Sie sind auf Seite 1von 34


CO 40 PHIL 491
W.G. Philpotts (Petitioner) , a stockholder in Philippine Manufacturing Company sought to compel
respondents to permit plaintiff, a person or by some authorized agent or attorney to inspect and
examine the records of the business transacted by said company since January 1, 1918.Respondent
corporation or any of its officials has refused to allow the petitioner himself to examine anything
relating to the affairs of the company, and the petitioner prays for an order commanding respondents to
place records of all business transactions of the company, during a specific period, at the disposal of the
plaintiff or his duly authorized agent or attorney. Petitioner desires to exercise said right through agent
or attorney. Petition is filed originally in the Supreme Court under authority of Section 515 of Code of
Civil Procedure, which gives SC concurrent jurisdiction with then Court of First Instance in cases
where any corporation or person unlawfully excludes the plaintiff from use and enjoyment and some
right he is entitled.
Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a
proper agent or attorney of the stockholder as well as by stockholder in person
Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as
well as by stockholder in person. The right of inspection / examination into corporate affairs given to a
stockholder in section 51 of the Corporation Law which states:
The records of all business transactions of the corporation and the minutes of any meeting shall be
open to the inspection of any director, member, or stockholder of the corporation at reasonable hour
can be exercised either by himself or by any duly authorized representative or attorney in fact,
and either with or without the attendance of the stockholder. This is in conformity with the general
rule that what a man may do in person he may do through another

Orient Air Services vs CA

1. On 15 January 1977, American Airlines, Inc. an air carrier offering passenger and air cargo
transportation in the Philippines, and Orient Air Services and Hotel Representatives , entered into
a General Sales Agency Agreement whereby the former authorized the latter to act as its exclusive
general sales agent within the Philippines for the sale of air passenger transportation.
2. On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by
failing to promptly remit the net proceeds of sales for the months of January to March 1981 in the
amount of US$254,400.40, American Air by itself undertook the collection of the proceeds of tickets
sold originally by Orient Air and terminated forthwith the Agreement.
3. Four (4) days later, or on 15 May 1981, American Air instituted suit against Orient Air with the CFI
of Manila, Branch 24, for Accounting with Preliminary Attachment or Garnishment, Mandatory
Injunction and Restraining Order averring the aforesaid basis for the termination of the Agreement as
well as therein defendant's previous record of failures "to promptly settle past outstanding refunds
of which there were available funds in the possession of the defendant, . . . to the damage and prejudice
of plaintiff."
4. Defendant Orient Air:
-denied the material allegations of the complaint with respect to plaintiffs entitlement to alleged
unremitted amounts, contending that after application thereof to the commissions due it under the
Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions
- Further, the defendant contended that the actions taken by American Air in the course of terminating
the Agreement as well as the termination itself were untenable, Orient Air claiming that American Air's
precipitous conduct had occasioned prejudice to its business interests.
5. TC ruled in favor of ORIENT AIR
-dismissing the complaint and holding the termination made by the plaintiff American Airlines as
affecting the GSA agreement illegal and improper and
-order the plaintiff American Airlines to reinstate defendant as its general sales agent for passenger
transportation in the Philippines in accordance with said GSA agreement;
-plaintiff is ordered to pay defendant the balance of the overriding commission on total flown revenue
covering the period from March16, 1977 to December 31, 1980 in the amount of US$84,821.31 plus
the additional amount of US$8,000.00 by way of proper 3% overriding commission per month
commencing from January 1, 1981 until such reinstatement or said amounts in its Philippine peso
equivalent legally prevailing at the time of payment plus legal interest to commence from the filing of
the counterclaim up to the time of payment.
6. Intermediate Appellate Court (now Court of Appeals) in a decision promulgated on 27 January 1986,
affirmed the findings of the court
a quo
on their material points but with some modifications with respect to the monetary awards granted.
7. Both appealed the decision of the CA
ISSUE: WON American Air can be ordered by the court to "reinstate defendant as its general sales
agent for passenger transportation in the Philippines in accordance with said GSA Agreement.
-By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air
to extend its personality to Orient Air.

-Such would be violative of the principles and essence of agency, defined by law as a contract whereby
"a person binds himself to render some service or to do something in representation or on behalf of
-In an agent-principal relationship, the personality of the principal is extended through the facility of
the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts
which the latter would have him do. Such a relationship can only be effected with the consent of the
principal, which must not, in any way, be compelled by law or by any court.
-The Agreement itself between the parties states that "either party may terminate the Agreement
without cause by giving the other 30days' notice by letter, telegram or cable."


Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of a parcel
of land.
They executed a special power of attorney in favor of their brother, Simeon Rallos,authorizing him to
sell such land for and in their behalf.
After Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty Corporation and new TCTs were issued to the latter.
Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint praying
(1) that the sale of the undivided share of the deceased Concepcion Rallos be unenforceable, and said
share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of Felix Go Chan
& Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and
the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by
way of attorney's fees and payment of costs of suit.
CFI: In favor of plaintiff, ordering the sale was null and void insofar as the one-half pro-indiviso share
of Concepcion Rallos and ordered the issuance of new TCT in proportion of share each pro-indiviso.
Juan T. Borromeo, administrator of the Estate of Simeon Rallos was ordered to pay defendant the price
of the share of the land (P5,343.45) plus attorneys fees[Borromeo filed a third party complaint
against Josefina Rallos, special administratrix of the Estate of Gerundia]
Dismissed without prejudice to filing either a complaint against the regular administrator of the Estate
of Gerundia Rallos or a claim in the Intestate-Estate of Cerundia Rallos, covering the same subjectmatter
On appeal to the CA:CFI Decision reversed, upheld the sale of Concepcions share.
MR: denied.
1. WON the sale was valid although it was executed after the death of the principal, Concepcion.
2. WON the sale fell within the exception to the general rule that death extinguishes the authority of the
3. WON petitioner must suffer the consequence for failing to annotate a notice of death in the title even
there was a good faith on the part of respondent corporation.
The essential elements of agency are: (1) there is consent, express or implied of the parties to establish
the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the
agents acts as a representative and not for himself, and (4) the agent acts within the scope of his
Paragraph 1 of Article 1403 provides that:
Article 1403. The following contracts are unenforceable, unless they are justified:
(1) Those entered into in the name of another person by one who hi - been given no authority or legal
representation or who has acted beyond his powers;
The general rule for extinguishment of agency is provided in Par. 3 of Article 1919 which states that:
Article 1919. Agency is extinguished.
xxx xxx xxx
3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent.
xxx xxx xxx
But the exception to the general rule are provided in 1930 and 1931.
ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it
has been constituted in the common interest of the latter and of the agent, or in the interest of a third
person who has accepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid and shall be fully effective with respect to third
persons who may have contracted with him in good faith.
1. No, the sale was void. No one may contract in the name of another without being authorized by the
latter, or unless he has by law a right to represent him. A contract entered into in the name of another
by one who has no authority or the legal representation or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting party.
2. No, the sale did not fall under the exception to the general rule that death extinguishes the authority
of the agent. Article 1930 is not applicable because the special power of attorney executed in favor
of Simeon Rallos was not coupled with an interest. We refer to Article 1931, an act done by the
agent after the death of his principal is valid and effective only under two conditions: (1) that the
agent acted without knowledge of the death of the principal and (2) that the third person who
contracted with the agent himself acted in good faith. Simeon Rallos, knew of the death of his
principal at the time he sold the latter's share of the disputed land to respondent corporation, hence
Article 1931 is inapplicable. The law expressly requires for its application lack of knowledge on the
part of the agent of the death of his principal; it is not enough that the third person acted in good
3. No, the Civil Code does not impost a duty on the heirs of the principal to notify the agent of the eath
of the principal. If revocation was by the act of the principal: a general power which does not specify
the persons to whom represents' on should be made, it is the general opinion that all acts, executed
with third persons who contracted in good faith, without knowledge of the revocation, are valid. But,
if revocation was due to death of the principal: extinguishment, by operation of law, is instantaneous
without the need for notification to the parties concerned.

G.R. No. 145817 October 19, 2011

URBAN BANK, INC, Petitioner,

MAGDALENO M. PEA, Respondent.
Magdaleno Pea, a lawyer, was formerly a stockholder, director and corporate secretary of Isabel Sugar
Company, Inc. (ISCI). ISCI owned a parcel of land and leased it. Before the expiration of the lease
contract, ISCI informed the lessee and his tenants that the lease would no longer be renewed because
the land will be sold. ISCI and Urban Bank executed a Contract to Sell. ISCI then instructed Pea, to
act as its agent and handle the eviction of the tenants. The lessee left, but the unauthorized sub-tenants
refused to leave. Pea had the gates of the property closed and he also posted security guardsservices
for which he advanced payments. Despite this, the sub-tenants would force open the gates, and proceed
to carry on with their businesses. Pea then filed a complaint with the RTC, which issued a TRO. At the
time the complaint was filed, a new title to the land had already been issued in the name of Urban
Bank. When information reached the judge that the land had already been transferred by ISCI to Urban
Bank, the trial court recalled the TRO and issued a break-open order for the property. Pea
immediately contacted ISCIs president and told him that he would be recalling the security guards he
had posted to secure the property. The ISCI President asked him to suspend the withdrawal of the
posted guards, so that ISCI could get in touch first with Urban Bank. Pea also called Urban Banks
President. The President allegedly assured him that the bank was going to retain his services, and that
the he should not give up possession of the subject land. Thereafter, Pea, in representation of Urban
Bank, filed a separate complaint with the RTC-Makati City, to enjoin the tenants from entering
property. The RTC-Makati City issued a TRO. While the 2nd complaint was pending, Pea made efforts
to settle the issue of possession with the sub-tenants. The sub-tenants eventually agreed to stay off the
property for a total consideration of PhP1.5M. Pea advanced the payment for the full and final
settlement of their claims against Urban Bank. Pea formally informed Urban Bank that it could
already take possession of the property. There was however no mention of the compensation due and
owed to him for the services he had rendered. The bank subsequently took actual possession of the
property and installed its own guards at the premises. Pea filed a complaint with RTC demanding
from Urban Bank the payment of the 10% compensation and attorneys fees allegedly promised to him
by Urban Banks President. Urban Bank argued that it was ISCI, the original owners of the property,
that had engaged the services of Pea in securing the premises; and, consequently, they could not be
held liable for the expenses Pea had incurred. The RTC ruled in favor of Pea because if found there
has a contract of agency created. On appeal, it reversed RTCs decision and ordered Urban Bank to pay
Pea reasonable compensation for his service. Pea appealed on certiorari.
W/N Pena is entitled to payment for the services he rendered as agent of Urban Bank and W/N there
exist a contract of agency.
Pea should be paid for services rendered under the agency relationship that existed between him and
Urban Bank based on the civil law principle against unjust enrichment, and not on the basis of
the purported oral contract. In a contract of agency, agents bind themselves to render some service or to
do something in representation or on behalf of the principal, with the consent or authority of the latter.
The essential elements of agency are the following: (a) the relationship is established by the parties
consent, express or implied; (b) the object is the execution of a juridical act in relation to a third person;
(c) agents act as representatives and not for themselves; and (d) agents act within the scope of their
Whether or not an agency has been created is determined by the fact that one is representing and acting
for another. The law makes no presumption of agency; proving its existence, nature and extent is
incumbent upon the person alleging it.
The Court concludes that Urban Bank constituted Atty. Pea as its agent to secure possession of the
property. This conclusion, however, is not determinative of the basis of the amount of payment that
must be made to him by the bank. The context in which the agency was created lays the basis for the
amount of compensation Atty. Pea is entitled to.

Agency is presumed to be for compensation. There is no evidence that Urban Bank agreed to pay Pea
a specific amount or percentage of amount for his services, so the court applies the principle against
unjust enrichment and on the basis of quantum meruit. Lawyering is not a business; it is a profession in
which duty to public service, not money, is the primary consideration. The principle of quantum meruit
applies if lawyers are employed without a price agreed upon for their services, in which case they
would be entitled to receive what they merit for their services, or as much as they have earned.

DOCTRINE: (No need to write)

When a special power of attorney is required for the agent to do a certain act, the agent, in the
performance of such act, must comply with the specifications embodied in the special power of
attorney giving him authority to do such. For example, here, a special power of attorney was needed for
Guevarra to settle the claims of Dominions clients. And for this purpose, there was a memorandum.
However, the memorandum stated that Guevarra was to settle the claims using the money in a
revolving fund. Guevarra did not comply with this, so the expenses Guevarra incurred in the settlement
of the claims of the insured may not be reimbursed from Dominion, at least under the law of agency.
Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion
Insurance. He sought to recover P156,473.90, which he claimed to have advanced in his capacity as
manager of Dominion
to satisfy claims filed by Dominions clients. Dominion denied any liability to Guevarra and asserted a
counterclaim for premiums allegedly unremitted by the latter. The pre-trial conference never pushed
through despite being scheduled and postponed nine times over the course of six months. Finally, the
case was called again for pre-trial and Dominion and counsel failed to show up. The trial court declared
Dominion in default and denied any reconsideration. On the merits of the case, the RTC ruled that
Dominion was to pay Guevarra the P156,473.90 claimed as the total amount advanced by the latter in
the payment of the claims of Dominions clients. The CA affirmed.
1. WON Guevarra acted within his authority as agent for Dominion
2. WON Guevarra is entitled to reimbursement of amounts
1. NO. A perusal of the Special Power of Attorney would show that Dominion and Guevarra
intended to enter into a principal-agent relationship. Despite the word special, the contents of the
document reveal that what was constituted was a general agency. The agency comprises all the
business of the principal, but, couched in general terms, is limited only to acts of administration. A
general power permits the agent to do all acts for which the law does not require a special power. Art.
1878 enumerates the instances when a special power of attorney is required, including (1) to make
such payments as are not usually considered as acts of administration; (15) any other act of strict
dominion. The payment of claims is not an act of administration. The settlement of claims is not
included among the acts enumerated in the Special Power of Attorney, neither is it of a character
similar to the acts enumerated therein. A special power of attorney would have been required before
Guevarra could settle the insurance claims of the insured. Guevarras authority to settle claims is
embodied in the Memorandum of Management Agreement which enumerated the scope of Guevarra
s duties and responsibilities. However, the Memorandum showed the instruction of Dominion that
payment of claims shall come from a revolving fund. Having deviated from the instructions of the
principal, the expenses that Guevarra incurred in the settlement of the claims of the insured may
not be reimbursed from Dominion.
2. YES. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right
to recovery may still be justified under the general law on Obligations and Contracts, particularly,
Art. 1236 I n this case, when the risk insured against occurred, Dominions liability as insurer arose.
This obligation was extinguished when Guevarra paid such claims. Thus, to the extent that the
obligation of Dominion had been extinguished. respondent Guevarra may demand for reimbursement
from his principal.

G.R. No. 179446

January 10, 2011


CORPORATION, Respondents.
R&B Insurance issued insurance policy in favor of Columbia for the shipment of 132 bundles of
electric copper cathodes against all risks. The cargoes were shipped and arrived in Manila. Columbia
engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the
subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for
the use of its delivery trucks to transport the cargoes to Columbias warehouses/plants.
The goods were loaded on board twelve (12) trucks owned by Loadmasters. Six (6) truckloads were to
be delivered to Balagtas, Bulacan, while the other six (6) truckloads were destined for Lawang Bato,
Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered in Columbias
warehouses there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached
the destination. One (1) truck, failed to deliver its cargo.
Because of this incident, Columbia filed with R&B Insurance a claim for insurance indemnity. After
the requisite investigation and adjustment, R&B Insurance paid Columbia the amount of insurance
R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before
the Manila RTC. It sought reimbursement of the amount it had paid to Columbia for the loss of the
subject cargo.
The RTC rendered a decision in favor of R&B Insurance and dismissed Loadmasters counterclaim.
Both R&B Insurance and Glodel appealed the RTC decision to the CA. The CA rendered that
Loadmasters is likewise held liable to appellant Glodel for the insurance indemnity appellant Glodel
has been held liable to appellant R&B Insurance Corporation considering that appellee is an agent of
appellant Glodel. Hence, Loadmasters filed petition for review on certiorari to the SC.
ISSUES: WON Loadmasters be legally considered as an Agent of respondent Glodel?
No. Article 1868 of the Civil Code provides: "By the contract of agency a person binds himself to
render some service or to do something in representation or on behalf of another, with the consent or
authority of the latter." The elements of a contract of agency are: (1) consent, express or implied, of the
parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of
his authority.
Loadmasters never represented Glodel. Neither was it ever authorized to make such representation. It is
a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the
principal on matters within the scope of his authority and said acts have the same legal effect as if they
were personally executed by the principal. On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable from his words or actions, while on the part of
the agent, there must be an intention to accept the appointment and act on it. Such mutual intent is not
obtaining in this case.

G.R. No. 144805 June 8, 2006

Eduardo V. Lintonjua, Jr. and Antonio K. Litonjua vs. Eternit Corporation (EC), Eteroutremer,
S.A. Corporation (ESAC) and Far East Bank & Trust Company (FEBTC)
FACTS: The Eternit Corporation (EC) is a corporation duly organized and registered under Philippine
laws engaged in the manufacture of roofing materials and pipe products. Its manufacturing operations
were conducted on eight parcels of land covered by TCTs under the name of FEBTC, as trustee. 90%
of the shares of stocks of EC were owned by ESAC, a corporation organized and registered under the
laws of Belgium. Jack Glanville, an Australian citizen, was the Gen. Manager and Pres. of EC, while
Claude Delsaux was the Reg. Director for Asia of ESAC. Both had their offices in Belgium.
In 1986, the management of ESAC grew concerned about the political situation in the Philippines and
wanted to stop its operations in the country. The Committee for Asia of ESAC instructed EC Board of
Directors Member Michael Adams, to dispose of the eight parcels of land. Adams engaged the services
of realtor/broker Lauro G. Marquez so that the properties could be offered for sale to prospective
Marquez thereafter offered the parcels of land and the improvements thereon to Eduardo B. Litonjua,
Jr. of the Litonjua & Company, Inc. In a Letter, Marquez declared that he was authorized to sell the
properties for P27,000,000.00. The Litonjua siblings offered to buy the property for P20,000,000.00
cash. Delsaux sent a telex to Glanville stating that, based on the "Belgian/Swiss decision," that the final
offer was "US$1,000,000.00 and P2,500,000.00. Litonjua, Jr. accepted the counterproposal of Delsaux.
The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank & Trust
Company, Ermita Branch, and drafted an Escrow Agreement to expedite the sale.
Meanwhile, with the assumption of Corazon C. Aquino as President of the Republic of the Philippines,
the political situation in the Philippines had improved. Glanville informed Marquez that "the decision
has been taken at a Board Meeting not to sell the properties on which Eternit Corporation is situated."
When apprised of this development, the Litonjuas, wrote EC, demanding payment for damages they
had suffered on account of the aborted sale. EC, however, rejected their demand. The Litonjuas then
filed a complaint for specific performance and damages against EC and the FEBTC, and ESAC in the
RTC of Pasig City.
EC and ESAC alleged that the Board and stockholders of EC never approved any resolution to sell
subject properties nor authorized Marquez to sell the same.
Petitioners further emphasize that they acted in good faith when Glanville and Delsaux were knowingly
permitted by respondent EC to sell the properties within the scope of an apparent authority. Petitioners
insist that respondents held themselves to the public as possessing power to sell the subject properties.
The trial court rendered judgment in favor of defendants and dismissed on the ground that there is no
valid and binding sale between the plaintiffs and said defendants.
The CA rendered judgment affirming the decision of the RTC. The Litonjuas filed a motion for
reconsideration, which was also denied by the appellate court. Hence, this appeal.
ISSUE: Whether or not Marquez needed a written authority from respondent Eternit before the sale can
be perfected.
HELD: YES. The general principles of agency govern the relation between the corporation and its
officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. Any
sale of real property of a corporation by a person purporting to be an agent thereof but without written
authority from the corporation is NULL AND VOID. The declarations of the agent alone are generally
insufficient to establish the fact or extent of his/her authority.
Agency may be oral unless the law requires a specific form. However, to create or convey real rights
over immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land
or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the
sale shall be void. In this case, the petitioners as plaintiffs below, failed to adduce in evidence any
resolution of the Board of Directors of respondent EC empowering Marquez, Glanville or Delsaux as
its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of land owned by
respondent EC including the improvements thereon.

G.R. No. 149353 June 26, 2006

FACTS: Respondent Angeles filed with the RTC a complaint for Specific Performance with Damages
against Petitioner Doles. Respondent alleged that petitioner was indebted to the former in the concept
of a personal loan. By virtue of a "Deed of Absolute Sale",3 petitioner, as seller, ceded to respondent, as
buyer, a parcel of land, as well as the improvements thereon, at a subdivision project known as Camella
Townhomes Sorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent; that
despite repeated demand, petitioner refused to cooperate with respondent to execute the necessary
documents and other formalities required by the NHMFC to effect the transfer of the title over the
However, petitioner denied that she borrowed money from respondent, and averred that she referred
her friends to respondent whom she knew to be engaged in the business of lending money in exchange
for personal checks through her capitalist Arsenio Pua. She alleged that her friends, namely, Zenaida
Romulo, Theresa Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money
from respondent and issued personal checks in payment of the loan; that the checks bounced for
insufficiency of funds; that despite her efforts to assist respondent to collect from the borrowers, she
could no longer locate them; that, because of this, respondent became furious and threatened petitioner
that if the accounts were not settled, a criminal case will be filed against her.
The trial court dismissed the case at bar on the ground that the deed of sale between the parties has no
consideration or insufficiency of evidence. The CA reversed the TCs decision and concluded that
petitioner is the real borrower, while the respondent, the real lender, therefore there existed no contract
of agency.
ISSUE: Whether or not there exist a contract of agency between Petitioner Doles and the alleged
debtors, therefore, Petitioner is not a party to the loan.
HELD: YES. Under Article 1868 of the Civil Code, the basis of agency is representation. The question
of whether an agency has been created is ordinarily a question which may be established in the same
way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of
intention. Agency may even be implied from the words and conduct of the parties and the
circumstances of the particular case. Though the fact or extent of authority of the agents may not, as a
general rule, be established from the declarations of the agents alone, if one professes to act as agent for
another, she may be estopped to deny her agency both as against the asserted principal and the third
persons interested in the transaction in which he or she is engaged.
In this case, petitioner knew that the financier of respondent is Pua; and respondent knew that the
borrowers are friends of petitioner. Respondent is estopped to deny that she herself acted as agent of a
certain Arsenio Pua, her disclosed principal. She is also estopped to deny that petitioner acted as agent
for the alleged debtors, the friends whom she (petitioner) referred.The CA is incorrect when it
considered the fact that the "supposed friends of [petitioner], the actual borrowers, did not present
themselves to [respondent]" as evidence that negates the agency relationshipit is sufficient that
petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends
whom she referred to respondent.
For an agency to arise, it is not necessary that the principal personally encounter the third person with
whom the agent interacts. The law in fact contemplates, and to a great degree, impersonal dealings
where the principal need not personally know or meet the third person with whom her agent transacts:
precisely, the purpose of agency is to extend the personality of the principal through the facility of the
agent. In the case at bar, both petitioner and respondent have undeniably disclosed to each other that
they are representing someone else, and so both of them are estopped to deny the same. It is evident
from the record that petitioner merely refers actual borrowers and then collects and disburses the
amounts of the loan upon which she received a commission; and that respondent transacts on behalf of
her "principal financier", a certain Arsenio Pua. If their respective principals do not actually and
personally know each other, such ignorance does not affect their juridical standing as agents, especially

since the very purpose of agency is to extend the personality of the principal through the facility of the

G.R. No. 151319. November 22, 2004

FACTS: Florencia Baluyot is authorized by the Manila Memorial Park Inc. (MMPI) to sell burial lots
to those interested in purchasing. Herein respondent Atty. Linsangan was approached by Florencia with
an offer to sell to the former a lot that she alleges to have already been previously sold but the owner
thereof has cancelled and thus, Atty. Linsangan shall only continue the payment thereof amounting to
P95,000, Atty. Linsangan agreed and payed an initial P35, 000. Thereafter, Florencia advised Atty.
Linsangan that there were changes in the contract and that she needed him to sign a new contract
stipulating the total price of P132, 000 but Florencia assured Atty. Linsangan that he would only pay
the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has read and understood all
the stipulations therein. The payment was made in installments for two years which Atty. Linsangan
completed, however, after two years, Florencia informed Linsangan that their contract was cancelled
and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract
against MMPI and Florencia. MMPI avers that Florencia acted beyond the scope of her authority as
MMPIs agent since the latter did not allow her to renegotiate existing contracts but only to sell new
contracts. Atty. Lnsangan on the other hand argues that MMPI should be liable for the acts of its agents.
Issue: Whether or not MMPI is liable for the acts of Florencia
Held: NO. The SC ruled that Florencia acted outside the scope of her authority as agent of MMPI and
Atty. Linsangan failed to ascertain the authority given to Florencia especially that their agreement on
the second contract had a different stipulation than what he and Florencia agreed upon. Moreover, Atty.
Linsangans signature over the new contract signifies his agreement thereto and serves as a form of
ratification for the acts of Florencia which were outside the authority given her. As such, the SC ruled
that the principal cannot be held liable for actions of agents outside the scope of their authority when
such acts are ratified by the principal himself. On the part of MMPI, they did not ratify Florencias acts,
nor did they know of such actions.


Petitioners Bordador spouses were engaged in the business of purchase and sale of jewelry, while
respondent Brigida Luz was their regular customer. Respondent Narciso Deganos, Luz's brother,
received several pieces of jewelry from the Bordadors amounting to P382,816.00, which items
wereindicated in 17 receipts covering the same--11 of the receipts stated that they were received by
Deganos for a certain Evelyn Aquino, while the remaining 6indicated that they were received by
Deganos for Luz.
Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold items to
the Bordadors. Deganos remitted only P53,207.00. He neither paid the balance of the sales proceeds,
nor did he return any unsold item to the Bordadors, which led them to file an action for recovery of a
sum of money and damages against Deganos and Luz with the RTC. The Bordadors claimed that
Deganos acted as the agent of Luz when he received the items of jewelry, and because he failed to pay
for the same, Luz, as principal, became solidarily liable with him.
Deganos asserted that it was he alone who was involved in the transaction with the Bordadors; that he
neither acted as agent for nor was he authorized to act as an agent by Luz, notwithstanding the fact that
6 of thereceipts indicated that the items were received by him for Luz. He added that he never delivered
any of the items to Luz. Luz corroborated the claims of Deganos.
The RTC found that only Deganos was liable to the Bordados. It further found that it was petitioner
Lydia Bordador who indicated in the receipts that the items were received by Deganos for Evelyn
Aquino and for Luz. It said that it was "persuaded that Brigida D. Luz was behind Deganos,"but
because there was no memorandum to this effect, the agreement between the parties was unenforceable
under the Statute of Frauds. Absent the required memorandum or any written document connecting Luz
with the subject receipts or authorizing Deganos to act on her behalf, the alleged agreement between
the Bordadors and Luz was unenforceable.
The Bordadors elevated the case to the CA which affirmed said judgment, hence the instant petition.
Whether Luz is liable to the Bordadors for the latter's claim for money and damages despite the fact
that Luz did not sign any of the subject receipts or authorized Deganos to receive the items of jewelry
on her behalf
No, Luz is not liable to the Bordadors.
THE BASIS FOR AGENCY IS REPRESENTATION. The basis for agency is representation. Here,
there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf,
much less with respect to the particular transactions involved. The Bordadors' attempt to foist liability
on Luz through the supposed agency relation with Deganos is groundless and ill-advised.
Besides, it was grossly and inexcusably negligent of the Bordadors to entrust to Deganos, not once or
twice but on at least 6 occasions as evidenced by 6 receipts, several pieces of jewelry of substantial
value without requiring a written authorization from his alleged principal. A person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the agent.

Regina Dizon et al v. CA and Overland Express Lines, Inc. 302 SCRA 288

Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitioners
involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and SouthH
Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16, 1974 up
to May 15, 1975. During this period, Overland Express Lines was granted an option to purchase for the
amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a
monthly rental of P3,000.00.
For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June
1976, petitioners filed an action for ejectment against it. The lower court rendered judgment ordering
Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00representing
rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation
of the premises during the period of illegal detainer from June 1976 to November1982 at the monthly
rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the
date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982,
until Overland Express Lines fully vacates the premises, and to payP20,000.00 as and by way of
attorneys fees.
WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative
(agent) of petitioners in consideration of the option
No. CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the
leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt
was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of
petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon,
acting as agent of petitioners, was authorized by them to receive the money in their behalf.CA went
further by stating that in fact, what was entered into was a conditional contract of sale wherein
ownership over the leased property shall not pass to the Overland Express Lines until it has fully paid
the purchase price. Since Overland Express Lines did not consign to the court the balance of the
purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of
P1,700.00 in monthly rentals until full payment of the purchase price.
In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to
petitioners(thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would
constitute a perfected contract of sale pursuant to the contract of lease with option to buy.
There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed
sale entered into by Alice A. Dizon, as petitioners alleged agent, and Overland Express Lines. The
basis for agency is representation and a person dealing with an agent is put upon inquiry and must
discover upon his peril the authority of the agent. As provided in Article 1868 of the New Civil Code,
there was no showing that petitioners neither consented to the act of Alice A. Dizon nor authorized her
to act on their behalf with regard to her transaction with private respondent. The most prudent thing
private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon.
Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency.
Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority
of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority,
and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agency,
whether the assumed agency be a general or special one, are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and
in case either is controverted, the burden of proof is upon them to establish it.

Morales vs. CA (1997)

1. 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
him to the performance of certain duties and the exercise of certain powers by the latter. The
characteristics of a trust are:
a. It is a relationship;
b. It is a relationship of fiduciary character;
c. It is a relationship with respect to property, not one involving merely personal duties;
d. 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
e. It arises as a result of a manifestation of intention to create the relationship.
2. 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.
Cast of Characters:
Celso Avelino Owner of the premises in question
Priscilla Morales Sister of Celso Avelino, claims ownership of the land
Rodolfo Morales Son of Priscilla, built beauty shop on premises in question
Ranulfo and Erlinda Ortiz Purchased premises in question from Celso Avelino
Aurea Avelino Sister of Celso, caretaker of the premises in question
Rosendo Avelino and Juana Ricaforte Parents of Celso, Aurea and Priscilla
Ranulfo and Erlinda Ortiz claim that they are the absolute and exclusive owners of the premises in
question (318 sq.m. land located at corner Umbria St. and Rosales Blvd. Brgy. Central, Calbayog City)
through their purchase of the said property from Celso Avelino and stated the following:
The property was purchased by Celso Avelino (the Ortiz's predecessor in interest) when he was still a
bachelor and a city fiscal of Calbayog city from Alejandra Mendiola and Celita Bartolome through an
"Escritura de Venta." After the purchase, he caused the transfer of the title as well as the tax
declarations in his name. He faithfully paid the taxes and kept the receipts thereof. He also caused a
survey of the premises in question with the Bureau of Lands and built a residential house thereon. He
took his parents Rosendo Avelino and Juana Ricaforte and his sister Aurea to live in his property until
their death. Celso Avelino then became an Immigration Officer and later a Judge of the Court of First
Instance in Cebu so he left his property under the care of his sister, Aurea. Without his knowledge, his
nephew Rodolfo Morales (a son of his other sister, Priscilla) constructed a beauty shop on the premises
in question. Celso thereafter sold the property to Ranulfo and Erlinda Ortiz (Celso's neighbors), they
paid the purchase price and a deed of absolute sale was executed. Rodolfo Morales, however, refused to
vacate the premises unless he is reimbursed P35,000. He also occupied the residential building on the
property, took in paying boarders and even claimed ownership of the premises in question.
Rodolfo Morales contends that his grandparents Rosendo Avelino and Juana Ricaforte originally owned
the premises in question. The property was allegedly bought by Celso Avelino who was entrusted by
Rosendo with the money to buy it. They caused the name of the property to be under Celso Avelino
being the only son. When Rosendo Avelino and Juana Ricaforte died, their children: Celso Avelino,
Trinidad Cruz, Concepcion Peralta, Priscilla Morales and Aurea Avelino succeeded as owners thereof.
1. W/N Celso Avelino acquired the property as a mere trustee.
2. W/N Rodolfo Morales a builder in good faith that would entitle him to reimbursement.
1. NO.

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the
parties. Implied trusts come into being by operation of law, either through implication of an intention
to create a trust as a matter of law or through the imposition of the trust irrespective of and even
contrary to, any such intention. Implied trusts are either resulting or constructive trusts. Constructive
trusts are created by the construction of equity in order to satisfy the demands of justice and prevent
unjust enrichment. 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 of circumstances of the consideration involved
in a transaction whereby one person becomes invested with legal title but is obligated in equity to hold
his legal title for the benefit of another.
A resulting trust in exemplified by Article 1448 of the Civil Code: "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 having the
beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However,
if the person to whom 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 disputable presumed that there is gift in favor of a child.
The last sentence of Article 1448 gives one of the recognized exceptions to the establishment of an
implied resulting trust. (The other two would be: when actual contrary intention is proved and when
purchase is made in violation of an existing statute and in evasion of its express provision.)
As a rule the burden of proving the existence of trust is on the party asserting its existence, and such
proof must be clear and satisfactorily show the existence of trust. While implied trusts may be proved
by oral evidence, evidence must be trustworthy and received by the courts wth extreme caution. On this
basis alone, Rodolfo and Priscilla Morales' claim must fail. Rodolfo and Priscilla relied merely on
testimonial evidences which are self-serving. Proof of Ranulfo and Erlinda Ortiz's lawful acquisition of
the property through Celso Avelinos ownership on the other hand was supported by documentary
evidences such as the deed of absolute sale and tax declarations. Even testimonies of Celso's other
sisters prove that they believe that he is the true owner of the property. The fact that the other siblings
did not intervene in this case to protect their right and that upon the death of their parents no extrajudicial partition occurred further strengthens Celso's ownership. Moreover, assuming that their claim
that Celso was a mere trustee is true, it still falls under the exemption under the last sentence of Article
1448 which states that if the person to whom the title conveyed is a child, there is a presumption that it
is a gift in favor of the child.
2. NO. Article 448 (This is on builders in good faith, look it up nalang if you want) only applies when a
builder thinks he owns the land or believes himself to have a claim of title. From the evidences
adduced, Rodolfo Morales knew from the beginning that he was not the owner of the land. Rodolfo is
not entitled to reimbursement.


G.R. No. 178645. January 30, 2009
Facts: Petitioner operated a hardware store in a building along Bonifacio St., Tuguegarao, Cagayan,
which stood in a commercial lot owned by Maria Mendoza, from whom the petitioner rented the same.
In 1982, petitioner allowed respondents to manage the store. In 1984, Mendoza put the Bonifacio
property for sale. Having no funds, Petitioner allegedly entered into a verbal agreement with
respondents stipulating that the latter shall buy the property in behalf of the petitioner and the
consideration for the lot shall be paid from the accumulated earnings of the store. On September 20,
1984, respondents returned the management of the store to the petitioner with an inventory showing a
difference of P116,946.15. The petitioner then demanded from the respondents the reconveyance title
of the property but the latter refused. Petitioner argues that the respondents are mere trustees of the
property and thus, are under moral and legal obligation to reconvey the property to her. Petitioner
further argues that the difference in the inventory proves that such amount was used to pay for the
purchase price of the property. Respondents, on the other hand, contend that they have the full
ownership of the property because they paid for it out of their own funds. The petitioner filed a case
before the RTC which rendered a judgment in favor of the petitioner, which was later on reversed by
the Court of Appeals.
Issue: Whether there is a valid and enforceable trust.
Held: No, the Court ruled that petitioners allegations as to the existence of an express trust agreement
with respondent spouses Ramos, supported only by her own and her son Johnsons testimonies, do not
hold water. A resulting difference of P116,946.15 in the beginning inventory of the stocks of the
hardware store and the second inventory thereof, by itself, is not conclusive proof that the said amount
was used to pay the purchase price of the Bonifacio property, such as would make it the property of
petitioner held merely in trust by respondent spouses Ramos.

VDA. DE ESCONDE vs. CA, G.R. No. 103635 February 1, 1996

Petitioners Constancia, Benjamin and Elenita, and private respondent Pedro, are the children of the late
Eulogio Esconde and petitioner Catalina Buan. Eulogio Esconde was one of the children and heirs of
Andres Esconde. Andres is the brother of Estanislao Esconde, the original owner of the disputed lot
who died without issue. Survived by his only brother, Andres, Estanislao left an estate consisting of
four parcels of land in Samal, Bataan. Eulogio died in April, 1944 survived by petitioners and private
respondent. At that time, Lazara and Ciriaca, Eulogio's sisters, had already died without having
partitioned the estate of the late Estanislao Esconde. Sometime later, the heirs of Lazara, Ciriaca and
Eulogio executed a deed of extrajudicial partition. Since the children of Eulogio, with the exception of
Constancia, were then all minors, they were represented by their mother and judicial guardian,
petitioner Catalina Buan vda. de Esconde who renounced and waived her usufructuary rights over the
parcels of land in favor of her children in the same deed. Subsequently, Benjamin discovered that Lot
No. 1700 was registered in the name of his brother, private respondent. Believing that the lot was coowned by all the children of Eulogio Esconde, Benjamin demanded his share of the lot from private
respondent. However, private respondent asserted exclusive ownership thereof pursuant to the deed of
extrajudicial partition. The lower court ruled that the action had been barred by both prescription and
The applicability of the laches doctrine to implied trust is the issue in this petition.
Petitioner Catalina Buan vda. de Esconde, as mother and legal guardian of her children, appears to have
favored her elder son, private respondent, in allowing that he be given Lot No. 1700 in its entirety in
the extrajudicial partition of the Esconde estate to the prejudice of her other children. Private
respondent exercised exclusive rights of ownership therein to the extent of even mortgaging the lot
when he needed money. If, as petitioners insist, a mistake was committed in allotting Lot No. 1700 to
private respondent, then a trust relationship was created between them and private respondent.
However, private respondent never considered himself a trustee. If he allowed his brother Benjamin to
construct or make improvements thereon, it appears to have been out of tolerance to a brother.
Consequently, if indeed, by mistake, private respondent was given the entirety of Lot No. 1700, the
trust relationship between him and petitioners was a constructive, not resulting, implied trust.
Unfortunately, petitioners assailed private respondents exercise of absolute ownership over the
property long after their right to do so have prescribed. The rule that a trustee cannot acquire by
prescription ownership over property entrusted to him until and unless he repudiates the trust, applies
to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may
supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of the said
trust is not a condition precedent to the running of the prescriptive period.

Torbela vs. Spouses Rosario

GR 140528 Dec. 07, 2011
FACTS: The issue is over a parcel of land inherited by the Torbela siblings from their parents. They
executed a deed of absolute quitclaim over the property in favor of Dr. Rosario. Four days later, on
December 16, 1964, Lot No. 356-A was issued in Dr. Rosarios name covering the said property.
Another Deed of Absolute Quitclaim was subsequently executed on December 28, 1964, this time by
Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the Torbela siblings and was
already returning the same to the latter for P1.00.
This deed was notarized but not immediately annotated. Dr. Rosario used the land as mortgage for a
loan he obtain and used the proceeds of the loan for the construction of improvements. Dr. Rosario
fully paid the loan from DBP and the mortgage was cancelled and ratified by a notary public. However,
Dr. Rosario took another loan from PNB. He later acquired a third loan from Banco Filipino and
bought out the loan from PNB cancelling the mortgage with PNB. Rosario failed to pay their loan in
Banco Filipino and the property was extrajudicially foreclosed. In 1986, the siblings filed a civil case
for recovery of ownership and possession and damages.
ISSUES: Whether or not an implied or express trust was established between the parties; Whether or
not the right of the Torbelas to recover the land has prescribed.
Dr. Rosario only holds Lot No. 356-A in trust for the Torbela siblings. When Dr. Rosario was able to
register Lot No. 356-A in his name under December 16, 1964, an implied trust was initially established
between him and the Torbela siblings under Article 1451 of the Civil Code, which provides:
ART. 1451. When land passes by succession to any person and he causes the legal title to be put in the
name of another, a trust is established by implication of law for the benefit of the true owner.
Dr. Rosarios execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his
express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually
transformed the nature of the trust to an express one. The express trust continued despite Dr. Rosario
stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the Torbela
siblings as Lot No. 356-A remained registered in Dr. Rosarios name. He kept possession of said
property, together with the improvements thereon.
To apply the 10-year prescriptive period, which would bar a beneficiarys action to recover in an
express trust, the repudiation of the trust must be proven by clear and convincing evidence and made
known to the beneficiary. The express trust disables the trustee from acquiring for his own benefit the
property committed to his management or custody, at least while he does not openly repudiate the trust,
and makes such repudiation known to the beneficiary or cestui que trust. For this reason, the old Code
of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to continuing
and subsisting (i.e., unrepudiated) trusts. In an express trust, the delay of the beneficiary is directly
attributable to the trustee who undertakes to hold the property for the former, or who is linked to the
beneficiary by confidential or fiduciary relations. The trustee's possession is, therefore, not adverse to
the beneficiary, until and unless the latter is made aware that the trust has been repudiated.
Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when he
registered Lot No. 356-A in his name under, so when on February 13, 1986, the Torbela siblings
instituted before the RTC for the recovery of ownership and possession of Lot No. 356-A from the
spouses Rosario, over 21 years had passed, concluding that it was already barred by prescription, as
well as laches.
Hence, Dr. Rosario is deemed to have effectively repudiated the express trust between him and the
Torbela siblings on March 6, 1981, on which day, the prescriptive period for the enforcement of the
express trust by the Torbela siblings began to run.

From March 6, 1981, when the amended loan and mortgage agreement was registered, to February 13,
1986, when the Torbela siblings instituted before the RTC the case against the spouses Rosario, only
about five years had passed. The Torbela siblings were able to institute the case well before the lapse of
the 10-year prescriptive period for the enforcement of their express trust with Dr. Rosario.
The case at bench is likewise not barred by laches. Laches means the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by exercising due diligence could or
should have been done earlier. The Torbela siblings instituted their case five years after Dr. Rosarios
repudiation of the express trust, still within the 10-year prescriptive period for enforcement of such
trusts. This does not constitute an unreasonable delay in asserting one's right. A delay within the
prescriptive period is sanctioned by law and is not considered to be a delay that would bar relief.
Laches apply only in the absence of a statutory prescriptive period.

PNB vs Aznar
649 SCRA 214 (2011)
In 1958, RISCO ceased operation due to business reverses. In plaintiffs desire to rehabilitate
RISCO, they contributed a total amount of P212,720.00 which was used in the purchase of the
three (3) parcels of land. After the purchase of the above lots, titles were issued in the name of
RISCO. The amount contributed by plaintiffs constituted as liens and encumbrances on the
aforementioned properties as annotated in the titles of said lots.
The stockholders contributed specific amount to constitute as their lien or interest on the property
described above, if and when said property are titled in the name of RURAL INSURANCE &
SURETY CO., INC., subject to registration as their adverse claim until such time their respective
contributions are refunded to them completely. Thereafter, various subsequent annotations were
made on the same titles in favor of herein defendant PNB
Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings. Thus, the trial court
rendered a decision which ruled against PNB on the basis that there was an express trust created
over the subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were
the beneficiaries or the cestui que trust.
Whether or not the language of the subject Minutes created an express trust.
No. No such reasonable certitude in the creation of an express trust obtains in the case at bar. In
fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not
offer any indication that the parties thereto intended that Aznar, et al., become beneficiaries under
an express trust and that RISCO serve as trustor.
Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties at
issue because they have no legal and/or equitable rights over the properties that are derived from
the previous registered owner which is RISCO, the pertinent provision of the law is Section 2 of the
Corporation Code (Batas Pambansa Blg. 68), which states that "[a] corporation is an artificial being
created by operation of law, having the right of succession and the powers, attributes and properties
expressly authorized by law or incident to its existence.
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
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit
of the beneficiary. Trust relations between parties may either be express or implied. An express trust
is created by the intention of the trustor or of the parties. An implied trust comes into being by
operation of law.
Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and
positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is
created not necessarily by some written words, but by the direct and positive acts of the parties.
This is in consonance with Article 1444 of the Civil Code, which states that "[n]o particular words
are required for the creation of an express trust, it being sufficient that a trust is clearly intended."
Note: You may choose to copy the words in red for an in-depth background of express trust.

Pacheco vs Arro
85 Phil. 505 (1950)
A petition for a writ of certiorari was filed by Dolores Pacheco, as guardian of the minors
Concepcion, Alicia and Herminia surnamed Yulo, daughters of the late Jose Yulo y Regalado, for
the review of a judgment rendered by the Court of Appeals which affirmed the one rendered on 21
March 1939 by the Court of First Instance of Occidental Negros, ordering Jose Yulo y Regalado to
execute deeds of assignment in favor of the plaintiffs for each and every lot claimed by them.
The respondents, claiming lots as their property and began to present evidence before a referee
appointed by the court in support of their respective claims. Upon the assurance and promise made
in open court by Dr. Mariano Yulo, who represented the late predecessor-in-interest of the
petitioners in the cadastral case, the latter would convey and assign the lots to the claimants, the
herein respondents withdrew their claims, and the cadastral court confirmed the title to the lots and
decreed their registration in the name of the defendant Jose Yulo y Regalado. The plaintiffs and
appellees in the courts below and now respondents asserted title to each lot claimed by them and
began to present evidence to prove title thereto in the cadastral case, but because of the promise
referred to made in open court by the representative of the defendant-appellant, the predecessor-ininterest of the petitioners, the respondents withdrew their claims relying upon such promise.
Whether or not there exists a trust or fiduciary relationship?
When the claim to the lots in the cadastral case was withdrawn by the respondents relying upon the
assurance and promise made in open court by... the predecessor-in-interest of the petitioners, a trust
or fiduciary relation between them arose, or resulted therefrom, or was created thereby. The trustee
cannot invoke the statute of limitations to bar the action and defeat the right of the cestui que
The reason why Pacheco is covered under the Art. 1456, rather than under Art. 1453 (When
property is conveyed to a person in reliance to his declared intention to hold it for, or transfer is to
another or the grantor) is because the action for reconveyance was being filed against the
successors-in-interest of the person who gave such a declaration, and consequently, the property
held in trust passed to the heirs by way of mistake, and rightfully covered under Art. 1456.


61 SCRA 284
Spouses Martin Ramos and Candida Tanate died on October 4, 1906 and October 26, 1880,
respectively. They were survived by their 3 children. Moreover, Martin was survived by his 7 natural
children. In December 1906, a special proceeding for the settlement of the intestate estate of said
spouses was conducted. Rafael Ramos, a brother of Martin, administered the estate for more than 6
years. Eventually, a partition project was submitted which was signed by the 3legitimate children and 2
of the 7 natural children. A certain Timoteo Zayco signed in representation of the other 5 natural
children who were minors. The partition was sworn to before a justice of peace.
The conjugal hereditary estate was appraised at P74,984.93, consisting of 18 parcels of land, some head
of cattle and the advances to the legitimate children. thereof represented the estate of Martin. 1/3
thereof was the free portion or P12,497.98. The shares of the 7 natural children were to be taken from
that 1/3 free portion. Indeed, the partition was made in accordance with the Old Civil code. Thereafter,
Judge Richard Campbell approved the partition project. The court declared that the proceeding will be
considered closed and the record should be archived as soon as proof was submitted that each he3ir had
received the portion adjudicated to him.
On February 3, 1914, Judge Nepumoceno asked the administrator to submit a report showing that the
shares of the heirs had been delivered to them as required by the previous decision. Nevertheless, the
manifestation was not in strict conformity with the terms of the judges order and with the partition
project itself. 8 lots of the Himamaylan Cadastre were registered in equal shares in the names of
Gregoria (widow of Jose Ramos) and her daughter, when in fact the administrator was supposed to pay
the cash adjudications to each of them as enshrined in the partition project. Plaintiffs were then
constrained to bring the suit before the court seeking for the reconveyance in their favor their
corresponding participations in said parcels of land in accordance with Article 840 of the old Civil
Code. Note that 1/6 of the subject lots represents the 1/3 free portion of martins shares which will
eventually redound to the shares of his 7 legally acknowledged natural children. The petitioners action
was predicated on the theory that their shares were merely held in trust by defendants. Nonetheless, no
Deed of Trust was alleged and proven. Ultimately, the lower court dismissed the complaint on the
grounds of res judicata, prescription and laches.
Whether or not the plaintiffs action was barred by prescription, laches and res judicata to the effect that
they were denied of their right to share in their fathers estate.
YES, there was inexcusable delay thereby making the plaintiffs action unquestionably barred by
prescription and laches and also by res judicata. Inextricably interwoven with the questions of
prescription and res judicata is the question on the existence of a trust. It is noteworthy that the main
thrust of plaintiffs action is the alleged holding of their shares in trust by defendants. Emanating from
such, the Supreme Court elucidated on the nature of trusts and the availability of prescription and
laches to bar the action for reconveyance of property allegedly held in trust. It is said that trust is the
right, enforceable solely in equity to the beneficial enjoyment of property, the legal title to which is
vested in another. It may either be express or implied. The latter ids further subdivided into resulting
and constructive trusts. Applying it now to the case at bar, the plaintiffs did not prove any express trust.
Neither did they specify the kind of implied trust contemplated in their action. Therefore, its
enforcement maybe barred by laches and prescription whether they contemplate a resulting or a
constructive trust.

Alejandro Ty vs. Sylvia Ty

553 SCRA 306
Facts: Alexander Ty, son of Alejandro Ty and husband of Sylvia Ty, dies of cancer at the age of 34.
Sylvia files petition for the settlement of Alexanders intestate estate. She also asks court to sell or
mortgage properties in order to pay the estate tax amounting to P4,714,560.02 assessed by the BIR.
The properties include a parcel of land in EDSA Greenhills, a residential land in Wack Wack, and
the Meridien condo unit in Annapolis, Greenhills.
Alejandro Ty opposed the move and filed for recovery of the property with prayer for preliminary
injunction and/or temporary restraining order. Plaintiff Alejandro claims that he owns the EDSA,
Wack Wack and Meridien condo unit because he paid for them. The property was supposedly
registered in trust for Alexanders brothers and sisters in case plaintiff dies. Plaintiff also claimed
that Alex had no financial capacity to purchase the disputed property, as the latter was only
dependent on the former.
Sylvia countered that Alexander had purchased the property with his money. Alexander was
financially capable of purchasing it because he had been managing the family corporations since he
was 18 years old and was also engage in other profitable businesses.
The RTC granted the application for preliminary injunction and decides in favor of plaintiff
regarding the recovery of the property. CA reversed the RTC stating that the implication created by
law under Art. 1448 does not apply if the property was in the name of the purchasers child. They
agreed that plaintiff partly paid for the EDSA property. Plaintiff appealed.
Issue: Whether there was an implied trust under Art. 1448 of the Civil Code?
Held: No, there was no implied trust created in relation to the EDSA property. If the person to
whom the title is conveyed is the child of the one paying the price of the sale, no trust is implied by
law under Art. 1448, the so-called purchase money resulting trust. The said article provides an
exception: 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 disputable presumed
that there is a gift in favor of the child. The Court also noted that plaintiff failed to prove that he
did not intend a donation.
Regarding the Meridien Condo and Wack Wack property, the court said that plaintiff failed to prove
that purchase money came from him. They also said that Alexander was capable of purchasing the
property as he had been working for nine years, had a car care business, and was actively engaged
in the business dealings of several family corporations from which he received emoluments and
other benefits. Hence, no implied trust created because there was no proof that plaintiff had paid for
said properties.


respondent. [G.R. No. 144516. February 11, 2004]
FACTS: The DBP is a government financial institution with an original charter, Executive Order No.
81as amended by Republic Act No. 8523 (DBP Charter). The COA is a constitutional body with the
mandate to examine and audit all government instrumentalities and investment of public funds. the
Development Bank of the Philippines (DBP) Board of Governors adopted Resolution No. 794 creating
the DBP Gratuity Plan and authorizing the setting up of a retirement fund to cover the benefits due to
DBP retiring officials and employees under Commonwealth Act No. 186, as amended. On February 26,
1980, a Trust Indenture was entered into by and between the DBP and the Board of Trustees of the
Gratuity Plan Fund, vesting in the latter the control and administration of the Fund. The trustee,
subsequently, appointed the DBP Trust Services Department (DBP-TSD) as the investment manager
thru an Investment Management Agreement, with the end in view of making the income and principal
of the Fund sufficient to meet the liabilities of DBP under the Gratuity Plan. Pursuant to the investment
scheme, DBP-TSD paid to the investor-members a total of P11,626,414.25 representing the net
earnings of the investments for the years 1991 and 1992. The payments were disallowed by the Auditor
under Audit Observation Memorandum No. 93-2 dated March 1, 1993, on the ground that the
distribution of income of the Gratuity Plan Fund (GPF) to future retirees of DBP is irregular and
constituted the use of public funds for private purposes which is specifically proscribed under Section 4
of P.D. 1445. The Auditor reasoned that the Fund is still owned by the Bank, the Board of Trustees is a
mere administrator of the Fund in the same way that the Trust Services Department where the fund was
invested was a mere investor and neither can the employees, who have still an inchoate interest [i]n the
Fund be considered as rightful owner of the Fund. . Chairman Antonio alleged that the express trust
created for the benefit of qualified DBP employees under the Trust Agreement (Agreement) dated 26
February 1980 gave the Fund a separate legal personality.
ISSUE: Whether the income of the Fund is income of DBP?
HELD: The COA alleges that DBP is the actual owner of the Fund and its income, on the following
grounds: (1) DBP made the contributions to the Fund; (2) the trustees of the Fund are merely
administrators; and (3) DBP employees only have an inchoate right to the Fund. The DBP counters that
the Fund is the subject of a trust, and that the Agreement transferred legal title over the Fund to the
trustees. The income of the Fund does not accrue to DBP. Thus, such income should not be recorded in
DBPs books of account. A trust is a fiduciary relationship with respect to property which 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. A trust is either express or implied. Express trusts are those which the direct and
positive acts of the parties create, by some writing or deed, or will, or by words evincing an intention to
create a trust. In the present case, the DBP Board of Governors (now Board of Directors) Resolution
No. 794 and the Agreement executed by former DBP Chairman Rafael Sison and the trustees of the
Plan created an express trust, specifically, an employees trust. An employees trust is a trust maintained
by an employer to provide retirement, pension or other benefits to its employees. It is a separate taxable
entity established for the exclusive benefit of the employees. In a trust, one person has an equitable
ownership in the property while another person owns 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.


FACTS: The instant petition stemmed from an action for reconveyance instituted by petitioner Richard
B. Lopez in his capacity as trustee of the estate of the late Juliana Lopez Manzano (Juliana) to recover
from respondents several large tracts of lands allegedly belonging to the trust estate of Juliana. The
decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union did not bear any children.
Juliana was the owner of several properties, among them, the properties subject of this dispute. The
disputed properties totaling more than 1,500 hectares consist of six parcels of land, which are all
located in Batangas. They were the exclusive paraphernal properties of Juliana together with a parcel of
land situated in Mindoro known as Abra de Ilog and a fractional interest in a residential land on
Antorcha St., Balayan, Batangas. , Juliana executed a notarial will,[4] whereby she expressed that she
wished to constitute a trust fund for her paraphernal properties, denominated as Fideicomiso de Juliana
Lopez Manzano (Fideicomiso), to be administered by her husband. If her husband were to die or
renounce the obligation, her nephew, Enrique Lopez, was to become administrator and executor of the
Fideicomiso. Juliana initiated the probate of her will five (5) days after its execution, but she died on 12
August 1968, before the petition for probate could be heard. The petition was pursued instead in
Special Proceedings (S.P.) No. 706 by her husband, Jose, who was the designated executor in the will.
Jose died on 22 July 1980, leaving a holographic will disposing of the disputed properties to
respondents. The will was allowed probate on 20 December 1983 in S.P. No. 2675 before the RTC of
Pasay City. Pursuant to Joses will, the RTC ordered on 20 December 1983 the transfer of the disputed
properties to the respondents as the heirs of Jose. Consequently, the certificates of title of the disputed
properties were cancelled and new ones issued in the names of respondents.
On 11 December 1984, petitioner instituted an action for reconveyance of parcels of land with sum of
money before the RTC of Balayan, Batangas against respondents. The complaint[5] essentially alleged
that Jose was able to register in his name the disputed properties, which were the paraphernal properties
of Juliana, either during their conjugal union or in the course of the performance of his duties as
executor of the testate estate of Juliana and that upon the death of Jose, the disputed properties were
included in the inventory as if they formed part of Joses estate when in fact Jose was holding them
only in trust for the trust estate of Juliana.
ISSUE: of whether an implied trust was constituted over the disputed properties when Jose, the trustee,
registered them in his name.
HELD: Petitioner insists that an express trust was constituted over the disputed properties; thus the
registration of the disputed properties in the name of Jose as trustee cannot give rise to prescription of
action to prevent the recovery of the disputed properties by the beneficiary against the trustee.
Evidently, Julianas testamentary intent was to constitute an express trust over her paraphernal
properties which was carried out when the Fideicomiso was established in S.P. No. 706. . The probate
court adjudicated the disputed properties to Jose as the sole heir of Juliana. If a mistake was made in
excluding the disputed properties from the Fideicomiso and adjudicating the same to Jose as sole heir,
the mistake was not rectified as no party appeared to oppose or appeal the exclusion of the disputed
properties from the Fideicomiso. Moreover, the
exclusion of the disputed properties from the Fideicomiso bore the approval of the probate court. The
issuance of the probate courts order adjudicating the disputed properties to Jose as the sole heir of
Juliana enjoys the presumption of regularity. On the premise that the disputed properties were the
paraphernal properties of Juliana which should have been included in the Fideicomiso, their registration
in the name of Jose would be erroneous and Joses possession would be that of a trustee in an implied
trust. 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.
The provision on implied trust governing the factual milieu of this case is provided in Article 1456 of
the Civil Code, which states:
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.

The registration of the disputed properties in the name of Jose was actually pursuant to a court order.
The apparent mistake in the adjudication of the disputed properties to Jose created a mere implied trust
of the constructive variety in favor of the beneficiaries of the Fideicomiso.

Facts: During their lifetime, spouses Julian and Aurelia Paringit leased a lot on from Terocel Realty,
Inc. They built their home raised their 5 children. Then Aurelia died on November 6, 1972. For having
occupied the lot for years, Terocel Realty offered to sell it to Julian but he did not have enough money
at that time to meet the payment deadline. Julian sought the help of his children so he can buy the
property but only his son Felipe and wife Josefa had the financial resources he needed at that time. To
bring about the purchase, Julian executed a deed of assignment of leasehold right in favor of Felipe and
his wife that would enable them to acquire the lot. The latter bought the same from Terocel Realty for
P55,500.00 to be paid in installments. Felipe and his wife paid the last installment and the realty
company executed a Deed of Absolute Sale in their favor and turned over the title to them. Due to
issues among Julians children regarding the ownership of the lot, Julian executed an affidavit
clarifying the nature of Felipe and his wifes purchase of the lot. He claimed that it was bought for the
benefit of all his children and the same must be divided equally among my five children at 15 sq. m.
each; but each of them should reimburse their brother Felipe and his wife, Josefa the proportional
amount advanced by them as I also will reimburse him the sum of P30,000.00 or one half of the
amount that the couple advanced. Felipe and his wife registered their purchase of the lot, resulting in
the issuance of Transfer Certificate of Title 172313 in their names. Despite the title, however, the
spouses moved to another house on the same street in 1988. Marciana, et al, on the other hand,
continued to occupy the lot with their families without paying rent. This was the situation when their
father Julian died. Felipe and his wife sent a demand letter to Marciana, et al asking them to pay rental
arrearages for occupying the property from and Marciana, et al refused to pay or reply to the letter,
believing that they had the right to occupy the house and lot, it being their inheritance from their
parents. Then Felipe and his wife filed an ejectment suit against them. The suit prospered, resulting in
the ejectment of Marciana, et al and their families from the property. Shortly after, Felipe and his wife
moved into the same.
1. Whether or not Felipe and his wife purchased the subject lot under an implied trust for the benefit of
all the children of Julian;
2. W/n that Marciana, et als right of action was barred by prescription or laches.
1. The CA found that Felipe and his wifes purchase of the lot falls under the rubric of the implied trust
provided in Article 1450 of the Civil Code. Implied trust under Article 1450 presupposes a situation
where a person, using his own funds, buys property on behalf of another, who in the meantime may not
have the funds to purchase it. Title to the property is for the time being placed in the name of the
trustee, the person who pays for it, until he is reimbursed by the beneficiary, the person for whom the
trustee bought the land. It is only after the beneficiary reimburses the trustee of the purchase price that
the former can compel conveyance of the property from the latter. But the circumstances of this case
are actually what implied trust is about. Although no express agreement covered Felipe and his wifes
purchase of the lot for the siblings and their father, it came about by operation of law and is protected
by it. The nature of the transaction established the implied trust and this in turn gave rise to the rights
and obligations provided by law. Implied trust is a rule of equity, independent of the particular intention
of the parties. In an implied trust, the beneficiarys cause of action arises when the trustee repudiates
the trust, not when the trust was created as Felipe and his wife would have it.
2. Felipe and his wife also claim that Marciana, et als action was barred by laches. But there is no basis
for such claim. Laches has been defined as the failure or neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence could or should have been done earlier.
Marciana, et al had no reason to file an earlier suit against Felipe and his wife since the latter had not
bothered them despite their purchase of the lot in their names. Only about 12 years later when they
wrote their demand letter did the spouses take an adverse attitude against Marciana, et al. The latter
filed their action to annul Felipe and his wifes title and have the same transferred to their name.


June 15, 2011 Maria Sta. Maria and Dominga Manangan were the registered owners - three-fourths () and
one-fourth () pro-indiviso, respectively - of a parcel of land. Sta. Maria sold her three-fourths () share to
Benigna Llamas. The sale was duly annotated at the back of OCT No. 24695. When Benigna died in 1944, she
willed her three-fourths () share equally to her sisters Alejandra Llamas and Josefa Llamas. Thus, Alejandra
and Josefa each owned one-half () of Benignas three-fourths () share. Alejandras heirs sold their
predecessors one-half () share (roughly equivalent to 10,564 square meters) to the respondent, as evidenced
by a Deed of Absolute Sale. Also, Josefa sold her own one-half () share (subject property) to the respondent
and the petitioner, as evidenced by another Deed of Absolute Sale. The respondent and the petitioner executed
an Agreement, allotting their portions of the subject property. The petitioner and the respondent executed an
Affidavit of Adverse Claim over the subject property. The parties took possession of their respective portions of
the subject property and declared it in their name for taxation purposes. The respondent asked the Register of
Deeds of Lingayen, Pangasinan on the requirements for the transfer of title over the portion allotted to him on
the subject property. To his surprise, the respondent learned that the petitioner had already obtained in his name
two transfer certificates of title. The respondent filed a complaint for Annulment of Title, Reconveyance and
Damages against the petitioner, seeking the reconveyance of the 1,004-square meter portion (disputed property)
covered by TCT No. 195813, on the ground that the petitioner is entitled only to the 3,020 square meters
identified in the parties Agreement. The respondent sought the nullification of the petitioners titles by
contesting the authenticity of the petitioners documents. Particularly, the respondent assailed the Benigna Deed
by presenting Benignas death certificate. The respondent argued that Benigna could not have executed a deed,
which purports to convey 4,024 square meters to the petitioner, in 1969 because Benigna already died in 1944.
The respondent added that neither could Sta. Maria have sold to the parties her three-fourths () share in 1969
because she had already sold her share to Benigna in 1932.22 The petitioner asked for the dismissal of the
complaint and for a declaration that he is the lawful owner of the parcels of land covered by his titles. The RTC
dismissed the complaint. On appeal, the CA reversed the RTC by ruling against the authenticity of the Benigna
Deed and the Affidavit. As the totality of the evidence presented sufficiently sustains [the respondents] claim
that the titles issued to [the petitioner] were based on forged and spurious documents, it behooves this Court to
annul these certificates of title. Hence, this petition for revie.
Whether the CA erred in ordering the reconveyance of the parcel of land covered by the petitioners titles.
We partially grant the petition. An action for reconveyance is a legal and equitable remedy granted to the
rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the
registered owner to transfer or reconvey the land to him. The plaintiff in this action must allege and prove his
ownership of the land in dispute and the defendants erroneous, fraudulent or wrongful registration of the
property. The petitioners argument confuses registration of title with ownership. While the petitioners
ownership over the land covered by TCT No. 195812 is undisputed, his ownership only gave him the right to
apply for the proper transfer of title to the property in his name. Obviously, the petitioner, even as a rightful
owner, must comply with the statutory provisions on the transfer of registered title to lands. Section 53 of
Presidential Decree No. 1529 provides that the subsequent registration of title procured by the presentation of a
forged deed or other instrument is null and void. Thus, the subsequent issuance of TCT No. 195812 gave the
petitioner no better right than the tainted registration which was the basis for the issuance of the same title. The
Court simply cannot allow the petitioners attempt to get around the proper procedure for registering the transfer
of title in his name by using spurious documents. Reconveyance is the remedy of the rightful owner only While
the CA correctly nullified the petitioners certificates of title, the CA erred in ordering the reconveyance of the
entire subject property in the respondents favor. The respondent himself admitted that the 3,020- square meter
portion covered by TCT No. 195812 is the petitioners just share in the subject property.54 Thus, although the
petitioner obtained TCT No. 195812 using the same spurious documents, the land covered by this title should
not be reconveyed in favor of the respondent since he is not the rightful owner of the property covered by this

Pasio vs Monterroyo

This case originated from an action for recovery of possession and damages, with prayer for the
issuance of a temporary restraining order or writ of preliminary mandatory injunction, filed by Rogelio,
George, Lolita, Rosalinda and Josephine, all surnamed Pasio, represented by their father and attorneyin-fact Jose Pasio (petitioners) against Dr. Teofilo Eduardo F. Monterroyo (Dr. Monterroyo), later
substituted by his heirs Romualdo, Maria Teresa and Stephen, all surnamed Monterroyo (respondents).
Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of 19,979 square meters,
located at Panul-iran, Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and cleared
by Laureano Pasio (Laureano) in 1933. The 24-hectare land formed part of the public domain which
was later declared alienable and disposable. On 18 February 1935, Laureano filed a homestead
application over the entire 24-hectare land under Homestead Application No. 205845.[5] On 22 April
1940, the Bureau of Forestry wrote Laureano and informed him that the tract of land covered by his
application was not needed for forest purposes.[6] On 11 September 1941, the Director of Lands issued
an Order[7] approving Laureanos homestead application and stating that Homestead Entry No. 154651
was recorded in his name for the land applied for by him.
Laureano died on 24 March 1950. On 15 April 1952, the Director of Lands issued an Order[8] for the
issuance of a homestead patent in favor of Laureano, married to Graciana Herbito[9] (Graciana).
Laureanos heirs did not receive the order and consequently, the land was not registered under
Laureanos name or under that of his heirs. In 1953, the property was covered by Tax Declaration No.
11102[10] in the name of Laureano with Graciana[11] as administrator.
Between 1949 and 1954, a Cadastral Survey was conducted in Iligan City. The surveyor found that a
small creek divided the 24-hectare parcel of land into two portions, identified as Lot No. 2138 and Lot
No. 2139.
Petitioners claimed that Laureanos heirs, headed by his son Jose, continuously possessed and
cultivated both lots. On 16 October 1962, Joses co-heirs executed a Deed of Quitclaim renouncing
their rights and interest over the land in favor of Jose. Jose secured a title in his name for Lot No. 2138.
Later, Jose alienated Lot No. 2139 in favor of his children (petitioners in this case) who, on 8 January
1994, simultaneously filed applications for grant of Free Patent Titles over their respective shares of
Lot No. 2139 before the Land Management Bureau of the Department of Environment and Natural
Resources (DENR). On 22 August 1994, the DENR granted petitioners applications and issued
Original Certificate of Title (OCT) No. P-1322 (a.f.) in favor of Rogelio Pasio, OCT No. P-1318 (a.f.)
in favor of George Pasio, OCT No. P-1317 (a.f.) in favor of Lolita Pasio, OCT No. P-1321 (a.f.) in
favor of Josephine Pasio, and OCT No. P-1319 (a.f.) in favor of Rosalinda Pasio. Petitioners alleged
that their possession of Lot No. 2139 was interrupted on 3 January 1993 when respondents forcibly
took possession of the property.
Respondents alleged that they had been in open, continuous, exclusive and notorious possession of Lot
No. 2139, by themselves and through their predecessors-in-interest, since 10 July 1949. They alleged
that on 10 July 1949, Rufo Larumbe (Larumbe) sold Lot No. 2139 to Petra Teves (Petra). On 27
February 1984, Petra executed a deed of sale over Lot No. 2139 in favor of Vicente Teves (Vicente).
On 20 February 1985, Vicente executed a pacto de retro sale over the land in favor of Arturo Teves
(Arturo). In 1992, Arturo sold Lot No. 2139 in favor of respondents father, Dr. Monterroyo, by virtue
of an oral contract. On 5 January 1995, Arturo executed a Deed of Confirmation of Absolute Sale of
Unregistered Land in favor of Dr. Monterroyos heirs.
Respondents alleged that Jose was not the owner of Lot No. 2139 and as such, he could not sell the
land to his children. They alleged that petitioners OCTs were null and void for having been procured in
violation of the Public Land Act. They further alleged that the Land Management Bureau had no
authority to issue the free patent titles because Lot No. 2139 was a private land.
whether the Court of Appeals erred in sustaining the trial courts Decision declaring respondents as the
rightful owners and possessors of Lot No. 2139

The trial court found that the preponderance of evidence favors respondents as the possessors of Lot
No. 2139 for over 30 years, by themselves and through their predecessors-in-interest. The question of
who between petitioners and respondents had prior possession of the property is a factual question
whose resolution is the function of the lower courts.[17] When the factual findings of both the trial
court and the Court of Appeals are supported by substantial evidence, they are conclusive and binding
on the parties and are not reviewable by this Court.[18] While the rule is subject to exceptions, no
exception exists in this case.
Respondents were able to present the original Deed of Absolute Sale, dated 10 July 1949, executed by
Larumbe in favor of Petra.[19]Respondents also presented the succeeding Deeds of Sale showing the
transfer of Lot No. 2139 from Petra to Vicente[20] and from Vicente to Arturo[21] and the Deed of
Confirmation of Absolute Sale of Unregistered Real Property executed by Arturo in favor of
respondents.[22] Respondents also presented a certification[23] executed by P/Sr. Superintendent
Julmunier Akbar Jubail, City Director of Iligan City Police Command and verified from the Log Book
records by Senior Police Officer Betty Dalongenes Mab-Abo confirming that Andres Quinaquin made
a report that Jose, Rogelio and Luciana Pasio, Lucino Pelarion and Nando Avilo forcibly took his
copra. This belied petitioners allegation that they were in possession of Lot No. 2139 and respondents
forcibly took possession of the property only in January 1993.
Considering that petitioners application for free patent titles was filed only on 8 January 1994, when
Lot No. 2139 had already become private land ipso jure, the Land Management Bureau had no
jurisdiction to entertain petitioners application.

Estate of Margarita Cabancungan v. Marilou Laigo

GR. No. 175073 August 15, 2011

1. Margarita Cabacungan (Margarita) owned three parcels of unregistered land in Paringao and in
Baccuit, Bauang, La Union.
2. Sometime in 1968, Margaritas son, Roberto Laigo, Jr. (Roberto), applied for a nonimmigrant visa
to the United States, and to support his application, he allegedly asked Margarita to transfer the tax
declarations of the properties in his name.
3. For said purpose, Margarita, unknown to her other children, executed an Affidavit of Transfer of
Real Property whereby the subject properties were transferred by donation toRoberto.
4. Not long after, Robertos visa was issued and he was able to travel to the U.S. as a tourist and
returned in due time. In 1979, he adopted respondents Pedro Laigo (Pedro) and Marilou Laigo
(Marilou), and then he married respondent Estella Balagot.
5. In July 1990, Roberto sold the 4,512 sq m property in Baccuit to the spouses Mario and Julia
Campos for P23,000.00.
6. Then in August 1992, he sold the 1,986 sq m and 3,454 sq m lots in Paringao, respectively, to
Marilou for P100,000.00 and to Pedro for P40,000.00.
7. Allegedly, these sales were not known to Margarita and her other children.
8. It was only in August 1995, at Robertos wake, that Margarita came to know of the sales as told by
Pedro himself.
9. In February 1996, Margarita, represented by her daughter, Luz, instituted the instant complaint for
the annulment of said sales and for the recovery of ownership and possession of the subject
properties as well as for the cancellation of Ricardos tax declarations.
10. Margarita admitted having accommodated Robertos request for the transfer of the properties to his
name, but pointed out that the arrangement was only for the specific purpose of supporting his U.S.
visa application. She emphasized that she never intended to divest herself of ownership over the
subject lands and, hence, Roberto had no right to sell them to respondents and the Spouses Campos.
She likewise alleged that the sales, which were fictitious and simulated considering the gross
inadequacy of the stipulated price, were fraudulently entered into by Roberto. She imputed bad faith
to Pedro, Marilou and the Spouses Campos as buyers of the lots, as they supposedly knew all along
that Roberto was not the rightful owner of the properties.
11. The Spouses Campos advanced that they were innocent purchasers for value and in good faith, and
had merely relied on Robertos representation that he had the right to sell the property; and that,
hence, they were not bound by whatever agreement entered by Margarita with her son.
12. In much the same way, Marilou and Pedro, who likewise professed themselves to be buyers in good
faith and for value, believed that Margaritas cause of action had already been barred by laches, and
that even assuming the contrary, the cause of action was nevertheless barred by prescription as the
same had accrued way back in 1968 upon the execution of the affidavit of transfer by virtue of
which an implied trust had been created. In this regard, they emphasized that the law allowed only a
period of ten (10) years within which an action to recover ownership of real property or to enforce
an implied trust thereon may be brought, but Margarita merely let it pass.
1. Whether or not that the complaint is barred by laches and prescription
2. Whether or not the rule on innocent purchaser for value applies in this case of sale of
unregistered land
3. Whether or not there is evidence to support the finding that there is an implied
trust created between Margarita and her son Roberto
1. No
2. No
3. Yes
For issues 1 and 2. In the case at bar, lands involved are concededly unregistered lands; hence, there is
no way by which Margarita, during her lifetime, could be notified of the furtive and fraudulent sales
made in 1992 by Roberto in favor of respondents, except by actual notice from Pedro himself in August

1995. Hence, it is from that date that prescription began to toll. The filing of the complaint in February
1996 is well within the prescriptive period.
3. Intention although only presumed, implied or supposed by law from the nature of the transaction
or from the facts and circumstances accompanying the transaction, particularly the source of the
consideration is always an element of a resulting trust and may be inferred from the acts or
conduct of the parties rather than from direct expression of conduct. Certainly, intent as an
indispensable element, is a matter that necessarily lies in the evidence, that is, by evidence, even
circumstantial, of statements made by the parties at or before the time title passes. Because an
implied trust is neither dependent upon an express agreement nor required to be evidenced by
writing, Article 1457 of our Civil Code authorizes the admission of parole evidence to prove their
existence. Parole evidence that is required to establish the existence of an implied trust necessarily
has to be trustworthy and it cannot rest on loose, equivocal or indefinite declarations. Thus, contrary
to the Court of Appeals finding that there was no evidence on record showing that an implied trust
relation arose between Margarita and Roberto, we find that petitioner before the trial court, had
actually adduced evidence to prove the intention of Margarita to transfer to Roberto only the legal
title to the properties in question, with attendant expectation that Roberto would return the same to
her on accomplishment of that specific purpose for which the transaction was entered into. The
evidence of course is not documentary, but rather testimonial.