the Deed of Assignment and Conveyance was
executed, "the Subject Properties remained within the
RTC: Issued a stay order saying "the enforcement of all jurisdiction of the [Regional Trial Court] even after the
claims, whether for money or otherwise, and whether lifting of the Stay Order dated 04 June 2003"50 and that,
such enforcement is by court action or otherwise, against as a result, "any contract or document affecting title to
[La Savoie], its guarantors and sureties not solidarity the Subject Properties is also subject to the rehabilitation
liable with it."80 It also "prohibited [La Savoie] from proceedings pending with the [trial court]."51 It also
making any payment of its liabilities outstanding as of asserted that by paying the guaranty, Home Guaranty
the date of the filing of the petition. Corporation effectively became its creditor. Excluding the
properties comprising the Asset Pool from the
Issued another Order denying due course to La Savoie's rehabilitation proceedings would then be tantamount to
Petition for Rehabilitation and lifting the Stay Order. The giving preference to one creditor, something which is
trial court reasoned that the "findings of sufficiency in prohibited in rehabilitation proceedings.
the form and substance of the petition for which a stay
order was issued has been flawed"and that "[i]t cannot
countenance a situation such as this where the petitioner ISSUE: Whether the conveyance to Home Guaranty
files a petition on the basis of inaccurate or unverifiable Corporation of the properties comprising the Asset Pool
allegations and false representations." It noted that per was valid and effectual.
the Rehabilitation Receiver's Report, there were "various
inaccuracies in the material allegations of the petition HELD: NO.
and its annexes."33 Several documents "to verify other During rehabilitation receivership, the assets are held in
material statements made therein" were also lacking. It trust for the equal benefit of all creditors to preclude one
added that La Savoie "has not presented any concrete from obtaining an advantage or preference over another
and feasible plan on how it will be able to secure by the expediency of an attachment, execution or
additional funds to continue with the development of its otherwise. For what would prevent an alert creditor,
raw land and on-going joint-venture projects." upon learning of the receivership, from rushing
posthaste to the courts to secure judgments for the
CA: Reversed the decision. Reinstated the Stay order, satisfaction of its claims to the prejudice of the less alert
gave due course to the petition for rehabilitation, and creditors.
remanded the case back to the trial court for further
proceedings. As between creditors, the key phrase is "equality is
La Savoie "convincingly showed that it could undertake equity. When a corporation threatened by bankruptcy is
to market its projects through [the] Pag-Ibig Overseas taken over by a receiver, all the creditors should stand
Program, sell the existing inventories of unsold on an equal footing. Not anyone of them should be given
subdivision lots and use the un-remitted collections due any preference by paying one or some of them ahead of
to HGC which will be converted as additional loan to fund the others. This is precisely the reason for the
its on-going projects."45Regarding Home Guaranty suspension of all pending claims against the corporation
Corporation's payment of the guaranty call, the Court of under receivership. Instead of creditors vexing the courts
Appeals noted that it was made after the Petition for with suits against the distressed firm, they are directed
Rehabilitation had been brought by La Savoie and after to file their claims with the receiver who is a duly
the issuance of the Stay Order; thus, Home Guaranty appointed officer of the SEC.
Corporation had no right to make such payment.
If, following this payment and while La Savoie remained
Home Guaranty Corporation filed before this court the to be not under receivership, a valid transfer of the
present Petition for Review on Certiorari under Rule 45 of properties comprising the Asset Pool was made in favor
the 1997 Rules of Civil Procedure. of Home Guaranty Corporation, the properties would
It asserts 'that the properties comprising the Asset Pool then no longer be under the dominion of La Savoie. They
should be excluded from the rehabilitation proceedings would thus be beyond the reach of rehabilitation
as these have now been "removed from the oominion"47 proceedings and no longer susceptible to the rule against
of La Savoie and have been conveyed and assigned to it. preference of creditors. However, we find that the
It underscores that the transfer made to it by Planters transfer made to Home Guaranty Corporation was
Development Bank was made after the Stay Order had ineffectual.
been lifted, per the Regional Trial Court's October 1,
2003 Order. Viewed solely through the lens of the Trust Agreement
and the Contract of Guaranty, the transfer made to
La Savoie filed its Comment It claimed that the supposed Home Guaranty Corporation on the strength of the Deed
assignment and conveyance to Home Guaranty of Conveyance appears valid and binding. However, we
Corporation was ineffectual considering that "at the time find that its execution is in violation of a
of the guaranty call, the Stay Order dated 04 June 2003 fundamental principle in the law governing credit
was admittedly in effect. La Savoie faulted Home transactions. We find the execution of a Deed of
Guaranty Corporation for supposedly not adducing proof Conveyance without resorting to foreclosure to be
of the transfer effected to it by Planters Development indicative of pactum commissorium. Hence, it is
Bank on the strength of its payment on the guaranty. It void and ineffectual and does not serve to vest
ownership in Home Guaranty Corporation. construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise
Art. 2088. The creditor cannot appropriate the things contrary to intention against one who, by fraud, duress
given by way of pledge or mortgage, or dispose of them. or abuse of confidence, obtains or holds the legal right to
Any stipulation to the contrary is null and void. property which he ought not, in equity and good
conscience, to hold.104 (Emphasis supplied)
Art. 2137. The creditor does not acquire the ownership Articles 1450, 1454, 1455, and 1456 of the Civil Code
of the real estate for non-payment of the debt within the provide examples of constructive trusts:
period agreed upon. Art. 1450. If the price of a sale of property is loaned or
paid by one person for the benefit of another and the
Every stipulation to the contrary shall be void. But the conveyance is made to the lender or payor to secure the
creditor may petition the court for the payment of the payment of the debt, a trust arises by operation of law in
debt or the sale of the real property. favor of the person to whom the money is loaned or for
In this case, Sections 13.1 and 13.2 of the Contract of whom it is paid. The latter may redeem the property and
Guaranty call for the "prompt assignment and compel a conveyance thereof to him.
conveyance to [Home Guaranty Corporation] of all the
corresponding properties in the Asset Pool" that are held Art. 1454. If an absolute conveyance of property is
as security in favor of the guarantor. Moreover, Sections made in order to secure the performance of an
13.1 and 13.2 dispense with the need of conducting obligation of the grantor toward the grantee, a trust by
foreclosure proceedings, judicial or otherwise. Albeit virtue of law is established. If the fulfillment of the
requiring the intervention of the trustee of the Asset obligation is offered by the grantor when it becomes
Pool, Sections 13.1 and 13.2 spell out what is, for all due, he may demand the reconveyance of the property
intents and purposes, the automatic appropriation by the to him.
paying guarantor of the properties held as security. This
is thus a clear case of pactum commissorium. It is null Art. 1455. When any trustee, guardian or other person
and void. Accordingly, whatever conveyance was made holding a fiduciary relationship uses trust funds for the
by Planters Development Bank to Home Guaranty purchase of property and causes the conveyance to be
Corporation in view of this illicit stipulation is ineffectual. made to him or to a third person, a trust is established
It did not vest ownership in Home Guaranty Corporation. by operation Of law in favor of the person to whom the
funds belong.
This transfer engendered is a constructive trust in
which the properties comprising the Asset Pool are Art. 1456. If property is acquired through mistake
held in trust by Home Guaranty Corporation, as or fraud, the person obtaining it is, by force of law,
trustee, for the trustor, La Savoie. considered a trustee of an implied trust for the
benefit of the person from whom the property
Trust is the legal relationship between one person having comes.
an equitable ownership in property and another person
owning the legal title to such property, the equitable Home Guaranty Corporation acquired the
ownership of the former entitling him to the performance properties comprising the Asset Pool by mistake or
of certain duties and the exercise of certain powers by through the ineffectual transfer (i.e., for being
the latter. Trusts are either express or implied. An pactum commissorium) made by the original
express trust is created by the direct and positive acts of trustee, Planters Development Bank.
the parties, by some writing or deed or will or by words
evidencing an intention to create a trust. No particular Two key points are established from the preceding
words are required for the creation of an express trust, it discussions. First, the Court of Appeals' June 21, 2005
being sufficient that a trust is clearly intended. Decision restored La Savoie's status as a corporation
under receivership. Second, with all but a constructive
On the other hand, implied trusts are those which, trust created between Home Guaranty Corporation and
without being expressed, are deducible from the nature La Savoie, the properties comprising the Asset Pool
of the transaction as matters of intent or which are super remain within the dominion of La Savoie.
induced on the transaction by operation of law as On the first point, the restoration of La Savoie's status as
matters of equity, independently of the particular a corporation under receivership brings into operation
intention of the parties. In turn, implied trusts are either the rule against preference of creditors. On the second
resulting or constructive trusts. These two are point, La Savoie's continuing ownership entails the
differentiated from each other as follows: continuing competence of the court having jurisdiction
Resulting trusts are based on the equitable doctrine that over the rehabilitation proceedings to rule on how the
valuable consideration and not legal title determines the properties comprising the Asset Pool shall be disposed,
equitable title or interest and are presumed always to managed, or administered in order to satisfy La Savoie's
have been contemplated by the parties. They arise from obligations and/or effect its rehabilitation.
the nature or circumstances of the consideration
involved in a transaction whereby one person thereby The cumulative effect of these is that Home Guaranty
becomes invested with legal title but is obligated in Corporation must submit itself, like La Savoie's other
equity to hold his legal title for the benefit of another. On creditors, to how La Savoie's Petition for Rehabilitation
the other hand, constructive trusts are created by the shall be resolved. As a paying guarantor, Home Guaranty
Corporation was subrogated into the rights of La Savoie's CFI dismissed the complaint on the ground of res
creditors and now stands as the latter's own creditor. It judicata.
remains so pending the satisfaction of La Savoie's ISSUE: WON the dismissal on the ground of res judicata
obligation and as the void conveyance made to it by correct.
Planters Development Bank failed to terminate in the HELD: Yes. The crucial issue is prescription. With it the
creditor-debtor relationship with La Savoie. question of res judicata and the existence of a trust are
inextricably interwoven.
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
V. Rules of Prescription on Trusts registered in his name in trust for the benefit of the
cestui qui trust does not prescribe, or that the defense of
174. Ramos v. Ramos prescription cannot be set up in an action to recover
property held by a person in trust for the benefit of
FACTS: The spouses Martin Ramos and Candida Tanate another, or that property held in trust can be recovered
died and were survived by their three legitimate children by the beneficiary regardless of the lapse of time. That
named Jose, Agustin, and Granada. Martin Ramos was rule applies squarely to express trusts.
also survived by his seven natural children named The rule of imprescriptibility of the action to recover
Anatacia, Timoteo, Modesto, Manuel, Emiliano, Maria, property held in trust may possibly apply to resulting
and Federico. trusts as long as the trustee has not repudiated the
A special proceeding was instituted in the Court of First trust.
Instance of Negros Occidental for the settlement of the The rule of imprescriptibility was misapplied to
intestate estate of the said spouses. constructive trusts.
A project of partition was submitted. It was signed by Acquisitive prescription may bar the action of the
the three legitimate children, Jose, Agustin and Granada; beneficiary against the trustee in an express trust for the
by the two natural children, Atanacia and Timoteo, and recovery of the property held in trust where (a) the
by Timoteo Zayco in representation of the other five trustee has performed unequivocal acts of repudiation
natural children who were minors. It was sworn to before amounting to an ouster of the cestui qui trust; (b) such
the justice of the peace. positive acts of repudiation have been made known to
It was agreed in the project of partition that Jose Ramos the cestui qui trust and (c) the evidence thereon is clear
would pay the cash adjudications to Atanacia, Timoteo and conclusive.
and Manuel, while Agustin Ramos would pay the cash With respect to constructive trusts, the rule is different.
adjudications to Modesto, Federico, Emiliano and Maria. The prescriptibility of an action for reconveyance based
It was further agreed that Jose Ramos and Agustin on constructive trust is now settled. Prescription may
Ramos would pay their sister, Granada, the sums of supervene in an implied trust.
P3,302.36 and P14,273.78, respectively. The plaintiffs did not prove any express trust in this
Judge Richard Campbell, in his "decision" approved the case. The expediente of the intestate proceeding,
project of partition as well as the intervention of Timoteo particularly the project of partition, the decision and the
Zayco as guardian of the five heirs, who were minors. In manifestation as to the receipt of shares negatives the
an order, Judge V. Nepomuceno asked the administrator existence of an express trust. Those public documents
to submit a report, complete with the supporting prove that the estate of Martin Ramos was settled in that
evidence, showing that the shared of the heirs had been proceeding and that adjudications were made to his
delivered to them as required in the decision. In a seven natural children. A trust must be proven by clear,
manifestation, which was signed by Jose, Agustin, satisfactory, and convincing evidence. It cannot rest on
Granada, Atanacia and Timoteo all surnamed Ramos, vague and uncertain evidence or on loose, equivocal or
and by Timoteo Zayco, the guardian, and which was indefinite declarations. As already noted, an express
sworn to before the justice of the peace. trust cannot be proven by parol evidence. Neither have
Upon their father’s death, his properties were left under the plaintiffs specified the kind of implied trust
the administration of Rafael Ramos, the younger brother contemplated in their action. We have stated that
of their father. Rafael then turned over Hacienda Ylaya whether it is a resulting or constructive trust, its
to Agustin Ramos and Hacienda Calaza to Jose Ramos. enforcement may be barred by laches.
Plaintiffs later discovered that the property administered
by their brother Jose had a Torrens Title in the name of 175. Diaz v. Gorricho and Aguado
his Widow, Gregoria and daughter, Candida. Plaintiffs did
not intervene in the intestate proceedings for the FACTS:
settlement of the estate of their brother Jose as they did Spouses Francisco Diaz and Maria Sevilla
not know of it. originally owned Lot Nos. 1941 and 3073. Francisco Diaz
It is predicated on the theory that plaintiffs' shares were died in 1919, survived by his widow Maria Sevilla and
held in trust by the defendants. No deed of trust was their three children — Manuel, Lolita and Constancia. In
alleged and proven. 1935, defendant Carmen J. Gorricho filed an action
The defendants denied the existence of a trust. against Sevilla, wherein a writ of attachment was issued
Plaintiffs brought the suit to CFI Negros Occidental upon the shares of Sevilla in said lots, which were later
seeking for the reconveyance in their favor by on sold at a public auction to Gorricho. Since Sevilla
defendants. failed to redeem the lots in one year, the acting
provincial sheriff executed a final deed of sale in favor of notified of a breach or other cause of suit against the
Gorricho; however, the sheriff wrongfully conveyed to trustee. However, laches exists where suit is not
Gorricho the whole of the two lots, instead of only the commenced within such reasonable time.
half-interest of Sevilla therein. In constructive trusts, laches constitutes a bar to
In 1951, Sevilla died. A year later, Sevilla’s actions to enforce the trust, and repudiation is not
children, plaintiffs Manuel, Constancia and Lolita filed an required, unless there is concealment of the facts giving
against defendants Gorricho and her husband Francisco rise to the trust. Time runs from the moment that the
Aguado, compelling the latter to execute in their favor a law creates the trust, which is the time when the cause
deed of reconveyance over an undivided one-half of action arises. But laches does not exist while the
interest over the two lots – the share of their deceased trustee, fraudulently and successfully conceals the facts
father, Francisco Diaz, which was illegally conveyed by giving rise to the trust, although the concealment must
the provincial sheriff to Gorricho. be adequately pleaded by the plaintiff in a suit to declare
The siblings Diaz contend that Gorricho acquired a trust, where the delay is apparent on the face of his
their father’s half of the disputed property through an pleading.
error of the provincial sheriff, so it was subject to an The reason for the difference in treatment is that
implied trust, under Article 1456 of the New Civil Code. on one hand, in express trusts, the delay of the
Furthermore, they allege that since the trust is beneficiary is directly attributable to the trustee who
continuing and subsisting, the siblings Diaz may compel holds the property for the former, thus creating a
reconveyance of the property despite the lapse of time, fiduciary relation between them. The trustee's
because prescription does not run against titles possession is, therefore, not adverse to the beneficiary,
registered under Act 496. until and unless the latter is made aware that the trust
Defendants denied and alleged that plaintiffs' has been repudiated.
action had prescribed. The trial court held that while a On the other hand, in constructive trusts, there
constructive trust in siblings Diaz’ favor arose when is neither promise nor fiduciary relation; the trustee does
defendant Gorricho took advantage of the error of the not recognize any trust and has no intent to hold for the
provincial sheriff in conveying to her the whole of the beneficiary; therefore, the beneficiary is not justified in
lots and obtained title in herself, the action of plaintiffs delaying action to recover his property. It is his fault if
was, however, barred by laches and prescription. So, the he delays; hence, he may be estopped by his own
plaintiffs appealed. laches.
Since the cause of action of siblings Diaz to
ISSUES: attack the sheriff's deed and cancel the transfer
1. Whether or not a constructive trust was created in certificates of title issued to spouses Gorricho and
favor of the siblings Diaz. Aguado accrued since its issuance and recording in 1937,
2. Whether or not the action for reconveyance of the two and plaintiffs had allowed fifteen (15) years to elapse
lots to siblings Diaz was barred by laches. before seeking remedy in 1952, then the dismissal of the
3. Whether or not the action for reconveyance of the two case must be upheld. Even considering that Constancia
lots to siblings Diaz was barred by prescription. only became of age in 1939, more than sufficient time
(thirteen years) had been allowed to elapse to extinguish
HELD: appellant's action.
1. YES. Art. 1456 of the NCC provides that “if property is 3. YES. Under the old Code of Civil Procedure in force at
acquired through mistake or fraud, the person obtaining the time, the longest period of extinctive prescription
it is, by force of law, considered a trustee of an implied was only ten years. Since 15 years lapsed from the time
trust for the benefit of the person from whom the the cause of action arose before plaintiffs sought for
property comes.” Since Gorricho acquired the whole of remedy, then their action for reconveyance was barred
the disputed lots through the error of the sheriff, when in by prescription.
fact Gorricho was only entitled to the half of it, then a
constructive trust was created in favor of the siblings 176. Heirs of Tranquilino Labiste v. Heirs of Jose Labiste
Diaz.
2. YES. The action for reconveyance of the two lots to
siblings Diaz was barred by laches. DOCTRINE:
Express trusts are created by intention of the If a trust relationship has been created between the
parties, while implied or constructive trusts are parties whether expressly or impliedly, prescription does
exclusively created by law and are not trusts in their not run until the said trust is repudiated.
technical sense. The express trusts disable the trustee
from acquiring for his own benefit the property FACTS:
committed to his management or custody, at least while
he does not openly repudiate the trust, and makes such ● The case involved a parcel of Friar Land with an
repudiation known to the beneficiary. Thus, the old Code area of 13,308 square meters known at Cebu
of Civil Procedure (Act 190) declared that rules on City which was purchased from the Bureau of
adverse possession do not apply to "continuing and Lands way back on 1919 by Emilio in his own
subsisting" (i.e., unrepudiated) trusts. behalf and on behalf of his brothers and sisters
In the case of an express trust, a beneficiary is who were the heirs of Jose. (Collectively known
entitled to rely upon the fidelity of the trustee. No laches as Heirs of Jose)
exists until a reasonable time after a beneficiary is
 ● The money that was used to purchase the land compromise agreement was reached by the parties and
came from both Emilio and their Uncle Lino so approved by the RTC which ordered the reconstitution.
after full payment of the purchase price but prior
to the issuance of the deed of conveyance by the The RTC further held that the reconstituted title did not
Bureau of Lands, Emilio executed an Affidavit in give any more right to respondents than what their
Spanish dated on 1923 affirming that he, as one predecessors-in-interest actually had as it is limited to
of the heirs of Jose and his Uncle Lino then co- the reconstitution of the certificate as it stood at the time
owned the lot. Thereafter or on 1924 the Bureau of its loss or destruction.
of Lands executed the Deed of Conveyance in
favor of Emilio and his siblings, or the heirs of CA while affirming petitioners right to the property,
Jose by virtue of which a TCT was issued by the nevertheless reversed the RTCs decision on the
Register of Deeds. ground of prescription and laches. It affirmed the RTCs
findings that the Affidavit and the Calig-onan sa
● On 1928, the lot was subdivided by Deputy Land Panagpalit are genuine and authentic, and that the same
Surveyor, Engineer Bunag into two (2) equal are valid and enforceable documents. Citing Article 1144
parts with an area of 6,664 square meters for of the Civil Code, it held that petitioners cause of action
Lino and an area of 6,664 square meters for had prescribed for the action must be brought within ten
Emilio and the other heirs of Jose. This was (10) years from the time the right of action accrues upon
approved by the Director of Lands on 1928. the written contract which in this case was when
petitioners predecessors-in-interest lost possession over
● On 1939, the heirs of Lino purchased the share the property after World War II. Also, the lapse of time
of the lot of the heirs of Jose as evidenced by the to file the action constitutes neglect on petitioners part
Calig-onan sa Panagpalit executed by the parties so the principle of laches is applicable.
in Visayan dialect. So the heirs of Lino
immediately took possession of the entire 13,308 ISSUE:
sqm lot. a) WON Lino’s heirs had long prescribed or barred by
laches.
● When World War II broke out however, Lino’s b) How Express Trusts are created.
heirs fled the city. When they came back after
the war, they found their homes and possessions RULING:
and the records in the government offices a) No. The rules on prescription and the principle of
burned and destroyed with squatters occupying laches cannot be applied here because of the
their entire property. existence of a trust relationship.

● Lino’s heirs subsequently learned that one of the b) Trust is the right to the beneficial enjoyment of
heirs of Jose filed a petition for reconstitution of property, the legal title to which is vested in
title over the Lot on September 17, 1993. So in another. It may either be express or implied. An
October 1993 they opposed the said petition but express trust is created by direct and positive
later on withdrew the same on the basis of a acts of the parties, by some writing or deed or
compromise agreement they entered with the will. No particular words are required for the
heirs of Jose to expedite the reconstitution of creation of an express trust it being sufficient
title. So on December 14, 1994, the Register of that a trust is clearly intended (Article 144, Civil
Deed issued the reconstituted Title in the names Code). An implied trust comes into being by
of the heirs of Jose. operation of law.

● The heirs of Jose however did not honor the The Affidavit of Emilio which is genuine and
compromise agreement. So on January 13, authentic beyond cavil is in the nature of an
1995, the heirs of Lino filed a complaint for express trust. In said affidavit, Emilio confirmed
annulment of title, re-conveyance of property that Lot 1054 bought in his name was co-owned
with damages. Jose’s heirs however said that the by him as one of the heirs of Jose, and his uncle
action of Lino’s heirs had long prescribed or Lino. And by agreement, each of them has been
barred by laches. in possession of half of the property as
corroborated by the subdivision plan prepared by
RTC ruled in favor of petitioners. Engineer Bunag and approved by the Bureau of
After evaluating the documents presented by petitioners, Lands. As such prescription and laches will run
the RTC found that they are genuine and authentic as only if it is shown that: (a) the trustee has
ancient documents and that they are valid and performed unequivocal acts of repudiation
enforceable. amounting to an ouster of the beneficiary; (b)
such positive acts of repudiation have been made
Moreover, it held that the action had not prescribed as known to the beneficiary, and (c) the evidence
the complaint was filed about a year after the thereon is clear and conclusive.
reconstitution of the title by respondents. The judicial
reconstitution was even opposed by petitioners until a Jose’s heirs cannot rely on the fact that the
Torrens title was issued in their names. Trustees
 who obtain a Torrens title over a property held in the deceased Emilio Escay in its order of February
trust by them for another cannot repudiate the 24, 1934. In 1941, Magdalena Vda. de Escay,
trust by relying on the registration. The only act
Roberto and the other children filed a complaint
that can be construed as repudiation was when
against Jose Escay, Sr. and Atty. Arboleda
one of Jose’s heirs filed the petition for
reconstitution in October 1993. And since Lino’s (administrator of the deceased Emilio), for the
heirs filed their complaint in January 1995 their recovery of the ownership and possession of the
cause of action has not yet prescribed. properties in question. This case was provisionally
dismissed after defendants have answered, upon
Neither can laches be attributed to them. Laches motion of the parties on July 24, 1944.
cannot be used to defeat justice or perpetuate
Issue:
fraud and injustice. Neither should it be applied
to prevent rightful owners of a property from Whether or not the Court erred in holding of the
recovering what has been fraudulently registered properties in trust (implied) for the heirs of Emilio
in the name of another. Escay.
Held:
However with respect to the other half covered Petitioners contend that since the titles over the
by the private Calig-onan sa Pagpapalit, the heirs
properties in question were transferred to the name
of Lino should have filed an action to compel
Jose’s heirs to execute a public deed of sale.
of respondents' predecessor-in-interest, Jose Escay,
Since this document was executed on October Sr., by fraudulent means, an implied trust was
18, 1939, such action has already prescribed created between the testate estate of Emilio Escay
because actions upon written contract must be and Jose Escay, Sr. under which, by operation of
filed within 10 years only. So only one-half can law, Jose Escay, Sr. became a trustee of the
be recovered by Lino’s heirs or 6,664 sqm shall properties in question in favor of the heirs of Emilio
be retained by Jose’s heirs.
Escay as the cestuique trust; consequently, the
respondents are duty bound to reconvey the
177. Escay v. CA properties in question to the petitioners whose right
Escay v CA to recover the properties does not prescribe.
Petitioners also argue that the original contract,
Facts: Exhibit "F" and the supplementary contract, Exhibit
Emilio and Jose Escay, now both deceased, were "I", created in their favor an express trust because
brothers. In his lifetime, Emilio mortgaged his the true intention of the parties was that only the
properties now in question, to the Philippine National possession and administration of the properties of
Bank. He died in 1924 before he could pay his petitioners in question should be transferred to
obligation with the bank which had mounted. The respondents, predecessor-in-interest Jose Escay,
bank then filed in 1930 a foreclosure suit against the Sr., which properties he was supposed to hold in
estate of Emilio represented by the administrator, trust for the petitioners until such time as he shall
Atty. Eduardo Arboleda. Pending the said suit, on have fully liquidated the obligations of the testate
April 28, 1933, a contract hereafter referred to as estate of Emilio Escay, and since an action based on
original contract was entered among the Philippine an express trust does not prescribe the right of
National Bank, Jose Escay, Sr., and the petitioners to recover the properties in question from
administrator, Atty. Arboleda, under which Jose the respondents does not prescribe and therefore the
assumed the mortgage indebtedness of his respondents can be ordered to reconvey the
deceased brother Emilio. This was agreed to by properties in question to petitioners. The
Magdalena Vda. de Escay, widow of Emilio, in her prescriptibility of an action for reconveyance based
own behalf and as guardian ad litem of their children. on implied or constructive trust, is now a settled
When it was discovered that the original contract question in this jurisdiction. It prescribes in ten years.
failed to state the transfer of the ownership of the
properties in question to Jose Escay, Sr., in
consideration of his assumption of the mortgage
178. Government v. Abadilla
indebtedness of Emilio (subject to the right of
repurchase of the heirs of Emilio within five (5) years
See #122/108 for the facts of the case
after the mortgage indebtedness had been fully paid),
a supplementary contract was entered into among
Issue: WON Lopez has acquired the title through
the Philippine National Bank, the administrator, Atty.
prescription
Arboleda and Jose Escay, Sr. This was approved by
the probate court taking cognizance of the estate of
Held: Yes. As to lot No. 3470 little need be said. It 8. The 9 remaining children of Juan Tong
may be noted that though the Statute of Limitation (petitioners) filed an action for Annulment of Sales,
does not run as between trustee and cestui que trust Titles, Reconveyance and Damages of Lot 998-B
as long as the trust relations subsist, it may run as docketed as Civil Case No. 22730 against Luis,
Jr., FRDC and VGCC. On March 6, 1997, the trial
between the trust and third persons. Contending that
court ruled in favor of the petitioners which were
the Colongcolong land was community property of
later affirmed by the CA and SC thus lot 998-B
her marriage with Luis Palad and that lot No. 3470 was reconvened and issued back to the name of
represented her share thereof, Dorotea Lopez has Luis Sr.
held possession of said lot, adverse to all other 9. Then, on February 24, 2001, Go Tiat Kun
claimants, since the year 1904 and has now acquired executed a Deed of Sale of Undivided Interest
title by prescription. over Lot 998-A in favor of her children resulting to
an issuance of a new TCT.
10. Petitioners, filed for Nullification of Titles, and
179. Tong v. Go Tiat Kun Deeds of Extrajudicial Settlement and Sale and
Damages claiming as owners of Lot 998-A.
Parties (implied trust - resulting trust) 11. RTC rendered its judgment in favor of the
petitioners Juan Tong.
Trustor - Spouses Juan Tong (Juan Tong), single 1. Ruled that there was an implied resulting
proprietor of “Juan Tong Lumber”. Survived by children. trust between Juan Tong, Luis, Sr., the
9/10 are petitioners. petitioners and the respondents, over Lot
Trustee - Luis Juan Tong Sr. (Luis Sr.). child of Juan Tong. 998. The trial court found that Luis Sr. was
Survived by spouse Go Tiat Kun and children as a mere trustee, and not the owner of Lot
respondents. 998, and the beneficial interest over said
Beneficiary - Juan Tong Lumber, Inc. property remained in Juan Tong and
subsequently in the Juan Tong Lumber,
FACTS Inc
1. Sometime in 1957, Juan Tong had a meeting with 12. CA reversed and set aside the trial court’s
all his children to inform them of his intention to decision, and dismissed the complaint for lack of
purchase Lot 998 to be used for the family’s merit.
lumber business called “Juan Tong Lumber.” 1. Ruled that an express trust was created
However, since he was a Chinese citizen and was because there was a direct and positive
disqualified from acquiring the said lot, the title to act from Juan Tong to create a trust. And
the property will be registered in the name of his when an express trust concerns an
eldest son, Luis, Sr., who at that time was already immovable property or any interest
of age and was the only Filipino citizen among his therein, it may not be proved by parol or
children. oral evidence, but must be proven by
2. On May 11, 1957, Juan Tong bought Lot 998 and some writing or deed.
accordingly a TCT was issued by the Register of 2. Also ruled that even granting that an
Deeds in the name of Luis, Sr. implied resulting trust was created; the
3. December 8, 1978, the single proprietorship of petitioners are still barred by prescription
Juan Tong Lumber was incorporated to Juan Tong because the said resulting trust was
Lumber, Inc. terminated upon the death of Luis, Sr. and
4. Luis Sr. died in 1981, while his parents Juan Tong was then converted into a constructive
and spouse on 1984 and 1990 respectively. trust. Since in an action for reconveyance
5. When Luis Sr. died, his surviving heirs (spouse based on a constructive trust prescribes in
and children) claimed ownership of Lot 998. ten years from the issuance of the Torrens
Executed a Deed of Extrajudicial Settlement of title over the property, counting from the
Estate of Luis, Sr., adjudicating unto themselves death of Luis, Sr. in 1981, the action has
Lot 998 and claiming that the said lot is the already prescribed.
conjugal property of Luis, Sr., and his wife. 13. Hence this petition for review on certiorari.
Subsequently they subdivided the lot into lot 998-A
and lot 998-B and new titles were issued. ISSUE
6. Lot 998-B which belonged to Luis Jr. was sold to
Fine Rock Development Corporation (FRDC), Whether or not
which in turn sold the same to Visayas Goodwill 1. An implied resulting trust was constituted over Lot
Credit Corporation (VGCC). 998 when Juan Tong purchased the property and
7. It was only after the petitioners received a letter registered it in the name of Luis, Sr.?
from VGCC, on August 31, 1995, that they 2. Parol evidence be used as proof of the
discovered about the breach of the trust establishment of the trust?
agreement committed by the respondents.
 3. The petitioners’ action barred by prescription, particularly the source of the consideration — is always an
estoppel and laches? element of a resulting trust and may be inferred from the
acts or conduct of the parties rather than from direct
HELD expression of conduct. Certainly, intent as an
indispensable element is a matter that necessarily lies in
1. Yes an implied resulting trust was constituted over the evidence, that is, by evidence, even circumstantial, of
Lot 998. statements made by the parties at or before the time title
passes.
The principle of a resulting trust is based on the equitable
doctrine that valuable consideration and not legal title (3) No, petitioners action is not barred by prescription.
determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They As a rule, implied resulting trusts do not prescribe except
arise from the nature or circumstances of the consideration when the trustee repudiates the trust. Further, the action to
involved in a transaction whereby one person thereby reconvey does not prescribe so long as the property
becomes invested with legal title but is obligated in equity stands in the name of the trustee. To allow prescription
to hold his legal title for the benefit of another. would be tantamount to allowing a trustee to acquire title
against his principal and true owner.
The Supreme Court is in conformity with the finding of the
trial court that an implied resulting trust was created as
provided under the first sentence of Article 1448 which is 180. Heirs of Candelaria v. Romero
sometimes referred to as a purchase money resulting
FACTS: Ester Candelaria filed a complaint in her own
trust, the elements of which are:
behalf and in representation of the other alleged heirs of
(a) an actual payment of money, property or
Emilio Candelaria, alleging in substance
services, or an equivalent, constituting valuable
- that sometime prior to 1917 Emilio and his
consideration; and brother Lucas Candelaria bought each a lot in the
(b) such consideration must be furnished by the Solokan Subdivision on installment basis;
alleged beneficiary of a resulting trust. - Lucas paid the first two installments
corresponding to his lot, but faced with the inability
Here, the petitioners have shown that the two elements of meeting the subsequent installments because of
are present in the instant case. Luis, Sr. was merely a sickness which caused him to be bedridden, he sold
trustee of Juan Tong and the petitioners in relation to the his interest therein to his brother Emilio, who then
subject property, and it was Juan Tong who provided the reimbursed him the amount he had already paid,
money for the purchase of Lot 998 but the corresponding - Lucas thereafter continued payment of the
transfer certificate of title was placed in the name of Luis, remaining installments until the whole purchase price
Sr. had been fully satisfied;
- although Lucas had no more interest over
Note also that at the outset, the issues posited in this case the lot, the subsequent payments made by Emilio
are not novel because in Civil Case involving Lot 998-B until fully paid were made in the name of Lucas, with
which forms part of Lot 998, the trial court already found the understanding that the necessary documents of
transfer will be made later, the reason that the
that said lot was held in trust by Luis, Sr. in favor of his
transaction being from brother to brother";
siblings by virtue of an implied resulting trust. The trial
- in 1918 a TCT for said lot was issued by the
court’s decision was then affirmed by the CA and the SC.
register of deeds of Manila in the name of "Lucas
Thus, Lot 998-A, the subject of this instant case, and Lot
Candelaria married to Luisa Romero";
998-B, are similarly situated as they comprise the - Ester further alleged that Lucas held the title
subdivided Lot 998, the property which in its entirety was to said lot merely in trust for Emilio and that this fact
held in trust by Luis, Sr. in favor of his siblings. was acknowledged not only by him but also by the
defendants (his heirs) on several occasions;
(2) Yes parole evidence may be used as proof of the - that Lucas' possession of the lot was merely
establishment of the resulting implied trust. tolerated by Emilio and his heirs;
- from the time Emilio bought the lot from his
An implied trust is neither dependent upon an express brother, Lucas had been collecting all its rents for his
agreement nor required to be evidenced by writing, Article own use as financial aid to him as a brother in view
1457 of our Civil Code authorizes the admission of parol of the fact that he was bedridden without any means
evidence to prove their existence. Parol evidence that is of livelihood and with several children to support,
required to establish the existence of an implied trust although from 1926, when Emilio was confined at the
necessarily has to be trustworthy and it cannot rest on Culion Leper Colony up to his death, Lucas had been
loose, equivocal or indefinite declarations.” giving part of the rents to Fortunata Bautista, the
second wife of Emilio, in accordance with the latter's
wishes;
“Intention — although only presumed, implied or supposed
Lucas died in August, 1942, survived by the present
by law from the nature of the transaction or from the facts
defendants, who are his spouse Luisa Romero and
and circumstances accompanying the transaction,
several children; and that said defendants are still in
possession of the lot, having refused to reconvey it to partition, declaration of nullity of title/documents,
plaintiff despite repeated demands. and damages against the heirs of Feliciano. The
The defendants filed a motion to dismiss, alleging that heirs of Hermogenes alleged that they and the
plaintiff's cause of action is unenforceable under the new
heirs of Feliciano are co-owners of the subject
Civil Code and that the action has already prescribed.
property, having inherited the right thereto from
RTC: Dismissed the complaint.
Hermogenes.

ISSUE: HAS THE CAUSE OF ACTION BY PLAINTIFF- The heirs of Feliciano denied the allegations of the
APPELLANT ALREADY PRECSRIBED? heirs of Hermogenes and claimed that their father,
Feliciano, was in possession of the subject property
HELD: NO. in the concept of owner since time immemorial.
Constructive or implied trusts may be barred by lapse of Accordingly, Feliciano was awarded a free patent
time. The rule in such trusts is that laches constitutes a
thereon for which Original Certificate of Title (OCT)
bar to actions to enforce the trust, and repudiation is not
No. P-10737 was issued. They also averred that
required, unless there is a concealment of the facts
giving rise to the trust. the cause of action in the complaint filed by the
Continuous recognition of a resulting trust, however, heirs of Hermogenes, which questioned the validity
precludes any defense of laches in a suit to declare and of OCT No. P-10737, prescribed after the lapse of
enforce the trust. one year from its issuance on November 29, 1989.
The beneficiary of a resulting trust may, therefore, RTC – dismissed the case. The RTC opined that
without prejudice to his right to enforce the trust, prefer the heirs of Hermogenes failed to show that the
the trust to persist and demand no conveyance from the subject property is owned by Macaria, stating that
trustee.
tax declarations and receipts in Macaria's name are
It being alleged in the complaint that Lucas held the title
not conclusive evidence of ownership. The RTC
to the lot in question merely in trust for Emilio and that
this fact was acknowledged not only by him but also by further held that even if Macaria owned the subject
his heirs, herein defendant (which allegation is property, the heirs of Hermogenes failed to show
hypothetically admitted plaintiff's action) is NOT barred that Hermogenes had the right to succeed over the
by lapse of time. On the contrary, the interest of justice estate of Macaria.
would be better served if plaintiff -appellant and her CA - reversed and set aside the RTC's
alleged co-heirs were to be given an opportunity to be Decision. The CA found that the RTC, in hastily
heard and allowed to present proof in support of their dismissing the complaint for partition, failed to
claim.
determine first whether the subject property is
indeed co-owned by the heirs of Hermogenes and
181. Heirs of Feliciano Yambao v. Heirs of Hermogenes
Yambao the heirs of Feliciano. The CA pointed out that:
A review of the records of the case shows that in
FACTS: Feliciano's application for free patent, he
A parcel of land located in Barangay Bangan, acknowledged that the source of his claim of
Botolan, Zambales, which is the subject of this possession over the subject property was
case was originally possessed by Macaria De Hermogenes's possession of the real property in
Ocampo (Macaria). Hermogenes Yambao , peaceful, open, continuous, and adverse manner
(Macaria's nephew), acted as the administrator of and more importantly, in the concept of an owner,
the property and paid realty taxes therefor. since 1944. Feliciano's claim of sole possession in
Hermogenes has eight children, namely: Ulpiano, his application for free patent did not therefore
Dominic, Teofilo, Feliciano, Asesclo, Delia, Amelia, extinguish the fact of co-ownership as claimed by
and Melinda, all surnamed Yambao. the children of Hermogenes.
After Hermogenes died, it was claimed that all of
his heirs were free to pick and harvest from the Accordingly, the CA, considering that the parties
fruit-bearing trees planted on the subject property. are co-owners of the subject property, ruled that
Eleanor Yambao (Eleanor), Ulpiano's daughter, the RTC should have conducted the appropriate
even constructed a house on the subject property. proceedings for partition. Hence, this petition.
In 2005, the communal and mutual use of the ISSUE:
subject property by the heirs of Hermogenes WON there was co-ownership between the heirs of
ceased when the heirs of Feliciano, herein Feliciano and the heirs of Hermogenes
petitioners, prohibited them from entering the RULING: YES.
property. The heirs of Feliciano even ejected As pointed out by the CA, the RTC overlooked the
Eleanor from the subject property. fact that the subject property is co-owned by the
This prompted the heirs of Hermogenes, herein parties herein, having inherited the same from
respondents, to file with the RTC a complaint for Hermogenes. Feliciano's free patent application
indicated that he merely tacked his possession of
the subject property from Hermogenes, his father, possession of the property. It was only in 2005
who held the property in peaceful, open, that the heirs of Feliciano expressly prohibited the
continuous, and adverse manner in the concept of heirs of Hermogenes from entering the property.
an owner since 1944. This is an implicit recognition Thus, as aptly ruled by the CA, the right of the
of the fact that Feliciano merely co-owns the heirs of Hermogenes to demand the partition of the
subject property with the other heirs of property had not yet prescribed. Accordingly, the
Hermogenes. Indeed, the heirs of Feliciano have RTC committed a reversible error when it
not presented any evidence that would show that dismissed the complaint for partition that was filed
Hermogenes bequeathed the subject property by the heirs of Hermogenes.
solely to Feliciano. Moreover, when Feliciano registered the subject
property in his name, to the exclusion of the other
A co-ownership is a form of trust, with each heirs of Hermogenes, an implied trust was
owner being a trustee for each other. Mere actual created by force of law and he was considered a
possession by one will not give rise to the trustee of the undivided shares of the other heirs
inference that the possession was adverse of Hermogenes in the property. As trustees, the
because a co-owner is, after all, entitled to heirs of Feliciano cannot be permitted to repudiate
possession of the property. Thus, as a rule, the trust by relying on the registration. "A trustee
prescription does not run in favor of a co-heir who obtains a Torrens title over a property
or co-owner as long as he expressly or held in trust for him by another cannot
impliedly recognizes the co-ownership; and he repudiate the trust by relying on the
cannot acquire by prescription the share of registration”.
the other co-owners, absent a clear
repudiation of the co-ownership. An action to
demand partition among co-owners is 182. Varsity Hills v. Navarro
imprescriptible, and each co-owner may demand at
any time the partition of the common property. FACTS:
The present controversy revolves around the
Prescription may nevertheless run against a co- ownership of a parcel of land in Loyola Heights,
owner if there is adverse, open, continuous and Quezon City. Present respondents alleged that
exclusive possession of the co-owned property by Quintin Mejia, their predecessor-in-interest, obtained
the other co-owner/s. In order that a co-owners ba Spanish Title over said land and that Mejia and
possession may be deemed adverse to the cestui his successors-in-interest occupied the same without
que trust or other co-owners, the following interruption until 1934 when a writ of execution
requisites must concur: (1) that he has performed vested said land to the Tuason Estate through fraud
unequivocal acts of repudiation amounting to an by inserting fake and false technical descriptions
ouster of the cestui que trust or other co-owners; expanding said estate. That the present petitioners
(2) that such positive acts of repudiation have are the successors-in-interest of the same estate.
been made known to the cestui que trust or other
co-owners; and (3) that the evidence thereon must As such, a petition was filed by present respondents
be clear and convincing. to regain said land. It was filed on December 29,
The issuance of the certificate of title would 1965. They argued, among others, that a
constitute an open and clear repudiation of any
constructive trust has been created. Subsequently,
trust. In such a case, an action to demand partition
present petitioners filed a motion to dismiss. One of
among co-owners prescribes in 10 years, the point
their grounds was extinctive prescription as over 51
of reference being the date of the issuance of
years has elapsed since the Decree of Registration
certificate of title over the property. But this rule
was issued. They also claimed that the present
applies only when the plaintiff is not in possession
action is barred by laches as 32 years has elapsed
of the property, since if a person claiming to be the
since Quintin Mejia has been driven away from said
owner thereof is in actual possession of the
property, the right to demand partition does not property.
prescribe.
The CFI dismissed the motion to dismiss and ruled in
Although OCT No. P-10737 was registered in the favor of the present respondents.
name of Feliciano on November 29, 1989, the
prescriptive period within which to demand ISSUE:
partition of the subject property, contrary to the Whether or not present respondents’ action has
claim of the heirs of Feliciano, did not begin to run. prescribed and is barred by laches.
At that time, the heirs of Hermogenes were still in
HELD: retaliation, was prompted to seek the partition of Lot
Yes, present respondents’ action has prescribed and 707 thus filed a complaint.
is barred by laches.
Hillaria and Felipa averred that respondent's (Emilia)
RATIO: cause of action had long prescribed and she is guilty
Actions based on implied and constructive trust of laches. That an action for partition and is no longer
prescribe in 10 years. It is also susceptible to laches. tenable because they (Felipa and Hilaria) have
already acquired rights to adverse to that claimed by
In the present case, it is very clear that more than 10 respondent Emilia and the same amount to
years has elapsed since the purported trust was repudiation of the alleged co-ownership.
created. That 51 years have elapsed since the
Decree of Registration was issued in favor of the RTC: Decided in favor of Emilia. Held that Carolina
petitioners. Likewise, it is also very clear that there transferred only her ½ share to Felipa and Hilaria and
has been unreasonable delay on the part of the any conveyance of the other half is void. But refused
defendants in instituting said action. The same is to adjudicate the ownership in favor of Emilia since a
then barred by laches. settlement of the estate of Eulalio is yet to be
undertaken.

183. Cañezo v. Rojas CA: Ruled that RTC erred in refusing to partition lot
707. There is no necessity placing Lot No. 707 undee
184. Figuracion v. Figuracion-Gerilla judicial administration since Carolina had long sold
her ½ pro indiviso share to Felipa and Hilaria. Thus,
when carolina sold the entire Lot on December as
facts: her own, the sale affected only her share and not that
belonging to her co-owner, Agripina.
Involved in the controversy is Lot. No. 707 of
Cadastral Survey of Urdanate, Pangasinan, orginally ISSUE:(1) WON Emilia can compel the partition of
owned by Eulalio Adviento. Eulalio begot Agripina Lot No. 707?
Adviento with his first wife Marcela, Whom Eulalio (2) WON Emilia’s right to demand for partition is
survived. When he remarried, Eulalio had another barred by acquisitive prescription or laches?
daughter, herein petitioner Carolina, with his second
wife Faustina.
RULING:
On November 28,1961, Agripina executed a Deed of (1) YES.
Quitclaim over the eastern half of Lot. 707 in favor of
her niece, herein respondent Emilia. Here, the respondent traces her ownership over the
eastern half of Lot No. 707 from the Deed of
Soon thereafter or on December 11, 1962, petitioner Quitclaim executed by Agripina, who in turn, was the
Carolina executed an Affidavit of Self-adjudication, co-owner thereof being one of the legitimate heirs of
adjudicating unto herself the entire Lot. No 707 as Eulalio. It is well to recall that the petitioners failed to
the sole and exclusive heir of her deceased parents categorically dispute the existence of the Deed of
Eulalio and Faustina. Quitclaim. Instead, they averred that it has been
rendered ineffective by TCT No. 42244 in the name
On the same date, Carolina also executed a Deed of of Felipa and Hilaria this contention is, of course,
Absolute Sale over Lot. No. 707 in favor of petitioner flawed.
s Hillaria and Felipa.
Mere issuance of a certificate of title in the name of
1971 Emilia went to the US and returned to any person does not foreclose the possibility that the
Philippines only on 1981. Upon her return and relying real property may be under co- ownership with
on the Deed of Quitclaim, she built a house on the persons not named in the certificate, or that the
eastern half of Lot No. 707. registrant may only be a trustee, or that other parties
may have acquired... interest over the property
However, on 1994 Hilaria and her agents threatened subsequent to the issuance of the certificate of title.
to the demolish the house of Emilia who, in Stated differently, placing a parcel of land under the
mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. The to Emilia. Their acts clearly manifest that they
certificate cannot... always be considered as recognized the subsistence of their co-ownership
conclusive evidence of ownership. In this case, co- with respondent Emilia despite the issuance of TCT
ownership of Lot No. 707 was precisely what No. 42244 in 1962.
respondent Emilia was able to successfully establish,
as correctly found by the RTC and affirmed by the Their acts constitute an implied recognition of the co-
CA. ownership which in turn negates the presence of a
clear notice of repudiation to the respondent.
The status of Agripina and Carolina as the legitimate
heirs of Eulalio is an undisputed fact. As such heirs, (AGENCY PART)
they became co-owners of Lot No. 707 upon the
death of Eulalio on July 20, 1930. Since Faustina In addition, when Hilaria and Felipa registered the lot
was predeceased by Eulalio, she likewise became a in their names to the exclusion of Emilia, an implied
co-owner of the lot upon trust was created by force of law and the two of them
were considered a trustee of the respondent's
Eulalio's death. Faustina's share, however, passed undivided share.As trustees, they cannot... be
on to her daughter Carolina when the former died on permitted to repudiate the trust by relying on the
October 18, 1949. The Affidavit of Self-Adjudication registration.
executed by Carolina did not prejudice the share of
Agripina because it is not legally possible for one to records do not reflect conclusive evidence showing
adjudicate unto himself an entire property he was not the manner of occupation and possession exercised
the sole owner of. A co-owner cannot alienate the by Hilaria and Felipa over the lot from the time it was
shares of her other co-owners nemo dat qui non registered in their names. The only evidence of
habet.[38] possession extant in the records dates back only to
1985 when
Hence, Lot No. 707 was a co-owned property of
Agripina and Carolina. Hilaria and Felipa declared the lot in their names for
taxation purposes. Prescription can only produce all
(2) No. its effects when acts of ownership, or in this case,
possession, do not evince any doubt as to the ouster
Co-heirs or co-owners cannot acquire by acquisitive of the rights of the other co-owners.
prescription the share of the other co-heirs or co-
owners absent a clear repudiation of the co Hence, prescription among co-owners cannot take
ownership.[43] The act of repudiation, as a mode of place when acts of ownership exercised are vague or
terminating co-ownership, is subject to certain... uncertain.
conditions, to wit: (1) a co-owner repudiates the co-
ownership; (2) such an act of repudiation is clearly The express disavowal of the co-ownership did not
made known to the other co-owners; (3) the evidence happen on December 11, 1962 when TCT No. 42244
thereon is clear and conclusive; and (4) he has been was issued but in 1994 when Hilaria attempted to
in possession through open, continuous, exclusive, demolish Emilia's house thus explicitly excluding her
and notorious... possession of the property for the from the co-ownership. It was the only time that
period required by law.[44] Hilaria and Felipa made known... their denial of the
co-ownership. On the same year, the respondent
The petitioners failed to comply with these conditions. instituted the present complaint for partition; hence,
The act of Hilaria and Felipa in effecting the the period required by law for acquisitive period to set
registration of the entire Lot No. 707 in their names in was not met.
thru TCT No. 42244 did not serve to effectively
repudiate the co-ownership. The respondent built her Anent laches, the Court finds it unavailing in this case
house on the eastern... portion of the lot in 1981 in view of the proximity of the period when the co-
without any opposition from the petitioners. Hilaria ownership was expressly repudiated and when the
also paid realty taxes on the lot, in behalf of the herein complaint was filed.
respondent, for the years 1983-1987.[45]

These events indubitably show that Hilaria and Felipa

failed to assert exclusive title in themselves adversely
 The defendants argued that they are the real owners of
the parcels of land and the granting of the free patents
to Perfecta should be invalidated since the CEP was the
proof that the land was actually conveyed by Castor to
Susana.

185. Cavile v. Litania-Hong

Facts:
Issue: Whether or not the defendants is correct in
instituting an action for reconveyance based on implied
RTC: Litania-Hong vs. Cavile, Dismissed the complaint.
or constructive trust?

- Cavile has a better title to the land in dispute.

- The CEP was only a simulated contract as between

Held: No. The action for reconveyance can only be made
Susana and Castor.
within 10 years from the time the land was registered
under the name of the petitioners and thereby issued
with Torrens title. Since the defendants only filed an
action after 12 years, the remedy is already barred. But
CA: Litania-Hong vs. Cavile, reversed the decision of the
even if they could file on time, the SC would still rule in
RTC
favor of the petitioner spouses since the defendants
could not present any evidence to show that they have
better title over the disputed land.

SC: Cavile vs. Litania-Hong reversed the decision of the

Moreover, the land was only held in trust by Susana
CA
since the purpose was only to secure a loan from the
Rural Bank.

The heirs of Bernardo Cavile and Tranquilla Galon,

186. Heirs of Domingo Valientes v. Ramas
FACTS:
Susana. Castor, Benidicta, and the children of Bernardo
from his previous marriages, Simplicia, Fortunato and
Petitioners claim that they are the heirs of Valientes who,
Vevencia, entered into a Deed of Partition, the subject of before his death, was the owner of a parcel of land in
which are parcels of land situated in the Municipality of Zamboanga delSur.
Tolong, Negros Oriental. Pursuant to the Deed of · In 1939, Valientes mortgaged the subject
Partition, the conjugal property of Sps. Caville was property to secure his loan to the spouses Belen
divided into two parts. The first part, that of Bernardo, · In the 1950s, the Valientes family purportedly
was subdivided into 6 equal shares and distributed attempted, but failed, to retrieve the subject property
among his 6 heirs. The second part, that of Tranquilla, from the spouses Belen. Through an allegedly forged
was subdivided into 3 shares and distributed to her document captioned VENTA DEFINITIVA purporting to
children with Bernardo. The shares of the legal heirs be a deed of sale of the subject property between
were sold to their co-heir Castor who is now the sole Valientes and the spouses Belen, the latter obtained
owner of the parcels of land in dispute. title over the land.
· On February 28, 1970, the legitimate children of
A Confirmation of Extrajudicial Partition was the late Valientes, had their Affidavit of Adverse Claim.
subsequently executed by Castor in favor of Susana Upon the death of the spouses Belen, their surviving
covering a porting of the land. The partition was merely
heirs executed an extra-judicial settlement with
to accommodate Susana with her application for loan
partition and sale in favor of private respondent Minor,
from Rural Bank. Susana obtained a loan from the Rural
the present possessor of the subject property.
Bank and mortgaged the subject lots as security. Justina
· On June 20, 1979, Minor filed with the then CFI
and Genova inherited the two parcels of land from their
a "PETITION FOR CANCELLATION OF
mother Susana. After 14 years, a complaint for
Reconveyance and Recovery of Property was filed MEMORANDUM OF ENCUMBRANCE APPEARING
against Perfecta, the daughter of Castor, Jose dela Cruz, IN THE TITLE IN HER POSSESSION" which the RTC
her husband (the petitioners in this case), and the Rural granted.
Bank of Bayawan, Inc. Castor, Perfecta and Jose · On the other hand, petitioners filed a complaint
occupied the subject lots. When Castor died, Perfecta for the cancellation of the title in Minors possession
applied for free patents from the Bureau of Lands for the and its reconveyance to them. On this complaint,
land in dispute. Despite the efforts to settle the matter, Minor filed an Omnibus Motion to Dismiss on the
Perfecta and Jose stubbornly refused to accede. ground of forum shopping and litis pendentia, which
Petitioner spouses asserted that the Confirmation of the RTC dismissed.
Extrajudicial Partition was a nullity since the said · Undeterred, Minor filed a Motion for
properties were never owned not adjudicated in favor of Reconsideration which was granted.
Susana.
 · Petitioners filed a Motion for Reconsideration total area of 3,549 square meters, with a house of strong
based on this decision which was denied. materials erected thereon, with a total assessed value of
RTC: *refer to facts P8,820.00. On that date, they mortgaged said four lots to La
CA: in favor of Petitioners on whether civil case is already Urbana, presumably a building and loan association, to secure
barred by forum shopping; affirmed dismissal order on the the payment of a loan of P3,047.76. For failure to live up to the
grounds of prescription and laches. terms of the mortgage, the latter was foreclosed by La Urbana,
ISSUE: WON prescription or laches has already set in to
pursuant to Act 3135, and on March 9, 1939, the said property
bar the filing of the civil case (cancellation of transfer
was sold to La Urbana for the sum of P3,786.26. On April 26,
certificate of title no. t-5,427, reconveyance, with
1938, La Urbana transferred and assigned all its rights and
accounting, receivership and application for a writ of
interest in the said property to Agatona Geronimo, plaintiff in
preliminary prohibitory injunction plus damages.)
the present case, for the sum of P6,000.00, subject, however, to
the right of redemption of Nava and his wife Felisa. Agatona
HELD:
The cause of action of petitioners in Civil Case No. paid P600.00 on account of the purchase price and to secure
the payment of the balance of P5,400.00, mortgaged the same
98-021, wherein they claim that private respondent Minors lots to La Urbana, which duly notified Nava and his wife of the
predecessor-in-interest acquired the subject property by assignment or transfer. Immediately after buying the lots from
forgery, can indeed be considered as that of enforcing an the Sheriff in March, 1938, La Urbana took possession of the
same and collected the rentals thereon at the rate of P30.00 a
implied trust. In particular, Article 1456 of the Civil Code month. In May, 1938 shortly after purchasing the same lots
provides: from La Urbana, Agatona also took possession of the property
and collected P62.50 representing the May and June rentals,
and since July of the same year, she had been collecting the
Art. 1456. If property is acquired rentals at the rate of P35.00 a month. In the title there was
through mistake or fraud, the person notice of lis pendens and other annotations.
obtaining it is, by force of law, considered
a trustee of an implied trust for the benefit Nava tried to redeem the property within the one year period
of the person from whom the property
which La Urbana refused since it had already been transferred
comes.
to Agatona. Nava made the same offer but was ignored by
Agatona. Finally depositing the amount of P3,470 to Agatona's
account in the PNB and filed a civil case (#8071) against the
However, the Court made a clear distinction in Olviga:
plaintiffs to permit him to redeem the property after rendering
when the plaintiff in such action is not in possession an account.
of the subject property, the action prescribes in ten years
Lower COurt - In favor of plaintiffs.
from the date of registration of the deed or the date of the
issuance of the certificate of title over the property. When CA - Affirmed
the plaintiff is in possession of the subject property,
ISSUE: Whether or not the present action is barred by
the action, being in effect that of quieting of title to the
prescription.
property, does not prescribe. In the case at bar, petitioners
(who are the plaintiffs in Civil Case No. 98-021) are not in RULING: Affirmed

possession of the subject property. Civil Case No. 98-021,

RATIO: Plaintiff herein maintain that they are still the owners of
if it were to be considered as that of enforcing an implied the four lots in question and have the right to continue as such;
trust, should have therefore been filed within ten years from that the annotation of lis pendens as regards the institution of
Civil Case No. 8071 may be cancelled, for the reason that the
the issuance of TCT No. T-5,427 on December 22, 1969.
judgment in said case in favor of Nava et al. can no longer be
Civil Case No. 98-021 was, however, filed on August 20, enforced because of the passage of time, namely, prescription.
1998, which was way beyond the prescriptive period. It will be recalled, however, that in Civil Case No. 8071, the
Court of First Instance of Nueva Ecija found and held that Nava
and his wife had the right to redeem the property, and it
ordered that Agatona and her husband execute the necessary
registerable titles to the four lots in favor of Nava and wife,
187. Geronimo and Isidro v. Nava and Aquino
upon the payment of the price to be ascertained after
FACTS: On October 19, 1935, Jose Nava and his wife, Felisa liquidation. The judgment may not have been executed totally,
Aquino, were owners of our lots, Nos. 2820, 2821, 2819 and but the defendants herein maintain and evidently with reason,
1729 of the Cabanatuan Cadastre, forming a single mass, with a that it was at least partially executed, for the reason that as
stated in the motion to dismiss, after Nava and his wife had property, and ordered Agatona et al. to make the resale, there
asked for the execution of the judgment rendered in Civil Case was created what may be regarded as a constructive trust, in
No. 8071, that is, in July 1944, provincial auditor Francisco the sense that although Agatona and her husband had the
Alejo, who was occupying the house erected on the four lots in naked title to the property by reason of the certificates of title
question, began paying the house rent to Nava, stating that issued in their names, and which they retained, nevertheless,
Agatona had refused to accept said rentals, for the reason that they were to hold such property in trust for Nava et al. to
she lost in Civil Case No. 8071, and that when Mr. Alejo vacated redeem, subject to the payment of redemption price. Of course,
the house in May 1945, Nava took possession of the whole it might be contended that in the latter instance of a
property and has continued in possession up to the date of constructive trust, prescription may apply where the trustee
filing the motion for dismissal on October 24, 1956. In other asserts a right adverse to that of the cestui que trust, such as,
words, by virtue of the decision in Civil Case No. 8071, herein asserting and exercising acts of ownership over a property
defendants Nava et al., not only were restored to the being held in trust. But even under this theory, such a claim of
possession of the property in question since 1945, but had been prescription would not prosper in the present case. As already
receiving the rentals of the house on said property since 1944. stated, since 1944, after the decision in Civil Case No. 8071
The only thing lacking is the formal execution of the deed of became final and executory, Agatona evidently acquiesced in
transfer or the sale by Agatona and her husband to herein the decision against her, so much so that thereafter, as already
defendants. stated, she suggested that the tenant of the house pay his
rentals to Nava instead of to her, meaning that Nava had a right
In the present case, we are inclined to brush aside technicalities to said rentals. No only this, but since May, 1945, when the
when they stand in the way of administering justice and giving tenant left the house, Nava took possession thereof as well as
to parties in litigation their due, specially in case of redemption. the land on which it was built, and has been occupying the
Moreover, the equities in the case are on the side of the same up to the present time, exercising acts of ownership over
defendants-appellees herein. The four lots in question at the the same, and Agatona evidently, all along, showing confirmity.
time that they were mortgaged to Nava and his wife to La It was only on September 30, 1956 that she and her husband
Urbana were assessed in the amount of P8,820 and the Court filed the present case to cancel the notice of lis pendens of Civil
may take judicial notice of the fact that the assessed value Case No. 8071, including naturally, the decision in said case
oftentimes is but a fraction of the real value of the property against them, and to recover the possession of the property. If
assessed. At the present time, or rather, when the present such acts on her part as trustee can be considered as an
action was instituted in 1956, the property in question, assertion of the right of ownership against Nava, the cestui que
according to plaintiffs themselves because of the natural trust, over the property, then the prescription invoked by her,
tendency of real estate to increase in value, are assessed at assuming it to be available, falls far short of the period required
P13,350.00 and must be worth more than that; and yet, that by law to established title by prescription. Agatona did not even
same property was originally mortgaged with La Urbana by have the possession of the property in order to exercise acts of
Nava and his wife for all P3,047.76 and was sold at auction sale ownership over the same.
to La Urbana for P3,376.29, so that the redemption price
cannot be much more than that, considering that from the
same shall be deducted the rentals received by Agatona and her 188. Adaza v. CA
husband at the rate of P30.00 a month from March 1938 until
the defendants herein began receiving said rentals some time in See #159
July, 1944.
ISSUE: Whether or not the action has prescribed.
Moreover, there is another aspect of this case which is not only
important, but also decisive. Considering the circumstances RULING: No.
surrounding this case, as well as that of Civil Case No. 8071, we
find that when Agatona evidently acquiescing in the final RATIO: Respondent Violeta and her husband also contended
decision in Civil Case No. 8071, not only allowed but even that the long delay and inaction on the part of Horacio in taking
directed the tenant of the house on the property to pay his any steps for reconveyance of the one-half (1/2) share claimed
rentals to Nava, instead of to herself; and when in 1945, she by him, indicates lack of any color of right over the said one-half
allowed Nava to occupy the house when the tenant (1/2) share. It was also argued by the two (2) that considering
disoccuppied it, and to take possession of the whole property, that twelve (12) years had passed since OCT No. P-11111 was
her acts should be construed as a recognition of the fact that issued and more than nineteen (19) years since the Deed of
the property, though still in her name, was to be held in trust Donation was executed, the counterclaim for partition and
for Nava, to be conveyed to him on payment of the repurchase reconveyance of Horacio's alleged one-half share was barred by
price. Such trust is an express one, not subject to prescription. laches, if not by prescription. Again, we rule for the petitioners.
We may also hold that when the trial court in that Civil Case No. In determining whether delay in seeking to enforce a right
8071 declared in a decision that had become final and constitutes laches, the existence of a confidential relationship
executory, that Nava et al. had the right to redeem the based upon, for instance, consanguinity, is an important
circumstance for consideration. Delay in a situation where such
circumstance exists, should not be as strictly construed as Castro to obtain a decree to the effect that the four adult
where the parties are complete strangers vis-a-vis each other. plaintiffs and the four
The doctrine of laches is not to be applied mechanically as Minor children of Vicente Castro, are each owners of an
between near relatives; the fact that the parties in the instant undivided one-sixth interest in a parcel of land in dispute,
case are brother and sister tends to explain and excuse what covered by Torrens issued in the name of the defendant.
would otherwise appears as long delay. Moreover, continued The complaint also asks for an order for the partition of
said land among the plaintiffs and defendant, as well as to
recognition of the existence of the trust precludes the defense
recover from the defendant the respective shares of the
of laches. The two (2) letters noted above sent by respondent
plaintiffs in the produce of said land from the year 1909 till
Violeta to petitioner Horacio, one in 1969 and the other in
the filing of complaint, or the value of the same in money.
1971, show that Violeta as late as 1971 had recognized the trust
imposed on her by law. Conversely, Horacio's reliance upon his
Trial Court- ruled in favor of the plaintiff. Court also
blood relationship with his sister and the trust and confidence
ordered the defendant to deliver to each of the four adult
normally connoted in our culture by that relationship, should plaintiffs and to the minor heirs of Vicente Castro his or her
not be taken against him. Petitioners' counter-claim in the trial appropriate share in the produce of the land for a number
court for partition and reconveyance cannot be regarded as of years prior to the filing of the complaint. And that the
barred whether by laches or by prescription. defendant should effect the corresponding operations of
subdivision for the purpose of segregation and delivery to
189. Castro v. Castro each of the parties plaintiff his or her appropriate share in
the land.
Facts:
Maximiana Tinio is the owner of the disputed land she Both the plaintiffs and the defendant appealed.
inherited from her father Mariano Tinio. Appeal of the plaintiffs is directed to the supposed
This land lies low and in its former natural state was under inadequacy of the portions awarded by the court to each of
water for a good part of the year. In the life of Mariano the plaintiffs in both the land and the produce received
Tinio part of it had been reduced to cultivation, and the from it.
prospects for the fruitful development of the property were Defendant appeals from the action of the court in awarding
then good. But as a result possibly of the destructive to the plaintiffs any part of their land or its produce.
ravages of rinderpest in this section of the country in the
eighties, followed in the nineties by the revolution against ISSUE: WON the defendant is obliged to surrender to the
Spain and the later insurrection against the sovereignty of plaintiffs their share of the land under his administration,
the United States, the property appears to have reverted to which was registered under his name in Torrens Title.
a wild state and came to be covered almost entirely b such
growth as is commonly found in low ground. Rule:
Yes, Upon the foregoing facts it is evident, and it
After civil order had been restored Maximiana began must be so declared, that, when the defendant procured
bringing portions of the property back into a state of the registration of this land in his own name, he was acting
cultivation and was aided by her son, Jose Castro. After in a trust capacity and as representative of all of his
his mother's death, Jose, as the oldest child and only brothers and sisters. As a consequence he is now holding
competent manager among the heirs, assumed the the registered title thereto in a trust capacity, and it is
administration of this land. proper for the court to declare that the plaintiffs are entitled
to their several pro rata shares, notwithstanding the fact
He now claims that he had taken possession of this that the certificate of registration is in the name of the
property in his own right, prior to his mother's death, by defendant alone.
virtue of an assignment of the property made to him by his One who acquires a Torrens Title in his own
mother, acting in concert with her brothers and sisters. name to property which he is administering for himself
and his brother and sisters as heirs in common by
Jose applied for the registration in his name but was descent from a common ancestor may be compelled
dismissed on the ground of technicalities. to surrender to each of his co-heirs his appropriate
Later, on second proceeding for registration, the court remedy by which to enforce this right.
therefore adjudicated the property to Jose Castro by virtue
ofhis proof of continued possession and heirship. Additional Ruling regarding repudiation of the trust:

Now, case was instituted in the Court of First Instance of But it is strongly urged for the defendant that, even
the Province of Nueva Ecija by the brothers and sisters supposing that the defendant in this case had procured the
Manuel Castro, Pedro Castro, Maria Castro, and title to be registered in his own name as representative of
Consolacion Castro, with whom are joined, under himself and his younger brothers and sisters, yet he had
representation of a proper guardian ad litem, the four repudiated the trust more than ten years before this action
minor children of Vicente Castro, deceased brother of the was begun, and it is insisted that he has acquired title by
four plaintiffs first named. Against Jose Castro, or Jose de adverse possession. In support of this contention, based
upon the repudiation of the trust and subsequent adverse The investigation disclosed that the petitioners
possession, the attorney for the defendant point to the falsified a document entitled “Extrajudicial
testimony of Manuel Castro who exercises the role of chief settlement of estate and sale”, so that the
promoter of this litigation on the part of the plaintiffs. This respondents be deprived of their shares in land.
witness testifies that back in 1916, 1918, and at other The document purportedly bore the respondents’
times, he had besought his uncle to recognize the right of signature, making them appear to have
his younger brothers and sisters in the property and to give
participated in the execution of the document when
them their part of the produce. The defendant, Manuel
they did not; they did not even know the
says, ignored the request and put aside the claim upon
petitioners. Subsequently, Macababbad registered
one excuse or another. We note, however, that this
portions of the land in his name and sold other
supposed repudiation of the trust first took place before
portions to third parties. Respondents then filed a
Manuel Castro had reached his majority, and we are
unable to see how a minor with whom another is in trust complaint against the petitioners.
relation can be prejudiced by repudiation of the trust The RTC dismissed the complaint on the grounds
addressed to him by the person who is subject to the trust that: 1. The action, which was filed 32 years after
obligation. The defendant in our opinion is not entitled to the property was partitioned and after a portion
the benefit of prescription from his supposed repudiation of was sold to Macababbad had already prescribed;
the trust. and 2. There was failure to implead indispensable
parties, namely, the other heirs of Pedro and
Prescription does not run in favor of one who Pantaleona and the persons who have already
holds in trust for others; and a denial of the trust made acquired title to portions of the subject property in
by the trustee to one of the beneficiaries who, at the good faith.
time of such repudiation of the trust is a minor, does On appeal, the CA reversed the ruling of RTC and
not have the effect of abrogating the trust relation. applied the Civil Code provisions on implied trust,
i.e., that a person who acquires a piece of property
through fraud is considered a trustee of an implied
190. Gabutan v. Nacalaban
trust for the benefit of the person from whom the
property came. Reconciling this legal provision
191. Macababbad v. Masirag with Article 1409 (which defines void contracts)
FACTS: and Art. 1410 (which provides that an action to
declare a contract null and void is imprescriptible),
On April 28, 1999, respondents, the Masirags and the CA ruled that the respondents’ cause of action
Goyagoy, filed with the RTC a complaint against had not prescribed, because in assailing the
the petitioners, Macababbad, Chua and Say. The extrajudicial partition as void, the [respondents]
respondents alleged that their complaint is an have the right to bring the action unfettered by a
action for quieting of title, nullity of title and prescriptive period.
reconveyance, against the petitioners who thru
fraud dishonesty, deceit, misrepresentations, bad ISSUE:
faith, under the guise of purported instrument, WON the action for nullity of the instrument was
nomenclature extrajudicial settlement of estate and barred by prescription.
sale (Lot 4144), dated December 3, 1967. No.
The Supreme Court believed and so holds that the
Respondents, then, amended their complaint respondents’ amended complaint sufficiently
alleging the following: pleaded a cause to declare the NULLITY of the
extrajudicial settlement of estate and sale, as they
The deceased spouses Pedro Masirag and claimed in their amended complaint. Without
Panteleona Talauan (Panteleona) were the original prejudging the issue of the merits of the
registered owners of a parcel of land located in respondents’ claim and on the assumption that the
Tuguegarao. They had eight (8) children, two (2) petitioners already hypothetically admitted the
of which are the parents of the respondents. The allegations of the complaint when they filed a
respondents (children of Valeriano and Vicenta) motion to dismiss based on prescription, the
allegedly did not know of the demise of their transfer may be null and void if indeed it is
respective parents; they only learned of the established that respondents had not given their
inheritance due from their parents in the first week consent and that the deed is a forgery or is
of March, 1999 when their relative, Pilar Quinto, absolutely fictitious. As the nullity of the
informed respondent Fernando and his wife extrajudicial settlement of estate and sale has been
Barbara Balisi about it. They immediate hired a raised and is the primary issue, the action to
lawyer to investigate the matter. secure this result will not prescribe pursuant to
Article 1410 of the Civil Code.
Art. 1410. The action or defense for the declaration years.
of the inexistence of a contract does not prescribe.
Peña Heirs filed a Motion to Dismiss. They argue that
respondents’ predecessor-in-interest, Anastacio, was a
mere squatter who had been allowed by Mendoza to
occupy a portion of the lot sometime in 1960.

192. Khoemani v. Heirs of Anastacio Trinidad

RTC: granted petitioner’s motion to dismiss and that
FACTS:
respondents are bound by the ruling of this Court in the
Khemani purchased Lot no. 107 from the heirs of Jose B.
Assistant Executive Secretary case.
Peña (the Peña Heirs) on February 1994.

Respondents filed a motion for reconsideration. They

Prior to such purchase, Lot Nos. 107, 108 and 109,
argued that neither they, nor Anastacio, were parties in
constitute Lot No. 355 which was part of the public
the said case and that their action for review of decree of
domain. On July 1950, Lot No. 355 with an was awarded
registration and/or reconveyance is not barred by the
to Jesus M. Larrabaster by the National Land Settlement
Court’s ruling in Assistant Executive Secretary.
Administration (NLSA) who subsequently sold his rights
and interests over the said property to Jose B. Peña
In 1998, Judge Soledad of the RTC died without
(Peña) on June 1956.
resolving the motion for reconsideration. Acting Judge
Francisco S. Ampig granted the motion for
Thereafter, the original area of Lot No. 355 increased
reconsideration.
due to accretion. Peña then requested the Bureau of
Lands (BOL) to adjust the area of the lot awarded to him
Peña Heirs, together with herein petitioner (Khemani) as
but the BOL denied the request on the ground that the
the new owner of Lot No. 107, filed a petition for
accretion belonged to the government.
certiorari before the Court of Appeals

Peña appealed to the Office of the President. The BOL

CA: dismissed the petition of Peña and Khemani. It ruled
recommended that Lot No. 355 be subdivided into three
that petition for certiorari was not the proper remedy
parts, Lot Nos. 107, 108 and 109, and that Lot No. 108
and that there is no res judicata.
be awarded to Peña instead. Meanwhile, Lot Nos. 107
and 109 would be allocated to Basilio Mendoza and
Petitioner filed a motion for reconsideration but was
Arturo Roxas, respectively.
denied.

The Office of the President initially adopted the

ISSUE: WON the respondents are barred from filing an
recommendation. However, it modified its decision and
action basing on implied or constructive trust.
held that the entire area of Lot No. 355, including the
accretion, belonged to Peña and not to the government.
HELD:
NO, An aggrieved party may file an action for
January 1970, Mendoza filed a special civil action for
reconveyance based on implied or constructive trust,
certiorari (Assistant Executive Secretary case). Claiming
which prescribes in ten years from the date of the
that he was denied due process, Mendoza assailed the
issuance of the certificate of title over the property
decision of the Office of the President. He asserted
provided that the property has not been acquired by an
ownership over Lot No. 107 on the strength of a
innocent purchaser for value.
Miscellaneous Sales Application he allegedly filed with
the BOL on November 1962.
In this case, the patent was issued in favor of the Peña
Heirs on September 20, 1993. Respondents filed the
May 1985, the trial court rendered a decision dismissing
action on January 27, 1994. Respondents clearly
Mendoza’s petition for certiorari but the same was
asserted in their complaint that they and their
reversed by the Court of Appeals on appeal. Hence,
predecessors-in-interest have long been the owners of
Mendoza filed a petition for review on certiorari before
the Disputed Property and that they were fraudulently
the Supreme Court.
deprived of ownership thereof when the Peña Heirs
obtained a patent and certificate of title in their favor.
The Supreme Court rejected Mendoza’s claim over Lot
These allegations certainly measure up to the requisite
No. 107. Thus, Peña’s right of ownership was affirmed.
statement of facts to constitute an action for
reconveyance.
On September 1993, the Peña Heirs were awarded a
patent by the DENR and Original Certificate of Title was
issued in their name.

January 1994, respondents (heirs of Anastacio Trinidad)

filed with the RTC a complaint against the Peña Heirs,
the DENR and the BOL. They claimed that the Disputed
Property had long ceased to be public land by virtue of
their open, public, continuous, adverse and exclusive
possession in the concept of owner for more than 40