Pilapil vs. Heirs of Maximo briones G.R. No. 150175 Facts: Donata and Maximino are married.

When Maximino died, Donata through her petition she was able to transfer in her as a sole owner the properties acquired by Maximino prior to their marriage. When Donata died her niece and nephew took over the properties as administrator, by this time one of the descendants also file a petition to be appointed as administrator but it was not successful because the properties are already under the name of Donata and her descendants was already assigned as administrators. The heirs of Maximino claimed that they were defrauded by Donate when she successfully transferred the properties under her name and allege that Donata was just a trustee under Art 1451 of NCC. Issue: Is Donata just a trustee? Ruling: No. The court finds that Donata did not use fraud when she transferred the properties in her name. Donata and some of Maximinos siblings just live in the same street and from the wake Maximo it was only now that they made an action. The heirs of Maximino failed to prove by clear and convincing evidence that Donata managed, through fraud, to have the real properties, belonging to the intestate estate of Maximino, registered in her name. In the absence of fraud, no implied trust was established between Donata and the heirs of Maximino under Article 1456 of the New Civil Code. Donata was able to register the real properties in her name, not through fraud or mistake, but pursuant to an Order, dated 2 October 1952, issued by the CFI in Special Proceedings No. 928-R. The CFI Order, presumed to be fairly and regularly issued, declared Donata as the sole, absolute, and exclusive heir of Maximino; hence, making Donata the singular owner of the entire estate of Maximino, including the real properties, and not merely a co-owner with the other heirs of her deceased husband. There being no basis for the Complaint of the heirs of Maximino in Civil Case No. CEB-5794, the same should have been dismissed. LABANON vs LABANON Trust is the legal relationship between one person having an equitable ownership in property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. Trusts are classified under the Civil Code as either express or implied. Such classification determines the prescriptive period for enforcing such trust. No particular form of words or conduct is necessary for the manifestation of intention to create a trust. It is possible to create a trust without using the word "trust" or "trustee". Conversely, the mere fact that these words are used does not necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the relationship which is called a trust.

An express trust is created by the direct and positive acts of the parties, by some writing or deed or by words evidencing an intention to create a trust; the use of the word trust is not required or essential to its constitution, it being sufficient that a trust is clearly intended. Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real property prescribed in 10 years, excepting only actions based on continuing or subsisting trusts that were considered by section 38 as imprescriptible. As held in the case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing or subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred only to express unrepudiated trusts, and did not include constructive trusts (that are imposed by law) where no fiduciary relation exists and the trustee does not recognize the trust at all. that the prescriptive period for the enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the trustee Gomez v. Duyan Before this Court is a petition for review on certiorari assailing the Decision of the Court of Appeals in CA-G.R. CV No. 49163 ordering the reconveyance by the petitioners to the respondents of the property covered by Transfer Certificate of Title (TCT) No. 281115 and declaring said title cancelled, thereby [2] reversing the Decision of the Regional Trial Court (RTC) of Quezon City, Branch 80 which dismissed the complaint. The dispositive portion of the challenged Decision reads as follows: WHEREFORE, premises considered, the assailed decision of the Regional Trial Court of Quezon City, Branch 80 in Civil Case No. Q-91-8821 is hereby REVERSED and SET ASIDE. ACCORDINGLY, defendants-appellees are hereby ordered to RECONVEY in favor of plaintiffs-appellants the property [3] covered by TCT No. 281115, which title is hereby declared CANCELLED. With costs. The facts as culled from the records are as follows: The parties in this case are relatives residing at 96 General Avenue, Project 8, Quezon City which consists of four houses situated in an eight hundred-square meter (800 sq.m.) lot, covered by TCT No. 41717 issued by the Register of Deeds of Quezon City in the name of Eulogio Duyan (now deceased) married to Purisima Duyan, one of the respondents in this case. The property in dispute which constitutes one-half of the property previously covered by TCT No. 41717 is now covered by TCT No. [4] 281115 issued in the name of petitioner spouses. Eulogio Duyan and Feliza Duyan are siblings. In his desire to help his sister, Eulogio allowed her to [5] construct a house on the disputed lot sometime in 1968. Petitioners acknowledged the fact that the disputed property was owned by Eulogio and that they were staying in the disputed property solely due to his benevolence. Accordingly, an instrument entitled Pagpapahayag was executed by the siblings on 5 May 1974. The instrument provides that in the event that the property will be registered in Felizas name, she will continue to acknowledge Eulogio as the owner and will never assert ownership over the same, [6] except in accordance with her brothers wishes. The pertinent portions of the instrument read: Na napagkasunduan naming magcapatid na bouin ang documentong ito bilang katibayan ang lahat; .... 4. Na kaming magkapatid ay magtutulongan at magdadamayan maging sa hirap at ginhawa alang-alang sa ikabubuti ng aming mga mahal sa buhay;
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5. Na ito ay mailagay sa pangalan man ng aming Ama o pangalan ko ay itoy hindi ko pag aari kundi ari ito ng aking kuya, Eulogio V. Duyan, at6. Na ito ay aming igagalang maging saan man makarating ngayon at kailan man.
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On 11 May 1974, a deed of sale covering a residential house situated on the disputed lot was executed by Eulogio and Regina Velasquez, a common-law wife of the former, in favor of petitioners for the sum of One Thousand Pesos (P1,000.00). Thereafter, petitioners allegedly asserted ownership not [8] only over the said house but over the whole lot covered by TCT No. 41717. This prompted Eulogios legal wife, Purisima, to file a complaint for recovery of possession and damages against petitioners with [9] the then Court of First Instance of Rizal, Branch IV-B, Quezon City. Deciding the case in favor of Purisima, the trial court ordered petitioners to surrender possession of the property to her. On appeal, the Court of Appeals dismissed the case after the parties entered into an [10] amicable settlement. On 25 January 1978, Eulogio and Purisima this time, as vendors, executed a Deed of Absolute Sale in favor of petitioners with respect to the disputed lot for the sum of Twenty Thousand Pesos [11] (P20,000.00). Purisima claims that the deed of sale was executed merely to give color of legality to petitioners stay in the disputed property so that she and her children will not drive them away after they (Purisima [12] and her children) manifested their opposition to Eulogios decision to let them stay therein. Petitioners claim otherwise, contending that the sale was freely agreed upon by the parties thereto; hence, it was [13] authentic and validly executed. Subsequent to the execution of the deed of sale or on 10 February [14] 1978, another Pagpapahayag was executed between Eulogio and Feliza, where the latter [15] acknowledged that the lot subject of the deed of sale will eventually be transferred to respondents [16] herein who are her nephews and nieces and the children of Eulogio. The pertinent portions of the second Pagpapahayag read: Na pagkatapos ng lahat ng hidwaan sa Husgado ay aming isasagawa agad and conwaring pagbibili muli ng nasabing xxx aming binili sa aking capatid na si Gg. Eulogio V. Duyan. At pag mangyari ang nasabing hatian ng lote, ay aming ilalagay agad sa pangalan ng aming mga pamangkin na sina Salome V. Duyan, Divina V. Duyan, Cresencia V. Duyan, Reulgina V. Duyan, Domincia, Rodrigo at [17] Avencio C. Duyan. Notwithstanding the second Pagpapahayag, petitioners caused the registration of the deed of sale dated 25 January 1978 with the Register of Deeds of Quezon City. As a consequence, TCT No. 281115 [18] covering the disputed lot was issued on 22 September 1981 in the name of petitioners. On 20 May 1991, respondents filed a suit for reconveyance of real property and cancellation of TCT No. 281115 with damages against petitioners before Branch 80 of the Quezon City RTC. On 5 September 1994, the trial court rendered a decision, dismissing the complaint and ordering respondents to pay jointly and severally defendants therein, now petitioners, the amount of Ten [19] Thousand Pesos (P10,000,00) as reasonable attorneys fees and to pay the costs of the suit. In dismissing the case, the trial court held that: [the] TCT No. 281115 (Exh. 4) was validly issued pursuant to the Absolute Deed of Sale dated January 25, 1978 (Exh. 3) duly registered at the Office of the Registry of Deeds of Quezon City. The same became indefeasible and conclusive upon the expiration of one year period from its entry as it was not attacked [20] directly by anyone due to fraud.

On appeal, the Court of Appeals reversed the decision and held that an implied trust arose in favor of respondents over the disputed property by virtue of the Pagpapahayagdated 10 February 1978. It held [21] that the action for reconveyance of property was properly filed by respondents against petitioners. Petitioners motion for reconsideration having been denied by the appellate court in [23] a Resolution promulgated on 28 June 2000, the case was elevated to this Court by way of a petition for review. Petitioners in their petition for review contend that the Court of Appeals acted with grave abuse [25] of discretion when it reversed the RTC decision and that the error, if not corrected, will cause them [26] great injustice. They claim that the Court of Appeals erred when it ordered the reconveyance by petitioners to respondents of the property covered by TCT No. 281115 and declared the cancellation of [27] said title . The contention is without merit. The Court of Appeals did not err in ordering the reconveyance of the property in dispute. As found by the appellate court, the trial court failed to consider the law on trusts despite the existence of uncontroverted evidence establishing the creation of a trust as it anchored its decision solely on the indefeasibility of title aspect. Although it recognized the instruments creating the trust, the trial court nevertheless held that: In the document entitled Pagpapahayag (Exh. B), although the defendant Felisa Gomez stipulated therein that she will not claim ownership over the lot covered by TCT No. 41717, even in the event that the same will be transferred in her name, the same does not bar her totally from becoming as owner because of the exception provided therein that she can still own the lot or part thereof in accordance with the wishes of the deceased which was clearly manifested when the Absolute Deed of Sale of the half of the lot covered by TCT No. 41717 was executed between the deceased and his spouse Purisima Duyan [28] (plaintiff) and the defendants. While citing the provisions of the Pagpapahayag dated 5 May 1974 and concluding therefrom that Feliza was not actually prohibited from claiming ownership over the property, the trial court completely disregarded and missed the import of the other Pagpapahayag dated 10 February 1978. In express terms, Feliza undertook in the subsequent Pagpapahayag to convey the property subject of the fictitious deed of sale to her own nephews and nieces who are the children of her brother Eulogio. To reiterate, Feliza stated At pag mangyari ang nasabing hatian ng lote, ay aming ilalagay agad sa pangalan ng aming mga pamangkin na sina Salome V. Duyan, Divina V. Duyan, Cresencia V. [29] Duyan, Reulgina V. Duyan, Domincia, Rodrigo at Avencio C. Duyan. It must be noted that this Pagpapahayag was entered into by Eulogio and Feliza after the supposed sale of the property on 25 January 1978. Based on the clear provisions of this document, the intent of the siblings to create a trust was manifest with Eulogio as the trustor, Feliza as the trustee and Eulogios children as the beneficiaries [30] [31] or the cestui qui trust of the res which was the disputed property. This is based on the provision of the law on trusts which states that: Art. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose [32] benefit the trust has been created is referred to as the beneficiary. However, the trust created was not merely implied as held by the Court of Appeals but belongs to the express kind. Based on the provisions of the Civil Code and jurisprudence, Express trusts are those which the direct and positive acts of the parties create, by some writing, deed or will, or words evincing [33] an intention to create a trust.
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In this case, the provisions of the Pagpapahayag dated 10 February 1978 left no room for doubt. It was clearly intended therein by Eulogio and Feliza that the property subject of the sale will subsequently be placed by the latter in the name of respondents, thus creating a trust relationship over the property in dispute. Even if the word trust was not expressly used by the signatories to the 10 February 1978 Pagpapahayag and the document did not expressly state that a trust was being established by reason thereof, the establishment of an express trust cannot be discounted. Under the Civil Code, No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly [34] intended. In a decision penned by Justice Paras, this Court held that under the law on Trusts, it is not necessary that the document expressly state and provide for the express trust, for it may even be created orally, no particular words are required for its creation (Art. 1444, Civil [35] Code). ThePagpapahayag dated 10 February 1978 having been freely entered into by Eulogio and Feliza, it had the force of law between them. It was therefore incumbent upon Feliza as trustee to comply with the provisions of the instrument and have the subject property registered in the names of her nephews and nieces. Petitioners subsequent act of registering the disputed property in their own names and resisting the action for reconveyance later filed by respondents was clearly a betrayal of the provisions of the express trust created by the 10 February 1978 Pagpapahayag. By these actions, petitioners not only failed to comply with the provisions of thePagpapahayag, but actually circumvented them. It is worthy of note that petitioners never denied the existence, authenticity and due execution of [36] the 10 February 1978 Pagpapahayag as they merely objected to the purpose of its presentation. As held by the appellate court: Neither refutation nor denial of the existence of such document exist in the records of the case at bar. Particularly, Feliza did not even raise any objection as to the due execution and authenticity of the Pagpapahayag dated 10 February 1978. In relation thereto, it is worthy to note that an objection as to the purpose of its presentation is not tantamount to an objection as to the authenticity and due execution of the document. In view of the absence of such objection, the GOMEZES as signatories [37] thereto, are deemed bound by the stipulations therein. A trust is sacred and inviolable. The courts have therefore shielded fiduciary relations against [38] every manner of chicanery or detestable design cloaked by legal technicalities. Considering this pronouncement of the Supreme Court and the betrayal by petitioners of the provisions of the Pagpapahayag creating the trust in this case, the Court of Appeals rightly ordered the reconveyance of the disputed property to respondents and the cancellation of TCT No. 21885. Moreover, petitioners admitted in the Pagpapahayag itself that the 25 January 1978 sale was [39] fictitious. This is evident by the use of the phrase conwaring pagbibili which means simulated or fictitious sale. Thus, petitioners are estopped from claiming or asserting ownership over the subject property based on the 25 January 1978 deed of sale. Felizas admission in the said Pagpapahayag of the falsity of the sale is deemed conclusive upon her and her co-petitioner Eugenio Gomez. Under the Civil Code, Through estoppel an admission or representation is rendered conclusive upon the person making [40] it, and cannot be denied or disproved as against the person relying thereon. That admission cannot now be denied by Feliza as against Eulogio and his successors-in-interest, the latter having relied upon her representation. Petitioners argue that the action for reconveyance filed by respondents against them is not proper, [41] the latter not being the owners of the property in question. Invoking the 25 January 1978 deed of sale despite Felizas admission adverted to above that such sale was fictitious, petitioners assert that they are the owners of the subject property. They claim that the best proof of ownership of a piece of land is the [42] certificate of title, and the TCT being in their name, they are the rightful owners thereof. They further

argue that based on the case of Dela Pea vs. Court of Appeals among others, reconveyance is a [44] remedy granted only to the owner of the property alleged to be wrongfully titled in anothers name. The argument begs the question. Reconveyance is precisely the proper action for respondents to take against petitioners since the former are claiming that they are the rightful owners of the property in question, not petitioners. By filing an action for reconveyance, a party seeks to show that the person who [45] secured the registration of the questioned property is not the real owner thereof. Petitioners cannot rely on the registration of the disputed property and the corresponding issuance of a certificate of title in their name as vesting ownership on them simply because an express trust over the property was created in favor of respondents. It has been held that a trustee who obtains a Torrens title over the property held in trust by him for another cannot repudiate the trust by relying on the [46] registration. The law safeguards the rightful partys interest in titled land from fraud and im proper technicalities by allowing such party to bring an action for reconveyance of whatever he has been deprived of as long [47] as the property has not been transferred or conveyed to an innocent purchaser for value. The action while respecting the registration decree as incontrovertible, seeks to transfer or reconvey the land from [48] the registered owner to the rightful owner. As this Court held in the case of Escobar vs. Locsin, The [49] Torrens system was never calculated to foment betrayal in the performance of a trust. In a further effort to bolster the claim that they own the property in dispute, petitioners attempt to introduce new evidence annexed to their petition in the form of a purported declaration made by Eulogio [50] dated 19 February 1979. The declaration purports to state that the previous instruments entered into [51] by him and the petitioners are void because he had already sold the lot to them. This declaration, although annexed to the Petition for Review appears nowhere in the records of the trial court and the appellate court. This is a piece of factual evidence which should have been presented before the trial court to be considered and to allow respondents the opportunity to rebut it or to present evidence to the contrary. The Rules of Court specifically provides that The court shall consider no evidence which has [52] not been formally offered The alleged declaration not having been formally offered in evidence is deemed to be a mere scrap of paper which has no evidentiary value. Lastly, petitioners contend that the conflict between the decision of the appellate court and that of [53] the trial court provides this Court with a ground to review the decisions of both courts. That may be true but the circumstance does not suffice to warrant the reversal of the Court of Appeals Decision. Quite the contrary, the undisputed facts and the applicable law ineluctably support the conclusion that the appellate court did not commit any reversible error. WHEREFORE, the petition is DENIED due course and the Decision of the Court of Appeals is AFFIRMED. Costs against petitioners. SO ORDERED. Ringor v. Ringor

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Petitioners seek the review of the Decision dated November 27, 2000 of the Court of Appeals in [2] CA-G.R. CV No. 48581 and its Resolution, dated April 24, 2001, denying the subsequent motion for reconsideration. The Court of Appeals affirmed the decision of the Regional Trial Court (formerly the Court of First Instance) of Dagupan City, Branch 43, in favor of herein respondents, for partition and reconveyance of land with damages. The controversy involves lands in San Fabian, Pangasinan, owned by the late Jacobo Ringor. By his first wife, Gavina Laranang, he had two children, Juan and Catalina. He did not have offsprings by his second and third wives. Catalina predeceased her father Jacobo who died sometime in 1935, leaving Juan his lone heir.

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Juan married Gavina Marcella. They had seven (7) children, namely: Jose (the father and predecessor-in-interest of herein petitioners), Genoveva, Felipa, Concordia, Agapito, Emeteria and Espirita. Genoveva and Agapito are represented in this case by Teofilo Abalos and Marcelina Ringor, their respective children. Espirita is represented by her children, Avelina, Cresencia and Felimon Almasen. Jacobo applied for the registration of his lands under the Torrens system. He filed three land registration cases alone, with his son Juan, or his grandson Jose, applying jointly with him. The first application, docketed as Expediente 241, G.L.R.O. Record No. 13152 was applied for alone by Jacobo. While Jacobo was the only applicant in Expediente 241, on November 22, 1921, in Decree No. 119561, Parcels 1 and 2 of the lands in Expediente 241 were adjudicated to Jacobo and his son, Juan, in [3] equal shares as pro-indiviso co-owners. On March 6, 1922, OCT No. 23689 was issued in the names of [4] Jacobo and Juan. With Jacobos thumbmark, in a Compraventa dated November 6, 1928, the one-half () undivided interest of Jacobo in the said Parcels 1 and 2 was sold and transferred to Jose. The OCT was eventually cancelled and replaced by TCT No. 15918, dated November 6, 1928. The [5] sale to Jose was registered only on February 15, 1940. Decree No. 119562 awarded full ownership of Parcel 3 to Jacobo. Thus, OCT No. 23690 pertaining [7] to Parcel 3, was issued in Jacobos name. By another Compraventaalso dated November 6, 1928, and with the same circumstances as the Compraventa in Parcels 1 and 2, the entire interest of Jacobo in Parcel 3 was likewise sold and transferred to Jose. Thereafter, TCT No. 5090 was issued in the name of [8] [9] Jose. All the lands declared to Jacobo in Expediente 241 were allegedly sold to Jose for P6,000. In the second application, Expediente 244, G.L.R.O. Record No. 13168, Jacobo named Jose as the applicant. In Decree No. 65500, the five (5) parcels of land inExpediente 244 were adjudicated to Jose as a [10] donacion de su abuelo (donation of his grandfather). On April 18, 1918, OCT No. 18797 was issued [11] exclusively to Jose. The third application docketed as Expediente 4449, G.L.R.O. Record No. 23643, was filed in the [12] names of Jacobo and his only son Juan. It covered three parcels of land. Juan died on July 16, 1922, a year before the decision of the land registration court was issued. On October 10, 1923, in Decree No. 147191, half of Parcel 1 was adjudicated to Jacobo and the other half to Jose and later, three-fourths () [13] of parcels 2 and 3 to Jacobo and one-fourth () to Jose. Although Juan was one of the named applicants, it later appeared that Joses name was substituted for Juans name because of an erroneous [14] information that Jose was the only successor-in-interest of Juan. Thus, on February 29, 1924, OCT Nos. [15] 25885 and 25886 were issued in the names of Jacobo and Jose respectively. Subsequently, in a Compraventa dated November 3, 1928, Jacobo allegedly sold and transferred to Jose his one-half () undivided interest in Parcel 1 covered by OCT No. 25885. Jacobos thumbmark [16] appeared on the Compraventa. These lands are now covered by TCT No. 15916, in the name of petitioner corporation, Heirs of Jose M. Ringor, Inc., organized after the initiation of the instant [17] case. By another Compraventa also dated November 3, 1928, the three-fourths () undivided interests of Jacobo in Parcels 2 and 3 covered by OCT No. 25886 were likewise sold and transferred to Jose. The Compraventas were duly registered sometime in 1940. The OCTs were cancelled and new TCTs were issued in the name of Jose. Jacobo allegedly sold to Jose for P800 all the lands declared to him [18] in Expediente 4449. During trial, witnesses attested that even after the decisions in the three land registration cases and the Compraventas, Jacobo remained in possession of the lands and continued administering them as he did prior to their registration. He unfailingly gave a share of the produce to all the 7 children of his son [19] Juan. According to witness Julio Monsis, Jacobo did not partition the lands since the latter said that he [20] still needed them. When Jacobo died on June 7, 1935, the lands under the three land registration applications, including those which petitioners sought to partition in their counterclaim before the trial court, remained undivided. Jose, as the eldest grandchild, assumed and continued the administration of
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the lands. He also conscientiously gave his 5 younger sisters and only brother Agapito, their share in [22] the produce and income from the lands. Herein respondents claim they repeatedly asked Jose for partitioning of the land; however, every time they did, Jose always answered that it was not going to be [23] easy because there would be big and small shares. Respondents explained that they did not zealously press for the immediate partition of the lands because Jose constantly assured them that he [24] would never cheat them and because they respected him highly. Jose died on April 30, 1971. Respondents demanded from Joses children, herein petitioners, the partition and delivery of their share in the estate left by Jacobo and under Joses administration. The [25] petitioners refused and attempts at amicable settlement failed. On March 27, 1973, respondents filed a Complaint for partition and reconveyance with damages, docketed as Civil Case No. D-3037. [26] An Amended Complaint was admitted by the lower court in its Order of August 6, 1973. In their Complaint, herein respondents claimed that (1) they are all grandchildren and/or great grandchildren of Jacobo, who left intestate the disputed lands with a total area of 322,775 sq. m., all located in San Fabian, Pangasinan, and declared for tax purposes in the name of Jose Ringor; (2) that the [27] late Jose Ringor had always been the administrator and trustee of Jacobo; (3) that after Jacobos death, they asked for their shares of the intestate properties but was refused; and (4) that Jose as trustee and overseer of all these properties was answerable to the respondents for their just shares in the [28] intestate properties of Jacobo. They asked for (a) the partition of their corresponding shares, the cancellation of OCT No. 18797 issued in the name of Jose Ringor under Expediente 244 and that these be subdivided among the seven children of Jose Ringor, and the six children and grandchildren of Juan Ringor; (b) the payment to plaintiffs of whatever maybe found as chargeable to the late Jose Ringor as trustee, as well as liability for administering these properties from the time of Joses death up to the time [29] the case is terminated; and (c) the payment of attorneys fees, surveyors expenses and cost of th e suit. In their Answer, herein petitioners insisted that they rightfully own and possess the disputed lands. They alleged that their father acquired legitimate title to and remained in continuous, uninterrupted and exclusive possession and enjoyment of the said parcels of land in the concept of an owner at varying times since 1917, 1923, and 1928, as evidenced by the certificates of title issued more than thirty (30) years ago and in some cases more than fifty (50) years ago, before the present suit was instituted by respondents. They claimed that Jacobo sold the parcels of land under Expediente Nos. 4449 and 241 to Jose for valuable consideration on November 3 and 6, 1928, respectively, evidenced by notarial deeds of sale duly registered in the Registry of Deeds of Pangasinan. The other disputed lands sought to be divided, petitioners assured, were held by Jose as exclusive owner. In their Amended Answer, petitioners averred that the parcels of land in the exclusive name of Jose are his exclusive properties acquired by him either by inheritance, homestead patent, or purchase. They claimed that Jose had long acquired indefeasible and incontrovertible title to the said properties in accordance with the provisions of the Land Registration Act. These are evidenced by OCT No. 18797 issued March 6, 1919 for Lots Nos. 1, 2, 3, 4, 5, Plan Psu-6099; OCT No. 23797 on May 6, 1922 for Plan Psu-15467; TCT No. 5090 issued December 12, 1929 for Lot No. 3, Plan Psu-6095; TCT No. 15918 issued February 15, 1940 for Lots Nos. 1 & 2, Plan Psu-6095 Amd; TCT No. 15917 on February 15, 1940 for Lots Nos. 1 & 2, Plan Psu-35491; and TCT No. 15916 issued February 15, 1940 for Plan Psu-31271, now TCT No. 93019 issued November 22, 1971. Further, according to petitioners, whatever cause or right of action, if any, the respondents had with respect to the properties owned and possessed by them and their late father, including those based on constructive trust, it had long been barred by prescription and laches and/or prior judgments since it is an incontrovertible fact that Jose had been, for more than thirty (30) years and in some cases for more than fifty (50) years, the exclusive registered owner of the [30] registered properties. Lastly, petitioners asserted that respondents claim of express trust concerning the properties in question could not be proved by parol evidence. While trial of the case was in progress, Julio Monsis, alleging he was the only child of Macaria Discipulo and Jacobo, filed a Complaint in Intervention. So did Leocadia Ringor, alleging she was the only child of Jacobo with Marcelina Gimeno. When Julio died on February 3, 1977, he was survived by his

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wife Felipa and their legitimate children Maria, Federico, Eusebio, Paciencia, Panfilo and Fermin, all surnamed Monsis. On July 8, 1982, herein respondents filed an Amendment to their Amended [31] Complaintimpleading as additional party-defendants, the Heirs of Jose M. Ringor, Inc. On February 10, 1995, the RTC decided in favor of respondents. The dispositive portion of the Decision set forth its judgment: (a) Declaring the 7 children of Juan L. Ringor who are the grandchildren of Jacobo Ringor, namely: Jose, Genoveva, Felipa, Concordia, Agapito, Emeteria and Espirita, all surnamed Ringor, as pro-indiviso coowners of all the lands covered by Expediente Nos. 241, 244 and 4449 described in pages 2, 3, 4 and 5 of this decision brought under the Land Registration Act and now covered by TCT No. 15918 (Lots 1 and 2) and TCT 5090 (Lot No. 3) in the name of Jose Ringor (Expediente 241); TCT No. 15916 in the name of defendant Heirs of Jose M. Ringor, Inc. (Lot 1, Expediente 2449); TCT No. 15917 (Lots 2 and 3, Expediente 4449); and TCT No. 18797 (Lots 1, 2, 3, 4 and 5, Expediente 244), in the name of Jose Ringor; (b) Ordering the partition of the said parcels of land covered by TCT Nos. 15918, 5090, 15916, 15917 and 18797, all of the Register of Deeds of Pangasinan, among Jose, Genoveva, Felipa, Concordia, Agapito, Emeteria and Espirita, all surnamed Ringor into 7 equal parts; (c) Ordering defendants to render an accounting to the plaintiffs of all the income, produce and rents on these parcels of land from 1973 until the respective shares of the plaintiffs are physically and peacefully delivered to each of them; (d) Ordering defendants jointly and severally to pay the plaintiffs the sum of P50,000.00 for attorneys fees; (e) Dismissing the Complaints-in-Intervention of Julio Mon[sis] and Leocadia Ringor; (f) On the Counterclaim, ordering the partition in seven (7) equal shares the parcels of land described in paragraph 34 (a and b), pages 14 and 15 of this decision, among Jose, Genoveva, Felipa, Concordia, Agapito, Emeteria and Espirita, all surnamed Ringor. (g) Ordering the defendants to pay the costs of suit. SO ORDERED.
[32]

The trial court concluded that Jacobo created an express trust over his entire property in favor of his grandchildren. It found that Jose held the subject lands as co-owner and trustee of the express trust. The trial court held that the notarial deeds of sale executed between Jacobo and Jose in Expediente 241 were false and simulated. It noted that Jose registered the deed of sale twelve years after their execution and five years after Jacobos death. More important, the trial court declared that Jacobo continued to occupy and exercise acts of ownership over the same parcels of land until his death despite the supposed sale to Jose. On Expediente 244, the trial court observed that the document evidencing that Jacobo donated the lands therein to Jose was never presented to the registration court, nor was any explanation given for the failure to register the alleged donation. Hence, the donation was declared invalid. On Expediente 4449, the trial court observed that although the applicants were Jacobo and Juan, the land was erroneously adjudicated to Jacobo and Jose because it was made to appear that Jose was the only child who succeeded Juan, who died a year before the application was adjudicated, when in fact Juan had seven children. Jacobo knew of this error, yet he did nothing to correct it.

The trial court concluded that all these incidents and circumstances served as indicia that Jacobo cared little if the lands were in his name or someone elses. As far as he was concerned, all these lands belonged to him such that notwithstanding the subsequent compraventas, he continued to possess and administer the lands and all the profits from them were at his disposal. Thus, the trial court continued, from the acts of Jacobo and his full exercise of dominion over the lands until his death, it could be deduced that the compraventas were without consideration and this was why the compraventas were not registered during Jacobos lifetime. The trial court noted that even after the registration of the compraventas, until his own death, Jose continued Jacobos practice of sharing the produce of the land with his siblings, a recognition that even Jose considered that his siblings were beneficial co-owners [33] of the lands under his care. The trial court reasoned that despite the absence of a document proving the express trust, the same [34] was proven by parol evidence. The trial court explained that the prohibition in Article 1443 of the New Civil Code that no express trust concerning an immovable or any interest therein may be proved by parol evidence is a prohibition for purposes of presenting proof on the matter, but it could be waived by [35] a party. It went on to say that the failure to object to parol evidence during trial and the crossexamination of the witnesses is a waiver of the prohibition. Furthermore, it said that Jose, as trustee, did not repudiate the trust, such that the trust remained, and since the trust continued to exist, an action to [36] compel the trustee to convey the properties has not prescribed nor is it barred by laches. Before the Court of Appeals, petitioners contended that the lower court erred when (1) it ruled that Jacobo Ringor constituted an express trust over the disputed properties abovecited in favor of respondents as the beneficiaries and with Jose Ringor as trustee; and (2) it gave weight to the oral evidence of herein respondents to prove the existence of an express trust in their favor. The Court of Appeals affirmed the lower courts decision. The Motion for Reconsideration of petitioners was also denied. Now before us the petitioners, in their Memorandum, raise the following issues: 1. WHETHER OR NOT THERE IS A DOCUMENT, INSTRUMENT, DEED OR ANY WRITING CREATING AN EXPRESS TRUST AND FORMING PART OF THE EVIDENCE ON RECORD WHICH SUPPORTS THE FINDINGS OF THE TRIAL COURT, AS THE SAME WAS AFFIRMED BY THE COURT A QUO, THAT AN EXPRESS TRUST WAS ESTABLISHED BY THE LATE JACOBO RINGOR OVER THE PARCELS OF LAND IN QUESTION IN FAVOR OF THE RESPONDENTS AS THE BENEFICIARIES, WITH JOSE RINGOR AS THE TRUSTEE THEREOF (AND CO-BENEFICIARY AT THE SAME TIME). 2. WHETHER OR NOT THE TRIAL COURTS RULINGS AS THE SAME WERE AFFIRMED ON APPEAL BY THE COURT A QUO, WERE ANCHORED ONLY ON PAROL EVIDENCE. 3. WHETHER OR NOT THE ADMISSION OF PAROL EVIDENCE TO PROVE EXPRESS TRUST AS PROSCRIBED BY ART. 1443 OF THE NEW CIVIL CODE CAN BE WAIVED. 4. WHETHER OR NOT THE COURT A QUO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PETITIONERS VALIDLY WAIVED THEIR OBJECTION TO THE ADMISSION BY THE TRIAL COURT OF PAROL EVIDENCE AS PROOF OF THE ESTABLISHMENT OF AN EXPRESS TRUST. 5. WHETHER OR NOT THE COURT A QUO ERRED IN AFFIRMING THE TRIAL COURTS RULING ADMITTING AND GIVING WEIGHT AND CONSIDERATION TO THE PAROL EVIDENCE ON RECORD TO PROVE THE EXISTENCE OF AN EXPRESS TRUST. 6. WHETHER OR NOT THE FACTUAL FINDINGS OF THE TRIAL COURT WHICH WERE AFFIRMED IN TOTO BY THE COURT A QUO ARE SUPPORTED BY, OR CONTRARY TO, THE EVIDENCE ON RECORD.

7. WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS ERRORS AND GRAVE ABUSE OF DISCRETION IN VIRTUALLY ORDERING THE NULLIFICATION AND/OR DECLARING THE NULLITY OF --- ALL THE TITLES (TCT NO. 5090, TCT NO. 15918, OCT NO. 18797, TCT NO. 1597, AND TCT NO. 93019) OF JOSE RINGOR AND HIS SUCCESSORSIN-INTEREST (THE PETITIONERS HEREIN) AND DIVESTING THEM OF THEIR EXCLUSIVE OWNERSHIP OVER THE PARCELS OF LAND IN QUESTION; THE DECISIONS OF THE LAND REGISTRATION COURTS IN EXPEDIENTE 244 AND 4449; THE DONATION REFERRED TO IN THE DECISION IN EXPEDIENTE 244; AND THE FOUR (4) DULY NOTARIZED COMPRAVENTAS EXECUTED BY JACOBO RINGOR IN FAVOR OF JOSE RINGOR COVERING THE PARCELS OF LAND DESCRIBED THEREIN, AND --- WHETHER OR NOT THE COURT A QUO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING THE SUBJECT PARCELS OF LAND AS BELONGING TO THE INTESTATE ESTATE OF JACOBO RINGOR AND UNDER THE CO-OWNERSHIP OF JOSE RINGOR AND THE RESPONDENTS, AND IN ORDERING THEIR PARTITION AMONG THE SEVEN CHILDREN OF JUAN RINGOR, IN VIOLATION OF THE APPLICABLE PROVISIONS OF THE CIVIL CODE, AND THE PRINCIPLES OF RES JUDICATA AND THE INDEFEASIBILITY OF A TORRENS TITLE. 8. WHETHER OR NOT RESPONDENTS ACTION WAS ALREADY BARRED BY [37] PRESCRIPTION, BOTH ACQUISITIVE AND EXTINCTIVE, AND LACHES.

Briefly stated, the issues to be resolved in this petition are: (1) Were the factual findings of the lower and appellate courts supported by evidence on record? (2) Was there a valid express trust established by Jacobo Ringor? (3) May parol evidence be used as proof of the establishment of the express trust? (4) Did the court in effect nullify the Torrens titles over the disputed parcels of land? (5) Were respondents action barred by prescription and laches? We shall now address these issues together. At the outset, petitioners urge this Court to review the factual findings of the case. It is a well[38] established principle, however, that in an appeal via certiorari only questions of law may be raised. The findings of fact of the Court of Appeals especially when not at variance with those of the trial court may not, generally be reviewed by this Court. The findings of fact of the lower court are conclusive on us, absent any palpable error or patent arbitrariness. In this case, we find no tenable route but to leave the findings of fact of the lower courts untouched, and move on to the resolution of the other issues. Petitioners main contention is that the trial and appellate co urts had no basis to conclude that Jacobo constituted an express trust because respondents did not present any deed, instrument or document expressly declaring that a trust was constituted. Petitioners anchor their assertion on the Civil [39] [40] [41] [42] [43] Code, particularly their interpretation of Articles 1440, 1441, 1443, 1444, 1445, and [44] 1446, as they point out that in these provisions, for an express trust over an immovable to exist, four elements must be present, namely: (1) a trustor or settlor who executes the instrument creating the trust; (2) a trustee, who is the person expressly designated to carry out the trust; (3) the trust res, consisting of duly identified and definite real properties; and (4) the cestui que trust, or beneficiaries whose identity must be clear. Petitioners aver that these elements are indispensable for an express trust to exist. Petitioners then lament that respondents did not present during trial or even attach to the records of the case, any deed, instrument or document that Jacobo intended to create a trust. Petitioners, in their petition, insist that the intent to create a trust must be in writing; and they claimed that they objected, from the beginning, to the introduction of any oral testimony to prove the establishment of an express trust. Respondents, for their part, argue that Jacobo created an express trust. Respondents cite the three applications for registration of the lands referred to the Expedientes 241, 244 and 4449 and the three Compraventas as documentary proofs that an express trust was created by Jacobo. According to them, this conclusion can be gleaned clearly when Jacobo exercised acts of ownership over all the

disputed lands even after the alleged donation and deeds of sale in favor of Jose, and when Jacobo religiously gave shares of the income and produce of the disputed lands to the respondents, a practice Jose continued until three years before his death. Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and [45] positive acts of the settlor or the trustor by some writing, deed, or will, ororal declaration. It is created not necessarily by some written words, but by the direct and positive acts of the parties. No [46] particular words are required, it being sufficient that a trust was clearly intended. Unless required by a statutory provision, such as the Statute of Frauds, a writing is not a requisite for the creation of a [47] trust. Such a statute providing that no instruments concerning lands shall be created or declared unless by written instruments signed by the party creating the trust, or by his attorney, is not to be construed as precluding a creation of a trust by oral agreement, but merely as rendering such a trust [48] unenforceable. Contrary to the claim of petitioners, oral testimony is allowed to prove that a trust exists. It is not error for the court to rely on parol evidence, - - i.e., the oral testimonies of witnesses Emeteria Ringor, Julio Monsis and Teofilo Abalos - - which the appellate court also relied on to arrive at the conclusion that an express trust exists. What is crucial is the intention to create a trust. While oftentimes the intention is manifested by the trustor in express or explicit language, such intention may be manifested by inference from what the trustor has said or done, from the nature of the transaction, or [49] from the circumstances surrounding the creation of the purported trust. However, an inference of the intention to create a trust, made from language, conduct or [50] circumstances, must be made with reasonable certainty. It cannot rest on vague, uncertain or indefinite declarations. An inference of intention to create a trust, predicated only on circumstances, can [51] be made only where they admit of no other interpretation. In the present case, credible witnesses testified that (1) the lands subject of Expedientes 241 and 4449 were made and transferred in the name of Jose merely for convenience since Juan predeceased Jacobo; (2) despite the Compraventas, transferring all the lands in Joses name, Jacobo continued t o perform all the acts of ownership including possession, use and administration of the lands; (3) Jacobo did not want to partition the lands because he was still using them; (4) when Jacobo died, Jose took over the administration of the lands and conscientiously and unfailingly gave his siblings their share in the produce of the lands, in recognition of their share as co-owners; and (5) Jose did not repudiate the claim of his siblings and only explained upon their expression of the desire for partitioning, that it was not going to be an easy task. From all these premises and the fact that Jose did not repudiate the claim of his co-heirs, it can be concluded that as far as the lands covered by Expediente Nos. 241 and4449 are concerned, when Jacobo transferred these lands to Jose, in what the lower court said were simulated or falsified sales, Jacobos intention impressed upon the titles of Jose a trust in favor of the true party-beneficiaries, including herein respondents. Under the doctrine of partial performance recognized in this jurisdiction, the objection to the oral character of a trust may be overcome or removed where there has been partial performance of the terms [52] of the trust as to raise an equity in the promisee. A trustee may perform the provisions of the trust, and [53] if he does, the beneficiary is protected in benefits that he has received from such performance. Thus, when a verbal contract has been completed, executed or partially consummated, its enforceability will [54] not be barred by the Statute of Frauds, which applies only to an executory agreement. Noteworthy, despite the compraventas transferring the lands in his name, Jose unfailingly gave his siblings their share of the produce of the lands. Furthermore, not only did he fail to repudiate the trust, he also assured his co-heirs that it was the inconvenience of partitioning that kept him from transferring the shares of his siblings to them. Accordingly, with respect to the lands covered by Expediente Nos. 241 and 4449, an express trust exists with Jose Ringor as trustee in favor of all the heirs of Jacobo Ringor. As far as prescription or laches are concerned, they pose no hindrance or limitation to the enforcement of an [55] express trust. Finally, on the lands covered in Expediente 244, we note that as a donacion de su abuelo, the donation impaired the hereditary rights of succession of Joses co-heirs. Nevertheless, these were

transferred to Jose by final judgment of the land registration court. Despite the registration in Joses name, Jose did not take possession over them from the date of registration to the time of Jacobos death. Instead, while alive, Jacobo retained possession, and continued the administration of the lands. Considering then these circumstances, Article 1449 of the New Civil Code on implied trusts is the pertinent law. It provides that, [t]here is also an implied trust when a donation is made to a person but it appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof. Article 1449 creates a resulting trust where the donee be comes [56] the trustee of the real beneficiary. Generally, resulting trusts do not prescribe except when the trustee [57] repudiates the trust. Further, the action to reconvey does not prescribe so long as the property stands [58] in the name of the trustee. To allow prescription would be tantamount to allowing a trustee to acquire [59] title against his principal and true owner. Here, Jose did not repudiate the trust, and the titles of the disputed lands are still registered in Joses name or in the name of the Heirs of Jose M. Ringor, Inc. Petitioners contend, however, that the court a quo virtually nullified all the land titles in Joses name when it declared that the disputed lands belong to the intestate estate of Jacobo and Jose and his siblings were co-owners thereof. This, petitioners aver, violates the principle of res judicata and the indefeasibility of the Torrens title. Nothing is farther from the truth than this contention. A trustee who obtains a Torrens title over a [60] property held in trust for him by another cannot repudiate the trust by relying on the registration. A Torrens Certificate of Title in Joses name did not vest ownership of the land upon him. The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does [61] not protect a usurper from the true owner. The Torrens system was not intended to foment betrayal in [62] the performance of a trust. It does not permit one to enrich himself at the expense of another. Where one does not have a rightful claim to the property, the Torrens system of registration can confirm or [63] record nothing. Petitioners cannot rely on the registration of the lands in Joses name nor in the name of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate a trust by [64] relying on a Torrens title he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust, notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained. To recapitulate, we find no reversible error in the assailed decision of the appellate court. We are in agreement in sustaining the findings and conclusions of the court a quo. The trial court found in favor of herein respondents claim that the deeds of sale that caused the registration of the TCTs in Expedientes 241 and 4449 in Joses name were invalid. The deeds were false, simulated and clearly without consideration. The trial court also found that Jose owned only about three hectares of land which he farmed, and he had no other means for his alleged purchases. He was never in business, nor gainfully employed in the government or in the private sector. Neither were the children of Jose [65] propertied nor employed. In fine, we sustain its findings on the invalidity of the deeds of sale for being simulated and false. As for the donations of the lands in Expediente 244, the basis of which was an alleged donacion de su abuelo the trial court concluded they were invalid donations because no deed of donation was ever shown. The trial court noted that the documents evidencing the donations were never presented for registration simply because there was never a donation to Jose and because at the time the application was filed, Jacobos only son, Juan, was still alive. The donation was allegedly made merely to facilitate [66] the registration of the lands in Joses name. As found by the trial court and sustained by the appellate court, it was merely for convenience that Jacobo registered the lands in the name of Jose. He did not intend to relinquish his rights to the lands. His intention was clearly to keep the lands for himself until his death, and it was to be understood that Jose was merely a trustee. We are not inclined to disturb these findings and conclusions of the trial court, sustained by the Court of Appeals, which persuasively convince us that the transfers of the lands in Expedientes 241 and 4449 were simulated sales, and in Expediente 244 the transfers were invalid donations.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated November 27, 2000 of the Court of Appeals, affirming the Decision of the Regional Trial Court, formerly the Court of First Instance of Dagupan City, Branch 43, is hereby AFFIRMED. Costs against petitioners. SO ORDERED.

SECUYA v. Vda. De Selma

In action for quieting of title, the plaintiff must show not only that there is a cloud or contrary interest over the subject real property, but that the have a valid title to it. In the present case, the action must fail, because petitioners failed to show the requisite title. The Case Before us is a Petition for Review seeking to set aside the July 30, 1998 Decision of the Court of Appeals 1 2 (CA) in CA-G.R. CV No. 38580, which affirmed the judgment of the Regional Trial Court (RTC) of Cebu City. The CA ruled: WHEREFORE, [there being] no error in the appealed decision, the same is hereby 3 AFFIRMED in toto. The decretal portion of the trial court Decision reads as follows: WHEREFORE, in view of all the foregoing [evidence] and considerations, this court hereby finds the preponderance of evidence to be in favor of the defendant Gerarda Selma as judgment is rendered: 1. Dismissing this Complaint for Quieting of title, Cancellation of Certificate of Title of Gerarda vda. de Selma and damages, 2. Ordering the plaintiffs to vacate the premises in question and turn over the possession of the same to the defendant Gerarda Selma; 3. Requiring the plaintiffs to pay defendant the sum of P20,000 as moral damages, according to Art. 2217, attorney's fees of P15,000.00, litigation expenses of P5,000.00 pursuant to Art. 2208 No. 11 and to pay the costs of this suit.1wphi1.nt SO ORDERED.
4

Likewise challenged is the October 14, 1998 CA Resolution which denied petitioners' Motion for 5 Reconsideration. The Facts The present Petition is rooted in an action for quieting of title filed before the RTC by Benigna, Miguel, Marcelino, Corazon, Rufina, Bernardino, Natividad, Gliceria and Purita all surnamed Secuya against Gerarda M. vda. de Selma. Petitioners asserted ownership over the disputed parcel of land, alleging the following facts:

xxx

xxx

xxx

8. The parcel of land subject of this case is a PORTION of Lot 5679 of the Talisay-Minglanilla Friar Lands Estate, referred to and covered [o]n Page 279, Friar Lands Sale Certificate Register of the Bureau of Lands (Exh. "K"). The property was originally sold, and the covering patent issued, to Maxima Caballero Vda. de Cario (Exhs. "K-1"; "K-2). Lot 5679 has an area of 12,750 square meters, more or less; 9. During the lifetime of Maxima Caballero, vendee and patentee of Lot 5679, she entered into that AGREEMENT OF PARTITION dated January 5, 1938 with Paciencia Sabellona, whereby the former bound herself and parted [with] one-third (1/3) portion of Lot 5679 in favor of the latter (Exh. "D"). Among others it was stipulated in said agreement of partition that the said portion of one-third so ceded will be located adjoining the municipal road (par. 5. Exh "D"); 10. Paciencia Sabellona took possession and occupation of that one-third portion of Lot 5679 adjudicated to her. Later, she sold the three thousand square meter portion thereof to Dalmacio Secuya on October 20, 1953, for a consideration of ONE THOUSAND EIGHT HUNDRED FIFTY PESOS (P1,850.00), by means of a private document which was lost (p. 8, tsn., 8/8/89-Calzada). Such sale was admitted and confirmed by Ramon Sabellona, only heir of Paciencia Sabellona, per that instrument denominated CONFIRMATION OF SALE OF UNDIVIDED SHARES, dated September 28, 1976(Exh. "B"); 11. Ramon Sabellona was the only [or] sole voluntary heir of Paciencia Sabellona, per that KATAPUSAN NGA KABUT-ON UG PANUGON NI PACIENCIA SABELLONA (Last Will and Testament of Paciencia Sabellona), dated July 9, 1954, executed and acknowledged before Notary Public Teodoro P. Villarmina (Exh. "C"). Pursuant to such will, Ramon Sabellona inherited all the properties left by Paciencia Sabellona; 12. After the purchase [by] Dalmacio Secuya, predecessor-in interest of plaintiffs of the property in litigation on October 20, 1953, Dalmacio, together with his brothers and sisters he being single took physical possession of the land and cultivated the same. In 1967, Edilberto Superales married Rufina Secuya, niece of Dalmacio Secuya. With the permission and tolerance of the Secuyas, Edilberto Superales constructed his house on the lot in question in January 1974 and lived thereon continuously up to the present (p. 8., tsn 7/25/88 Daclan). Said house is inside Lot 5679-C-12-B, along lines 18-19-20 of said lot, per Certification dated August 10, 1985, by Geodetic Engineer Celestino R. Orozco (Exh. "F"); 13. Dalmacio Secuya died on November 20, 1961. Thus his heirs brothers, sisters, nephews and nieces are the plaintiffs in Civil Case No. CEB-4247 and now the petitioners; 14. In 1972, defendant-respondent Gerarda Selma bought a 1,000 square-meter portion of Lot 5679, evidenced by Exhibit "P". Then on February 19, 1975, she bought the bigger bulk of Lot 5679, consisting of 9,302 square meters, evidenced by that deed of absolute sale, marked as Exhibit "5". The land in question, a 3,000-square meter portion of Lot 5679, is embraced and included within the boundary of the later acquisition by respondent Selma; 15. Defendant-respondent Gerarda Selma lodged a complaint, and had the plaintiffs-petitioners summoned, before the Barangay Captain of the place, and in the confrontation and conciliation proceedings at the Lupong Tagapayapa, defendant-respondent Selma was asserting ownership over the land inherited by plaintiffs-petitioners from Dalmacio Secuya of which they had long

been in possession . . . in concept of owner. Such claim of defendant-respondent Selma is a 6 cloud on the title of plaintiffs-petitioners, hence, their complaint (Annex "C"). Respondent Selma's version of the facts, on the other hand, was summarized by the appellate court as follows: She is the registered owner of Lot 5679-C-120 consisting of 9,302 square meters as evidenced by TCT No. T-35678 (Exhibit "6", Record, p. 324), having bought the same sometime in February 1975 from Cesaria Caballero as evidenced by a notarized Deed of Sale (Exhibit "5", Record, p. 323) and ha[ve] been in possession of the same since then. Cesaria Caballero was the widow of Silvestre Aro, registered owner of the mother lot, Lot. No. 5679 with an area of 12,750 square meters of the Talisay-Minglanilla Friar Lands Estate, as shown by Transfer Certificate of Title No. 4752 (Exhibit "10", Record, p. 340). Upon Silvestre Aro's demise, his heirs executed an "Extrajudicial Partition and Deed of Absolute Sale" (Exhibit "11", Record, p. 341) wherein onehalf plus one-fifth of Lot No. 5679 was adjudicated to the widow, Cesaria Caballero, from whom 7 defendant-appellee derives her title. The CA Ruling In affirming the trial court's ruling, the appellate court debunked petitioners' claim of ownership of the land and upheld Respondent Selma's title thereto. It held that respondent's title can be traced to a valid TCT. On the other hand, it ruled that petitioners anchor their claim on an "Agreement of Partition" which is void for being violative of the Public Land Act. The CA noted that the said law prohibited the alienation or encumbrance of land acquired under a free patent or homestead patent, for a period of five years from the issuance of the said patent. Hence, this Petition.
8

The Issues In their Memorandum, petitioners urge the Court to resolve the following questions: 1. Whether or not there was a valid transfer or conveyance of one-third (1/3) portion of Lot 5679 by Maxima Caballero in favor of Paciencia Sabellona, by virtue of [the] Agreement of Partition dated January 5, 1938[;] and 2. Whether or not the trial court, as well as the court, committed grave abuse of discretion amounting to lack of jurisdiction in not making a finding that respondent Gerarda M. vda. de 9 Selma [was] a buyer in bad faith with respect to the land, which is a portion of Lot 5679. For a clearer understanding of the above matters, we will divide the issues into three: first, the implications of the Agreement of Partition; second, the validity of the Deed of Confirmation of Sale executed in favor of the petitioners; and third, the validity of private respondent's title. The Court's Ruling The Petition fails to show any reversible error in the assailed Decision. Preliminary Matter: The Action for Quieting of Title

In an action to quiet title, the plaintiffs or complainants must demonstrate a legal or an equitable title to, 10 or an interest in, the subject real property. Likewise, they must show that the deed, claim, encumbrance or proceeding that purportedly casts a cloud on their title is in fact invalid or inoperative despite its prima 11 facieappearance of validity or legal efficacy. This point is clear from Article 476 of the Civil Code, which reads: Whenever there is cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. In the case at bar, petitioners allege that TCT No. 5679-C-120, issued in the name of Private Respondent Selma, is a cloud on their title as owners and possessors of the subject property, which is a 3,000 square-meter portion of Lot No. 5679-C-120 covered by the TCT. But the underlying question is, do petitioners have the requisite title that would enable them to avail themselves of the remedy of quieting of title? Petitioners anchor their claim of ownership on two documents: the Agreement of Partition executed by Maxima Caballero and Paciencia Sabellona and the Deed of Confirmation of Sale executed by Ramon Sabellona. We will now examine these two documents. First Issue: The Real Nature of the "Agreement of Partition" The duly notarized Agreement of Partition dated January 5, 1938; is worded as follows: AGREEMENT OF PARTITION I, MAXIMA CABALLERO, Filipina, of legal age, married to Rafael Cario, now residing and with postal address in the Municipality of Dumaguete, Oriental Negros, depose the following and say: 1. That I am the applicant of vacant lot No. 5679 of the Talisay-Minglanilla Estate and the said application has already been indorsed by the District Land Officer, Talisay, Cebu, for private sale in my favor; 2. That the said Lot 5679 was formerly registered in the name of Felix Abad y Caballero and the sale certificate of which has already been cancelled by the Hon. Secretary of Agriculture and Commerce; 3. That for and in representation of my brother, Luis Caballero, who is now the actual occupant of said lot I deem it wise to have the said lot paid by me, as Luis Caballero has no means o[r] any way to pay the government; 4. That as soon as the application is approved by the Director of Lands, Manila, in my favor, I hereby bind myself to transfer the one-third (l/3) portion of the above mentioned lot in favor of my aunt, Paciencia Sabellana y Caballero, of legal age, single, residing and with postal address in Tungkop, Minglanilla, Cebu. Said portion of one-third (1/3) will be subdivided after the approval

of said application and the same will be paid by her to the government [for] the corresponding portion. 5. That the said portion of one-third (1/3) will be located adjoining the municipal road; 6. I, Paciencia Sabellana y Caballero, hereby accept and take the portion herein adjudicated to me by Mrs. Maxima Caballero of Lot No. 5679 Talisay-Minglanilla Estate and will pay the corresponding portion to the government after the subdivision of the same; IN WITNESS WHEREOF, we have hereunto set our hands this 5th day of January, 1988, at 12 Talisay, Cebu." The Agreement: An Express Trust, Not a Partition Notwithstanding its purported nomenclature, this Agreement is not one of partition, because there was no property to partition and the parties were not co-owners. Rather, it is in the nature of a trust agreement. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the 13 beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operation of 14 law. The present Agreement of Partition involves an express trust. Under Article 1444 of the Civil Code, "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." That Maxima Caballero bound herself to give one third of Lot No. 5629 to Paciencia Sabellona upon the approval of the former's application is clear from the terms of the Agreement. Likewise, it is evident that Paciencia acquiesced to the covenant and is thus bound to fulfill her obligation therein. As a result of the Agreement, Maxima Caballero held the portion specified therein as belonging to Paciencia Sabellona when the application was eventually approved and a sale certificate was issued in her 15 name. Thus, she should have transferred the same to the latter, but she never did so during her lifetime. Instead, her heirs sold the entire Lot No. 5679 to Silvestre Aro in 1955. From 1954 when the sale certificate was issued until 1985 when petitioners filed their Complaint, Paciencia and her successors-in-interest did not do anything to enforce their proprietary rights over the disputed property or to consolidate their ownership over the same. In fact, they did not even register the said Agreement with the Registry of Property or pay the requisite land taxes. While petitioners had been doing nothing, the disputed property, as part of Lot No. 5679, had been the subject of several sales 16 transactions and covered by several transfer certificates of title. The Repudiation of the Express Trust While no time limit is imposed for the enforcement of rights under express trusts, prescription may, however, bar a beneficiary's action for recovery, if a repudiation of the trust is proven by clear and 18 convincing evidence and made known to the beneficiary. There was a repudiation of the express trust when the heirs of Maxima Caballero failed to deliver or transfer the property to Paciencia Sabellona, and instead sold the same to a third person not privy to the 19 Agreement. In the memorandum of incumbrances of TCT No. 3087 issued in the name of Maxima, there
17

was no notation of the Agreement between her and Paciencia. Equally important, the Agreement was not registered; thus, it could not bind third persons. Neither was there any allegation that Silvestre Aro, who purchased the property from Maxima's heirs, knew of it. Consequently, the subsequent sales transactions involving the land in dispute and the titles covering it must be upheld, in the absence of proof that the said transactions were fraudulent and irregular. Second Issue: The Purported Sale to Dalmacio Secuya Even granting that the express trust subsists, petitioners have not proven that they are the rightful successors-in-interest of Paciencia Sabellona. The Absence of the Purported Deed of Sale Petitioners insist that Paciencia sold the disputed property to Dalmacio Secuya on October 20, 1953, and that the sale was embodied in a private document. However, such document, which would have been the best evidence of the transaction, was never presented in court, allegedly because it had been lost. While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be considered binding on third persons, if it is not embodied in a public instrument and recorded in the 20 Registry of Property. Moreover, while petitioners could not present the purported deed evidencing the transaction between Paciencia Sabellona and Dalmacio Secuya, petitioners' immediate predecessor-in-interest, private respondent in contrast has the necessary documents to support her claim to the disputed property. The Questionable Value of the Deed Executed by Ramon Sabellona To prove the alleged sale of the disputed property to Dalmacio, petitioners instead presented the 21 testimony of Miguel Secuya, one of the petitioners; and a Deed confirming the sale executed by Ramon Sabellona, Paciencia's alleged heir. The testimony of Miguel was a bare assertion that the sale had indeed taken place and that the document evidencing it had been destroyed. While the Deed executed by Ramon ratified the transaction, its probative value is doubtful. His status as heir of Paciencia was not affirmatively established. Moreover, he was not presented in court and was thus not quizzed on his knowledge or lack thereof of the 1953 transaction. Petitioners' Failure to Exercise Owners' Rights to the Property Petitioners insist that they had been occupying the disputed property for forty-seven years before they filed their Complaint for quieting of title. However, there is no proof that they had exercised their rights and duties as owners of the same. They argue that they had been gathering the fruits of such property; yet, it would seem that they had been remiss in their duty to pay the land taxes. If petitioners really believed that they owned the property, they have should have been more vigilant in protecting their rights thereto. As noted earlier, they did nothing to enforce whatever proprietary rights they had over the disputed parcel of land. Third Issue: The Validity of Private Respondent's Title

Petitioners debunk Private Respondent Selma's title to the disputed property, alleging that she was aware of their possession of the disputed properties. Thus, they insist that she could not be regarded as a purchaser in good faith who is entitled to the protection of the Torrens system. Indeed, a party who has actual knowledge of facts and circumstances that would move a reasonably cautious man to make an inquiry will not be protected by the Torrens system. In Sandoval v. Court of 22 Appeals, we held: It is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title. The aforesaid principle admits of an unchallenged exception: that a person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense without the need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry, or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of title of the property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of the certificate. One who falls within the exception can neither be denominated an innocent purchaser for value purchaser in good faith; and hence does not merit the protection of the law. Granting arguendo that private respondent knew that petitioners, through Superales and his family, were actually occupying the disputed lot, we must stress that the vendor, Cesaria Caballero, assured her that petitioners were just tenants on the said lot. Private respondent cannot be faulted for believing this representation, considering that petitioners' claim was not noted in the certificate of the title covering Lot No. 5679. Moreover, the lot, including the disputed portion, had been the subject of several sales transactions. The title thereto had been transferred several times, without any protestation or complaint from the petitioners. In any case, private respondent's title is amply supported by clear evidence, while petitioners' claim is barren of proof. Clearly, petitioners do not have the requisite title to pursue an action for quieting of title. 1wphi1.nt WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED. Viloria v. CA

ASSAILED in this petition for review on certiorari is the decision of the Court of Appeals which affirmed 2 with modification that of the Regional Trial Court, Branch 34, Balaoan, La Union, declaring petitioner and private respondents as co-owners of the 2/3 portion of the commercial lot located in Cabua-an Oeste, Balaoan, La Union, under TCT No. T-29060 in the name of Ruperto L. Viloria as trustee, and 1/3 portion of the orchard located in Nalasin, Balaoan, La Union, under OCT No. 0-1952 in the name of Ruperto, Nicolasa and Rosaida, all surnamed Viloria.

Sometime in December 1980 Nicolasa Viloria passed away, followed by her sister Rosaida in June 1989. Both died single and without issue, survived by their brothers Ruperto L. Viloria, Anastacio L. Viloria, the heirs of their sister Felicitacion V. Cacanando, who predeceased them, namely, Lida C. Aquino and Manuel V. Cacanando, and the heirs of their other sister Josefina V. Ancheta, who likewise predeceased them, namely, Rodolfo V. Ancheta, Estrella V. Ancheta and Carmen A. Nicolasura. On 18 February 1991 the heirs of Rosaida and Nicolasa Viloria filed an action for partition with the Regional Trial Court of Balaoan, La Union, against their co-heir Ruperto L. Viloria. The heirs alleged that during the lifetime of Nicolasa and Rosaida they were co-owners in equal shares and pro-indiviso with Ruperto L. Viloria of a commercial lot and an orchard. After Nicolasa and Rosaida died, their heirs demanded from Ruperto L. Viloria, who was in possession of the properties, to partition the same among them but he refused claiming that during their lifetime Nicolasa and Rosaida sold and conveyed to him all their shares, interests and participation over the properties in question. Ruperto alleged that Nicolasa and Rosaida sold the commercial lot to him by virtue of a deed of sale executed on 10 August 1965 and duly registered in the Office of the Register of Deeds of La Union, while the heirs of Josefina V. Ancheta sold and relinguished to him all their claims and ownership over the commercial lot. As regards the orchard, Ruperto further alleged that it came to his possession when Nicolasa sold to him her share of the land and the ancestral house standing thereon by virtue of a private agreement written in Ilocano, referred to as "Catulagan," dated 10 June 1978, while Rosaida sold to him her share of the property by virtue of a deed of sale dated 10 September 1987. Refuting Ruperto's allegations, the heirs of Nicolasa and Rosaida maintained that the transfer of title of the commercial lot in the name of Ruperto Viloria was only for loan purposes and not to convey and relinquish ownership over the property, and that Ruperto assured Nicolasa and Rosaida that they would remain as co-owners and the deed of sale returned to them. As proof of this arrangement, the heirs asserted that Nicolasa and Rosaida exercised acts of administration and dominion over the property and collected rentals from the buildings standing thereon for 25 years or until they died. Through their co-heirs Lida C. Aquino and Atty. Gerardo Viloria, private respondents also asserted that while Rosaida Viloria executed a deed of sale conveying her share of the orchard to Ruperto Viloria, it was without any consideration. However, upon realization of the iniquitous nature of the document, Rosaida Viloria immediately executed a deed of revocation of the sale. On 6 April 1992 the trial court ruled that title over the commercial lot was not in reality transferred in the name of Ruperto L. Viloria for the reason that the parties to the deed of sale merely intended to create an 3 express trust. By admitting the trust and assuring his sisters Nicolasa and Rosaida as well as private 4 respondents that they would remain as co-owners, an express trust had been created. Petitioner Ruperto Viloria thus became only a trustee to an express trust which incapacitated him from acquiring for 5 his own benefit the property committed to his custody although titled in his name. Nicolasa and Rosaida remained as co-owners of the commercial lot, which upon their demise passed on to their heirs. The trial court likewise declared that there was no effective conveyance of the 1/3 share of Rosaida over the orchard in Nalasin since the document of conveyance was in effect nullified when Rosaida executed 6 the deed of revocation. Neither did the "Catulagan" allegedly executed by Nicolasa convey her share of the orchard to Ruperto since she had already disposed of the property in favor of Rodolfo Ancheta by 7 virtue of a deed of donation. Consequently, the trial court declared Ruperto L. Viloria and the other heirs as co-owners of the entire portion of the commercial lot (except the northern portion titled in the name of Rodolfo, Aurora and Estrella Ancheta) and the entire orchard, and ordered a partition of the properties such that the commercial lot and the orchard would be divided into four (4) equal parts each, 1/4 for 8 Ruperto Viloria and 3/4 for the other heirs.

Apparently dissatisfied with the adjudication by the lower court, Ruperto L. Viloria elevated the matter to the Court of Appeals which affirmed the findings of the court a quo with the modification that petitioner and private respondents should be declared co-owners of the commercial lot only to the extent of 2/3 of 9 the property and co-owners of 1/3 of the orchard. Indeed, the trial court erred in ordering that the entire commercial lot be divided into four (4) equal parts since petitioner Ruperto Viloria already owned 1/3 as co-owner thereof. Therefore, with regard to the commercial lot, what should be divided into four (4) equal parts should only be the 2/3 share of Nicolasa and Rosaida Viloria. The appellate court further held that the deed of revocation executed by Rosaida did not rescind the 1987 deed of sale over the orchard since it was duly notarized and hence enjoyed the presumption of validity which could only be annulled through proper judicial action. In the absence thereof, the 1987 deed of sale remained valid. Hence, only the 1/3 share of Rosaida Viloria in the orchard should be divided among petitioner and private respondents. Petitioner now impugns the decision of the Court of Appeals as he contends that the appellate court committed serious errors when it affirmed the findings of the lower court that (a) the 1965 deed of sale of the commercial lot was an express trust and not a true conveyance of real property, and (b) that prescription did not run against private respondents. Petitioner argues that the existence of an express trust cannot be deduced from the collection of rentals by Nicolasa and Rosaida since what they collected were merely rentals for the use of the buildings and 10 improvements on the property as differentiated from rentals for the use of the land itself. Neither can the existence of an express trust be inferred from the consent and conformity to the waiver of rights issued by Nicolasa and Rosaida since they were not signatories to the actual document, petitioner being 11 the sole signatory thereto. These issues would call for the examination of the probative value of the evidence presented by the parties before the trial court. As we have ruled in a litany of cases, resort to judicial review of the decisions of the Court of Appeals under Rule 45 is confined only to errors of law. The findings of fact by the lower court are conclusive absent any palpable error or arbitrariness. After carefully examining the records, we find no reason to depart from this principle. The lower courts are in a much better position to properly evaluate the evidence and hence we find no other recourse but to leave it untouched and proceed with the determination of the other issues raised. Petitioner further contends that the appellate court committed a grave error in law when it assumed jurisdiction over the validity of the 1965 deed of sale since it was never raised as an issue in Civil Case No. 417 where plaintiffs, private respondents herein, merely asked for partition without praying for the 12 annulment of the document, hence, according to petitioner, public respondent overstepped the boundaries of its jurisdiction when it classified the 1965 sale as merely one of express trust and not a true conveyance. The contention is without merit. In the action for partition private respondents claimed that they were co-owners of the property subject thereof hence entitled to their share, while petitioner denied their claim by asserting that their rights were supplanted by his by virtue of the deed of absolute sale. As a result, the issue of co-ownership and the legality of the 1965 sale have to be resolved in the partition 13 case. As enunciated in Catapusan v. CA, until and unless the issue of ownership is definitely resolved, it would be premature to effect a partition of the properties. Thus, the appellate court did not exceed the limits of its jurisdiction when it ruled on the validity of the 1965 sale. Petitioner still further asserts that the 1965 deed of sale should not have been declared as an express trust in the absence of a court declaration annulling and declaring it as such, pursuant to Art. 1390 of New 14 Civil Code. Likewise, petitioner points out that the 1965 deed of sale should have enjoyed the 15 presumption of validity since it was duly notarized.

Art. 1390 of the New Civil Code has no bearing in the instant case. The provision alludes to contracts which could be voided by reason of absence or infirmity of consent and not to simulated contracts. The parties in the instant case freely gave their consent to the 1965 deed of sale but intended it to be merely a trust agreement and not a relinquishment of rights. It is therefore the nature of the contract that is in issue and not the character of the consent given. Moreover, a separate declaration of nullity is no longer necessary since the trial court already assumed jurisdiction over the validity of the 1965 deed of sale in determining whether co-ownership in fact existed and whether partition was proper. The fact that a deed of sale is notarized does not necessarily justify the conclusion that the sale is a true 16 conveyance to which the parties thereto are irrevocably and undeniably bound. Although the notarization of the deed of sale vests in its favor the presumption of regularity, it does not validate nor make binding an instrument never intended, in the first place, to have any binding legal effect upon the 17 parties thereto. Petitioner argues that the determination of the preceding issue is contrary to the principle laid down 18 in Dino v. CA where it was held that under the Torrens system registration is the operative act that gives validity to the transfer or creates a lien upon the land. The deed of sale being duly registered in the Office of the Register of Deeds of La Union in 1965 and a certificate of title issued in his name, thereby conferring upon him valid and legal title to the property, cannot thereafter be declared as merely an 19 express trust. Petitioner cannot rely on the registration of the land subject of the 1965 sale and the corresponding issuance of a certificate of title in his name as vesting ownership on him because the trial court found the deed of sale to be in fact an express trust. It has been held that a trustee who obtains a Torrens title over 20 property held in trust by him for another cannot repudiate the trust by relying on the registration. Finally, petitioner claims that the ruling that the heirs are entitled to the property in question is contrary 21 to the law on succession. Citing Locsin v. 22 CA, petitioner postulates that property transferred or conveyed by one person to another during the lifetime of the former no longer forms part of his estate at the time of his death to which his heirs may lay claim. Since the shares of Nicolasa and Rosaida in the commercial lot were already sold to Ruperto Viloria by virtue of the 1965 deed of sale the heirs had nothing more to inherit. The contention is without merit. The claim that the ruling of the appellate court is contrary to the law on succession and jurisprudence proceeds from the assumption that the deed of sale was a true conveyance. However, the Court finds that the 1965 deed of sale was in fact an express trust and hence no actual conveyance took place. The owners Nicolasa and Rosaida did not relinquish their claim of ownership over the commercial lot but continued to exercise acts of administration and dominion over it, hence, it continued to form part of their estate and devolved upon their demise on their heirs. As regards prescription invoked by petitioner, it is contended that prescription has already run against co-owners Nicolasa and Rosaida Viloria since Ruperto Viloria openly, publicly and continuously owned and possessed the properties for a period of more than 25 years, or from 1965 up to the filing of the case 23 24 25 26 in 1991, with good and just title pursuant to Arts. 1117, 1127 and 1134 of the New Civil Code. We disagree. Prescriptive period for an action of reconveyance of real property based on implied or constructive trust which is counted from the date of registration of property applies when the plaintiff is 27 not in possession of the contested property. Moreover, an action to compel the trustee to convey property registered in his name for the benefit of the cestui que trust does not prescribe unless the trustee 28 repudiates the trust. Nicolasa and Rosaida were in possession of the land and were exercising acts of ownership and administration over the property consistent with their responsibility as co-owners. At no time did Ruperto openly repudiate the claims of his co-owners but continued to assure them of their

rights regarding the property. Hence, prescriptive period did not commence to run against private respondents. WHEREFORE, the decision of the Court of Appeals declaring petitioner and private respondents as coowners of the 2/3 portion of the commercial lot located in Cabua-an Oeste (Poblacion), Balaoan, La Union, under TCT No. T-29060 in the name of Ruperto Viloria as trustee, and 1/3 portion of the orchard located in Nalasin, Balaoan, La Union, under OCT No. 0-1952 in the name of Ruperto, Nicolasa and Rosaida, all surnamed Viloria, is AFFIRMED. The properties in Cabua-an Oeste and Nalasin, Balaoan, La Union, shall be divided into 4 equal parts: 1/4 for petitioner, and 3/4 for private respondents Anastacio L. Viloria; Lida C. Aquino, assisted by her husband Gregorio Aquino, and Manuel V. Cacanando, as heirs of the late Felicitacion V. Cacanando; and Rodolfo V. Ancheta, Estrella V. Ancheta and Carmen A. Nicolasura, assisted by her husband Ramon Nicolasura, as heirs of the late Josefina V. Ancheta.1wphi1.nt Heirs of Salvador Hermosilla vs. Spouses Remoquillo G.R. No. 167320, January 20, 2007 CARPIO MORALES, J.: FACTS: The subject property is a 65 sq.m. lot located in the San Pedro Tunasan Homesite. This Homesite was acquired by the Republic of the Philippines in 1931. Apolinario Hermosilla (Apolinario) was occupying a lot in such homesite until his death in 1964. He caused the subdivision of the lots into two, Lot 12 and Lot 19, with the same area of 341 sq. m. The 65 sq.m. subject of this controversy forms part of Lot 19. In 1962, Apolinario made a deed of assignment transferring possession of Lot 19 in favor of his grandson, Jaime Remoquillo. The Land Tenure Administration later found that Lot 19 is still available for qualified applicants. Jaime, being its occupant filed an application in 1963. On that same year, Apolinario conveyed Lot 12 to his son Salvador. He filed for an application to purchase the said lot, which the LTA granted in 1971. In 1972, Jaime and Salvador made a Kasunduan whereby Jaime transferred ownership of the 65 sq.m. in Lot 19 in favor of Salvador. In 1986, the NHA (then LTA) awarded Lot 19 to Jaime, for which he and his wife were issued a title. The petitioners filed for the annulment of the title on the ground of fraud because by the virtue of the Kasunduan, the 65 sq.m. in Lot 19 were already conveyed to Salvador. The trial court held that the petitioners were co-owners of the subject property and allowed for the action for specific performance. The CA reversed the trial courts decision, renderin g the Kasunduan void because at the time of its execution (1972), the lot was still owned by the Republic of the Philippines. Hence, no right was transferred to Jaime, who was awarded the lot in 1986 and no right was transferred by Salvador to the petitioners. Also, the CA held that the action had prescribed, it having been filed in 1992, more than four years from the issuance of the title to the spouses Remoquillo. Hence, this petition. ISSUE: (1) Whether or not the property was acquired by the spouses Remoquillo through fraud which by force of law, considered them trustees of an implied trusts (2) Whether or not the prescriptive period to recover the property obtained by fraud is applicable in the case at bar HELD: (1) NO. The property was previously a public land, petitioners have no personality to impute fraud or misrepresentation against the State or violation of the law. If the title was in fact fraudulently obtained, it is the State which should file the suit to recover the property through the Office of the Solicitor General. The title originated from a grant by the government, hence, its cancellation is a matter between the grantor and the grantee.

At all events, for an action for reconveyance based on fraud to prosper, the petitioners must prove by clear and convincing evidence not only his title to the property but also the fact of fraud. Fraud is never presumed. Intentional acts to deceive and deprive another of his right, or in some manner injure him must be specifically alleged and proved by the petitioners by clear and convincing evidence. Petitioners failed to discharge this burden, however.

(2) NO. From the allegations of the Complaint, petitioners seek the reconveyance of the
property based on implied trust. The prescriptive period for the reconveyance of fraudulently registered real property is 10 years, reckoned from the date of the issuance of the certificate of title, if the plaintiff is not in possession, but imprescriptible if he is in possession of the property. It is undisputed that petitioners houses occupy the questioned property and that respondents have not been in possession thereof. Since there was no actual need to reconvey the property as petitioners remained in possession thereof, the action took the nature of a suit for quieting of title, it having been filed to enforce an alleged implied trust after Jaime refused to segregate title over Lot 19.One who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. From the body of the complaint, this type of action denotes imprescriptibility.

SOLEDAD CAEZO vs. CONCEPCION ROJAS G.R. No. 148788, November 23, 2007 NACHURA, J. FACTS:The subject property is an unregistered land with an area of 4,169 square meters situated at Naval, Biliran. In a complaint on 1997, petitioner Soledad Caezo alleged that she bought such parcel of land in 1939 from Crisogono Limpiado, although the sale was not reduced into writing. Thereafter, she immediately took possession of the property. In 1948, she and her husband left for Mindanao and entrusted the said land to her father, Crispulo Rojas, who took possession of, and cultivated the property. In 1980, she found out that the respondent, Concepcion Rojas, her stepmother, was in possession of the property and was cultivating the same. She also discovered that the tax declaration over the property was already in the name of his father. Respondent asserted that it was her husband who bought the property from Limpiado, which accounts for the tax declaration being in Crispulos name. After the hearing, MTC rendered a decision in favor of the petitioner, making her the real and lawful owner of the land. Respondent appealed to the RTC of Naval, Biliran, which reversed the MTC decision on the ground that the action had already prescribed and acquisitive prescription had set in. However, acting on petitioners motion for reconsideration, the RTC amended its origina l decision and held that the action had not yet prescribed considering that the petitioner merely entrusted the property to her father. The ten-year prescriptive period for the recovery of a property held in trust would commence to run only from the time the trustee repudiates the trust. The RTC found no evidence on record showing that Crispulo Rojas ever ousted the petitioner from the property. Petitioner filed a petition for review with the CA, which reversed the amended decision of the RTC. The CA held that, assuming that there was a trust between the petitioner and her father over the property, her right of action to recover the same would still be barred by prescription since 49 years had already lapsed since Crispulo adversely possessed the contested property in 1948. Hence, this petition for review.

ISSUE:Whether or not there is an existence of trust over the property express or implied between the petitioner and her father HELD:NONE. A trust is the legal relationship between one person having an equitable ownership of property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. Trusts are either express or implied. Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or, independently, of the particular intention of the parties, as being superinduced on the transaction by operation of law basically by reason of equity. As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. The presence of the following elements must be proved: (1) a trustor or settlor who executes the instrument creating the trust; (2) a trustee, who is the person expressly designated to carry out the trust; (3) the trust res, consisting of duly identified and definite real properties; and (4) thecestui que trust, or beneficiaries whose identity must be clear. Accordingly, it was incumbent upon petitioner to prove the existence of the trust relationship. And petitioner sadly failed to discharge that burden. The existence of express trusts concerning real property may not be established by parol evidence. It must be proven by some writing or deed. In this case, the only evidence to support the claim that an express trust existed between the petitioner and her father was the self-serving testimony of the petitioner. Although no particular words are required for the creation of an express trust, a clear intention to create a trust must be shown; and the proof of fiduciary relationship must be clear and convincing. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. In the case at bench, an intention to create a trust cannot be inferred from the petitioners testimony and the attendant facts and circumstances. The petitioner testified only to the effect that her agreement with her father was that she will be given a share in the produce of the property. This allegation, standing alone as it does, is inadequate to establish the existence of a trust because profit-sharing per se, does not necessarily translate to a trust relation. In light of the disquisitions, we hold that there was no express trust or resulting trust established between the petitioner and her father. Thus, in the absence of a trust relation, we c an only conclude that Crispulos uninterrupted possession of the subject property for 49 years, coupled with the performance of acts of ownership, such as payment of real estate taxes, ripened into ownership. Petition denied. Decision of the CA affirmed. G.R. NO. 159666 PEDRANO VS PEDRANO Facts: Lot No. 6416 was previously owned by Dr. Isidro Hynson who sold it on March 15, 1965 to Romana Monteal Pedrano, for PhP 315.02. Romana was married to Benedicto Pedrano who passed away on August 19, 1967. Fourteen years later, petitioner Eulogio M. Pedrano, a son of Romana, alleged that he had bought the land himself for PhP 30,000 from Romana, payable on or before December 31, 1982 as shown in the Deed of Sale dated December 22, 1981. Since Lot No. 6416 and another lot, Lot No. 6409, were yet untitled, these became subject of Cadastral Case No. N-4, LRC Cad. Rec. No. N-64, for titling.

Alleging that petitioner had not paid the PhP 30,000 consideration for Lot No. 6416 until the December 31, 1982 deadline, as stipulated in the December 22, 1981 Deed of Sale, respondents filed a case asking for the annulment of the December 22, 1981 Deed of Sale, and the recovery of the possession and ownership of Lot No. 6416, with prayer for a writ of preliminary injunction and restraining order and damages. According to respondents, Romana informed petitioner that the former was canceling the sale and petitioner should have Dr. Hynsons name in the title replaced with her name. Respondents added that despite the cancellation of the deed of sale, Romana allowed petitioner to occupy the house on Lot No. 6416. Further, respondents averred they were unaware that petitioner instituted a cadastral case to have the land titled to himself. They discovered his machinations only in 1994. Thus, respondents instituted the instant case to have the December 22, 1981 Deed of Sale voided for want of consideration and for fraud. The Trial Court ruled that prescription of the cause of action to annul the questioned Deed of Absolute Sale has already set in, the complaint in the above-entitled case is ordered dismissed. The RTC said that it could no longer annul the sale reasoning that Article 1144[6] of the Civil Code provided for 10 years within which to bring action from the time the right of action accrues upon a written contract. Hence, it concluded that since the deed of sale was executed on December 22, 1981, and the instant action was filed only on September 5, 1996, after more than 14 years, prescription had set in. The CA reversed the ruling of RTC and stated that Art. 1144 of the Civil Code was erroneously applied by the RTC. The CA explained that the instant case involves an implied trust, and that Art. 1456 of the Civil Code was the applicable law. Issue: W/O prescription had set in. Held: An action for the reconveyance of a parcel of land based on implied or constructive trust, as we have already explained in this case, prescribes in 10 years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title of the property; however, where no OCT has yet been issued despite an order from the court to title the lots, the date from whence the prescriptive period could be reckoned is unknown and it could not be determined if indeed the period had already lapsed or not. Thus, we agree with the CA that prescription has not yet set in. Mendizabel v. APAO

This is a petition for review to set aside the Decision dated 30 July 1999 and the Resolution dated 5 April 2000 of the Court of Appeals in CA-G.R. CV No. 52803. The Court of Appeals affirmed the 4 Decision dated 25 August 1995 of the Regional Trial Court of Pagadian City, Branch 18 ("trial court") in Civil Case No. 2737. The Facts On 21 March 1955, Fernando Apao ("Fernando") purchased from spouses Alejandro and Teofila Magbanua ("vendors") a parcel of land with an area of 61,616 square meters ("property") situated in Malangas, Zamboanga del Sur. Fernando bought the property for P400. The vendors executed a deed of sale which stated inter alia that they could purchase back the property within six months for P400, failing which, the sale would become absolute. The vendors failed to repurchase the property. Fernando thus 6 took possession of the same. On 1 April 1958, Fernando had the property surveyed by Engr. Ernesto Nuval together with the piece of land adjacent to it, which he had previously purchased from one Leopoldo Carloto. The Bureau of Lands approved the survey on 2 July 1959 resulting in the issuance of Survey Plan Psu-173083 covering both 7 lots. Upon receipt of the approved survey plan, Fernando immediately filed an application with the 8 Bureau of Lands for a free patent over the entirety of Psu-173083. His application was docketed as F.P.A. 9 No. 18-1481.
5

After the survey of Fernandos land, the Survey Party of the Bureau of Lands surveyed the same area. This latter survey resulted in a subdivision of the land into two separate and distinct lots identified as Lot 10 Nos. 407 and 1080. Fernando learned that Ignacio Mendizabel ("Ignacio") had filed prior to the Bureau of Lands survey a homestead application over Lot No. 1080. Fernando became the claimant-protestant 11 in Ignacios application, docketed as H.A. No. 18-8905 (E-18-8521). On 11 May 1962, the Bureau of Lands Regional Office in Zamboanga City rendered a decision awarding 12 Lot No. 1080 to Ignacio. On appeal, the Secretary of Agriculture and Natural Resources modified the decision of the Bureau of Lands. The dispositive portion of the decision of the Secretary of Agriculture and Natural Resources reads: Wherefore, the decision of the Director of Lands dated May 11, 1962, should be, as hereby it is set aside. The free patent application No. 18-1481 of Fernando Apao shall be given due course for Lot No. 407 and 14 Homestead Application No. 18-8905 of Ignacio Mendizabel for Lot No. 1080. Dissatisfied with the decision of the Secretary of Agriculture and Natural Resources, Fernando appealed 15 to the Office of the President. Fernando did not receive any notice of the decision on his appeal. Barely 10 days after he filed his appeal, Fernando found out from the Office of the Register of Deeds of Pagadian City that Lot No. 1080 had been partitioned between Ignacio and his son Nestor Mendizabel ("Nestor"). Fernando learned that Lot No. 1080 was already titled separately as Lot No. 1080-A covered by Original Certificate of Title No. P-29,822 in the name of Nestor, and Lot No. 1080-B covered by Original Certificate of Title No. P-29,823 in the name of Ignacio. The Register of Deeds issued the 16 certificates of title on 14 December 1982. Fernando talked to Nestor and Ignacio, pleading with them to reconvey the property to him. Nestor and Ignacio rejected Fernandos request. On 6 August 1987, Fernando and his wife Teopista Paridela-Apao ("respondents") filed before the trial 18 court a complaint for Annulment of Titles, Reconveyance and Damages against spouses Nestor and Elizabeth Mendizabel and spouses Ignacio Mendizabel and Adelina Villamor ("petitioners"). Respondents alleged in their complaint that they were the "true and actual possessors" of a parcel of agricultural land more particularly described as follows: Certain parcel of land actually devoted to corn and rice cultivation, root crops, bananas and about one hundred (100) punos of coconut fruit bearing trees and with four (4) residential houses occupied by produce-sharing tenants and with all other existing improvements thereon, located at Kilometer 4, Barangay Mabini, Malangas, Zamboanga del Sur. Bounded on the NORTH by the lot of Ricardo Conwi; on the SOUTH by the lot of the herein plaintiffs; on the EAST by the National Highway; and on the WEST by the lot of Leonardo Aban, containing an area of sixty-one thousand six hundred-sixteen (61,616) 19 sq.m., more or less. Respondents also alleged that petitioners secured the titles to the property "fraudulently." Respondents asserted that x x x Assuming, arguendo, that the issuance thereof, could have been based and predicated upon the resolution of the aforesaid land conflict by and between herein plaintiffs and defendant, Nestor Mendizabel, which has been raised on appeal to the Office of [the] President, nonetheless, such administrative decision/order and/or resolution, if any there be, did not since then ripen into or attain its
17 13

finality and enforceability, for the basic and fundamental reason that plaintiffs who, are directly affected 20 thereby, has [sic] not been furnished with a copy thereof. In their answer, petitioners claimed that Ignacio, whose wife Adelina Villamor ("Adelina") had since died, purchased the property, identified as Lot No. 1080, from Alejandro Magbanua on 24 May 1955. Petitioners claimed that Ignacio took possession of the property and introduced improvements on it. Petitioners also asserted that the issuance of Original Certificate of Title No. P-29,822 covering Lot No. 1080-A in the name of Nestor, and Original Certificate of Title No. P-29,823 covering Lot No. 1080-B in the name of Ignacio was based on a homestead patent granted by then President Ferdinand Marcos on 6 April 1971. As affirmative defenses, petitioners claimed that respondents had no cause of action against them as respondents had no personality to institute the present case "seeking the nullity of a patent issued by order of the President of the Philippines." As counterclaim, petitioners alleged that the present case was filed merely to harass them because respondents knew that the Bureau of Lands, Secretary of Agriculture and Natural Resources, and the Office of the President had already adjudged petitioners the owners of the property. Petitioners sought the dismissal of the complaint and asked for damages. On 25 March 1988, respondents filed their Answer to Counterclaims and Petition for Issuance of an 22 Ancillary Restraining Writ. Respondents alleged that on 21 March 1988, petitioners, through Lorenzo 23 Braanula ("Braanula"), respondents tenant for 25 years, surreptitiously harvested coconuts from the coconut trees on the property. Respondents claimed that when they confronted Braanula, he told them that Oscar Guevarra, the INP Station Commander of the Buug Police Force in Pagadian City and who was petitioners administrator of the property, directed him to harvest the coconuts. Respondents asked the trial court to issue "an injunctive, prohibitory, mandatory restraining writ" ordering petitioners to desist and refrain from disturbing the peaceful enjoyment and possession of respondents of the property during the pendency of the proceedings, lest respondents suffer more damages. On 30 March 1988, the trial court issued an Order granting respondents petition for issuance of a 24 restraining order. On 29 April 1988, petitioners filed a Motion for Leave to Amend Answer.
25 21

On 16 May 1988, respondents filed an Opposition to Defendants Motion for Leave to Amend Answer and 26 Motion to Declare Co-Defendants Ignacio Mendizabel and Wife in Default. Respondents claimed that petitioners Amended Answer had substantially altered petitioners defenses. Respondents asserted that allowance of petitioners Amended Answer would only cause undue delay in deciding the present case. Respondents further asserted that Ignacio and his wife Adelina should be declared in default considering that from the time petitioners were served with summons and copies of the complaint on 21 October 1987, only Nestor had filed his Answer. The trial court denied respondents Motion to Declare Ignacio and Wife in Default in its Order dated 15 27 June 1988. The trial court allowed petitioners Amended Answer. In their Amended Answer, petitioners included the defenses of prescription, estoppel and laches, and the indefeasibility and incontrovertibility of their titles.
28

On 12 January 1989, respondents filed an Urgent Motion to Declare Defendants and Hired Hands in 29 Contempt of Court. Respondents asserted that despite the restraining order issued by the trial court, petitioners, through their hired hands, namely, Braanula, Francisco Briones, and Oscar Guevarra, harvested palay, corn, and coconuts from the property in October 1988 and on 2 December 1988. Respondents asserted that unless petitioners and their agents are enjoined from disturbing respondents peaceful possession of the property, respondents would continue to suffer irreparable damages. On 13 January 1989, the trial court issued an Order citing petitioners and their hired hands in contempt of 30 31 court. Upon petitioners Motion for Reconsideration, the trial court set aside the order. On 9 November 1989, petitioners filed a Notice of Death stating that Adelina died on 8 April 1983. The 33 Notice stated that Adelina was survived by her six children. In its Order dated 28 November 1989, the trial court directed petitioners to submit the names of Adelinas children. The trial court stated that Adelinas children would substitute her in the proceedings. Respondents presented three witnesses: Braanula, Justiniano Lizardo ("Lizardo"), both of whom were residents of Malangas, Zamboanga del Sur, and Fernando himself. Respondents also offered documentary evidence consisting of a Sketch Plan and the blue print of the approved subdivision plan of respondents land identified as Psu-173083. On the other hand, petitioners repeatedly failed to present evidence at the scheduled hearings. On 13 September 1994, the trial court issued the following Order: When the above-entitled case was called for continuation of trial today, counsel for the plaintiffs appeared and manifested that he is ready for todays continuation of hearing. On the other hand, counsel for the defendants had requested that this case be reset to another date. Counsel for the plaintiffs manifested that he is not interposing to the postponement of this case today but requested that this will be the last postponement with the warning that should the defendants fail to present any evidence in the next hearing of this case, the case shall be deemed submitted for decision. Finding the manifestation of counsel for the plaintiffs to be proper and in order, the same is hereby granted. WHEREFORE, let the continuation of trial of the above-entitled case be set again on October 18, 1994, at 8:30 in the morning, with the warning that should defendants fail to present their evidence in the next hearing, the case is deemed submitted for decision. SO ORDERED.
35 34 32

Petitioners counsel failed to present evidence at the scheduled hearing of 18 October 1994. Thus, the 36 trial court issued an Order stating that the case was deemed submitted for decision. Petitioners filed a 37 motion for reconsideration of the order. On 25 October 1994, the trial court issued the following Order: Acting on the Motion for Reconsideration filed by counsel for the defendants, the court resolves to DENY the same. As borne out by the record of the instant case, as of March 24, 1992, defendants per Courts Order were considered to have waived their right to present their evidences for failure to appear on the hearing set

on the said date. Upon Motion by counsel for the defendants, said Order was set aside and defendants were allowed to present their evidences. Despite the indulgence of the Court, defendants choose to delay the proceedings of this case thus, in an Order dated September 13, 1994, the defendants were warned that should they fail to present their evidences in the next hearing, the case will be deemed submitted for decision. However, on October 18, 1994, still defendants failed to present their evidences, thus the Court considered the case submitted for decision. WHEREFORE, considering that this case has logged for a long time already, the instant Motion for Reconsideration is hereby DENIED and this case is deemed submitted for resolution. Stenographers who took the proceedings of this case are hereby ordered to submit their transcripts of their stenographic notes within 15 days from the date of this order. SO ORDERED.
38

On 28 October 1994, petitioners filed a Motion to Offer Documentary Exhibits with Prayer to Submit 39 40 Memorandum. The trial court granted the motion in its Order dated 3 November 1994. The Ruling of the Trial Court On 25 August 1995, the trial court rendered judgment, the dispositive portion of which reads: WHEREFORE, in view of the foregoing and premises considered, judgment is hereby rendered:1avvphil.net a. Declaring Original Certificate of Title No. P-29,822 for Lot No. 1080-A and Original Certificate of Title No. P-29,823 for Lot No. 1080-B issued in the name of Nestor Mendizabel and Ignacio Mendizabel, respectively their rights as NULL AND VOID AB INITIO and held said property as trustees for the benefit of plaintiffs; b. Ordering the Register of Deeds of Pagadian City to require defendants Nestor Mendizabel and Ignacio Mendizabel to surrender the above named titles immediately; c. Ordering the Provincial Sheriff through the Clerk of Court, Regional Trial Court, Pagadian City, to execute the necessary Deed of Reconveyance of the above-specified titles in favor of plaintiffs; and d. Pronouncing exemplary and incidental damages against defendants, in favor of plaintiffs to include cost of suit and attorneys fees in the amount of seventy five ( P75,000.00) pesos, Philippine Currency. SO ORDERED.
41

The trial court explained its decision in this wise: From the documents presented and from the oral testimonies given by the witnesses, it is very clear that defendants never acquired actual possession of the land in question. In fact, after they were issued the

titles, they had to employ the services of an INP Station Commander in the person of Oscar Guevarra to be able to enjoy the harvest and fruits of the plants in the litigated area. There is also no showing that defendants acted to eject plaintiff if the latter forcibly entered and took possession of the land. Although it is true that the Deed of Sale in Cebuano (Exhibit "A" for plaintiff) remains a private document being devoid of notarial registration, it stands as plain proof of plaintiffs prior acquisition and right of possession which defendants have not demolished, except by their having secured titles thereon. The tenants who testified affirmed plaintiffs[] claim of ownership. Under the land reform law, they have all the right to have the land they are tenanting acquired by opting to avail of the benefits provided by law, but not one of them ventured, perhaps, out of respect or goodwill with the landholders. How plaintiff failed to secure title over the land in question is explained by the fact that some other persons were applying for it. It is clear, however, that the battle or contest to secure the title was not waged in the venue itself, meaning, while one party applying for title over the land was in actual possession, the other parties applying for title over the same area was in a better position to facilitate the documents, as shown by the fact that defendant Nestor Mendizabel was working with the Bureau of Lands as a skilled employee. This Court would like to believe defendants as the true and lawful owners of Lot No. 1080, which was subdivided and apportioned among father and son as Lot Nos. 1080-A and 1080-B, because of the titles they have thereon. But ownership of real property is better recognized by actual possession thereof and not by mere possession of documents relative thereto. Nowhere in the records of this case was there any evidence to show from whom defendants acquired and how they acquired the land they succeeded to have titles to, except the allegation that they bought the property from Alejandro Magbanua, on May 24, 1955, as pointed out in their answer. Besides there is no showing that the alleged vendor, Alejandro Magbanua from whom defendants acquired said property has been in possession of the subject property, either constructive in the form of a Tax Declaration or other monuments of title or physically. It is obvious that the authorities, namely, the DENR, the Secretary of Agriculture and the [O]ffice of the President were made to believe that defendants, at the time they applied for homestead title, were in actual possession of and occupying the land in question, when the contrary was true. Ironically, the Decision of the Secretary of Agriculture which was accordingly affirmed in toto by the [O]ffice of the President placed defendants in an awkward situation, because the "free patent" application of Fernando Apao was given due course for Lot No. 407 and the "homestead" application of Ignacio Mendizabel was similarly given due course for Lot No. 1080. If it was the other way around, that would have saved defendants from an awkward situation. "Homestead" presupposes actual occupation and possession of the land and enjoyment of its fruits, but, unfortunately, plaintiffs were the ones in actual possession and enjoying the fruits thereof who were disturbed only by the issuance of Original Certificate of Title No. P-29,822 and Original Certificate No. P-29,823 to defendants twenty seven (27) years after and entitling plaintiffs to have acquired the property by acquisitive prescription bearing in mind that defendants or their predecessors had never taken any legal steps or remedy to demolish plaintiffs[] possession. The documentary evidences and the oral testimonies have conjured a very clear picture sufficient to convince this Court that the original certificate of titles issued in the name of defendants Ignacio

Mendizabel and Nestor Mendizabel, namely Original Certificate of Title No. P-29,822 and Original Certificate of Title No. P-29,823, could have been obtained through fraud, manipulation, and stratagem to the disadvantage of plaintiffs. Accordingly, under these circumstances an implied trust is created by 42 operation of law for the benefit of the plaintiffs. (Emphasis supplied) On 25 October 1995, the trial court issued the following Order: The Court in the exercise of its inherent power hereby corrects its Decision dated August 25, 1995, issued in the above-entitled case particularly in the dispositive portion of page 8, paragraph d of said decision which should read as follows: d. Pronouncing exemplary and incidental damages against defendants, in favor of plaintiffs to include cost of suit and attorneys fees in the amount of seventy five thousand ( P75,000.00) pesos, Philippine Currency. SO ORDERED.
43

Petitioners appealed to the Court of Appeals. The Court of Appeals Ruling On 30 July 1999, the Court of Appeals rendered judgment as follows: WHEREFORE, prescinding from the foregoing disquisitions, the decision appealed from is hereby AFFIRMED in toto. Costs against defendants-appellants. SO ORDERED.
44

The Court of Appeals held that there is no cogent reason for it to deviate from the rule that factual findings of the trial court shall not be disturbed on appeal unless the trial court has overlooked or ignored some fact or circumstance of sufficient weight or significance, which, if considered, would alter the situation. The Court of Appeals held that while factual findings of administrative agencies must be respected, the same holds true only if the findings are supported by substantial evidence. The Court of Appeals held that the evidence presented by respondents "tend to disprove the factual findings of the administrative bodies." The Court of Appeals further held that respondents have adequately proven by the testimonies of their witnesses that Fernando actually possessed and cultivated the property at the time of the homestead application and was then enjoying its fruits. The Court of Appeals noted that the only instance when petitioners "voiced out" their title to the property was in 1988 when Oscar Guevarra vehemently told respondents tenants to vacate Lot No. 1 080. Since prior to that time, respondents were undisturbed in their possession of the property, the Court of Appeals ruled that the possessor has a better right. The Court of Appeals, moreover, held that reliance by petitioners on the fact that respondents never appealed the 1971 decision of the Office of the President could not be given credence because the decision was not properly identified. The Court of Appeals held that petitioners failure to prove that respondents received the decision or that petitioners enforced the decision against respondents was fatal to petitioners defense.

The Court of Appeals also ruled that the doctrine of implied trust as enunciated in Article 1456 of the Civil Code operates in favor of Respondents. The Court of Appeals stated that under Article 1456, when a person through fraud succeeds in registering a property in his name, the law creates what is called a "constructive or implied trust" in favor of the defrauded party and grants the latter the right to recover the property fraudulently registered. The Court of Appeals also ruled that the action for reconveyance that respondents availed of in the present case is proper. The Court of Appeals held that while it is doctrinal that a decree of registration is no longer open to review or attack after the lapse of one year, although its issuance is attended with fraud, it does not necessarily mean that the aggrieved party is without remedy at law. An action for reconveyance is still available to the aggrieved party if the property has not passed to an innocent purchaser for value. The Court of Appeals held that in the present case prescription has not set in. The Court of Appeals held that considering that respondents are in possession of the property in the concept of an owner, the action for reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The Court of Appeals held that an action for reconveyance based on implied trust prescribes in 10 years only if the 45 claimant is not in actual possession. The Court of Appeals denied petitioners motion for reconsideration in its Resolution dated 5 April 2000. Hence, this petition. The Issues Petitioners raise the following issues: 1. Whether the petition lacks cause of action considering that the alleged circumstances constituting fraud or mistake were not stated with particularity in the complaint. 2. Whether the action for reconveyance has already prescribed. 3. Whether respondents have acquired ownership of the lands covered by the homestead titles granted to petitioners. 4. Whether the Court of Appeals erred in not giving weight to the factual findings of the Department of Agriculture and Natural Resources. 5. Whether implied trust exists in this case.
47 46

The Ruling of the Court The petition must fail. Action for Reconveyance Based on Implied Trust Petitioners claim that while respondents complaint alleged "fraud or mistake," it did not state with particularity the circumstances constituting fraud or mistake, pursuant to Section 5, Rule 8 of the Rules of

Court. Petitioners claim that on this score alone, both the trial court and the Court of Appeals should have decided the case in their favor. Petitioners argument is untenable. In an action for reconveyance, all that must be alleged in the complaint are two facts which, admitting them to be true, would entitle the plaintiff to recover title to the disputed land, namely, (1) that the 48 plaintiff was the owner of the land or possessed the land in the concept of owner, and (2) that the 49 defendant had illegally dispossessed him of the land. In their complaint, respondents clearly asserted that: (1) they were the "true and actual possessors" of the property; (2) they purchased the property from spouses Alejandro and Teofila Magbanua on 21 March 1955 as evidenced by a deed of sale pacto de retro which spouses Magbanua executed in their favor; (3) their ownership of the property became absolute when the vendors failed to repurchase it within the period stipulated in their contract; and (4) they were fraudulently deprived of ownership of the property 50 when petitioners obtained homestead patents and certificates of title in their names. These allegations certainly measure up to the requisite statement of facts to constitute an action for reconveyance based on an implied trust. Indubitably, the act of petitioners in misrepresenting that they were in actual possession and occupation 51 of the property, obtaining patents and original certificates of title in their names, created an implied trust in favor of the actual possessors of the property. The Civil Code provides: ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. In other words, if the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of 52 the property. Petitioners would nonetheless insist that respondents failed to present any proof of fiduciary relation between them and respondents and "breach of such trust by petitioners." Whether there is fiduciary relation between petitioners and respondents is of no moment. Construing the 53 provision of Article 1456, the Court in Aznar Brothers Realty Company v. Aying stated: A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. xxxx implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties. In turn, implied trusts are either resulting or constructive trusts. x x x

x x x constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and 54 good conscience, to hold. (Emphasis supplied) The records show that respondents bought the property from spouses Alejandro and Teofila Magbanua 55 on 21 March 1955 as evidenced by a deed of sale. Fernando testified that he was in actual, open, peaceful, and continuous possession of the property at the time he filed his application for a free patent and was then enjoying its fruits. These facts were corroborated by the testimonies of Braanula and 56 Lizardo, residents of Barangay Mabini, Malangas, Zamboanga del Sur. Petitioners, however, assert that the deed of sale, "although Annex A of respondents complaint," should not be given weight for it was not 57 offered in evidence. Petitioners assertion has no merit. All documents attached to a complaint, the due execution and genuineness of which are not denied under oath by the defendant, must be considered as part of the 58 complaint without need of introducing evidence. In petitioners answer, there was no denial under oath of the due execution and genuineness of the deed of sale. Thus, the deed of sale is not only incorporated 59 into respondents complaint, it is also deemed admitted by petitioners. This has the effect of relieving respondents from the duty of expressly presenting such document as evidence. The court, for the proper resolution of the case, may and should consider without the introduction of evidence the facts admitted 60 by the parties. Moreover, despite the opportunities given them by the trial court, petitioners still failed to prove that 61 they were the owners of the property or that they had been in possession of the same. In fact, it was only on 21 March 1988, or after respondents had filed their complaint, that petitioners tried to occupy the 62 property by attempting to eject respondents tenants. Hence, petitioners never exercised any right of ownership over the land. In a number of cases, the Court has ordered reconveyance of property to the true owner or to one with a better right, where the property had been erroneously or fraudulently titled in another persons 63 64 name. In Bustarga v. Navo II, the Court held that "reconveyance is just and proper in order to terminate the intolerable anomaly that the patentees should have a Torrens title for the land which they and their predecessors never possessed and which has been possessed by [another person] in the concept of owner." After all, the Torrens system was not designed to shield and protect one who had 65 committed fraud or misrepresentation and thus holds title in bad faith. Considering the circumstances in the present case, therefore, we hold that respondents have a better right to the property since they had long been in possession of the property in the concept of owners. In contrast, petitioners were never in possession of the property. Despite the irrevocability of the Torrens titles issued in their names, petitioners, even if they are already the registered owners under the Torrens system, may still be compelled under the law to reconvey the property to Respondents. Prescriptive Period of an Action for Reconveyance The essence of an action for reconveyance is that the free patent and certificate of title are respected as incontrovertible. What is sought is the transfer of the property, in this case its title, which has been wrongfully or erroneously registered in another persons name, to its rightful owner or to one with a 66 better right. It is of no moment that respondents filed this action for reconveyance more than four years after the property was registered in favor of petitioners. An action for reconveyance of registered land based on

implied trust prescribes in 10 years, the point of reference being the date of registration of the deed or 67 the date of the issuance of the certificate of title over the property. Besides, respondents were in 68 possession of the property at the time they filed their complaint in the present case. The Court has ruled that the 10-year prescriptive period applies only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason is that the one who is in actual possession of the land claiming to be its owner may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only 69 by one who is in possession. Factual Findings of Administrative Agencies The decision of the Office of the President affirming the decision of the Secretary of Agriculture and Natural Resources in DANR Case No. 2481, which petitioners offered in evidence, could hardly carry the day for them. Factual findings of administrative agencies such as the Department of Agriculture and Natural Resources ("DANR") are accorded not only respect but also even finality if they are supported by substantial evidence. However, deviation from this rule must be made when the administrative agency 71 itself clearly misappreciated the facts. In the present case, the factual findings of the Court of Appeals are at variance with those of the DANR. We have carefully reviewed the records and found that petitioners have not sufficiently proved that the findings of fact of the Court of Appeals are totally devoid of support in the records, or that they are so glaringly erroneous as to constitute serious abuse of discretion. Wherefore, we hold that the findings of fact made by the Court of Appeals are conclusive and binding on this Court even if contrary to those of the DANR, so long as such findings are supported by the 72 records or based on substantial evidence. Besides, there is no showing that respondents received a copy of the decision of the Office of the 73 President. No judgment or order, whether final or interlocutory, has juridical existence unless it is set down in writing, signed, promulgated, and released to the parties. Even after its promulgation, a decision does not bind the parties until notice of the decision is duly served on them by any of the modes 74 prescribed by law. WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. CV No. 52803. SO ORDERED. De La Cruz v. CA ARAS, J.: This is a petition for review on certiorari of the June 17, 1986 decision * of the then Intermediate Appellate Court in AC-G.R. CV No. 05785 reversing the appealed decision of the Regional Trial Court of Angeles City, and the November 12, 1986 resolution of the same court denying the motion for reconsideration. Herein petitioners are the heirs (children) of the late Maria de la Cruz y Gutierrez, married to Mateo del Rosario Lansang, while herein private respondents are the heirs of Maria de la Cruz y Guevarra, married to Calixto Dimalanta, and Fermin de la Cruz. The controversy involves a 1,980 square meters portion of Lot 1488.
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From 1921 until her death in 1951, Maria de la Cruz y Gutierrez resided in the questioned lot in the concept of an owner. She declared the lot for tax purposes in her name. Later, she entrusted the administration of the said lot to her niece Maria de la Cruz y Guevarra. When cadastral proceedings were held in Porac, in Cadastral Case No. 18, on March 17, 1926, Maria de la Cruz y Gutierrez filed an answer to the questioned lot. In the said filed answer, over the handwritten name "Maria de la Cruz y Gutierrez" is a thumbmark presumably affixed by her, Exhibit "2-C"; that in paragraph 7, a person named therein as Fermin de la Cruz y Gutierrez is stated to have an interest or participation on the said lot. However, in the space provided in paragraph 8 to be filled up with the personal circumstances of claimant Maria de la Cruz y Gutierrez, what appears therein is the name Maria de la Cruz, married to Calixto Dimalanta, instead of Maria de la Cruz y Gutierrez, Exhibit "2-A"; and in the space provided in paragraph 9, intended for the personal circumstances of other person or persons who may have an interest on the said lot, the name Fermin de la Cruz, single, appears, Exhibit "2-B". Accordingly, the trial court rendered a decision adjudicating Lot No. 1488 in favor of Maria de la Cruz, 26 years old, married to Calixto Dimalanta and Fermin de la Cruz, Single. Finally, Original Certificate of Title No. 16684 of the Register of Deeds of Pampanga was issued in their names. Petitioners, claiming to have learned of the same only on July 1, 1974, on October 1, 1974 (allegedly barely three months after discovery of the registration, and two years after the death of Maria de la Cruz y Guevarra who, before she died in 1974, revealed to petitioners Daniel Lansang and Isidro Lansang that the lot of their mother Maria de la Cruz y Gutierrez had been included in her title), filed with the then Court of First Instance of Pampanga, Branch IV, presided over by Hon. Cesar V. Alejandria, a complaint for reconveyance, docketed therein as Civil Case No. 2148. The same was amended on June 16, 1975. The main thrust of the complaint is that the claimant of Lot 1488 in Cadastral Case No. 18 was Maria de la Cruz y Gutierrez and not Maria de la Cruz y Guevarra who by not using her maternal surname "Guevarra" succeeded in registering Lot 1488 in her name and that of her brother Fermin de la Cruz. Under the circumstances, it is claimed that Maria de la Cruz married to Calixto Dimalanta and Fermin de la Cruz hold the property in trust for the petitioners. In their answer (Rollo, pp. 62-65), private respondents claimed that the land in questin is their exclusive property, having inherited the same from their parents and the OCT No. 16684 was issued in their names. Moreover, they asserted that petitioners have lost their cause of action by prescription. During the pre-trial, the parties stipulated the following facts: 1. That Lot No. 1488 is the lot in question as stated in Paragraph 3 of the Complaint; 2. That on March 17, 1926, Maria de la Cruz y Gutierrez filed her Answer over the cadastral lot in question; 3. That Maria de la Cruz y Gutierrez affixed her thumbmark in the Answer dated March 17, 1926; 4. That by virtue of the Answer over Cadastral lot in question filed by Maria de la Cruz y Gutierrez on March 17, 1926, OCT No. 16684 was issued covering the lot in question; 5. That the maternal surname of Maria de la Cruz and Fermin de la Cruz is Guevarra and not Gutierrez; and

6. That Maria de la Cruz y Guevarra and Fermin de la Cruz y Guevarra did not file their answer over the lot in question. (p. 3, Intermediate Appellate Court Decision; p. 46, Rollo) The issues stated are as follows: 1. Whether or not the handwritings in the Answer of Maria de la Cruz y Gutierrez were her handwritings; 2. Whether or not the heirs of Maria de la Cruz y Gutierrez are paying the land taxes of the lot in question proportionately to their respective shares; 3. Whether or not Lot 1488, the lot in question, is declared in the name of Maria de la Cruz y Gutierrez; 4. Whether or not during the lifetime of Maria de la Cruz y Gutierrez up to the time of her death, she was in actual possession of the lot in question; and 5. If there was fraud in securing OCT No. 16684 in the name of Maria de la Cruz, married to Calixto Dimalanta, and Fermin de la Cruz, single. (pp. 3-4, Intermediate Appellate Court Decision; pp. 4647, Rollo) After trial, the trial court, in a decision dated November 17, 1983 ( ibid., pp. 34-42), ruled in favor of the petitioners. The decretal portion of the said decision, reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs; (a) ordering the above-named defendants to reconvey to the plaintiffs a portion of 1,980 square meters of Lot No. 1488 covered by Original Certificate of Title No. 16684 of the Register of Deeds of Pampanga, by executing a deed of reconveyance and registering the same with the said Office at their own expense; (b) ordering the parties to cause the survey and division of Lot No. 1844 into two equal parts in order that two separate titles, one for the plaintiffs and the other for the defendants can be issued by the Register of Deeds of Pampanga in their favor and one-half of the expenses therefore to be shouldered by the plaintiffs, and the other half by the defendant; (c) ordering that the land to be adjudicated to the plaintiffs should include the portion where the existing house of the late Maria de la Cruz y Gutierrez is situated; (d) ordering the plaintiffs and the defendants to pay the corresponding estate and inheritance taxes if the parcels of land inherited by them are subject to the payment of the same;

(e) ordering the defendants to pay the costs of suit. On appeal, considering the action as based on an implied trust, the then Intermediate Appellate Court in its decision promulgated on June 17, 1986 (Ibid., pp. 44-53) reversed the decision of the trial court. The dispositive portion reads: WHEREFORE, the Court is constrained to REVERSE the decision appealed from. A new one is hereby entered dismissing the complaint. A Motion for Reconsideration was filed, but the same was denied in a resolution dated November 12, 1986 (Ibid.,p. 66). Hence, the instant petition. Petitioners raised three (3) reasons warranting review, to wit: I RESPONDENT COURT ERRED WHEN IT RULED THAT THE ACTION FOR RECONVEYANCE FILED BY HEREIN PETITIONERS WITH THE LOWER COURT HAD ALREADY PRESCRIBED; II RESPONDENT COURT ERRED IN RULING THAT PETITIONERS WERE GUILTY OF LACHES; and III RESPONDENT COURT ERRED IN RULING THAT THERE WAS NO EVIDENCE OF FRAUD COMMITTED BY THE PREDECESSOR-IN-INTEREST OF PRIVATE RESPONDENTS IN SECURING TITLE TO THE LOT IN QUESTION. (pp. 13, 20 and 22, Petition for Review pp. 21, 28, and 30 Rollo) The instant petition is impressed with merit. The main issue in this case is whether or not petitioners' action for reconveyance has already prescribed. The answer is in the negative. As aptly argued by petitioners, the Court of Appeals erred when it ruled that their action has already prescribed; obviously on the wrong premise that the action is one based on implied or constructive trust. As maintained by petitioners, their action is one based on express trust and not on implied or constructive trust. Petitioners' predecessor-in-interest, Maria de la Cruz y Gutierrez, was an unlettered woman, a fact borne out by her affixing her thumbmark in her answer in Cadastral Case No. 18, Exhibit "2-C". Because of her mental weakness, in a prepared document for her, Exhibit "B-3", she consented and authorized her niece Maria de la Cruz y Guevarra to administer the lot in question. Such fact is corroborated by the testimony of Daniel Lansay, the son of Maria de la Cruz y Gutierrez that Maria de la Cruz y Guevarra was the one entrusted with the paying of land taxes. Private respondents argue that said Exhibit "B-3" is a portion of the tax declaration (Exhibit "B") which was prepared by the Office of the Municipal Assessor/Treasurer where the lot in question is located, and

clearly not the written instrument constituting an express trust required under Article 1443 of the Civil Code. This argument of private respondents, is untenable. It has been held that under the law on Trusts, it is not necessary that the document expressly state and provide for the express trust, for it may even be created orally, no particular words are required for its creation (Article 1444, Civil Code). An express trust is created by the direct and positive acts of the parties, by some writing or deed or will or by words evidencing an intention to create a trust (Sotto v. Teves, 86 SCRA 154 [1978]). No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended (Vda. de Mapa v. Court of Appeals, 154 SCRA 294 [1987]). Hence, petitioner's action, being one based on express trust, has not yet prescribed. Be it noted that Article 1443 of the Civil Code which states "No express trusts concerning an immovable or any interest therein may be proved by parol evidence," refers merely to enforceability, not validity of a contract between the parties. Otherwise stated, for purposes of validity between the parties, an express trust concerning an immovable does not have to be in writing. Thus, Article 1443 may be said to be an extension of the Statute of Frauds. The action to compel the trustee to convey the property registered in his name for the benefit of the cestui for trust does not prescribe. If at all, it is only when the trustee repudiates the trust that the period of prescription may run (Enriquez v. Court of Appeals, 104 SCRA 656 [1981]). PREMISES CONSIDERED, the June 17, 1986 decision of the Intermediate Appellate Court is hereby REVERSED and the November 17, 1983 decision of the trial court is hereby REINSTATED, excpt as to the latter court's finding that this case deals with an implied trust. SO ORDERED. PNB v. CA

Rarely is this Court confronted with a case calling for the delineation in broad strokes of the distinctions between such closely allied concepts as the quasi-contract called "solutio indebiti" under the venerable Spanish Civil Code and the species of implied trust denominated "constructive trusts," commonly regarded as of Anglo-American origin. Such a case is the one presented to us now which has highlighted more of the affinity and less of the dissimilarity between the two concepts as to lead the legal scholar into the error of interchanging the two. Presented below are the factual circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-contract and the Anglo-American trust. Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and services to shipping companies. Since 1966, it has acted as a manning or crewing agent for several foreign firms, one of which is Star Kist Foods, Inc., USA (Star Kist). As part of their agreement, Mata makes advances for the crew's medical expenses, National Seaman's Board fees, Seaman's Welfare fund, and standby fees and for the crew's basic personal needs. Subsequently, Mata sends monthly billings to its foreign principal Star Kist, which in turn reimburses Mata by sending a telegraphic transfer through banks for credit to the latter's account. Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los Angeles which had an agency arrangement with Philippine National Bank (PNB), transmitted a cable message to the International Department of PNB to pay the amount of US$14,000 to Mata by crediting the latter's account with the Insular Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt of this cabled message on February 24, 1975, PNB's International Department noticed an error and sent a service message to SEPAC Bank. The latter replied with instructions that the amount of US$14,000 should only be for US$1,400.

On the basis of the cable message dated February 24, 1975 Cashier's Check No. 269522 in the amount of US$1,400 (P9,772.95) representing reimbursement from Star Kist, was issued by the Star Kist for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America (IBAA). However, fourteen days after or on March 11, 1975, PNB effected another payment through Cashier's Check No. 270271 in the amount of US$14,000 (P97,878.60) purporting to be another transmittal of reimbursement from Star Kist, private respondent's foreign principal. Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000 (P97,878.60) after it discovered its error in effecting the second payment. On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it has a right to recover the said 1 amount it erroneously credited to respondent Mata. After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint ruling that the instant case falls squarely under Article 2154 on solutio indebiti and not under Article 1456 on constructive trust. The lower court ruled out constructive trust, applying strictly the technical definition of a trust as "a right of property, real or personal, held by one party for the benefit of another; that there is a fiduciary relation between a trustee and a cestui que trust as regards certain property, real, personal, money or 2 choses in action." In affirming the lower court, the appellate court added in its opinion that under Article 2154 on solutio indebiti, the person who makes the payment is the one who commits the mistake vis-a-vis the recipient 3 who is unaware of such a mistake. Consequently, recipient is duty bound to return the amount paid by mistake. But the appellate court concluded that petitioner's demand for the return of US$14,000 cannot prosper because its cause of action had already prescribed under Article 1145, paragraph 2 of the Civil Code which states: The following actions must be commenced within six years: xxx xxx xxx (2) Upon a quasi-contract. This is because petitioner's complaint was filed only on February 4, 1982, almost seven years after March 11, 1975 when petitioner mistakenly made payment to private respondent. Hence, the instant petition for certiorari proceeding seeking to annul the decision of the appellate court on the basis that Mata's obligation to return US$14,000 is governed, in the alternative, by either Article 4 1456 on constructive trust or Article 2154 of the Civil Code on quasi-contract. Article 1456 of the Civil Code provides: If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. On the other hand, Article 2154 states:

If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. Petitioner naturally opts for an interpretation under constructive trust as its action filed on February 4, 1982 can still prosper, as it is well within the prescriptive period of ten (10) years as provided by Article 5 1144, paragraph 2 of the Civil Code. If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period for quasi-contracts of six years applies, as provided by Article 1145. As pointed out by the appellate court, petitioner's cause of action thereunder shall have prescribed, having been brought almost seven years after the cause of action accrued. However, even assuming that the instant case constitutes a constructive trust and prescription has not set in, the present action has already been barred by laches. To recall, trusts are either express or implied. While express trusts are created by the intention of the 6 trustor or of the parties, implied trusts come into being by operation of law. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the 7 particular intention of the parties. In turn, implied trusts are subdivided into resulting and constructive trusts. A resulting trust is a trust raised by implication of law and presumed always to have been contemplated by the parties, the intention of which is found in the nature of the transaction, but not expressed in the deed or instrument 9 10 of conveyance. Examples of resulting trusts are found in Articles 1448 to 1455 of the Civil Code. On the other hand, a constructive trust is one not created by words either expressly or impliedly, but by construction of equity in order to satisfy the demands of justice. An example of a constructive trust is 11 Article 1456 quoted above. A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que 13 trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the 14 so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding the same for a supposed beneficiary or cestui que trust, namely PNB. But under Article 1456, the law construes a trust, namely a constructive trust, for the benefit of the person from whom the property comes, in this case PNB, for reasons of justice and equity. At this juncture, a historical note on the codal provisions on trust and quasi-contracts is in order. Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts: negotiorum gestio andsolutio indebiti. But the Code Commission, mindful of the position of the eminent Spanish jurist, Manresa, that "the number of quasi contracts may be indefinite," added Section 3 entitled "Other 15 Quasi-Contracts." Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding article provides that: "The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may 16 come within the purview of the preceding article."
12 8

Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts enumerated from Articles 2144 to 2175 but is open to the possibility that, absent a pre-existing relationship, there being neither crime nor quasi-delict, a quasi-contractual relation may be forced upon the parties to avoid a case 17 of unjust enrichment. There being no express consent, in the sense of a meeting of minds between the parties, there is no contract to speak of. However, in view of the peculiar circumstances or factual environment, consent is presumed to the end that a recipient of benefits or favors resulting from lawful, voluntary and unilateral acts of another may not be unjustly enriched at the expense of another. Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as defined in Article 2154 that something (in this case money) has been received when there was no right to demand it and (2) the same was unduly delivered through mistake. There is a presumption that there was a mistake in the payment "if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just 18 cause." In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No. 269522 had already been made by PNB for the account of Mata on February 25, 1975. Strangely, however, fourteen days later, PNB effected another payment through Cashier's Check No. 270271 in the amount of US$14,000, this time purporting to be another transmittal of reimbursement from Star Kist, private respondent's foreign principal. While the principle of undue enrichment or solutio indebiti, is not new, having been incorporated in the subject on quasi-contracts in Title XVI of Book IV of the Spanish Civil Code entitled "Obligations incurred 19 without contract," the chapter on Trusts is fairly recent, having been introduced by the Code Commission in 1949. Although the concept of trusts is nowhere to be found in the Spanish Civil Code, the framers of our present Civil Code incorporated implied trusts, which includes constructive trusts, on top 20 of quasi-contracts, both of which embody the principle of equity above strict legalism. In analyzing the law on trusts, it would be instructive to refer to Anglo-American jurisprudence on the subject. Under American Law, a court of equity does not consider a constructive trustee for all purposes as though he were in reality a trustee; although it will force him to return the property, it will not impose 21 upon him the numerous fiduciary obligations ordinarily demanded from a trustee of an express trust. It must be borne in mind that in an express trust, the trustee has active duties of management while in a constructive trust, the duty is merely to surrender the property. Still applying American case law, quasi-contractual obligations give rise to a personal liability ordinarily enforceable by an action at law, while constructive trusts are enforceable by a proceeding in equity to compel the defendant to surrender specific property. To be sure, the distinction is more procedural than 22 substantive. Further reflection on these concepts reveals that a constructive "trust" is as much a misnomer as a "quasicontract," so far removed are they from trusts and contracts proper, respectively. In the case of a constructive trust, as in the case of quasi-contract, a relationship is "forced" by operation of law upon the parties, not because of any intention on their part but in order to prevent unjust enrichment, thus giving 23 rise to certain obligations not within the contemplation of the parties. Although we are not quite in accord with the opinion that "the trusts known to American and English 24 equity jurisprudence are derived from the fidei commissa of the Roman Law," it is safe to state that their roots are firmly grounded on such Civil Law principles are expressed in the Latin maxim, "Nemo cum 25 alterius detrimento locupletari potest," particularly the concept of constructive trust.

Returning to the instant case, while petitioner may indeed opt to avail of an action to enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has effectively blocked quasi-contract as an alternative, leaving only constructive trust as the feasible option. Petitioner argues that the lower and appellate courts cannot indulge in semantics by holding that in Article 1456 the recipient commits the mistake while in Article 2154, the recipient commits no 26 mistake. On the other hand, private respondent, invoking the appellate court's reasoning, would impress upon us that under Article 1456, there can be no mutual mistake. Consequently, private respondent contends that the case at bar is one of solutio indebiti and not a constructive trust. We agree with petitioner's stand that under Article 1456, the law does not make any distinction since 27 mutual mistake is a possibility on either side on the side of either the grantor or the grantee. Thus, it was error to conclude that in a constructive trust, only the person obtaining the property commits a mistake. This is because it is also possible that a grantor, like PNB in the case at hand, may commit the mistake. Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it erroneously paid private respondent under a constructive trust, we rule in the negative. Although we are aware that only seven (7) years lapsed after petitioner erroneously credited private respondent with the said amount and that under Article 1144, petitioner is well within the prescriptive period for the enforcement of a constructive or implied trust, we rule that petitioner's claim cannot prosper since it is already barred by laches. It is a well-settled rule now that an action to enforce an implied trust, whether resulting or 28 constructive, may be barred not only by prescription but also by laches. While prescription is concerned with the fact of delay, laches deals with the effect of unreasonable 29 delay. It is amazing that it took petitioner almost seven years before it discovered that it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy volume of international transactions handled by the Cable and Remittance Division of the International Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a bank, and a government bank at that, which regularly publishes its balanced financial statements annually or more frequently, by the quarter, to notice its error only seven years later. As a universal bank with worldwide operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where negligence is imputable to one and not to the other, the former must perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of its own negligence. WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim against private respondent is AFFIRMED. Ong Ching Po v. CA

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision of the Court of Appeals dated July 15, 1993, which dismissed the petition for certiorari in CA-G.R. CV Nos. 2839192. I On July 23, 1947, Ong Joi Jong sold a parcel of land located at Fundidor Street, San Nicolas to private respondent Soledad Parian, the wife of Ong Yee. The latter, the brother of petitioner Ong Ching Po, died in January 1983; while petitioner Ong Ching Po died in October 1986. The said sale was evidenced by a

notarized Deed of Sale written in English. Subsequently, the document was registered with the Register of Deeds of Manila, which issued Transfer Certificate of Title No. 9260 dated September 2, 1947 in the name of private respondent. According to private respondent, she entrusted the administration of the lot and building to petitioner Ong Ching Po when she and her husband settled in Iloilo. When her husband died, she demanded that the lot be vacated because she was going to sell it. Unfortunately, petitioners refused to vacate the said premises. On March 19, 1984, private respondent filed a case for unlawful detainer against petitioner Ong Ching Po before the Metropolitan Trial Court of Manila, Branch 26. The inferior court dismissed her case. The dismissal was affirmed by the Regional Trial Court, Branch 10, Manila. The decision of the Regional Trial Court was, in turn, affirmed by the Court of Appeals, which dismissed the petition. The decision of the Court of Appeals became final and executory. Petitioners, on the other hand, claimed that on July 23, 1946, petitioner Ong Ching Po bought the said parcel of land from Ong Joi Jong. The sale was evidenced by a photo copy of a Deed of Sale written in Chinese with the letter head "Sincere Trading Co." (Exh. "B"). An English translation of said document (Exh. "C") read as follows: Deed of Sale I, Ong Joi Jong, a party to this Deed of Sale hereby sell in absolutely (sic) manner a lot located on No. 4 Fundidor Street, San Nicolas an (sic) area consisting 213 square meters including a one-story house erected thereon unto Mr. Ong Ching Po for the sum of P6,000.00 the receipt of which is hereby acknowledged by me and consequently I have executed and signed the government registered title (sic) the said lot inclusive of the house erected thereon, now belong (sic) to Mr. Ong Ching Po unequivocally. And the purpose of this document is to precisely serve as proof of the sale. Addendum: I have acceded to the request of Mr. Ong Ching Po into signing another document in favor of Soledad Parian (She is the Filipino wife of Ong Yee, brother of Ong Ching Po) for the purpose of facilitating the issuance of the new title by the City Register of Deeds and for the reason that he is not yet a Filipino. I certify to the truthfulness of this fact. L o t S e l l e r : O n g

J o i J o n g (Exhibits for the plaintiff, p. 4) On December 6, 1983, petitioner Ong Ching Po executed a Deed of Absolute Sale conveying to his children, petitioners Jimmy and David Ong, the same property sold by Ong Joi Jong to private respondent in 1947. On December 12 1985, petitioners Ong Ching Po, Jimmy Ong and David Ong filed an action for reconveyance and damages against private respondent in the Regional Trial Court, Branch 53, Manila, docketed as Case No. 85-33962. On July 26, 1986, private respondent filed an action for quieting of title against petitioners Ong Ching Po and his wife, petitioner Yu Siok Lian, in the Regional Trial Court, Branch 58, Manila, docketed as Civil Case No. 86-36818. Upon her motion, the case was consolidated with Civil Case No. 85-33962. On May 30 1990, the trial court rendered a decision in favor of private respondent. On appeal by petitioners to the Court of Appeals, the said court affirmed the decision of the Regional Trial Court. Hence, this petition. II According to petitioners, the Court of Appeals erred: (1) When it gave full faith and credit to the Deed of Sale (Exh. "A") in favor of private respondent, instead of the Deed of Sale (Exh. "B" and its translation, Exh. "C") in favor of petitioner Ong Ching Po. (2) When it concluded that the acts of petitioners were not acts of ownership; and (3) When it ruled that no express nor implied trust existed between petitioners and private respondent (Rollo, pp. 17-18). As stated by petitioners themselves, what is in dispute ". . . is not so much as to which between Exhibit "A" and "Exhibit "B" is more weighty, but whether this document is what it purports to be (i.e., a deed of conveyance in favor of Soledad Parian [private respondent] or it was only resorted to or executed as a subterfuge because the real buyer (Ong Ching Po) was an alien and it was agreed upon between Ong Ching Po and his brother (Ong Yee, Soledad Parian's husband) that the land be registered in the name of Soledad Parian in order to avoid legal complications and to facilitate registration and transfer and that the said title would be transferred by Soledad to Ong Ching Po or his successors-in-interest and that she would be holding the title in trust for him" (Rollo, pp. 19-20). We cannot go along with the claim that petitioner Ong Ching Po merely used private respondent as a dummy to have the title over the parcel of land registered in her name because being an alien he was

disqualified to own real property in the Philippines. To sustain such an outrageous contention would be giving a high premium to a violation of our nationalization laws. Assuming that Exhibit "B" is in existence and that it was duly executed, still petitioners cannot claim ownership of the disputed lot by virtue thereof. Section 5, Article XIII of the 1935 Constitution provides, as follows: Save in cases of hereditary succession, no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines. Section 14, Article XIV of the 1973 Constitution provides, as follows: Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands in the public domain. Section 7, Article XII of the 1987 Constitution provides: Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands in the public domain. The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of the public domain" (II Bernas, The Constitution of the Philippines 439-440 [1988 ed.]). The 1935 Constitution reserved the right to participate in the "disposition, exploitation, development and utilization" of all "lands of the public domain and other natural resources of the Philippines" for Filipino citizens or corporations at least sixty percent of the capital of which was owned by Filipinos. Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands. Petitioner Ong Ching Po was a Chinese citizen; therefore, he was disqualified from acquiring and owning real property. Assuming that the genuineness and due execution of Exhibit "B" has been established, the same is null and void, it being contrary to law. On the other end of the legal spectrum, the deed of sale executed by Ong Joi Jong in favor of private respondent (Exh. "A") is a notarized document. To remove the mantle of validity bestowed by law on said document, petitioners claim that private respondent admitted that she did not pay anything as consideration for the purported sale in her favor. In the same breath, petitioners said that private respondent implied in her deposition that it was her husband who paid for the property. It appears, therefore, that the sale was financed out of conjugal funds and that it was her husband who handled the transaction for the purchase of the property. Such transaction is a common practice in Filipino-family affairs. It is not correct to say that private respondent never took possession of the property. Under the law, possession is transferred to the vendee by virtue of the notarized deed of conveyance. Under Article 1498 of the Civil Code of the Philippines, "when the sale is made through a public instrument, the execution

thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." If what petitioners meant was that private respondent never lived in the building constructed on said land, it was because her family had settled in Iloilo. There is no document showing the establishment of an express trust by petitioner Ong Ching Po as trustor and private respondent as trustee. Not even Exhibit "B" can be considered as such a document because private respondent, the registered owner of the property subject of said "deed of sale," was not a party thereto. The oral testimony to prove the existence of the express trust will not suffice. Under Article 1443 of the Civil Code of the Philippines, "No express trust concerning an immovable or any interest therein may be proved by parole evidence." Undaunted, petitioners argue that if they cannot prove an express trust in writing, they can prove an implied trust orally. While an implied trust may be proved orally (Civil Code of the Philippines, Art. 1457), the evidence must be trustworthy and received by the courts with extreme caution, because such kind of evidence may be easily fabricated (Salao v. Salao, 70 SCRA 65 [1976]). It cannot be made to rest on vague and uncertain evidence or on loose, equivocal or indefinite declarations (Cf. De Leon v. Molo-Peckson, et al., 116 Phil. 1267 [1962]). Petitioners do not claim that Ong Yee was not in a financial position to acquire the land and to introduce the improvements thereon. On the other hand, Yu Siok Lian, the wife of petitioner Ong Ching Po, admitted in her testimony in court that Ong Yee was a stockholder of Lam Sing Corporation and was engaged in business. The Court of Appeals did not give any credence to Exhibit "B" and its translation, Exhibit "C", because these documents had not been properly authenticated. Under Section 4, Rule 130 of the Revised Rules of Court: Secondary Evidence when Original is lost or destroyed. When the original writing has been lost or destroyed, or cannot be produced in court, upon proof of its execution and lost or destruction, or unavailability, its contents may be proved by a copy, or by a recital of its contents in some authentic document, or by the recollection of the witnesses. Secondary evidence is admissible when the original documents were actually lost or destroyed. But prior to the introduction of such secondary evidence, the proponent must establish the former existence of the document. The correct order of proof is as follows: existence; execution; loss; contents. This order may be changed if necessary in the discretion of the court (De Vera v. Aguilar, 218 SCRA 602 [1993]). Petitioners failed to adduce evidence as to the genuineness and due execution of the deed of sale, Exhibit "B". The due execution of the document may be established by the person or persons who executed it; by the person before whom its execution was acknowledged; or by any person who was present and saw it executed or who after its execution, saw it and recognized the signatures; or by a person to whom the parties to the instrument had previously confessed the execution thereof (De Vera v. Aguilar, supra). Petitioner Yu Siok Lian testified that she was present when said document was executed, but the trial court rejected her claim and held: If it is true that she was present, why did she not sign said document, even merely as a witness? Her oral testimony is easy to concoct or fabricate. Furthermore, she was married only on September 6, 1946 to the plaintiff, Ong Ching Po, in Baguio City where

she apparently resided, or after the deed of sale was executed. The Court does not believe that she was present during the execution and signing of the deed of sale involved therein, notwithstanding her pretensions to the contrary (Decision p. 6, Records p. 414). As to the contention of petitioners that all the tax receipts, tax declaration, rental receipts, deed of sale (Exh. "B") and transfer certificate of title were in their possession, private respondent explained that she and her husband entrusted said lot and building to petitioners when they moved to Iloilo. As observed by the Court of Appeals: We find, however, that these acts, even if true, are not necessarily reflective of dominion, as even a mere administrator or manager may lawfully perform them pursuant to his appointment or employment (Rollo, p. 10). It is markworthy that all the tax receipts were in the name of private respondent and her husband. The rental receipts were also in the name of her husband. Rizal Surety v. CA Was a trust relationship established between an insurer and the two insureds over the balance of the insurance proceeds being held by the insurer for the account of the two insureds, pending a final settlement by and between the two insureds of their respective claims to said proceeds? Can the insurer whether or not considered a trustee be held liable for interest on the said insurance proceeds, which proceeds the said insurer failed or neglected to deposit in an interest-bearing account, contrary to the specific written instructions of the two insureds? And should attorneys fees be awarded in this case? These questions confronted the Court in resolving the instant petition for review on certiorari, which [1] [2] assailed the Decision of the Court of Appeals promulgated October 25, 1990 affirming and modifying [3] [4] the decision dated September 19, 1986 of the Regional Trial Court of Manila, Branch 33, in Civil Case No. 125886.

The Facts As culled from the stipulations between the parties and the assailed Decision, the factual background of this case is as follows: On December 5, 1961, the Reparations Commission (hereinafter referred to as REPACOM) sold to private respondent Transocean Transport Corporation the vessel M/V TRANSOCEAN SHIPPER payable in twenty (20) annual installments. On June 22, 1974, the said vessel was insured with petitioner Rizal Surety & Insurance Company for US$3,500,000.00, with stipulated value in Philippine Currency of [5] P23,763,000.00 under Marine Hull Policy MH-1322 and MH-1331. The said policies named REPACOM and herein private respondent as the insured. Subsequently, petitioner reinsured the vessel with a foreign insurance firm. Sometime in February, 1975, during the effectivity of the aforementioned marine insurance policies, the vessel M/V TRANSOCEAN SHIPPER was lost in the Mediterranean Sea. The insured filed claims against herein petitioner for the insurance proceeds. Shortly thereafter, a partial compromise agreement was entered into between the REPACOM and respondent Transocean regarding the insurance proceeds.

On April 18, 1975, anticipating payment of the insurance proceeds in dollars, private respondent requested the Central Bank (CB) to allow it to retain the expected dollar insurance proceeds for a period [6] of three (3) months, to enable it to complete its study and decide on how to utilize the said amount. The CB granted the request subject to conditions, one of which was that the proceeds be deposited with a [7] local commercial bank in a special dollar account up to and until July 31, 1975. On November 18, 1975, private respondent and REPACOM requested petitioner to pay the [8] insurance proceeds in their joint names, despite problems regarding the amount of their respective claims. On November 20, 1975, the CB authorized petitioner to receive the insurance proceeds from the English re-insurance firm in foreign currency and to deposit it in the same currency with any local bank in [9] a non-interest bearing account, jointly in the names of private respondent and REPACOM. On December 2, 1975, upon the request of petitioner, CB authorized it to receive and deposit the dollar insurance proceeds in a non-interest bearing account in the name of petitioner and for the joint [11] account of REPACOM and private respondent. On January 3, 1976, petitioner informed private respondent and REPACOM that the entire insurance proceeds for the loss of the vessel M/V Transocean Shipper, consisting of: (a) P2,614,150.00 from local insurance companies and reinsurers, and (b) US$3,083,850.00 from the petitioners London insurance broker, had been deposited with Prudential Bank and Trust Company, Escolta Branch, Manila, the latter [12] sum in a non-interest bearing account as authorized by CB. On January 29, 1976, private respondent and REPACOM entered into a partial compromise [13] agreement, wherein they agreed to divide and distribute the insurance proceeds in such a manner that each would receive as its initial share thereof that portion not disputed by the other party (thus, REPACOM US$434,618.00, and private respondent US$1,931,153.00), leaving the balance in dispute for future settlement, either by way of compromise agreement or court litigation, pending which the said balance would continue to be kept in the same bank account in trust for private respondent and REPACOM unless the parties otherwise agree to transfer said balance to another bank account. Copies of this compromise agreement were sent to petitioner. In response to the March 10, 1976 letter-request of the parties, the CB on March 15, 1976 authorized private respondent and REPACOM to transfer the balance of the insurance proceeds, amounting to [14] US$718,078.20, into an interest-bearing special dollar account with any local commercial bank. The CBs letter-authorization was addressed to REPACOM, with private respondent and petitioner duly copyfurnished. Having obtained the CB authorization, REPACOM and private respondent then wrote the petitioner on April 21, 1976, requesting the latter to remit the said US$718,078.20 to the Philippine National Bank, [15] Escolta Branch for their joint account. In a reply dated May 10, 1976, petitioner indicated that it would effect the requested remittance when both REPACOM and private respondent shall have unconditionally and absolutely released petitioner from all liabilities under its policies by executing and delivering the Loss and Subrogation [16] Receipt prepared by petitioner. Because the parties proposed certain amendments and corrections to the Loss and Subrogation Receipt, a revised version thereof was finally presented to the Office of the Solicitor General, and on May 25, 1977, then Acting Solicitor General Vicente V. Mendoza wrote petitioner demanding that it pay [17] interest on the dollar balance per the CB letter-authority. His letter read in relevant part: From the foregoing, it is clear that effective as of the date of your receipt of a copy of the letter of the Central Bank authorizing the deposit of the amount in an interest-bearing special dollar account x x x, the same should bear interest at the authorized rates, and it was your duty as trustee of the said funds to see
[10]

to it that the same earned the interest authorized by the Central Bank. As trustee, you were morally and legally bound to deposit the funds under terms most advantageous to the beneficiaries. If you did not wish to transfer the deposit from the Prudential Bank and Trust Company, which we understand is your sister company, to another bank where it could earn interest, it was your obligation to require the Prudential Bank and Trust Company, at least, to place the deposit to an interest-bearing account. In view hereof, we hereby demand in behalf of the Reparations Commission payment of interest on the dollar deposit from the date of your receipt of the authorization by the Central Bank at the authorized rates. In a reply dated June 14, 1977, petitioner through counsel rejected the Acting Solicitor Generals demand, asserting that (i) there was no trust relationship, express or implied, involved in the transaction; (ii) there was no obligation on the part of petitioner to transfer the dollar deposit into an interest-bearing account because the CB authorization was given to REPACOM and not to petitioner, (iii) REPACOM did not ask petitioner to place the dollars in an interest-bearing account, and, (iv) no Loss and Subrogation Receipt was executed. On October 10, 1977, private respondent and REPACOM sent petitioner the duly executed Loss and Subrogation Receipt, dated January 31, 1977, without prejudice to their claim for interest on the dollar balance from the time CB authorized its placement in an interest bearing account. On February 27, 1978, a final compromise agreement was entered into between private respondent and REPACOM, whereby the latter, in consideration of an additional sum of one million pesos paid to it by the former, transferred, conveyed and assigned to the former all its rights, interests and claims in and to the insurance proceeds. The dollar balance of the insurance proceeds was then remitted to the Philippine National Bank, Escolta branch for the sole account of private respondent. On April 14, 1978, a demand letter for interest on the said dollar balance was sent by private respondents counsel to petitioner and Prudential Bank, which neither replied thereto nor complied therewith. On August 15, 1979, private respondent filed with the Regional Trial Court of Manila, Branch 33, a complaint for collection of unearned interest on the dollar balance of the insurance proceeds. On September 19, 1986, the trial court issued its decision holding that (i) a trust relationship existed between petitioner as trustee and private respondent and REPACOM as beneficiaries, (ii) from April 21, 1976, petitioner should have deposited the remaining dollar deposit in an interest-bearing account either by remitting the same to the PNB in compliance with the request of REPACOM and private respondent, or by transferring the same into an interest-bearing account with Prudential Bank, and (iii) this duty to deposit the funds in an interest-bearing account ended when private respondent signed the Loss and Subrogation Receipt on January 31, 1977. Thus, petitioner was ordered to pay (1) interest on the balance of US$718,078.20 at 6% per annum, computed from April 21, 1976 until January 31, 1977 based on the then prevailing peso-dollar rate of exchange; (2) interest of 6% per annum on the accrued interest earned [19] until fully paid; (3) 10% of the total amount claimed as attorneys fees and (4) costs of suit. The complaint against defendant Prudential Bank and Trust was dismissed for lack of merit. Both petitioner and private respondent appealed the trial courts decision. Private respondent alleged that the trial court erred when it absolved defendant Prudential Bank from liability and when it ruled that the interest on the balance of the dollar deposit, for which petitioner was held liable, should be computed only until January 31, 1977 (when the Loss and Subrogation Receipt was signed) instead of January 10, 1978 (when the actual transfer of the dollar deposit was made to the bank chosen by private [20] respondent). On the other hand, petitioner charged that the trial court had seriously erred in finding that a trust relationship existed and that petitioner was liable for the interest on the dollar balance despite the execution of the Loss and Subrogation Receipt wherein petitioner was unconditionally and [21] absolutely released from all its liabilities under the marine hull policies.
[18]

On October 25, 1990, the Court of Appeals upheld the judgment of the trial court, and confirmed that a trust had in fact been established and that petitioner became liable for interest on the dollar account in its capacity as trustee, not as insurer. As for the Loss and Subrogation document, the appellate Court ruled that petitioner gave undue importance thereto, and that the execution thereof did not bar the claims for accrued interest. By virtue of that document, petitioner was released only from its liabilities arising from the insurance policies, i.e., in respect of the principal amount representing the insurance proceeds, but not insofar as its liability for accrued interest was concerned, which arose from the violation of its duty as trustee i.e., its refusal to deposit the dollar balance in an interest-bearing account, under terms most advantageous to the beneficiaries. The respondent Court modified the trial courts judgment by ordering petitioner to pay said interest computed from April 21, 1976 up to January 10, 1978. On December 17, 1990, the Court of Appeals denied the petitioners motion for reconsideration. Hence, this petition.

Assignment of Errors Petitioner alleges that the Court of Appeals erred: I. xxx when it held that Rizal is liable to Transocean for supposed interest on the balance of US$718,078.20 after admitting that Transocean and REPACOM had unconditionally and absolutely released and discharged Rizal from its total liabilities when they signed the loss and subrogation receipt xxx on January 31, 1977; II. xxx in assuming that REPACOM and Transocean on one hand and Rizal, on the other, intended to create a trust; III. xxx in not holding that Transocean had acted in palpable bad faith and with malice in filing this clearly unfounded civil action, and in not ordering Transocean to pay to Rizal moral and punitive damages xxx, plus attorneys fees and expenses of litigation xxx; and IV. xxx in affirming the RTC decision which incorrectly awarded attorneys fees and costs of suit to [22] Transocean. The foregoing grounds are almost exactly the same grounds pleaded by petitioner before the respondent Court. At the heart of the matter is the question of whether the petitioner is liable for accrued interest on the dollar balance of the insurance proceeds. Reiterating the arguments it ventilated before the respondent appellate Court, petitioner continues to deny the existence of the trust, alleging that it never intended to enter into a fiduciary relationship with private respondent and REPACOM and that it held on to the dollar balance only as a means to protect its interest. Furthermore, petitioner insists that the Loss and Subrogation Receipt signed by the insureds released and absolved petitioner from all liabilities, including the claimed interest. Briefly, the key issues in this case may be re-stated thus: I. The existence of a trust relationship; II. The significance of the Loss and Subrogation Receipt; III. Petitioners liability for accrued interest on the dollar balance; and IV. Correctness of the award of attorneys fees.

The Courts Ruling The shop-worn arguments recycled by petitioner are mainly devoid of merit. We searched for arguments that could constitute reversible errors committed by respondent Court, but found only one in the last issue.

First Issue: The Trust Relationship Crucial in the resolution of this case is the determination of the role played by petitioner. Did it act merely as an insurer, or was it also a trustee? In ruling that petitioner was a trustee of the private respondent and REPACOM, the Court of Appeals ratiocinated thus: The respondent (trial) court sustained the theory of TRANSOCEAN and was of the view that RIZAL held the dollar balance of US$718,078.20 as trustee for the benefit of REPACOM and plaintiff corporation (private respondent herein) upon consideration of the following facts and the said courts observation 1. That pursuant to RIZALs letter to the Central Bank dated November 25, 1975, it requested that its authority to deposit the dollar proceeds with any local bank be amended by allowing it to deposit the same in the name of Rizal Surety & Insurance Company for the joint account of the Reparations Commission and Transocean Transport Corporation. It further states, to wit: This is in conformity with our agreement on this matter with the respective officers of our insureds, Reparations Commission and Transocean Transport Corporation, during our conference held in the office of Solicitor General Estelito Mendoza, last 18 November 1975. (E xhibit I). From these facts, it is very clear that the parties thereto intended that the entire dollar insurance proceeds be held in trust by defendant RIZAL for the benefit of REPACOM and plaintiff corporation. 2. This agreement was further fortified by the Central Banks reply to the above-mentioned letter authorizing RIZAL to deposit the dollar insurance proceeds in the name of Rizal Surety & Insurance Company for the joint account of Transocean Transport Corporation and Reparations Commission (Exhibit J). 3. Likewise, defendant RIZALs letter to REPACOM and plaintiff corporation confirming the fact that the insurance proceeds were then deposited with Prudential Bank and it was recorded under the name of Rizal Surety & Insurance Company for the joint account of Transocean Transport Corporation and REPACOM (Exhibit L). 4. The partial compromise agreement entered into between the insureds on January 29, 1976 over the division of the insurance proceeds which provides as follows: 4. The disputed portion or the balance of the insurance proceeds remaining after deducting the undisputed portions as agreed above shall be kept in the same bank deposit in trust for and in the joint name of REPACOM and TRANSOCEAN until such time as there is a court decision or a compromise agreement on the full amount or portion thereof, or until such time as REPACOM and TRANSOCEAN shall agree jointly to transfer such balance to another bank account.

It appears clearly that even from the start of the communications among themselves, especially between defendant RIZAL on one hand and REPACOM and the plaintiff corporation, on the other hand, it shows that the parties intended that the dollar insurance proceeds be held in the name of defendant RIZAL for the joint benefit of REPACOM and plaintiff corporation. No repudiation was ever made or any one of the parties for that matter questioned said agreement. There was, therefore, created a trust relationship between RIZAL on one hand and the REPACOM and plaintiff corporation on the other, over the dollar insurance proceeds of the lost vessel. x x x Indeed, the aforesaid enumerated facts sufficiently manifest the intention between REPACOM and TRANSOCEAN on one hand and RIZAL, on the other, to create a trust. It was RIZAL itself which requested the Central Bank that it be allowed to deposit the dollars in its name and for the joint account of REPACOM and TRANSOCEAN instead of in the joint account of REPACOM and TRANSOCEAN as originally authorized. Moreover, the Partial Compromise Agreement explicitly states that the dollars shall be kept in the same bank deposits in trust for and in the joint name of REPACOM and TRANSOCEAN. While it is true, that RIZAL was not a party to the Compromise Agreement, nevertheless, RIZAL was furnished a copy of the same and did not in any way manifest objection thereto. On the contrary, RIZAL even implemented certain provisions thereof. xxx xxx xxx

The intention to create a trust relation can be inferred from the surrounding factual circumstances. Thus: Such a manifestation can in fact be determined merely by construction of, and inference from, the surrounding factual circumstances, so long as the proof thereof is clear, satisfactory, and convincing, and does not rest on loose, equivocal or indefinite declarations (Medina vs. CA, 109 SCRA 437). Petitioner claims that respondent Court was misled by the trial courts crucial mis -assumption that [23] petitioner was the one which took the initiative of requesting authorization from CB to deposit the dollar proceeds in its name, into concluding that a trust relationship had been created. Petitioner insists that it did so only in reaction to the earlier CB letter dated November 20, 1975 which first ordered petitioner to receive the dollar insurance proceeds and deposit the same with any local bank in a noninterest bearing account in the names of Transocean and REPACOM jointly, and that it (petitioner) made such request to avoid having the dollar proceeds paid directly to the account of the two insured, as that would be tantamount to full payment of the loss without first secu ring petitioners release from its liabilities under the insurance policies. In short, petitioner claims it was just trying to protect its interest when it made such request. Petitioner further scores the respondent Court for relying on the two insureds arrangement contained in the Partial Compromise Agreement that the dollar balance be kept in the same bank deposit (held by petitioner) in trust for and in the joint name of REPACOM and TRANSOCEAN. Petitioner insists it was never a party to said compromi se agreement, and that therefore, it should not be held bound by anything contained therein, and simply because it did not in [24] any way manifest objection thereto Petitioners arguments notwithstanding, we hold that the courts below were correct in concluding that a trust relationship existed. It is basic in law that a trust is the right, enforceable solely in equity, to [25] the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary [26] relationship concerning property which obliges a person holding it (i.e., the trustee) to deal with the property for the benefit of another (i.e., the beneficiary). The Civil Code provides that: Article 1441. Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties. x x x.

Article 1444. No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended. Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, [27] or by words either expressly or impliedly evincing an intention to create a trust. The evidence on record is clear that petitioner held on to the dollar balance of the insurance proceeds because (1) private respondent and REPACOM requested it to do so as they had not yet agreed on the amount of their respective claims, and the Final Compromise Agreement was yet to be executed, and (2) they had not, prior to January 31, 1977, signed the Loss and Subrogation Receipt in favor of petitioner. Furthermore, petitioners letter dated November 20, 1975 addressed to the CB expressly stated that the deposit in Prudential Bank was being made in its name for the joint account of the private respondent and REPACOM. Petitioner never claimed ownership over the funds in said deposit. In fact, it made several tenders of payment to the private respondent and REPACOM, albeit the latter declined to accept since the dispute as to their respective claims could not yet be resolved at that time. By its own allegation, petitioner held on to the dollar balance of the insurance proceeds to protect its interest, as it was not yet granted the right of subrogation over the total loss of the vessel. As petitioner continued holding on to the deposit for the benefit of private respondent and REPACOM, petitioner obviously recognized its fiduciary relationship with said parties. This is the essence of the trust flowing from the actions and communications of petitioner. In Mindanao Development Authority vs. Court of Appeals ,
[28]

this Court held:

x x x It is fundamental in the law of trusts that certain requirements must exist before an express trust will be recognized. Basically, these elements include a competent trustor and trustee, an ascertainable trust res, and sufficiently certain beneficiaries. Stilted formalities are unnecessary, but nevertheless each of the above elements is required to be established, and, if any one of them is missing, it is fatal to the trusts (sic). Furthermore, there must be a present and complete disposition of the trust property, notwithstanding that the enjoyment in the beneficiary will take place in the future. It is essential, too, that the purpose be an active one to prevent trust from being executed into a legal estate or interest, and one that is not in contravention of some prohibition of statute or rule of public policy. There must also be some power of administration other than a mere duty to perform a contract although the contract is for a third-party beneficiary. A declaration of terms is essential, and these must be stated with reasonable certainty in order that the trustee may administer, and that the court, if called upon so to do, may enforce, the trust. (citing Sec. 31, Trusts, Am Jur 2d, pp. 278-279.) Undeniably, all the abovementioned elements are present in the instant case. Petitioners argument that it was never a party to the Partial Compromise Agreement is unavailing, since, upon being furnished a copy of the same, it undoubtedly became aware if it was not already aware even prior thereto that the parties to said agreement considered petitioner as their trustee in respect of said dollar balance; in short, it is all too evident that petitioner fully grasped the situation and realized that private respondent and REPACOM were constituting petitioner their trustee. Yet, petitioner not only did not manifest any objection thereto, but it instead proceeded to accept its role and responsibility as such trustee by implementing the compromise agreement. Equally as significant, petitioner never committed any act amounting to an unequivocal repudiation of its role as trustee. Petitioners desperate attempt to establish a viable defense by way of its allegation that no fiduciary relationship could have existed because of the joint insureds adversary positions with respect to the insurance proceeds deserves scant consideration. The so-called adversary positions of the parties had no effect on the trust as it never changed the position of the parties in relation to each other and to the dollar proceeds, i.e., petitioner held it for private respondent and REPACOM, which were the real owners of the money.

Second Issue: The Significance Of The Loss and Subrogation Receipt The respondent Court committed no reversible error in its appreciation of the Loss and Subrogation Receipt, which reads in relevant part: x x x we have unconditionally and absolutely accepted full payment from Rizal Surety & Insurance Company, as insurer, of its total liabilities. In consideration of this full payment, we hereby assign, cede and transfer to said Insurance Company any and all claims, interests and demands of whatever nature against any person, entity, corporation or property arising from or otherwise connected with such total loss of the insured property and we hereby acknowledge that the said Company is subrogated in our place and stead to any and all claims, interests and demands that we have, or in the future might have, against all persons, entities, corporations or properties to the full extent of the abovementioned payment received by us. Said receipt absolved the petitioner only from all claims arising from the insurance policies it issued. It did not exculpate petitioner from its liability for the accrued interest as this obligation arose in connection with its role as trustee and its unjustified refusal to deposit the money in an interest-bearing account as required. The respondent Court correctly held that: RIZAL gives undue importance to the Loss and Subrogation Receipt (Exh. U-1) signed by TRANSOCEAN and REPACOM in an effort to absolve itself from liability. The execution of the said Loss and Subrogation Receipt did not preclude the joint insured from claiming the accrued interest. TRANSOCEAN and REPACOM released RIZAL only from its (RIZAL) liabilities arising from the insurance policies issued, that is, in regard to the principal amount representing the insurance proceeds but not to the accrued interest which stemmed from its refusal to deposit the disputed dollar portion in violation of its duty as a trustee to deposit the same under the terms most advantageous to TRANSOCEAN and REPACOM. Corollary thereto, RIZAL was subrogated to the rights which stemmed from the insurance contract but not to those which arise from the trust relationship; otherwise, that would lead to an absurd situation. At most, the signing of the Loss and Subrogation Receipt was a valid pre-condition before petitioner could be compelled to turn over the whole amount of the insurance proceeds to the two insured. Thus, in response to the letter of private respondent and REPACOM to petitioner dated April 21, 1975, petitioner reiterated its offer to pay the balance of the insurance claim provided the former sign the Loss and Subrogation Receipt. But this was done only on October 10, 1977.

Third Issue: Liability of Petitioner For Accrued Interest Petitioner argues, rather unconvincingly, that it was of the belief that, as it was never the trustee for the insured and thus was under no obligation to execute the instruction to transfer the dollar balance into an interest-bearing account, therefore, it was also not obligated and hence it did not bother to advise private respondent and REPACOM that it would neither remit the dollar balance to the insureds bank of choice as specifically instructed, nor just deposit the same in an interest-bearing account at Prudential Bank. Petitioners other contention that it was not bound by the CB order, despite its having

been informed thereof and copy furnished by private respondent and REPACOM, simply because said order was not directed to it, is even more ridiculous and undeserving of further comment. Originally, petitioner, as shown by its November 25, 1975 letter, only agreed to receive and deposit the money under its name for the joint account of the private respondent and REPACOM in a noninterest bearing account. At that point, as trustee, it could have easily discharged its obligation by simply transferring and paying the dollar balance to private respondent and REPACOM and by so doing, would have dissolved the trust. However, when the trustors instructed petitioner as trustee to deposit the funds in an interest-bearing account, the latter ought, as a matter of ordinary common sense and common decency, to have at least informed the insured that it could not or would not, for whatever reason, carry out said instructions. This is the very least it could have done if indeed it wanted to repudiate its role as trustee or be relieved of its obligations as such trustee at that point. Instead of doing thus, petitioner chose to remain silent. After petitioners receipt of the April 21, 1976 letter of private respondent and REPACOM requesting petitioner to remit the dollar balance to an interest-bearing account, petitioner merely tendered payment of the said dollar balance in exchange for the signed Loss and Subrogation Receipt. This falls far short of the requirement to clearly inform the trustor-beneficiaries of petitioners refusal or inability to comply with said request/instruction. Such silence and inaction in the face of specific written instructions from the trustors-beneficiaries could not but have misled the latter into thinking that the trustee was amenable to and was carrying out their instructions, there being no reason for them to think otherwise. This in turn prevented the trustors-beneficiaries from early on taking action to discharge the unwilling trustee and appointing a new trustee in its place or from otherwise effecting the transfer of the deposit into an interest-bearing account. The result was that the trustorsbeneficiaries, private respondent and REPACOM, suffered prejudice in the form of loss of interest income on the dollar balance. As already mentioned, such prejudice could have been prevented had petitioner acted promptly and in good faith by communicating its real intentions to the trustors. Beyond the foregoing considerations, we must also make mention of the matter of undue enrichment. We agree with private respondent that the dollar balance of US$718,078.20 was certainly a large sum of money. Leaving such an enormous amount in a non-interest bearing bank account for an extended period of time about one year and nine months would undoubtedly have not only prejudiced the owner(s) of the funds, but, equally as true, would have resulted to the immense benefit of Prudential Bank (which happens to be a sister company of the petitioner), which beyond the shadow of a doubt must have earned income thereon by utilizing and relending the same without having to pay any interest cost thereon. However, one looks at it, it is grossly unfair for anyone to earn income on the money of another and still refuse to share any part of that income with the latter. And whether petitioner benefitted directly, or indirectly as by enabling its sister company to earn income on the dollar balance, is immaterial. The fact is that petitioners violation of its duty as trustee was at the expense of private respondent, and for the ultimate benefit of petitioner or its stockholders. This we cannot let pass.

Fourth Issue: Award of Attorneys Fees is Improper Petitioner argues that respondent Court erred in affirming RTCs award of attorneys fees and costs of suit, repeating the oft-heard refrain that it is not sound public policy to place a premium on the right to litigate. It is well settled that attorneys fees should not be awarded in the absence of stipulation except under the instances enumerated in Art. 2208 of the New Civil Code. As held by this Court in Solid Homes, [29] Inc. vs. Court of Appeals: Article 2208 of the Civil Code allows attorneys fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. While judicial discretion is here extant, an

award thereof demands, nevertheless, a factual, legal or equitable justification. The matter cannot and should not be left to speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA 619). In the case at bench, the records do not show enough basis for sustaining the award for attorneys fees and to adjudge its payment by petitioner. x x x Likewise, this Court held in Stronghold Insurance Company, Inc. vs. Court of Appeals
[30]

that:

In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15, 1988, 157 SCRA 57] the Court had occasion to state that [t]he reason for the award of attorneys fees must be stated in the text of the courts decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. x x x The Court finds that the same situation obtains in this case. A perusal of the text of the decisions of the trial court and the appellate Court reveals the absence of any justification for the award of attorneys fees made in the fallo or dispositive portions. Hence, the same should be disallowed and deleted. WHEREFORE, the petition is DENIED, and the assailed Decision is hereby AFFIRMED with the sole modification that the award of attorneys fees in favor of private respondent is DELETED. SO ORDERED. Marsh Thomson v. CA This is a petition for review on certiorari seeking the reversal of the Decision of the Court of Appeals on May 19, 1994, disposing as follows: WHEREFORE, THE DECISION APPEALED FROM IS HEREBY SET ASIDE. ANOTHER JUDGMENT IS ENTERED ORDERING DEFENDANT-APPELLEE MARSH THOMSON TO TRANSFER THE SAID MPC [Manila Polo Club] SHARE TO THE NOMINEE OF THE APPELLANT. The facts of the case are: Petitioner Marsh Thomson (Thomson) was the Executive Vice-President and, later on, the Management Consultant of private respondent, the American Chamber of Commerce of the Philippines, Inc. (AmCham) for over ten years, 1979-1989. While petitioner was still working with private respondent, his superior, A. Lewis Burridge, retired as AmChams President. Before Burridge decided to return to his home country, he wanted to transfer his proprietary share in the Manila Polo Club (MPC) to petitioner. However, through the intercession of Burridge, private respondent paid for the share but had it listed in petitioners name. This was made clear in an employment advice dated January 13, 1986, wherein petitioner was informed by private respondent as follows: xxx xxx xxx
[1]

11. If you so desire, the Chamber is willing to acquire for your use a membership in the Manila Polo Club. The timing of such acquisition shall be subject to the discretion of the Board based on the Chambers financial position. All dues and other charges relating to such membership shall be for your personal account. If the membership is acquired in your name, you would execute such documents as necessary to acknowledge beneficial ownership thereof by the [2] Chamber.

xxx

xxx

xxx

On April 25, 1986, Burridge transferred said proprietary share to petitioner, as confirmed in a [3] letter of notification to the Manila Polo Club. Upon his admission as a new member of the MPC, petitioner paid the transfer fee of P40,000.00 from his own funds; but private respondent subsequently reimbursed this amount. On November 19, 1986, MPC issued Proprietary Membership Certificate Number 3398 in favor of petitioner. But petitioner, however, failed to execute a document recognizing private respondents beneficial ownership over said share. Following AmChams policy and practice, there was a yearly renewal of employment contract between the petitioner and private respondent. Separate letters of employment advice dated October 1, [4] [5] [6] 1986, as well March 4, 1988 and January 7, 1989, mentioned the MPC share. But petitioner never acknowledged that private respondent is the beneficial owner of the share as requested in follow-up requests, particularly one dated March 4, 1988 as follows: Dear Marsh: x x x xxx xxx

All other provisions of your compensation/benefit package will remain the same and are summarized as follows: xxx xxx xxx

9) The Manila Polo Club membership provided by the Chamber for you and your family will continue on the same basis, to wit: all dues and other charges relating to such membership shall be for your personal account and, if you have not already done so, you will execute such documents as are necessary to acknowledge that the Chamber is the beneficial owner [7] of your membership in the Club. When petitioners contract of employment was up for renewal in 1989, he notified private respondent that he would no longer be available as Executive Vice President after September 30, 1989. Still, the private respondent asked the petitioner to stay on for another six (6) months. Petitioner indicated his acceptance of the consultancy arrangement with a counter-proposal in his letter dated October 8, 1989, among others as follows: 11.) Retention of the Polo Club share, subject to my reimbursing the purchase price to the [8] Chamber, or one hundred ten thousand pesos (P110,000.00). Private respondent rejected petitioners counter-proposal. Pending the negotiation for the consultancy arrangement, private respondent executed on [9] September 29, 1989 a Release and Quitclaim, stating that AMCHAM, its directors, officers and assigns, employees and/or representatives do hereby release, waive, abandon and discharge J. MARSH THOMSON from any and all existing claims that the AMCHAM, its directors, officers and assigns, [10] employees and/or representatives may have against J. MARSH THOMSON. The quitclaim, expressed in general terms, did not mention specifically the MPC share. On April 5, 1990, private respondent, through counsel sent a letter to the petitioner demanding the [11] return and delivery of the MPC share which it (AmCham) owns and placed in your (Thomsons) name.

Failing to get a favorable response, private respondent filed on May 15, 1990, a complaint against petitioner praying, inter alia, that the Makati Regional Trial Court render judgment ordering Thomson to [12] return the Manila Polo Club share to the plaintiff and transfer said share to the nominee of plaintiff. On February 28, 1992, the trial court promulgated its decision, The foregoing considered judgment is rendered as follows: 1.) The ownership of the contested Manila Polo Club share is adjudicated in favor of defendant Marsh Thomson; and; 2.) Defendant shall pay plaintiff the sum of P300,000.00 Because both parties thru their respective faults have somehow contributed to the birth of this case, each [14] shall bear the incidental expenses incurred. In said decision, the trial court awarded the MPC share to defendant (petitioner now) on the ground that the Articles of Incorporation and By-laws of Manila Polo Club prohibit artificial persons, such as corporations, to be club members, ratiocinating in this manner: An assessment of the evidence adduced by both parties at the trial will show clearly that it was the intention of the parties that a membership to Manila Polo Club was to be secured by plaintiff [herein private respondent] for defendants [herein petitioner] use. The latter was to execute the necessary documents to acknowledge ownership of the Polo membership in favor of plaintiff. (Exh. C par 9) However, when the parties parted ways in disagreement and with some degree of bitterness, the defendant had second thoughts and decided to keep the membership for himself. This is evident from the exhibits (E & G) where defendant asked that he retained the Polo Club membership upon reimbursement of its purchase price; and where he showed his profound disappointment, both at the previous Boards unfair action, and at what I consider to be harsh terms, after my long years of dedication to the Chambers interest. xxx xxx xxx
[13]

thus:

Notwithstanding all these evidence in favor of plaintiff, however, defendant may not be declared the owner of the contested membership nor be compelled to execute documents transferring the Polo Membership to plaintiff or the latters nominee for the reason that this is prohibited by Polo Clubs Articles & By-Laws. x x x It is for the foregoing reasons that the Court rules that the ownership of the questioned Polo Club [15] membership be retained by defendant. x x x. Not satisfied with the trial courts decision, private respondent appealed to the Court of Appeals. On May 19, 1994, the Court of Appeals (Former Special Sixth Division) promulgated its decision in said CA-G.R. CV No. 38417, reversing the trial courts judgment and ordered herein petitioner to transfer the MPC share to the nominee of private respondent, reasoning thus: xxx xxx xxx
[16]

The significant fact in the instant case is that the appellant [herein private respondent] purchased the MPC share for the use of the appellee [herein petitioner] and the latter expressly conformed thereto as shown in Exhibits A-1, B, B-1, C, C-1, D, D-1. By such express conformity of the appellee, the former was bound to recognize the appellant as the owner of the said share for a contract has the force of law

between the parties. (Alim vs. CA, 200 SCRA 450; Sasuhura Company, Inc., Ltd. vs. IAC, 205 SCRA 632) Aside from the foregoing, the appellee conceded the true ownership of the said share to the appellant when (1) he offered to buy the MPC share from the appellant (Exhs. E and E-1) upon the termination of his employment; (2) he obliged himself to return the MPC share after his six month consultancy contract had elapsed, unless its return was earlier requested in writing (Exh. I); and (3) on cross-examination, he admitted that the proprietary share listed as one of the assets of the appellant corporation in its 1988 Corporate Income Tax Return, which he signed as the latters Executive Vice President (prior to its filing), refers to the Manila Polo Club share (tsn., pp. 19-20, August 30, 1991). x x [17] x On 16 June 1994, petitioner filed a motion for reconsideration of said decision. By [19] resolution promulgated on August 4, 1994, the Court of Appeals denied the motion for reconsideration. In this petition for review, petitioner alleges the following errors of public respondent as grounds for our review: I. The respondent Court of Appeals erred in setting aside the Decision dated 28 February 1992 of the Regional Trial Court, NCJR, Branch 65, Makati, Metro Manila, in its Civil Case No. 901286, and in not confirming petitioners ownership over the MPC membership share. II. The respondent Court of Appeals erred in ruling that the Quitclaim executed by AmCham in favor of petitioner on September 29, 1989 was superseded by the contractual agreement entered into by the parties on October 13, 1989 wherein again the appellee acknowledged that the appellant owned the MPC share, there being absolutely no evidence to support such a conclusion and/or such inference is manifestly mistaken. III. The respondent Court of Appeals erred in rendering judgment ordering petitioner to transfer the contested MPC share to a nominee of respondent AmCham notwithstanding that: (a) AmCham has no standing in the Manila Polo Club (MPC), and being an artificial person, it is precluded under MPCs Articles of Incorporation and governing rules and regulations from owning a proprietary share or from becoming a member thereof; and (b) even under AmChams Articles of Incorporation, and the purposes for which it is dedicated, becoming a stockholder or shareholder in other corporations is not one of the express or [20] implied powers fixed in AmChams said corporate franchis e. As posited above, these assigned errors show the disputed matters herein are mainly factual. As such they are best left to the trial and appellate courts disposition. And this Court could have dismissed the petition outright, were it not for the opposite results reached by the courts below. Moreover, for the enhanced appreciation of the jural relationship between the parties involving trust, this Court has given due course to the petition, which we now decide. After carefully considering the pleadings on record, we find there are two main issues to be resolved: (1) Did respondent court err in holding that private respondent is the beneficial owner of the disputed share? (2) Did the respondent court err in ordering petitioner to transfer said share to private respondents nominee? Petitioner claims ownership of the MPC share, asserting that he merely incurred a debt to respondent when the latter advanced the funds for the purchase of the share. On the other hand, private respondent asserts beneficial ownership whereby petitioner only holds the share in his name, but the beneficial title belongs to private respondent. To resolve the first issue, we must clearly distinguish a debt from a trust. The beneficiary of a trust has beneficial interest in the trust property, while a creditor has merely a personal claim against the debtor. In trust, there is a fiduciary relation between a trustee and a beneficiary, but there is no such relation between a debtor and creditor. While a debt implies merely an
[18]

obligation to pay a certain sum of money, a trust refers to a duty to deal with a specific property for the benefit of another. If a creditor-debtor relationship exists, but not a fiduciary relationship between the parties, there is no express trust. However, it is understood that when the purported trustee of funds is entitled to use them as his or her own (and commingle them with his or her own money), a debtor[21] creditor relationship exists, not a trust. In the present case, as the Executive Vice-President of AmCham, petitioner occupied a fiduciary position in the business of Amcham. AmCham released the funds to acquire a share in the Club for the use of petitioner but obliged him to execute such document as necessary to acknowledge beneficial [22] ownership thereof by the Chamber. A trust relationship is, therefore, manifestly indicated. Moreover, petitioner failed to present evidence to support his allegation of being merely a debtor when the private respondent paid the purchase price of the MPC share. Applicable here is the rule that a trust arises in favor of one who pays the purchase money of property in the name of another, because of [23] the presumption that he who pays for a thing intends a beneficial interest therein for himself. Although petitioner initiated the acquisition of the share, evidence on record shows that private respondent acquired said share with its funds. Petitioner did not pay for said share, although he later wanted to, but according to his own terms, particularly the price thereof. Private respondents evident purpose in acquiring the share was to provide additional incentive and perks to its chosen executive, the petitioner himself. Such intention was repeated in the yearly employment advice prepared by AmCham for petitioners concurrence. In the cited employment advice, dated March 4, 1988, private respondent once again, asked the petitioner to execute proof to recognize the trust agreement in writing: The Manila Polo membership provided by the Chamber for you and your family will continue on the same basis, to wit: all dues and other charges relating to such membership shall be for your personal account and, if you have not already done so, you will execute such documents as are necessary to [24] acknowledge that the Chamber is the beneficial owner of your membership in the Club. Petitioner voluntarily affixed his signature to conform with the employment advice, including his obligation stated therein -- for him to execute the necessary document to recognize his employer as the beneficial owner of the MPC share. Now, we cannot hear him claiming otherwise, in derogation of said undertaking, without legal and equitable justification. For private respondents intention to hold on to its beneficial ownership is not only presumed; it was expressed in writing at the very outset. Although the share was placed in the name of petitioner, his title is limited to the usufruct, that is, to enjoy the facilities and privileges of such membership in the club appertaining to the share. Such arrangement reflects a trust relationship governed by law and equity. While private respondent paid the purchase price for the share, petitioner was given legal title thereto. Thus, a resulting trust is presumed as a matter of law. The burden then shifted to the transferee to show otherwise, that it was just a loan. Such resulting trust could have been rebutted by proof of a contrary intention by a showing that, in fact, no trust was intended. Petitioner could have negated the trust agreement by contrary, consistent and convincing evidence on rebuttal. However, on the witness stand, petitioner failed to do so persuasively. On cross-examination, the petitioner testified as follows: ATTY. AQUINO (continuing) Q. Okay, let me go to the cash advance that you mentioned Mr. Witness, is there any document proving that you claimed cash advance signed by an officer of the Chamber? A. I believe the best evidence is the check.

Q. Is there any document? COURT Other than the Check? MR. THOMSON Nothing more. ATTY. AQUINO Is there any application filed in the Chamber to avail of this cash advance? A. Verbal only. Q. Nothing written, and can you tell to this Honorable Court what are the stipulations or conditions, or terms of this transaction of securing this cash advance or loan? xxx COURT How are you going to repay the cash advance? MR THOMSON The cash advance, we never stipulate when I have to repay it, but I presume that I would, when [25] able to repay the money. In deciding whether the property was wrongfully appropriated or retained and what the intent of the parties was at the time of the conveyance, the court must rely upon its impression of the credibility [26] of the witnesses. Intent is a question of fact, the determination of which is not reviewable unless the [27] conclusion drawn by the trier is one which could not reasonably be drawn. Petitioners denial is not adequate to rebut the trust. Time and again, we have ruled that denials, if unsubstantiated by clear and [28] convincing evidence, are deemed negative and self-serving evidence, unworthy of credence. The trust between the parties having been established, petitioner advanced an alternative defense that the private respondent waived the beneficial ownership of MPC share by issuing the Release and Quitclaim in his favor. This argument is less than persuasive. The quitclaim executed by private respondent does not clearly show the intent to include therein the ownership over the MPC share. Private respondent even asserts that at the time the Release and Quitclaim was executed on September 29, 1989, the ownership of the MPC share was not controversial nor contested. Settled is the rule that a waiver to be valid and effective must, in the first place, be couched in clear and unequivocal terms which leave no doubt as to [29] the intention of a party to give up a right or benefit which legally pertains to him. A waiver may not be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon [30] a right vested in such person. If we apply the standard rule that waiver must be cast in clear and unequivocal terms, then clearly the general terms of the cited release and quitclaim indicates merely a clearance from general accountability, not specifically a waiver of AmChams beneficial ownership of the disputed shares. Additionally, the intention to waive a right or advantage must be shown clearly and convincingly, and when the only proof of intention rests in what a party does, his act should be so manifestly consistent with, and indicative of, an intent to voluntarily relinquish the particular right or advantage that no other [31] reasonable explanation of his conduct is possible. Considering the terms of the quitclaim executed by the President of private respondent, the tenor of the document does not lead to the purported conclusion that he intended to renounce private respondents beneficial title over its share in the Manila xxx xxx

Polo Club. We, therefore, find no reversible error in the respondent Courts holding that private respondent, AmCham, is the beneficial owner of the share in dispute. Turning now to the second issue, the petitioner contends that the Articles of Incorporation and Bylaws of Manila Polo Club prohibit corporate membership. However, private respondent does not insist nor intend to transfer the club membership in its name but rather to its designated nominee. For as properly ruled by the Court of Appeals: The matter prayed for does not involve the transfer of said share to the appellant, an artificial person. The transfer sought is to the appellants nominee. Even if the MPC By-Laws and Articles prohibit corporate membership, there would be no violation of said prohibition for the appellants nominee to whom the said share is sought to be transferred would certainly be a natural person. x x x As to whether or not the transfer of said share to the appellants nominee would be disapproved by the MPC, is a matter that should be raised at the proper time, which is only if such transfer is disapproved by [32] the MPC. The Manila Polo Club does not necessarily prohibit the transfer of proprietary shares by its members. The Club only restricts membership to deserving applicants in accordance with its rules, when the amended Articles of Incorporation states that: No transfer shall be valid except between the parties, and shall be registered in the Membership Book unless made in accordance with these Articles and the [33] By-Laws. Thus, as between parties herein, there is no question that a transfer is feasible. Moreover, authority granted to a corporation to regulate the transfer of its stock does not empower it to restrict the right of a stockholder to transfer his shares, but merely authorizes the adoption of regulations as to the [34] formalities and procedure to be followed in effecting transfer. In this case, the petitioner was the nominee of the private respondent to hold the share and enjoy the privileges of the club. But upon the expiration of petitioners employment as officer and consultant of AmCham, the incentives that go with the position, including use of the MPC share, also ceased to exist. It now behooves petitioner to surrender said share to private respondents next nominee, another natural person. Obviously this arrangement of trust and confidence cannot be defeated by the petitioners citation of the MPC rules to shield his untenable position, without doing violence to basic tenets of justice and fair dealing. However, we still have to ascertain whether the rights of herein parties to the trust still subsist. It has been held that so long as there has been no denial or repudiation of the trust, the possession of the trustee of an express and continuing trust is presumed to be that of the beneficiary, and the statute of [35] limitations does not run between them. With regard to a constructive or a resulting trust, the statute of limitations does not begin to run until the trustee clearly repudiates or disavows the trust and such [36] disavowal is brought home to the other party, cestui que trust. The statute of limitations runs generally from the time when the act was done by which the party became chargeable as a trustee by [37] operation of law or when the beneficiary knew that he had a cause of action, in the absence of fraud or concealment. Noteworthy in the instant case, there was no declared or explicit repudiation of the trust existing between the parties. Such repudiation could only be inferred as evident when the petitioner showed his intent to appropriate the MPC share for himself. Specifically, this happened when he requested to retain the MPC share upon his reimbursing the purchase price of P110,000, a request denied promptly by private respondent. Eventually, petitioner refused to surrender the share despite the written demand of private respondent. This act could then be construed as repudiation of the trust. The statute of limitation could start to set in at this point in time. But private respondent took immediate positive action. Thus, on May 15, 1990, private respondent filed an action to recover the MPC share. Between the time of implicit repudiation of the trust on October 9, 1989, as evidenced by petitioners letter of said date, and private respondents institution of the action to recover the MPC share on May 15, 1990, only about seven

months had lapsed. Our laws on the matter provide that actions to recover movables shall prescribe eight [38] years from the time the possession thereof is lost, unless the possessor has acquired the ownership by [39] prescription for a less period of four years if in good faith. Since the private respondent filed the necessary action on time and the defense of good faith is not available to the petitioner, there is no basis for any purported claim of prescription, after repudiation of the trust, which will entitle petitioner to ownership of the disputed share. As correctly held by the respondent court, petitioner has the obligation to transfer now said share to the nominee of private respondent. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals of May 19, 1994, is AFFIRMED. COSTS against petitioner. SO ORDERED. Rosario v. CA In this petition for review on certiorari, petitioners Spouses Jose and Herminia Rosario seek a [1] reversal of the decision dated June 14, 1996 of the Court of Appeals in CA-G.R. CV No.-36311 entitled Spouses Jose C. Rosario and Herminia L. Rosario vs. Lourdes L. Villahermosa, et al . which reversed the decision of the Regional Trial Court of Cebu in Civil Case No. R-20861. On August 25, 1981, Spouses Jose C. Rosario and Herminia Lariosa-Rosario (petitioners herein) filed an action for legal redemption with damages and attorneys fees against Lourdes, Aida, Rodulfo, Natividad, and Jesus, all surnamed Villahermosa, before the Regional Trial Court of Cebu, Cebu [2] City , alleging that they are husband and wife; that Herminia is the registered owner of one-half (1/2) undivided share of a parcel of land designated as Lot No. 77-A of the subdivision plan (LRC) Psd 35298, being a portion of Lot 77 of the Talisay-Minglanilla Estate, with Filomena Lariosa, single, as the owner of the other one-half (1/2) share, as shown by Transfer Certificate of Title No. 12326 of the Registry of Deed of Cebu Province; that sometime in April 1965, as Filomena needed funds for the construction of her house, she obtained a loan from the Government Service Insurance System (GSIS) in the amount of Seven Thousand Pesos (P7,000.00) and to guarantee the payment thereof, the above-mentioned lot was mortgaged with the GSIS; that since Herminia is a co-owner thereof, the latter became a co-signer of the promissory note and other documents pertinent to said loan; that when Filomena died on October 9, 1976, she had not completely paid her GSIS loan and since Herminia feared that the mortgage might be foreclosed to the prejudice of her undivided share, she paid the balance of Filomenas GSIS loan in the total sum of P848.00 thus obtaining the release of the mortgage and the certificate of title; that believing that she is the only heir of Filomena, considering that their other sister, Paulina Lariosa Villahermosa and mother of the defendants, had predeceased Filomena, Herminia began to possess the other half of the subject property and the house erected thereon in 1976 until the defendants disturbed her peaceful possession by claiming the undivided one-half of the property on the basis of a deed of sale dated July 28, 1976 allegedly executed by Filomena in favor of their father, Emilio Villahermosa, selling the subject lot 77-A for a consideration of THREE HUNDRED EIGHTY PESOS (P380.00); that plaintiffs offered the defendants what their father might have paid if they could prove that there was such a sale made by Filomena Lariosa to Emilio Villahermosa; however, the defendants stubbornly insisted that they would take possession of the property, thus, the plaintiffs sought the aid of the barangay for an amicable settlement and offered to redeem the portion of the subject lot, but the settlement failed; hence plaintiffs deposited the amount of P380.00 with the trial court but the defendants, through their lawyer, refused to accept the amount deposited insisting that their father had bought the entire lot from Filomena Lariosa. Defendants (private respondents herein) filed their answer denying the material allegations of the complaint and interposing the following affirmative defenses: that the complaint states no cause of action; that there exists an express or implied trust between plaintiffs and Filomena and the latter with

the defendants; that the subject lot 77-A was originally a part of lot 77 which belonged to defendan ts deceased parents, Paulina L. Villahermosa, married to Emilio Villahermosa, who purchased the same by installment from the Bureau of Lands, and who after full payment was issued TCT No. 1258 on February 28, 1950; that sometime in 1950, through the intercession of Maxima Lariosa, (the mother of Filomena, Paulina and petitioner Herminia and grandmother of the defendants) a request was made that Filomena be allowed to occupy of lot No. 77 as her place of residence for a consideration of P380.00, subject to the condition that the said lot would be held in trust by Filomena to be returned to the Villahermosas before her death, to which request Spouses Villahermosas agreed; thus Filomena was allowed to use the portion of Lot No. 77 as her residence; however no formal deed was actually executed, although the sum of P380.00 was actually received by the Villahermosas; that Paulina Lariosa Villahermosa (defendants mother) died on February 12, 1963 and sometime in the early part of 1964, Filomena wanted to demolish the old house standing on Lot No. 77 and build a new house on the site with GSIS funding, but since the GSIS required that the land on which the house to be erected should be mortgaged as collateral, Filomena requested the heirs of her sister Paulina to formalize the sale of one-half of the property; that acknowledging the arrangement that the lot would be held in trust by Filomena to be returned to the Villahermosas before her death, Emilio and his children (heirs of Paulina Lariosa) executed a deed of sale over one-half of Lot No. 77, to enable Filomena to comply with the GSIS requirement and accordingly, lot no. 77, which originally contained SEVEN HUNDRED FORTY-FIVE (745) SQUARE METERS, was subdivided into Lot 77-A with 372 square meters, which was transferred to Filomena Lariosa, and Lot 77-B with 373 square meters, which was transferred to Rodolfo Villahermosa; that since GSIS further required a co-signer for the loan, Filomena, without any consideration and for the purpose of complying with GSIS requirements, executed a simulated Deed of Sale over an undivided one-half portion of Lot No. 77-A in favor of the plaintiff Herminia Rosario who thereafter co-signed with Filomena the GSIS loan and executed a mortgage over Lot No. 77-A in favor of the GSIS and under such arrangement, the undivided share of the plaintiffs spouses Herminia and Jose Rosario was merely held in trust, all for the benefit of principal borrower and trustor, Filomena, to be returned to the Villahermosas before her death; that out of the GSIS loan, Filomena was able to build a house on Lot No. 77-A and since 1965 Filomena solely exercised ownership over the house and Lot No. 77-A until her death on October 9, 1976 and in compliance with the previous trust arrangement between Filomena and Emilio Villahermosa and his children, Filomena returned the lot and allowed the Villahermosas to buy back the lot for the same amount of P380.00 through a Deed of Sale dated July 28, 1976. After trial, the Regional Trial Court of Cebu, Branch 6, Cebu City rendered its decision on May 27, [3] 1991, the dispositive portion of which reads as follows: WHEREFORE, this Court hereby orders the defendants to accept t he payment of P380.00 for the purchase price of the lot; declares the plaintiff Herminia L. Rosario as the real and absolute owner of the entire of Lot No. 77-A of the Talisay-Minglanilla estate covered by TCT No. 12326; orders the defendants to execute a deed of conveyance transferring their rights over the one-half undivided share of Lot 77-A in favor of plaintiffs Herminia L. Rosario and Jose Rosario and orders the defendants to pay the plaintiffs P2,000.00 as attorneys fees, and P1,000.00 as moral damages. Costs against the defendants. The trial court found that the subject lot (lot no. 77-A) as evidenced by TCT No. 12326, belonged to Filomena Lariosa and Herminia Rosario, each co-owner having a one half (1/2) undivided share; that the validity of this title has not been assailed by the defendants (private respondents herein), although defendants tried to show that the subject lot was only held in trust by Filomena Lariosa in favor of their parents, which argument cannot be deemed a modification of the matters stated in the torrens title; the title cannot be the subject of a collateral attack, and as such the title remains valid and stands as conclusive proof of ownership of the subject lot. The court concluded that since co-ownership between Filomena Lariosa and Herminia Rosario had been established, Filomena could have sold only the undivided portion of the subject lot to Emilio considering that the other undivided portion belonged

to Herminia Rosario, and Herminia as the registered co-owner has the right to exercise legal redemption under Article 1620 of the Civil Code considering that Emilio is a third person, not being one of the registered co-owners. Moreover, Herminia was not furnished a writen notice of such sale nor a copy of the deed of sale; thus Herminias right to exercise legal redemption never began to run and had not yet expired when she tendered payment to the Villahermosas of the redemption price and subsequently consigned the amount in court in 1981. Defendants (private respondents herein) appealed to the respondent court which reversed the lower courts finding; the following is the dispositive portion of the judgment: WHEREFORE, premises considered, the judgment appealed from is REVERSED and SET ASIDE, and a new one entered DISMISSING the complaint and recognizing the Deed of Sale dated July 28,1976 as [4] valid and subsisting. Costs against the plaintiffs-appellees. Petitioners have appealed to this court raising the following issues: Whether or not respondents and their late father are strangers within the contemplation of Article 1620 of the Civil Code. Whether or not an implied trust under Article 1453 of the Civil Code existed between the late Filomena Lariosa in favor of the respondents and their late father. Whether or not plaintiffs, particularly plaintiff Herminia Rosario, complied with the thirty (30) day period provided under Article 1623 of the Civil Code. The basic question that needs to be addressed is (1) whether there is an implied trust that existed between Emilio Villahermosa and Filomena Lariosa over the subject property, and (2) whether an implied trust also existed between Filomena Lariosa and petitioner Herminia Rosario for the benefit of the Villahermosas. It is well-settled that the jurisdiction of this court in cases brought to it from the Court of Appeals by way of petition for review under Rule 45, is limited to reviewing or revising errors of law imputed to [5] it, its findings of fact being conclusive as a matter of general principle. However, since in the instant case there is a conflict between the factual findings of the trial court and the respondent court, we have [6] to rule on such factual issue as an exception to the general rule. Petitioners contend that there was no implied trust between Filomena Lariosa and Emilio Villahermosa and that petitioner Herminia Rosario had no way of knowing if there was any agreement for Filomena to return the subject property to Emilio and could not have refuted the execution and contents of the Deed of Sale dated July 28, 1976 executed by Filomena selling back the subject property to Emilio since she had no way of verifying whether the document was authentic and true from an independent source other than the Villahermosas; that notwithstanding the fact that Herminia did not question the execution of the controverted deed of sale in any action thus admitting the fact of execution, such admission does not include the truth and veracity of the contents of said document since the only fact which can be said as admitted for the purpose of exercising the right of redemption was the conveyance of the property but not extraneous matters such as the supposed reason for the sale, considering that both parties to the alleged Deed of Sale were both deceased at the time of the trial; that there are circumstances appearing on record which rendered the Deed of Sale questionable such as (1) the proximity of the alleged date of execution of the deed of sale with that of the death of Filomena on October 9, 1976 and the admission made by respondent Lourdes Villahermosa that Filomena was under the doctors care for several months, and (2) Emilio was only forced to present their deed of sale to Herminia when the latter presented her title over the property, thus indicating that said conveyance was tainted with irregularity; when Herminia Rosario acquired the 1/2 interest on the

subject lot and the title was made in her and Filomenas names, petitioner Herminia was never aware of the alleged implied trust between Filomena and Emilio Villahermosa, thus the absolute ownership over the subject property was reposed only in the registered owners to the exclusion of any other person including Emilio Villahermosa. Hence Emilio would be considered as a third person so that even if Emilio Villahermosa and private respondents are co-heirs and co-owners of the other properties left behind by Filomena Lariosa, it will not affect the fact that neither Emilio nor the private respondents are registered co-owners of lot 77-A and Herminia can exercise her right of legal redemption. Finally, since petitioners were never given any written notice of the sale of Filomena to Emilio as required under Article 1623 of the Civil Code, the 30-day period within which petitioners should exercise their right of legal redemption never commenced to run so that when petitioner Herminia commenced this action with the trial court, her right to legal redemption still subsists. In their comment, private respondents allege that the grounds relied upon by petitioner in this petition for review which are (1) that Emilio Villahermosa is not a third party contemplated under Art. 1620 and (2) that petitioner Herminia Rosario exercised her right of redemption within the 30-day reglementary period, are all moot and academic in view of the proven fact that trust was fully established and accomplished when Filomena, before her death, returned the subject lot to Emilio Villahermosa, hence redemption is not applicable. Even assuming redemption is available, the same is already moot and academic because the alleged redemption was made only on May 12, 1981, 5 years from the time petitioner had actual knowledge of the sale of the subject lot to Emilio Villahermosa who had already died on December 24, 1980, and redemption is thus unavailing. It is contended that the right of redemption must be exercised by the redemptioner during the lifetime of the seller (Filomena Lariosa) and buyer (Emilio Villahermosa, Sr.), and that private respondents ownership of the subject land is not by sale but by succession, as they are the legitimate children of the deceased Emilio Villahermosa, Sr., hence not subject to any redemption right; assuming redemption is proper, the written notice required under Article 1623 was complied with because petitioner Herminia admitted during the trial that she learned for the first time in 1977 of the existence of the deed of sale, and yet Herminia allowed four (4) years to lapse before she commenced the present action for legal redemption. Finally, private respondents contend that they are not parties to the documents hence the wrong parties are being sued. Petitioner filed their reply contending that private respondents argument that petitioners right of redemption over the subject lot was non-existent and was exercised on the wrong parties cannot be valid because private respondents as heirs of Emilio Villahermosa acquired only such rights as the said predecessor had over the subject property which in this case is subject to petitioners right to re deem the property; that petitioners were never furnished a written notice of the sale by the vendor nor a copy of the Deed of sale nor had they directly participated in the transaction to give them actual knowledge of the sale; thus the 30- day period to redeem did not commence to run at the time this action was filed. Finally, petitioners note that although the decision of the respondent court recognizes the validity of the deed of sale between Filomena Lariosa and Emilio Villahermosa, the same can only pertain to portion of the lot 77-A since petitioner Herminia is the registered co-owner of the other of lot 77-A. We find no merit in this petition. Trust is the legal relationship between one person having an equitable ownership in property and another person owning the legal title to such property, the equitable ownership of the former entitling [7] him to the performance of certain duties and the exercise of certain powers by the latter. Trust [8] relations between parties may either be express or implied. Express trusts are those which are created by the direct and positive acts of the parties, by some writing or deed, or will, or by words [9] evidencing an intention to create a trust. Implied trusts are those which without being express, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as a matter of equity, independently of the particular intention of the

parties. Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or hold [11] the legal right to property which he ought not, in equity and good conscience, to hold. After a review of the evidence on record, we hold that a trust was indeed created between Filomena, Emilio Villahermosa and his children when lot 77-A was transferred in the name of Filomena. Where a lot was taken by a person under an agreement to hold it for, or convey it to another or to the grantor, a resulting or implied trust arises in favor of the person for whose benefit the [12] property was intended . As found by the respondent court: The alleged existence of a TRUST between the parties is allegedly based on the agreement between the defendants predecessor-in-interest, Emilio Villahermosa, on the one hand, and the late Filomena Lariosa on the other, premised on the promise or commitment of the latter to return to the former Lot No. 77-A, title to which was transferred to her upon her request, to enable her to use it for a housing loan with the GSIS. This was testified to by defendant Lourdes Villahermosa, who attested on the following facts: Lot No. 77 was formerly owned by her parents, the late spouses Emilio Villahermosa and Paulina Lariosa Villahermosa, as shown by TCT No. 1258 issued in their names (Exhibit `3) and consisting of 745 square meters. Actually, her grandmother, Maxima Lariosa, had been occupying it and were (sic) the one paying for it with the Bureau of Lands, but she could no longer pay, so she assigned her rights (Exhibit `2) to Paulina (defendants mother). Her grandmother Maxima asked Paulina (defendants mother) to buy the land because she felt insecure while living in it. This is why it was her parents (Paulina and Emilio) who bought the lot after continuing to pay for it to the Bureau of Lands, and had it titled in their names (TSN, pp. 9-10 and 14-15, October 23, 1985). Grandmother Maxima continued to live in the old house located on the said lot. Aunti Filomena lived with her mother (grandmother Maxima) in that old house until she decided to build a new one (TSN, pp. 2224, Ibid.). Grandmother Maxima died in 1958. Mother Paulina died in 1963 (TSN, pp. 7-8, Sept. 19, 1985). Lot No. 77 was subdivided upon request of her late aunt Filomena who wanted to build a house on the lot. To get a loan from the GSIS, it was necessary that the lot should be a guaranty for the loan. So she (Aunt Filomena) asked her father (Emilio) to get (have) part of the lot. Thus, her father called all the defendants, since their mother was already dead, about their a unts request. They (her father, brothers and sisters) all agreed to her aunts request on the condition that when she (Aunt Filomena) no longer needs it, she will return the lot to them ( Ibid., pp. 9-10). And since her brother Rodolfo was also contemplating to build his office/home, the lot was subdivided into Lots 77-A and 77B, thus, A for her aunt and B for her brother. There were two Deeds of Sale executed by them (her father, brothers and sisters), one in favor of their aunt (Exhibit `8 or `L), a nd the other in favor of her brother, Rodolfo (Exhibit `7 or `M). When her Aunt Filomena applied for a GSIS loan, she (Filomena) was just a temporary public school teacher newly transferred from Negros. Thus, she (Filomena) was required to have a co-maker who is a permanent employee of the MECS. It was the plaintiff, Herminia L. Rosario, who volunteered, being a permanent teacher of the Talisay Elementary School and also a member of the GSIS (pp. 10-15, Ibid.). Anyway, before her Aunt Filomena died in October 1976, she returned the lot to her father, by executing a Deed of Sale (Exhibit `9 or `O), where it is explicitly stated: `That in compliance with the VENDORS solemn promise to return or to sell back to the VENDEE Lot No. 77-A (SEVENTY-SEVEN-A), and for and in consideration of the sum of THREE HUNDRED EIGHTY

[10]

PESOS ONLY (P380.00), Philippine Currency, the receipt whereof is hereby acknowledged by the VENDOR, said VENDOR does by these present sells (sic), transfers (sic) and conveys (sic) to the VENDEE herein, his heirs and assigns said RESIDENTIAL LOT NO. 77-A (SEVENTY-SEVEN-A), of the subdivision Plan (LRC) Psd-35298, together with all the improvements thereon, situated in the Poblacion, Municipality of Talisay, Province of Cebu, Philippines, with an area of THREE HUNDRED SEVENTY-TWO (372) SQUARE METERS, more or less, and which lot is more particularly described in Transfer Certificate of Title No. 11614 (ELEVEN THOUSAND SIX HUNDRED FOURTEEN) as follows: x x x The amount of P380.00 is the same amount which was paid by Filomena to her father (Lourdess) in 1965 (TSN, p. 17, September 19, 1985). We find these declarations indicative of an implied trust between Filomena and Emilio, as contemplated in Article 1453 of the Civil Code of the Philippines, to wit: `When property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another or to the grantor, there is an implied trust in favor of the person whose benefit is contemplated. In the instant case, the transfer made to Filomena was with the declared intention to hold the lot for, or to transfer it back to Emilio, as shown by the following circumstances: a) The opening paragraph of the Deed of Sale as quoted above is indicative of the intention of the parties. b) The plaintiffs never contested the authenticity or genuineness of the Deed of Sale (Exhibit `9 or `O). On the contrary, their filing of a case for legal redemption is a recognition of the validity of the transfer made, albeit purportedly subject to legal redemption (which We shall discuss separately). In view thereof, they are deemed to have admitted its due execution as well as the facts stated therein. c) The circumstances narrated by Lourdes Villahermosa were never refuted or controverted by the plaintiffs with any rebuttal evidence. On the contrary, many of the material facts narrated by Lourdes were also testified to by Herminia such as the origins and history of Lot No. 77, the requirements for the GSIS loan, the need for a co-borrower for Filomenas loan, the parties agreement to subdivide Lot No. 77 into two, etc. d) The consideration of P380.00 for the 1964 sale from Emilio to Filomena in 1964 was not increased by any single centavo despite the time difference of twelve (12) years when the lot was resold to the former in 1976, and the glaring fact that the 1964 sale was only for the lot, whereas the 1976 sale includes all the improvements thereon. This is an indication that the deed was really executed in compliance with the promise made by Filomena in 1964 to return or resell the property to the Villahermosas. When Emilio Villahermosa and his children, the respondents herein conveyed Lot No. 77-A in favor of Filomena Lariosa in order to enable the latter build a house thereon with a GSIS loan, an implied if not express trust was created in favor of the original registered owners of the subject lot, Emilio Villahermosa, together with his children, in view of Filomenas declared intention to hold the lot for them and her promise to return it back to Emilio and private respondents; in fact, Filomena, before her death, returned the lot with its improvements by virtue of the Deed of Sale dated July 28, 1976 precisely pursuant to the trust agreed upon; it stated that the sale was in compliance with the vendors solemn promise to return or sell back to the vendee lot No. 77-A.

The next question is whether such trust in favor of Emilio and his heirs (private respondents) is effective or binding upon petitioner Herminia Rosario who is the registered co-owner of the subject Lot No. 77-A pursuant to the deed of sale executed by Filomena in favor of Herminia on December 3, 1964. . We rule in the affirmative. It is petitioners theory that when the title to the subject property was registered solely in the name of Filomena Lariosa in 1964 under TCT No. 11614, there was already a conveyance and transfer of ownership to Filomena from Emilio and private respondents so that when petitioner Herminia acquired the one-half interest over the subject property and registration thereof was made in the names of both Filomena Lariosa and Herminia Rosario, Herminia was not aware of such alleged existing implied trust; hence the absolute ownership over the property was then reposed only in Filomena Lariosa and Herminia Rosario and under Art. 1620, Emilio Villahermosa and any other person would be considered a third person; that when Filomena Lariosa conveyed the property to Emilio Villahermosa in 1976, not being a co-owner, petitioner Herminia has the right to redeem the property. We are not persuaded by petitioners argument. It was established that the subject property was only held by Filomena in trust for Emilio and private respondents. We sustain private respondents allegation that the deed of sale dated December 3, 1964 executed between Filomena Lariosa and Herminia Rosario was merely for the purpose of facilitating and expediting the approval of Filomenas loan with the GSIS for the construction of Filomenas new house on the subject lot, the same being borne out by the evidence. The proven circumstances clearly demonstrated that the Deed of Sale in favor of Herminia was a mere accommodation arrangement, hence an absolutely simulated contract of sale. It was shown that sometime in 1964, Filomena Lariosa wanted to build a new house on the subject lot (lot no. 77-A) by obtaining a loan from the GSIS, however, the GSIS required that the land title should be mortgaged as collateral, thus, Filomena Lariosa requested Emilio Villahermosa and his heirs (private respondents herein) to execute a Deed of Sale transferring lot 77-A in her favor, and the Deed of Sale was executed on June 6, 1964. In addition to the title requirement, the borrowers experience as teacher and her [13] salary were also considered. Since Filomena Lariosa was only a temporary teacher at the time she [14] decided to obtain a loan from the GSIS to finance the construction of her house, Filomena Lariosa executed a Deed of Sale on December 3, 1964 over the portion of subject property in favor of her sister, petitioner Herminia Lariosa Rosario, who was a permanent school teacher, for the price [15] of P100.00. Filomena Lariosa applied for the loan and petitioner Herminia Rosario was made a cosigner on the promissory note and other documents pertinent to Filomenas GSIS loan; Thereafter the loan was approved and the house of Filomena was constructed on the subject lot. These circumstances unmistakably show that the sale of the portion of the subject lot by Filomena Lariosa to Herminia Rosario and the transfer of the title in both the names of Filomena and Herminia was for the purpose of obtaining the GSIS loan. Moreover, undisputed is the fact that the physical possession of both the house and the subject lot remained through the years with Filomena Lariosa until her death on October 9, 1976. Herminia Rosario never exercised her alleged right of a co-ownership over the subject lot, nor did she assume the burden of ownership; Herminia admitted that she never paid the taxes on the [16] subject lot during Filomenas lifetime as this was paid exclusively by Filomena Lariosa. Notably, the new house was constructed on the middle of the subject lot without any objection [17] on the part of petitioners and Herminia Rosario never demanded for a separation or partition of their [18] respective shares despite the fact that Herminia purportedly owns the portion of the subject lot. The execution of the deed of sale dated July 28, 1976 by Filomena Lariosa in favor of Emilio categorically stated that it was in compliance with the vendors solemn promise to return or to sell back the entire lot 77-A with all its improvements thereon to Emilio Villahermosa and Filomena never mentioned the name of petitioner Herminia as her co-owner, thus, confirming that the sale made by Filomena to Herminia was never intended to result in a real transfer of ownership, and the subsequent deed of sale of Filomena to Emilio Villahermosa was an affirmation of such intention.

The cumulative effect of the evidence on record as narrated identified badges of simulation showing that the sale of the portion of the subject lot made by Filomena to Herminia was not intended to have a legal effect between them, said parties having entered into a sale transaction by which they did not intend to be legally bound. As such it is void and is not susceptible of [19] [20] ratification, produces no legal effects, and does not convey property rights nor in any way alter [21] the juridical situation of the parties. Petitioner Herminia and Filomena never became co-owners of the subject land since the sale which transpired between them was only simulated; when Filomena returned or sold back the property to Emilio Villahermosa by virtue of a Deed of Sale dated July 28, [22] 1976 , no right of legal redemption accrued in favor of petitioner Herminia. The right of legal redemption among co-owners presupposes the existence of a co-ownership, which is not present in the instant case. Article 1620 which grants such right to a co-owner applies only when the co-ownership of [23] an undivided thing or right belongs to different person. Co-ownership is the right of common dominion which two or more persons have in a spiritual part of thing which is not physically [24] divided. Petitioner had never become a co-owner of the lot No. 77-A. The fact that the title to the subject lot was issued in 1965 under TCT No. 12326 registered in the names of both Filomena and Herminia Rosario and said to be conclusive as to all matters contained therein, did not operate to vest upon petitioners the ownership over the portion of lot 77 -A considering the above-mentioned circumstances surrounding the issuance of such title. . The torrens system does not create or vest title. It only confirms and records title already existing and vested. It [25] does not protect a usurper from the true owner. It cannot be a shield for the commission of fraud. It does not permit one to enrich himself at the expense of another. Where one does not have any rightful claim over a real property, the torrens system of registration can confirm or record nothing. When petitioner Herminia obtained the registration of the share of the subject lot by virtue of a simulated deed of sale it impressed upon the title a constructive trust in favor of the true party, [26] Filomena Lariosa. The conclusion we reach, finding constuctive trust under Article 1447 of the New Civil Code existing between Filomena and Herminia, rests on the principles of the general law on trust which, through Article 1442 of the Civil Code , have been adopted or incorporated into our civil law, to the extent that such principles are not inconsistent with the Civil Code, other statutes and the Rules of Court. Ecija,
[27]

This Court has ruled in the case of Sumaoang vs. Judge, RTC, Br. XXXI, Guimba, Nueva That:

A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property of which equity, in accordance with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision, takes cognizance. It has been broadly ruled that a breach of confidence, although in business or social relations, rendering an acquisition or retention of property by one person unconscionable against another, raises a constructive trust. And specifically applicable to the case at bar is the doctrine that A constructive trust is substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect of property, which has been acquired by fraud, or where although acquired originally without fraud, it is against equity that it should be retained by the person holding it.

The above principle is not in conflict with the New Civil Code, Codes of Commerce, Rules of court and special laws. And since We are a court of law and of equity, the case at bar must be resolved on the general principles of law on constructive trust which basically rest on equitable considerations in order to satisfy the demands of justice, morality, conscience and fair dealing and thus protect the innocent against fraud. As the respondent court said, It behooves upon the court s to shield fiduciary relations against every manner of chicanery or detestable design cloaked by legal technicalities. Although the citations in the above-mentioned case originated from American jurisprudence, they may well be applied in our jurisdiction. (S)ince the law of trust has been more frequently applied in England and in the United States than it has been in Spain, we may draw freely upon American precedents in determining the effects of trusts, especially so because the trust known to American and English equity jurisprudence are derived from the fidei commissa of the Roman Law and are based [28] entirely upon civil law principles.xxx A constructive trust is created by a court of equity as a means [29] of affording relief. Constructive trust constitutes a remedial device through which preference of [30] self is made subordinate to loyalty to others. In particular, fraud on the part of the person holding or detaining the property at stake is not essential in order that an implied trust may spring into being. In [31] the words of Judge Cardozo, in Beatty vs. Guggenheim Exploration Co. (w)hen property has been acquired in such circumstances t hat the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. Since the sale was a simulated conveyance of real property, the vendee, Herminia, acquired no title thereto and she merely became a trustee of the portion of the subject property for the benefit of its real owner Filomena who held the entire property in trust for the Villahermosas. The beneficiary is entitled to enforce the trust notwithstanding the irrevocability of the torrens title. The torrens [32] system was not intended to foment betrayal in the performance of a trust. WHEREFORE, premises considered, the petition for review is DENIED and the questioned decision of the respondent Court of Appeals is AFFIRMED.. SO ORDERED. Ty vs CA Case Digest THE INTESTATE ESTATE OF ALEXANDER T. TY, represented by the Administratrix, SYLVIA S. Ty, petitioner, VS. COURT OF APPEALS, HON. ILDEFONSO E. GASCON, and ALEJANDRO B. TY, respondents G.R. No. 112872 April 19, 2001 FACTS: Petitioner Sylvia S. Ty was married to Alexander T. Ty, son of private respondent Alejandro b. ty, on January 11, 1981. Alexander died of leukemia on May 19, 1988 and was survived by his wife, petitioner Silvia, and only child, Krizia Katrina. In the settlement of his estate, petitioner was appointed administratrix of her late husbands intestate estate. On November 4, 1992, petitioner filed a motion for leave to sell or mortgage estate property in order to generate funds for the payment of deficiency estate taxes in the sum of P4,714,560.00. Privite respondent Alejandro Ty then filed two complaints for the recovery of the above-mentioned property, praying for the declaration of nullity of the deed of absolute sale of the shares of stock executed by private respondent in favor of the deceased Alexander, praying for the recovery of the pieces of property that were placed in the name of deceased Alexander, they were acquired through privaterespondents money, without any cause or consideration from deceased Alexander.

The motions to dismiss were denied. Petitioner then filed petitions for certiorari in the Courts of Appeals, which were also dismissed for lack of merit. Thus, the present petitions now before the Court. ISSUE: Whether or not an express trust was created by private respondent when he transferred the property to his son. RULING: Private respondent contends that the pieces of property were transferred in the name of the deceased Alexander for the purpose of taking care of the property for him and his siblings. Such transfer having been effected without cause of consideration, a resulting trust was created. WHEREFORE, the petition for certiorari in G.R. No. 112872 is DISMISSED, having failed to show that grave abuse of discretion was committed in declaring that the regional trial court had jurisdiction over the case. The petition for review on certiorari in G.R. 114672 is DENIED, having found no reversible error was committed. G.R. No. 126437 March 6, 2002 JOSUE ARLEGUI vs.HON. COURT OF APPEALS and SPOUSES GIL AND BEATRIZ GENGUYON, YNARES-SANTIAGO, J.: FACTS: Residential Apartment Unit no. 15 was leased for more than 20 years by Serafia Real Estate, Inc. to spouses Gil and Beatriz. In 1984, Alberto Barretto (one of the owners of Serafia) informed the tenants of the apartment bldg. that Serfia and its assets had already been assigned and transferred to A.B. Barretto. The tenants formed an organization called Barretto Apartment Tenant Association to represent them in negotiations with A.B. Barretto Enterprises for the purchase of the apartment units. Josue Arlegui was elected vice president and Mateo Tan Lu as auditor of the association. Genguyons were later surprised to learn that the unit they were leasing had been sold to Mateo Tan Lu. Genguyons continued to occupy the premises and paid rentals. They were then informed that Mateo Tan sold the apartment to Josue Arlegui. Arlegui demanded Genguyons to vacate the premises. ISSUE:

Whether or not a constructive trust existed HELD: The petitioner denies that a constructive trust was created and maintains that there was no fraud committed. He neither received money from the Genguyons, nor was he unjustly enriched. However, the records show that the Genguyons, along with the other tenants and members of the association, contributed money to enable the officers to negotiate with the Barrettos. Besides, constructive trusts do not only arise out of fraud or duress, but also by abuse of confidence, in order to satisfy the demands of justice. The petitioner also argues that the Genguyons failed to prove the existence of an implied or constructive trust. We disagree. There is ample documentary and testimonial evidence to establish the existence of a fiduciary relationship between them, and that petitioners subsequent acts betrayed the trust and confidence reposed on him. It is further argued that no implied trust, as defined under Article 1456 of the New Civil Code, was created because the petitioner did not acquire the subject property through mistake or fraud. Nevertheless, the

absence of fraud or mistake on the part of the petitioner does not prevent the court from ruling that an implied or constructive trust was created nonetheless. A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property of which equity, in accordance with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision, takes cognizance. It has been broadly ruled that a breach of confidence, although in business or social relations, rendering an acquisition or retention of property by one person unconscionable against another, raises a constructive trust. *There was a breach of trust by the officers. SC annulled the sale of the apartment and ordered Arlegui to execute deed of conveyance to Genguyon spouses Sanchez v. CA This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court to annul and set aside the Decision of the Court of Appeals dated 23 May 2001 as well as its Resolution dated 8 January 2002 in CA-G.R. SP No. 59182. Lilia Sanchez, petitioner, constructed a house on a 76-square meter lot owned by her parents-inlaw. The lot was registered under TCT No. 263624 with the following co-owners: Eliseo Sanchez married to Celia Sanchez, Marilyn Sanchez married to Nicanor Montalban, Lilian Sanchez, widow, Nenita [1] Sanchez, single, Susana Sanchez married to Fernando Ramos, and Felipe Sanchez. On 20 February 1995, the lot was registered under TCT No. 289216 in the name of private respondent Virginia Teria by [2] virtue of a Deed of Absolute Sale supposed to have been executed on 23 June 1995 by all six (6) co[3] owners in her favor. Petitioner claimed that she did not affix her signature on the document and subsequently refused to vacate the lot, thus prompting private respondent Virginia Teria to file an action for recovery of possession of the aforesaid lot with the Metropolitan Trial Court (MeTC) of Caloocan City sometime in September 1995, subsequently raffled to Br. 49 of that court. On 12 February 1998, the MeTC-Br. 49 of Caloocan City ruled in favor of private respondent declaring that the sale was valid only to the extent of 5/6 of the lot and the other 1/6 remaining as the property of petitioner, on account of her signature in the Deed of Absolute Sale having been established as a forgery. Petitioner then elevated her appeal to the Regional Trial Court of Caloocan City, subsequently assigned to Br. 120, which ordered the parties to file their respective memoranda of appeal. Counsel for petitioner did not comply with this order, nor even inform her of the developments in her case. Petitioner not having filed any pleading with the RTC of Caloocan City, the trial court affirmed the 27 July 1998 decision of the MeTC. On 4 November 1998, the MeTC issued an order for the issuance of a writ of execution in favor of private respondent Virginia Teria, buyer of the property. On 4 November 1999 or a year later, a Notice to Vacate was served by the sheriff upon petitioner who however refused to heed the Notice. On 28 April 1999 private respondent started demolishing petitioners house without any special permit of demolition from the court.

Due to the demolition of her house which continued until 24 May 1999 petitioner was forced to inhabit the portion of the premises that used to serve as the houses toilet and laundry area. On 29 October 1999 petitioner filed her Petition for Relief from Judgment with the RTC on the ground that she was not bound by the inaction of her counsel who failed to submit petitioners appeal memorandum. However the RTC denied the Petition and the subsequent Motion for Reconsideration. On 14 June 2000 petitioner filed her Petition for Certiorari with the Court of Appeals alleging grave abuse of discretion on the part of the court a quo. On 23 May 2001 the appellate court dismissed the petition for lack of merit. On 18 June 2001 petitioner filed a Motion for Reconsideration but the Court of Appeals denied the motion in its Resolution of 8 January 2002. The only issue in this case is whether the Court of Appeals committed grave abuse of discretion in dismissing the challenged case before it. As a matter of policy, the original jurisdiction of this Court to issue the so-called extraordinary writs should generally be exercised relative to actions or proceedings before the Court of Appeals or before constitutional or other tribunals or agencies the acts of which for some reason or other are not controllable by the Court of Appeals. Where the issuance of the extraordinary writ is also within the competence of the Court of Appeals or the Regional Trial Court, it is either of these courts that the specific action for the procurement of the writ must be presented. However, this Court must be convinced thoroughly that two (2) grounds exist before it gives due course to a certiorari petition under Rule 65: (a) The tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction; and (b) There is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law. Despite the procedural lapses present in this case, we are giving due course to this petition as there are matters that require immediate resolution on the merits to effect substantial justice. The Rules of Court should be liberally construed in order to promote their object of securing a just, [4] speedy and inexpensive disposition of every action or proceeding. The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive determination of the cases before them. Liberal construction of the rules and the [5] pleadings is the controlling principle to effect substantial justice. Litigations should, as much as [6] possible, be decided on their merits and not on mere technicalities. Verily, the negligence of petitioners counsel cannot be deemed as negligence of petitioner herself in the case at bar. A notice to a lawyer who appears to have been unconscionably irresponsible cannot be [7] considered as notice to his client. Under the peculiar circumstances of this case, it appears from the records that counsel was negligent in not adequately protecting his clients interest, which necessarily calls for a liberal construction of the Rules. The rationale for this approach is explained in Ginete v. Court of Appeals [8]

This Court may suspend its own rules or exempt a particular case from its operation where the appellate court failed to obtain jurisdiction over the case owing to appellants failure to perfect an appeal. Hence, with more reason would this Court suspend its own rules in cases where the appellate court has already obtained jurisdiction over the appealed case. This prerogative to relax procedural rules of the most mandatory character in terms of compliance, such as the period to appeal has been invoked and granted in a considerable number of cases x x x x Let it be emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to

frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflect this principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court itself has already declared to be final, as we are now constrained to do in the instant case x x x x The emerging trend in the rulings of this Court is to afford every party litigant the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. Time and again, this Court has consistently held that rules must not be applied rigidly so as not to override substantial justice. Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review by the appellate court of the lower courts findings of fact, the other elements that should be considered are the following: (a) the existence of special or compelling circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be [9] unjustly prejudiced thereby. The suspension of the Rules is warranted in this case since the procedural infirmity was not entirely attributable to the fault or negligence of petitioner. Besides, substantial justice requires that we go into the merits of the case to resolve the present controversy that was brought about by the absence of any partition agreement among the parties who were co-owners of the subject lot in question. Hence, giving due course to the instant petition shall put an end to the dispute on the property held in common. In Peoples Homesite and Housing Corporation v. Tiongco
[10]

we held:

There should be no dispute regarding the doctrine that normally notice to counsel is notice to parties, and that such doctrine has beneficent effects upon the prompt dispensation of justice. Its application to a given case, however, should be looked into and adopted, according to the surrounding circumstances; otherwise, in the courts desire to make a short-cut of the proceedings, it might foster, wittingly or unwittingly, dangerous collusions to the detriment of justice. It would then be easy for one lawyer to sell ones rights down the river, by just alleging that he just forgot every process of the court affecting his clients, because he was so busy. Under this circumstance, one should not insist that a notice to such irresponsible lawyer is also a notice to his clients. Thus, we now look into the merits of the petition. This case overlooks a basic yet significant principle of civil law: co-ownership. Throughout the [11] proceedings from the MeTC to the Court of Appeals, the notion of co-ownership was not sufficiently dealt with. We attempt to address this controversy in the interest of substantial justice. Certiorari should therefore be granted to cure this grave abuse of discretion. Sanchez Roman defines co-ownership as the right of common dominion which two or more [12] persons have in a spiritual part of a thing, not materially or physically divided. Manresa defines it as the manifestation of the private right of ownership, which instead of being exercised by the owner in an exclusive manner over the things subject to it, is exercised by two or more owners and the undivided [13] thing or right to which it refers is one and the same. The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or material indivision, which means that there is a single object which is not materially divided, and which is the element which binds the subjects, and, (c) the recognition of ideal shares, which determines the [14] rights and obligations of the co-owners. In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and attribute. Whether established by law or by agreement of the co-owners, the property or thing held

pro-indiviso is impressed with a fiducial nature so that each co-owner becomes a trustee for the benefit [15] of his co-owners and he may not do any act prejudicial to the interest of his co-owners. Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express trust among the heirs as co-owners of the properties. Co-ownership is a form of trust and every [16] co-owner is a trustee for the others. Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share [17] in the entire land or thing. Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely sell and dispose of it, i.e., his undivided interest. He may validly lease his undivided interest to a [18] third party independently of the other co-owners. But he has no right to sell or alienate a concrete, specific or determinate part of the thing owned in common because his right over the thing is [19] represented by a quota or ideal portion without any physical adjudication. Although assigned an aliquot but abstract part of the property, the metes and bounds of petition ers lot has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be effected to protect her right to her definite share and determine the boundaries of her property. Such partition must be done without prejudice to the rights of private respondent Virginia Teria as buyer of the 5/6 portion of the lot under dispute. WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated 23 May 2001 as well as its Resolution dated 8 January 2002 in CA-G.R. SP No. 59182 is ANNULLED and SET ASIDE. A survey of the questioned lot with TCT No. 289216 (formerly TCT No. 263624) by a duly licensed geodetic engineer and the PARTITION of the aforesaid lot are ORDERED. Let the records of this case be REMANDED to MeTC-Br. 49, Caloocan City to effect the aforementioned survey and partition, as well as segregate the 1/6 portion appertaining to petitioner Lilia Sanchez. The Deed of Absolute Sale by the other co-owners to Virginia Teria shall be RESPECTED insofar as the other undivided 5/6 portion of the property is concerned. SO ORDERED. Tigno v. CA In denying this petition, the Court takes this occasion to apply the principles of implied trust. As an exception to the general rule barring factual reviews in petitions under Rule 45, the Court wades into the transcript of stenographic notes only to find that the Court of Appeals, indeed, correctly overturned the trial courts findings of facts.

The Case Petitioners challenge the Decision of Respondent Court of Appeals in CA-G.R. CV No. 29781 [3] promulgated on October 15, 1992 and its Resolution promulgated on May 5, 1993. The dispositive [4] portion of the assailed Decision reads: WHEREFORE, in view of the foregoing, the decision appealed from is hereby REVERSED and another one ENTERED as follows:
[1] [2]

1. Declaring plaintiff-appellant Eduardo M. Tigno as the true and lawful owner of the lands described in the complaint; 2. Declaring the Deed of Sale executed by defendant-appellee Rodolfo M. Tigno in favor of defendant-appellee spouses Edualino Casipit and Avelina Estrada as null and void and of no effect; and 3. Ordering defendant-appellee Rodolfo M. Tigno to vacate the parcels of land described in the complaint and surrender possession thereof to plaintiff-appellant Eduardo M. Tigno. With costs against defendants-appellees. Petitioners subsequent motion for reconsideration was denied for lack of merit in the assailed [5] Resolution.

The Facts Respondent Court adequately recited the facts of the case as follows:
[6]

The facts from the standpoint of plaintiff-appellants (herein private respondents) evidence are summarized in his brief, to wit: Sometime in January, 1980, Bienvenido Sison, Remedios Sison and the heirs of Isaac Sison, namely: Manuel Sison, Gerardo Sison and Adelaida Sison appointed Dominador Cruz as agent to sell three (3) parcels of land adjoining each other located at Padilla St., Lingayen, Pangasinan (TSN, Sept. 5, 1989, pp. 6-8). These parcels of land belonging to the abovenamed persons are more particularly described as follows: Bienvenido Sison: A parcel of fishpond situated at Padilla Street, Lingayen, Pangasinan, with an area of 3006.67 square meters, more or less, bounded on the North by Padilla Street, on the South by Lots 1105, 1106, 1107, 1108, etc., on the East by alley, and on the West by Alejandro Vinluan and Thomas Caldito; (Exh. B) Heirs of Isaac Sison (i.e. Manuel, Gerardo and Adelaida Sison) A parcel of fishpond, situated at Padilla Street, Lingayen, Pangasinan, with an area of 3006.66 square meters, more or less, bounded on the North by Padilla Street; On the South by Bienvenido Sison, on the East by Alley, and on the West by Mariano Sison; (Exh. A) Remedios Sison A parcel of unirrigated riceland (now fishpond) situated in Poblacion, Lingayen, Pangasinan, containing an area of 3006.66 square meters, more or less, bounded on the North by Padilla Street; on the East by Path; on the South by Dionisio and Domingo Sison; and on the West by Path; (Exh. C) Sometime in April 1980, Rodolfo Tigno learned that the abovedescribed properties were for sale. Accordingly, he approached Cruz and told the latter to offer these parcels of land to his brother, Eduardo Tigno, herein appellant (TSN, Sept. 5, 1989, p. 9).

Pursuant thereto, Cruz and Rodolfo Tigno went to appellants Makati office to convince the latter to buy the properties earlier described. At first, appellant was reluctant, but upon Rodolfo Tignos prodding, appellant was finally convinced to buy them (TSN, Sept. 5, 1989, pp. 9-11). In that meeting between Cruz and appellant at the latters office, it was agreed that each parcel of land would cost Ten Thousand Pesos (P10,000.00) [TSN, Oct. 16, 1989, p. 9]. Having reached an agreement of sale, appellant then instructed Cruz to bring the owners of these parcels of land to his ancestral house at Guilig Street, Lingayen, Pangasinan on May 2, 1980, as he will be there to attend the town fiesta (TSN, Sept. 5, 1989, p. 13). After leaving appellants office, Cruz and Rodolfo Tigno went to Manila City Hall to visit the latters uncle, Epifanio Tigno, who works there. At the Manila City Hall, Cruz and Rodolfo Tigno intimated to Epifanio Tigno that appellant has agreed to buy the 3 parcels of land abovedescribed (TSN, Sept. 5, 1989, p. 19; TSN, Sept. 29, 1989, pp. 8-10). After leaving Manila City Hall, Cruz and Rodolfo Tigno left for Lingayen, Pangasinan (TSN, Sept. 5, 1989, p. 15). On May 2, 1980, Cruz, together with Bienvenido Sison, Manuel Sison, Adelaida Sison and Remedios Sison went to appellants house at Guilig Street, Lingayen, Pangasinan. At around 5:00 o clock in the afternoon, the abovenamed persons and appellant went to Atty. Modesto Manuels house at Defensores West Street, Lingayen, Pangasinan for the preparation of the appropriate deeds of sale (TSN, Sept. 5, 1989, pp. 15-17). At Atty. Manuels house, it was learned that Bienvenido Sison failed to bring the tax declarations relating to his property. Also, Remedios Sison had mortgaged her property to a certain Mr. Tuliao, which mortgage was then existent. Further, Manuel Sison did not have a Special Power of Attorney from his sister in the United States of America to evidence her consent to the sale. In view thereof, no deed of sale was prepared on that day (TSN, Sept. 5, 1989, pp. 17-19). However, despite the fact that no deed of sale was prepared by Atty. Manuel, Remedios Sison, Bienvenido Sison and Manuel Sison asked appellant to pay a fifty percent (50%) downpayment for the properties. The latter acceded to the request and gave Five Thousand Pesos (P5,000.00) each to the 3 abovenamed persons for a total of Fifteen Thousand Pesos (P15,000.00) (TSN, Sept. 5, 1989, pp. 1920). This was witnessed by Cruz and Atty. Manuel. After giving the downpayment, appellant instructed Cruz and Atty. Manuel to place the name of Rodolfo Tigno as vendee in the deeds of sale to be subsequently prepared. This instruction was given to enable Rodolfo Tigno to mortgage these properties at the Philippine National Bank (PNB), Lingayen Branch, for appropriate funds needed for the development of these parcels of land as fishponds (TSN, Sept. 27, 1989, pp. 16 -23). On May 6, 1980, May 12, 1980 and June 12, 1980, the appropriate deeds of sale (Exhs. A, B, C) were finally prepared by Atty. Manuel and signed by Bienvenido Sison, the heirs of Isaac Sison (Manuel, Gerardo and Adelaida Sison), and Remedios Sison, respectively. In all these deeds of sale, Rodolfo Tigno was named as vendee pursuant to the verbal instruction of herein appellant. Cruz, the agent in the sale, signed in these three (3) deeds of sale as a witness (Exhs. A-2, B-1 and C-1). Sometime in the second week of July 1980, Cruz brought and showed these deeds of sale to appellant in his Makati office. After seeing these documents, appellant gave Cruz a Pacific Bank check in the amount of Twenty Six Thousand Pesos (P26,000.00) representing the following: a) P15,000.00 as the balance for the three (3) parcels of land;

b) P6,000.00 representing Cruzs commission as agent; and c) P5,000.00 for capital gains tax, registration and other incidental expense. (TSN, Sept. 5, 1989, pp. 3941). Upon encashment of this check at PNB, Lingayen Branch, Cruz paid Remedios Sison, Manuel Sison and Bienvenido Sison, through Adelaida Sison, the balance due them from appellant (TSN, Sept. 5, 1989, pp. 42-43). On April 29, 1989, Rodolfo Tigno, without the knowledge and consent of appellant, sold to Spouses Edualino Casipit and Avelina Casipit 508.56 square meters of the land previously owned by Bienvenido Sison (Exh. E). At the time of sale, the Casipits were aware that the portion of the land they bought was owned by appellant, not Rodolfo Tigno (TSN, Oct. 16, 1989, pp. 30-31; TSN, Nov. 6, 1989, p. 10). On May 16, 1989, appellant learned that Rodolfo Tigno is negotiating a portion of his land to the Casipits. Accordingly, appellant sent a letter (Exh. D) to the Casipits advising them to desist from the intended sale, not knowing that the sale was already consummated as early as April 29, 1989. A few days thereafter, upon learning that the sale was already consummated, appellant confronted the Casipits and Rodolfo Tigno and asked them to annul the sale, but his request was not heeded (TSN, Oct. 16, 1989, pp. 29-32). (pp. 12-B to 12-j, rollo) On May 24, 1989, the plaintiff filed Civil Case No. 16673 for Reconveyance, Annulment of Document, Recovery of Possession and Damages against Rodolfo M. Tigno and defendant spouses Edualino Casipit and Avelina Estrada. The complaint alleged, among others, that plaintiff purchased the three (3) parcels of land in question so that his brother Rodolfo Tigno, who was then jobless, could have a source of income as a caretaker of the fishponds; that plaintiff and Rodolfo agreed that the latter would secure a loan from the Philippine National Bank at Lingayen using said lands as collateral; that considering the busy schedule of plaintiff, then as executive vice-president of an American firm based in Makati, Metro Manila, it was made to appear in the deeds of sale that Rodolfo M. Tigno was the vendee so that the latter could, as he actually did, secure a loan from the PNB without need of plaintiffs signature and personal presence, the loan proceeds to be used as seed capital for the fishponds; that there being trust and confidence as brothers between plaintiff and defendant, the former instructed the Notary Public, who prepared the Deeds of Sale, to put in said Deeds the name of Rodolfo M. Tigno as vendee. The plaintiff further averred in said Complaint that some time on May 16, 1989, when he was in Lingayen, Pangasinan, he came to know from friends that Rodolfo was negotiating the sale to defendant spouses of a portion of one of the parcels of land; that after requesting in writing the defendant-spouses to desist from buying the land, and after confronting Rodolfo himself, plaintiff found out upon verification with the Register of Deeds of Lingayen, that Rodolfo had already sold on April 29, 1989 said portion of 508.56 square meters to his co-defendant spouses who had previous knowledge that plaintiff, and not Rodolfo Tigno, is the real owner of said lands; that there being a violation of trust and confidence by defendant Rodolfo, plaintiff demanded from said defendants the reconveyance of said lands, the surrender of the possession thereof to him and the cancellation of the Deed of Sale of said portion of 508.56 square meters, but all the demands were unjustifiably refused. In their Answer (pp. 8-11, records), defendants denied the material allegations of the complaint and alleged, by way of special and affirmative defense, that Rodolfo M. Tigno became the absolute and exclusive owner of the parcels of land having purchased the same after complying with all legal requirements for a valid transfer and that in selling a portion thereof to his co-defendants, he was merely

exercising his right to dispose as owner; and that defendant spouses Casipit acquired the portion of 508.56 square meters in good faith and for value, relying upon the validity of the vendors ownership. After trial on the merits, the trial court dismissed the complaint and disposed as follows:
[7] [8]

Wherefore, in the light of the facts and circumstances discussed above, the court hereby renders judgment against the plaintiff and in favor of the defendants. 1. Ordering the dismissal of the plaintiffs complaint for lack of basis in fact a nd in law;

2. Ordering the plaintiff to pay the defendants the sum of three thousand (P3,000.00) pesos as attys fees and further to pay the costs of the proceedings. As earlier stated, Respondent Court reversed the trial court. Hence, this petition for review.

The Issues Petitioners raise the following issues:

[9]

I Evidence of record definitely show that the receipts of payments of Petitioner Rodolfo Tigno for the fishponds in question are authenticated, contrary to the decision of the Court of Appeals II Documents and circumstances substantiate ownership of petitioner Rodolfo Tigno

III No fiduciary relationship existed between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno The main issue is whether the evidence on record proves the existence of an implied trust between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno. In petitions for review under Rule 45, this Court ordinarily passes upon questions of law only. However, in the present case, there is a conflict between the factual findings of the trial court and those of the Respondent Court. Hence, this Court decided to take up and rule on such factual issue, as an exception to the general rule. A corollary question is whether Petitioners Edualino and Evelyn Casipit are purchasers in good faith and for value of a portion of the lots allegedly held in trust and whether they may thus acquire ownership over the said property.

The Courts Ruling The petition has no merit.

First Issue: Was an Implied Trust Created? Implied trusts are those which are deducible by operation of law from the nature of the transaction [10] as matters of equity, independently of the particular intention of the parties. An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of

another. In such a case, the property is held on resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. The trust which results under such circumstances does not arise from a contract or an agreement of the parties, but from the facts and circumstances; that is to say, the trust results because of equity and it arises by implication [11] or operation of law. The species of implied trust raised by private respondent was extensively discussed by the Court, through the learned Mr. Justice Hilario G. Davide, Jr., in Morales, et al. vs. Court of [12] Appeals, et al.: A trust is the legal relationship between one person having an equitable ownership in property and another person owning the legal title to such property, the equitable ownership of the former entitling [13] him to the performance of certain duties and the exercise of certain powers by the latter. The characteristics of a trust are: 1. It is a relationship; 2. it is a relationship of fiduciary character; 3. it is a relationship with respect to property, not one involving merely personal duties; 4. it involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another; and 5. it arises as a result of a manifestation of intention to create the relationship.
[14]

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of [15] the parties, while implied trusts come into being by operation of law, In turn, implied trusts are either resulting or constructive trusts. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good [16] conscience, to hold. A resulting trust is exemplified by Article 1448 of the Civil Code, which reads: Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase [17] money resulting trust. The trust is created in order to effectuate what the law presumes to have been the intention of the parties in the circumstances that the person to whom the land was conveyed holds it [18] as trustee for the person who supplied the purchase money. To give rise to a purchase money resulting trust, it is essential that there be: 1. an 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.

[19]

There are recognized exceptions to the establishment of an implied resulting trust. The first is stated in the last part of Article 1448 itself. Thus, where A pays the purchase money and title is conveyed by absolute deed to As child or to a person to whom A stands in loco parentis and who makes no express promise, a trust does not result, the presumption being that a gift was intended. Another exception is, of course, that in which an actual contrary intention is proved. Also where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who [20] is guilty of the fraud. As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such [21] proof must be clear and satisfactorily show the existence of the trust and its elements. While implied [22] trusts may be proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite [23] declarations. Trustworthy evidence is required because oral evidence can easily be fabricated. In Chiao Liong Tan vs. Court of Appeals, we ruled:
[24]

A certificate of registration of a motor vehicle in ones name indeed creates a strong presumption of ownership. For all practical purposes, the person in whose favor it has been issued is virtually the owner thereof unless proved otherwise. In other words, such presumption is rebuttable by competent proof. The New Civil Code recognizes cases of implied trust other than those enumerated therein. (fn: Art. 1447, New Civil Code) Thus, although no specific provision could be cited to apply to the parties herein, it is undeniable that an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of petitioner although the price thereof was not paid by him but by private respondent. The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a title. A trust, which derives its strength from the confidence one reposes on another especially between brothers, does not lose that character simply because of what appears in a legal document. Even under the Torrens System of land registration, this Court in some instances did away with the irrevocability or indefeasibility of a certificate of title to prevent injustice against the rightful owner of the property. (fn: Bornales v. IAC, G.R. No. 75336, 166 SCRA 524 [1988]; Amerol v. Bagumbayan, G.R. No. L33261, 154 SCRA 403 [1987]; Cardiente v. IAC, G.R. No. 73651, 155 SCRA 689 [1987].) In this petition, petitioners deny that an implied trust was constituted between the brothers Rodolfo [25] and Eduardo. They contend that, contrary to the findings of Respondent Court, their Exhibit 16 and [26] Exhibit 17 were fully authenticated by Dominador Cruz, an instrumental witness. Hence, he should not be allowed to vary the plain content of the two documents indicating that Rodolfo Tigno was the vendee. 16:
[27]

We are not persuaded. Witness Dominador Cruz did not authenticate the genuineness of Exhibit ATTY. BERMUDEZ: As Exhibit 16 dated June 12, 1980 signed by Remedios Sison, is that the document executed by Remedios Sison? ATTY. VIRAY That is only a xerox copy, we object, Your Honor.

ATTY. BERMUDEZ At any rate there was a receipt, is this the receipt? A Maybe this or maybe not, sir.

ATTY. BERMUDEZ Q I am showing to you another document, which we respectfully request that the same be marked as Exhibit 17. In any event, these two exhibits are proof merely of the receipt of money by the seller; they do not [28] show that Rodolfo paid the balance of the purchase price. On the other hand, Witness Dominador Cruz was unshakable in testifying that Private Respondent Eduardo, though not named in the receipts or in [29] the deeds of sale, was definitely the real buyer: COURT: (The Court will ask few questions.) Q Do you know if there [is] a document executed between the brothers to show the real vendee in these three deeds of absolute sale is Eduardo Tigno? A I dont know of any document because according to Eduardo Tigno it will be placed in the name of his brother, Rodolfo Tigno so that it can be used as collateral.

COURT: Q Being the agent of this transaction did you not try to advice Eduardo Tigno to be safe for him a document will have to be executed showing that he is really the vendee? A I also explained that matter to him I know that matter to happen in the long run they will have dispute but Eduardo Tigno said he is his brother, he have [sic] trust and confidence in his brother, sir.

COURT: Q When did you give that advice? A Before the preparation of the documents, sir.

Q Do you know already that it will be in the name of Rofolfo [sic] Tigno before the execution? A Yes, sir. During the time we have conversation on May 2, 1980, he instructed me to place the name of Rodolfo Tigno in the document, Atty. Manuel was present when he gave that advice, sir.

COURT Q What did Atty. Manuel advised [sic]? A The reason for [sic] Eduardo Tigno have trust and confidence on his elder brother, Rodolfo Tigno.

COURT: (Propounding questions) Q So there is nothing written that will show that the money or purchase price came from Eduardo Tigno, is that correct? A None, sir. Its by trust and confidence,

Q Considering that you know that the money came from Eduardo Tigno, why did you consent that the deed of absolute sale in the name of Rodolfo Tigno and not Eduardo Tigno?

Because Atty. Manuel called for Rodolfo Tigno because the document was in the name of Rodolfo Tigno, sir.

Q The document is already defective, why did you not ask the preparation of the document to be executed by Rodolfo Tigno accordingly that the real owner who sold to you is the brother, Eduardo Tigno? A I did not think of it, what I know is that the real owner is Eduardo Tigno, sir, and has the power to disposed.

COURT: Q Eduardo Tigno is the real owner, why did you agree that Rodolfo Tigno to execute the document? A Yes, sir. Atty. Manuel called for Rodolfo Tigno so I consented.

Aside from the trust and confidence reposed in him by his brother, Petitioner Rodolfo was named as vendee in the deeds of sale to facilitate the loan and mortgage the brothers were applying for to rehabilitate the fishponds. Be it remembered that private respondent was a Makati-based business executive who had no time to follow up the loan application at the PNB branch in Lingayen, Pangasinan and, at the same time, to tend the fish farm on a daily basis. Atty. Modesto Manuel, who prepared and notarized the deeds of sale, unhesitatingly affirmed the unwritten agreement between the two [30] brothers: ATTY. VIRAY: Will you please tell the Court what is the reason, if ever there was, why the plaintiff, Eduardo Tigno, instructed you to put the name of Rodolfo Tigno as vendee in the papers? ATTY. BERMUDEZ: We object, Your Honor. The best witness to that is the plaintiff, Your Honor. COURT: Q Do you know the reason why Eduardo Tigno requested you to place the name of his brother as vendee? WITNESS: A Eduardo Tigno requested me to place the name of his brother as vendee so that the brother can use the lands as collateral for possible loan at the PNB (Philippine National Bank), sir.

COURT: Go ahead. ATTY. VIRAY: Q When was that when the plaintiff instructed you to place the name of his brother, the defendant, Rodolfo Tigno as vendee in the documents so that the defendant, Rodolfo Tigno, could use the properties as collateral for possible loan to the PNB? WITNESS: A It was sometimes during a fiesta in Guilig when Eduardo Tigno and Dominador Cruz, I think that was May 2, 1980, when Eduardo Tigno and Dominador Cruz and some of the vendors went to my house and they requested me to prepare the deeds of sale, sir.

In his direct examination, Atty. Manuel convincingly explained why Petitioner Rodolfo was [31] named as vendee: ATTY. VIRAY: Q When the plaintiff Eduardo Tigno instructed you to place the name of his brother as the vendee in the deeds of sale you were to prepare, what did you tell him or did you give any advice? A Yes, sir. I certainly did, sir.

Q What advice? A Why will I put the name of your brother as vendee when you were here as real buyer who will give the money to the vendors? Why not you, I told him, sir.

Q What else did you tell him? A I remember he is to make Special Power of Attorney in order his brother (sic) will execute the loan to the PNB, sir.

Q What did the plaintiff, Eduardo Tigno, tell you when you said it would be best to execute the Special Power of Attorney instead of placing the name directly in the deeds of sale, what is his answer? A He acceded to my advised [sic], sir. All right, make the deeds of sale, he said, agreeable to the deed of sale to my advised but when I told him that It would take the document probably by the middle of June, he back [sic] out, sir, because he told me he is going abroad and he may not be around and then he instructed me to place the name of his brother as the vendee not the plaintiff anymore, sir.

Q In other words, Mr. Witness, at first he was agreeable and that he would execute Special Power of Attorney? A Yes, sir.

Q Since he was going to the United States and he could not wait the preparation of the documents he just instructed you to go ahead with the first instruction, is that what you mean, Mr. Witness? A Yes, sir. (Underscoring supplied.)

This testimony of Atty. Manuel was corroborated by Dominador Cruz who was the real estate agent cum witness in all three deeds of sale. As a witness, he pointed out that Petitioner Rodolfo was named as [32] the vendee in the deeds of sale upon the order of private respondent: ATTY. VIRAY: Q When you said Atty. Manuel was not able to prepare the deed of sale on May 2, 1980, what then happened in the house of Atty. Manuel? A When Atty. Manuel was not able to prepare the document, my cousins wanted to get advance payment, one half of ten thousand pesos, sir, each.

ATTY. VIRAY: Q Did Eduardo Tigno agreed [sic] to the request of your cousins to get one half of the price of their land? A He agreed to give five thousand pesos each but he prepared temporary receipt fpr [sic] five thousand pesos, sir.

Q Who prepared the receipt? A Atty. Manuel, sir.

Q By the way, how much all in all did Eduardo Tigno give on May 2, 1980 as advanced consideration? A P15,000.00, sir.

Q You mean to say five thousand pesos for each parcel of land? A Yes, sir.

Q After the plaintiff, Eduardo Tigno paid the advanced payment for five thousand pesos for each parcel of land, what else happened? A When the three of us, I, Atty. Manuel and Eduardo Tigno were talking, I heard Eduardo Tigno said to Attyl. [sic] Manuel that the deed of sale will be placed in the name of my brother, Rodolfo because we will mortgage the land with the P.N.B., the proceeds will be used in the development of the fishpond. He requested that the buyer of the fishpond will be placed in the name of the brother of Eduardo Tigno.

Q Who is that brother of Eduardo Tigno? A xxx xxx Rodolfo Tigno. xxx

Q How about the balance of the purchase price of the property, is there any instruction made by Eduardo Tigno with respect to the payment thereof? A With respect to the balance after the preparation of the document they will bring it to Eduardo Tigno for him to pay the balance, sir.

Q By the way, was the deed of sale to these parcels of land finally executed? A Yes, sir.

From the foregoing, it is clear that the name of Rodolfo Tigno appeared in the deeds of sale not for the purpose of transferring ownership to him but only to enable him to hold the property in trust for his brother, herein private respondent. In the face of the credible and straightforward testimony of the two witnesses, Cruz and Manuel, the probative value, if any, of the tax declarations being in the name of Petitioner Rodolfo is utterly minimal to show ownership. Suffice it to say that these documents, by themselves, are not conclusive [33] evidence of ownership. Contrary to petitioners insistence, no delay may be imputed to private respondent. When private respondent went to Pangasinan to pay the taxes on his property in Bugallon, he learned from his relatives that his brother was negotiating the sale of a portion of the fishponds to Spouses Casipit. Failing to find his brother, he immediately wrote a letter dated May 16, 1989 addressed to the Casipits advising them to desist from buying the property because he was the real owner. On May 18, 1989, he confronted Petitioner Edualino Casipit about the impending sale, only to learn that the sale had already been [34] consummated as early as April 29, 1989. Failing to convince petitioners to annul the sale, private [35] respondent instituted this case on May 24, 1989 or five (5) days after learning from Edualino of the [36] consummation of the sale. Before the institution of this case, private respondent had no reason to sue. Indeed, he filed this case after only five days from learning of the infidelity of his brother. Clearly, no delay may be attributed to private respondent. We agree with the detailed disquisitions of the Court of Appeals on this point:
[37]

The trial courts conclusion that defendant-appellee is the true buyer and owner of the lands in question, mainly relying on the Deeds of Sale where defendant Rodolfos name appears as vendee, and on the Tax Declarations and Tax payment receipts in his name, must inevitably yield to the clear and positive evidence of plaintiff. Firstly, as has thus been fully established, the only reason why defendant Rodolfo was made to appear as the buyer in the Deeds of Sale was to facilitate their mortgage with the PNB Branch at Lingayen to generate seed capital for the fishponds, out of which Rodolfo could derive income. With Rodolfos name as vendee, there would be no need anymore for the personal presence of plaintiff-appellant who was very busy with his work in Manila. Moreover, aside from the fact that plaintiff was to travel abroad for thirty (30) days sometime in June, 1980, he could not have executed a Special Power of Attorney in favor of Rodolfo, as the Deeds of Sale were not yet prepared on May 2, 1980. Thus, to enable Rodolfo to mortgage the lands, his name was put as vendee in view of the mutural [sic] trust and confidence existing between said parties who are brothers. Secondly, it is well-settled that the tax declarations or the payments of real estate taxes on the land are not conclusive evidence of ownership of the declarant or payor (De Guzman v. CA, et al., L-47378, Feb. 27, 1987, and cases cited therein; Cited in II Regalado REMEDIAL LAW COMPENDIUM, p. 563 [1988]). Since defendant Rodolfo is named as vendee in the Deeds of Sale, it is only natural that Tax Declarations and the corresponding tax payment receipts be in his name so as to effect payment thereof. Petitioners contend that there was no fiduciary relationship created between the brothers Tigno. Petitioners argue that Rodolfo Tigno had exercised all the acts of dominion and ownership over the fishponds in question, as nobody shared in the produce of the fishponds for the past nine (9) years. Therefore, Petitioner Rodolfo, being the real purchaser of the parcels of land, could validly [38] transfer the ownership of a portion to Spouses Casipit. We firmly reject these contentions and need only to cite Respondent Courts incisive findings: After a careful examination of the evidence on record, we hold that an implied trust was created in favor of the plaintiff [private respondent herein] within the meaning of Article 1448 of the Civil Code, which provides: Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. x x x. An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. In such case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. (Lim vs. Court of Appeals, 65 SCRA 160) In the earlier case of Heirs of Candelaria, et al. v. Romero, et al., 109 Phil. 500, the Supreme Court elucidated on implied trust: The trust alleged to have been created in our opinion, is a n implied trust. As held, in effect, by this Court in the case of Martinez v. Grio (42 Phil. 35), where property is taken by a person under an agreement to hold it for or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended. xxx xxx xxx

It is also the rule that an implied trust arises where a person purchases land with his own money and takes a conveyance thereof in the name of another. In such a case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or

understanding appears. The trust which results under such circumstances does not arise from contract or agreement on the parties, but from the facts and circumstances, that is to say, it results because of equity and arises by implication or operation of law. We disagree with the trial courts ruling that if, indeed, a trust has been established , it is an express trust which cannot be proved by parol evidence. It must be noted that Article 1441 of the Civil Code defines both express trust and implied trust in general terms, thus: Art. 1441. Trusts are either express or implied. Express trust are created by the intention of the trustor or of the parties. Implied trust come into being by operation of law. Specific instances or examples of implied trusts are given in the Civil Code, one of which is described under Article 1448 quoted heretofore. Since Article 1448 is a specific provision, it prevails over and qualifies Article 1441, which is a general provision, under the rule generalia specialibus non derogant. (Alcantara, Statutes, 1990 Ed., p. 101). Therefore, since this case involves an implied trust falling under Article 1448, parol evidence is allowed to prove its existence pursuant to Article 1457, Civil Code, which states: Art. 1457. An implied trust may be proved by oral evidence. xxx xxx xxx

On the other hand, the record is replete with clear and convincing evidence to show that (1) plaintiff Eduardo Tigno is the real buyer and true owner of the lands in question and (2) defendant Rodolfo M. Tigno is merely a trustee constituted over said lands on behalf of plaintiff. It was established thru plaintiffs testimony that plaintiff paid P5,000.00 each, as first installment, to the three vendors for a total of P15,000.00 (TSN, Sept. 5, 1989, pp. 19-20), which was witnessed by Dominador Cruz and Atty. Manuel. Later, he gave a check to Dominador Cruz, the agent, in the amount of P26,000.00, representing the following: a) b) P15,000.00 as the balance for the three (3) parcels of land; P6,000.00 representing Cruzs commission as agent ;

c) P5,000.00 for capital gains tax, registration and other incidental expenses. (TSN, Sept. 5, 1989, pp. 39-41). When this check was encashed, Cruz paid the three vendors the balance due them (TSN, Sept. 5, 1989, pp. 42-43). That plaintiff was able to pay these amounts is believable, because plaintiff had the financial means to pay said amounts. At the time of the sale in 1980, plaintiff was an executive of Meryll Lynch, Pierce, Fennon S. Smith Phil., Inc., where he received P311,700.79 in 1980 alone, as shown by his Certificate of Income Tax Withheld on Wages for said year (Exhibit G for plaintiff). Indeed, by express provision of the Civil Code, oral evidence is admissible to establish a trust [40] relation between the Tigno brothers. Private respondent explained how this trust was created: ATTY. VIRAY Q When you said Dominador Cruz was able to bring the vendors at Guilig street, Lingayen, what happened there?
[39]

They came to our family home at Guilig street and we went to the house of Atty. Modesto Manuel, sir.

Q Why did you go to the house of Atty. Manuel? A For the executionof [sic] the deed of sale of the property I am going to buy, sir.

Q Was the deed of sale finished on that day? A No, sir.

Q What was the reason? A The vendors did not bring the tax declarations, secondly, the other heirs failed to get the power of attorney from their sister in United States.

Q When the deed of sale were not executed on that day, what transpired? A The vendors requested for advance payment of P5,000.00 each for the three parcels of land.

Q Did you agree to the request of the vendors for the advance payment of P5,000.00 each for the three parcels of land? A Yes, sir.

Q Did you comply? A Yes, sir.

Q How much all in all? A P15,000.00 in cash, sir.

Q Was there any receipt signed evidencing receipt for that? A There was receipt for the P15,000.00

Q Where is that receipt now? A I gave all the papers to him in my brown envelope, I trust [sic] him.

Q Do you remember in whose name the vendors allegedly to have received the P15,000.00? A In my name, received from Eduardo Tigno.

Q After giving the P15,000.00 advance payment which you said the deed of sale were not executed because of some requirement were not available, what happened next? A I talked to Atty. Manuel separately from the vendors, and I told him to prepare the deed of sale at that time and I told him to place my older brother, Rodolfo Tigno as vendee because I have plan to mortgage the property in PNB, Lingayen, sir. xxx

xxx xxx

Q Aside from instructing Atty. Manuel to place the name of your brother, Rodolfo Tigno, did you also instruct Dominador Cruz for the payment of the balance? A Yes, sir.

Q What was your instruction to Dominador Cruz?

I told Dominador Cruz, I am leaving for United States, I will be back first week of July, after the completion of the papers, see me on the second week of July and I will give the whole payment of the property.

Q And was the deed of sale covering the three parcels of land completed? A Yes, sir.

Q Did Dominador Cruz bring the documents to you in your office in Makati? A Yes, sir.

Q When was that? A First week of July 1980, sir.

Q Did you give the payment of the balance? A Yes, sir. After going over the documents, I issued to him a check payable in the sum of P26,000.00.

The previously quoted testimonies of Modesto Manuel and Dominador Cruz substantially corroborate private respondents testimony. On the other hand, Petitioner Rodolfo, although in possession of the deeds of sale in his name, failed to present a single witness to corroborate his claim that he bought the property partly with his own money and partly with the money he allegedly borrowed from a certain Jose Manaoat. His failure to present Manaoat gives rise to a presumption that the latters testimony, if given, would have been [41] unfavorable to the former. Respondent Court did not give credence to the financial capacity of [42] Petitioner Rodolfo Tigno: Defendant Rodolfos denial of plaintiffs evidence, and his bare testimony that he was the real buyer, without corroboration by other witnesses, cannot be given credence and do not deserve belief. It was unlikely that he had the financial means to pay for the lands in the total amount of P53,000.00. As testified to by Arnulfo Peralta (TSN, Sept. 29, 1988, pp. 36-37), Rodolfo was jobless then, and at one time or another was even supported financially by plaintiff, as testified to by plaintiff (TSN, Oct. 16, 1989, pp. 11-12), which in fact was confirmed by Rodolfo during his cross-examination (TSN, Oct. 18, 1989, pp. 67). If indeed he was engaged in some piggery, as he claimed, his financial capability is rendered doubtful by the fact that no evidence, other than his bare testimony, was presented to show his income, like an income tax return. His bare testimony that he borrowed P20,000.00 from Jose Manaoat to raise partly the amount of P53,000.00 lacks credibility. Manaoat, who was in the best position to testify that Rodolfo borrowed money from him, was never presented, which would gives rise to the presumption that his testimony would be adverse to defendant, if presented. (Sec. 3[e], Rule 131, Rules of Court). From the foregoing, it is ineludible that Article 1448 of the Civil Code finds application in this case. Although the deeds of sale were in the name of Petitioner Rodolfo, the purchase price was paid by private respondent who was the real owner of the property. Petitioner Rodolfo is the trustee, and private respondent is the beneficiary.

Second Issue: Are Petitioners Casipit Purchasers in Good Faith? Spouses Edualino and Evelyn Casipit contend that they are purchasers in good faith and for [43] valuable consideration; thus, they cannot be deprived of the land they bought from Rodolfo Tigno.

This posturing is unacceptable. First, unrebutted is the emphatic testimony of private respondent that Edualino was invited on May 2, 1980 to a picnic in the fishpond. At the picnic, private respondent informed Petitioner Edualino Casipit that he was the owner of the property. On this point, private [44] respondent testified: ATTY. VIRAY: Q You said Edualino Casipit very well knew that the property is owned by you, what made you say that the defendant Edualino Casipit very well knew that you are the owner of the property he bought? A Way back in 1980 when I gave the advance payment to the vendors, I invited my friends and right there in the fishpond, we had small picnic and that my father, and Boy Casipit were there.

ATTY. VIRAY: Q What if you invited them, sign that from that time you were the one who bought the parcels of land? A Yes, sir.

Second, also uncontested is the testimony of Dominador Cruz that he met Edualino on April 24, 1989, or five (5) days before the consummation of the sale between Rodolfo and Spouses Casipit. During that meeting, Cruz told Edualino that he bought from private respondent a portion of the subject property for the purpose of building a dike. Thereafter, Edualino asked Cruz to buy a portion of the [45] property from private respondent. Third, and in any event, Spouses Casipit did not acquire absolute ownership over the property since the apparent vendor, Petitioner Rodolfo, did not have the right to transfer ownership thereof. Be it remembered that the fishponds were not registered under the Torrens system. Again, we cite public [46] respondents ruling, which we find totally persuasive: It is our well-considered opinion, however, that whether or not defendant-appellee spouses are in good faith is entirely immaterial, because no valid sale in the first place was made between defendantappellees covering the portion of land in question. The fact is, as established by the evidence on record, that defendant Rodolfo M. Tigno is not the owner of the lands in question, but a mere trustee thereof, and could not have transferred ownership of said lands, by way of sale, to his co-defendant-appellee spouses. As a matter of basic principle in the law on sales, a person cannot transfer ownership, by way of sale, of something over which he has no right to transfer. Thus, Article 1459 of the Civil Code provides: Art. 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. (Underscoring supplied) Since defendant-appellee is not the owner of the lands in question, which are not registered under the Torrens system, he could not by way of sale have transferred, as he has no right to transfer, ownership of a portion thereof, at the time of delivery. WHEREFORE, premises considered, the petition is hereby DENIED and the assailed Decision and Resolution are AFFIRMED in toto. Costs against petitioners. SO ORDERED.