I

General Provisions - Art. 1440

Art. 1441. 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.

A Definition:
- Heirs of Maximo Labanon vs. Heirs of Constancio Labanon, 530 SCRA 97 (2007)
Facts: During the lifetime of Constancio Labanon, prior to the outbreak of WWII, he settled
upon a piece of alienable and disposable public agricultural land situated at Brgy. Lanao,
Kidapawan, Cotabato x x x. Constancio cultivated the said lot and introduced permanent
improvements that still exist up to the present. Being of very limited educational attainment,
he found it difficult to file his public land application over said lot. Constancio then asked his
brother, Maximo Labanon who was better educated to file the corresponding public land
application under the express agreement that they will divide the said lot as soon as it would
be feasible for them to do so. The offer was accepted by Maximo. During the time of the
application it was Constancio who continued to cultivate the said lot in order to comply with
the cultivation requirement set forth under Commonwealth Act 141, as amended,
on Homestead applications. After which, on June 6, 1941, due to industry of Constancio,
Homestead Application No. 244742 (E-128802) of his brother Maximo was approved with
Homestead Patent No. 67512. Eventually, Original Certificate of Title No. P-14320 was issued
by the Register of Deeds of Cotabato over said lot in favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a document denominated as Assignment
of Rights and Ownership and docketed as Doc. No. 20; Page No. 49; Book No. V; Series of
1955 of the Notarial Register of Atty. Florentino Kintanar. The document was executed to
safeguard the ownership and interest of his brother Constancio Labanon. Pertinent portion of
which is reproduced as follows:
That I, MAXIMO LABANON, of legal age, married to Anastacia Sagarino, and a
resident of Kidapawan, Cotabato, for and in consideration of the expenses incurred by
my elder brother CONSTANCIO LABANON also of legal age, Filipino, widower and a
resident of Kidapawan, Cotabato, for the clearing, cultivation and improvements on the
eastern portion xxx Lot No. 1, Blk. 22, Pls-59 xxx which expenses have been incurred
by my said brother xxx before the outbreak of the last world war xxx I do hereby assign
transfer and convey my rights to, interests in and ownership on the said eastern
portion of said Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M) ALONG THE
NATIONAL HIGHWAY, (DAVAO-COTABATO ROAD) by TWO HUNDRED FIFTY METERS (250
M) going inside the land to cover an area of TWO AND ONE HALF HECTARES (25,000
SQ. M.), more or less, adjoining the school site of barrio Lanao, Kidapawan, Cotabato,
to the said CONSTANCIO LABANON, his heirs and assigns, can freely occupy for his own
use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set my hand this 11 th day of February 1995 at
Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife) (p.16, rollo)

On April 25, 1962, Maximo Labanon executed a sworn statement reiterating his desire that
his elder brother Constancio, his heirs and assigns shall own the eastern portion of the Lot,
pertinent portion of which reads:
That I am the same and identical person who is a homestead applicant (HA224742, E-128802) of a tract of land which is covered by Homestead Patent
No. 67512 dated June 6, 1941, known as Lot No. 1, Block 22, Pls-59, situated
in [B]arrio Lanao, Municipality of Kidapawan, Province of Cotabato, Philippines,
and containing an area of 5.0000 hectares, more or less;
That I am the same and identical person who executed a deed of ASSIGNMENT
OF RIGHTS AND OWNERSHIP in favor of my brother Constancio Labanon, now
deceased, now for his heirs, for the eastern half portion of the land above
described, and which deed was duly notarized by notary public Florentino P.
Kintanar on February 11, 1955 at Kidapawan, Cotabato and entered in his
Notarial Register as Doc. No. 20, Page No. 49, Book No. V, Series of 1955; and
That in order that I and the Heirs of Constancio Labanon will exercise our
respective rights and ownership over the aforementioned lot, and to give force
and effect to said deed of assignment, I hereby, by these presents, request
the Honorable Director of Lands and the Land Title Commission to issue a
separate title in my favor covering the western half portion of the
aforementioned lot and to the Heirs of Constancio Labanon a title for the
eastern half portion thereof.
IN WITNESS THEREOF, I have hereunto set my hand this 25 th day of April,
1962, at Pikit, Cotabato, Philippines. (p. 9, records)
After the death of Constancio Labanon, his heirs executed an [e]xtra-judicial settlement of
estate with simultaneous sale over the aforesaid eastern portion of the lot in favor of Alberto
Makilang, the husband of Visitacion Labanon, one of the children of Constancio.
Subsequently, the parcel of land was declared for taxation purposes in the name of Alberto
under TD No. 11593. However, in March 1991, the defendants heirs of Maximo Labanon
namely, Alicia L. Caniedo, Leopoldo Labanon, Roberto Nieto and Pancho Labanon, caused to
be cancelled from the records of the defendant Provincial Assessor of Cotabato the aforesaid
TD No. 11593 and the latter, without first verifying the legality of the basis for said
cancellation, did cancel the same. x x x Further, after discovering that the defendant-heirs of
Maximo Labanon were taking steps to deprive the heirs of Constancio Labanon of their
ownership over the eastern portion of said lot, the latter, thru Alberto Makilang, demanded
the owners copy of the certificate of title covering the aforesaid Lot to be surrendered to the
Register of Deeds of Cotabato so that the ownership of the heirs of Constancio may be fully
effected but the defendants refused and still continue to refuse to honor the trust agreement
entered into by the deceased brothers. x x x[4]
Thus, on November 12, 1991, petitioners filed a complaint[5] for Specific Performance,
Recovery of Ownership, Attorneys Fees and Damages with Writ of Preliminary Injunction and
Prayer for Temporary Restraining Order against respondents docketed as Civil Case No. 865
before the Kidapawan City RTC. After hearing, the trial court rendered its August 18,
1999 Decision.
Issue: Whether or not the Trust Agreement allegedly made by Constancio Labanon and
Maximo Labanon prescribed.[7]

The trust agreement between Maximo Labanon and Constancio Labanon may still
be enforced
Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained the
nature and import of a trust:
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.
This legal relationship can be distinguished from other relationships of a fiduciary
character, such as deposit, guardianship, and agency, in that the trustee has legal title to
the property. In the case at bench, this is exactly the relationship established between the
parties.
Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that [n]o particular words are
required for the creation of an express trust, it being sufficient that a trust is clearly
intended.
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for the
manifestation of intention to create a trust. It is possible to create a trust
without using the word trust or trustee. Conversely, the mere fact that
these words are used does not necessarily indicate an intention to
create a trust. The question in each case is whether the trustor
manifested an intention to create the kind of relationship which to
lawyers is known as trust. It is immaterial whether or not he knows that
the relationship which he intends to create is called a trust, and whether
or not he knows the precise characteristics of the relationship which is
called a trust.
Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles Parsons
and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the parties,
by some writing or deed or by words evidencing an intention to create
a trust; the use of the word trust is not required or essential to its
constitution, it being sufficient that a trust is clearly intended.
In the instant case, such intention to institute an express trust between Maximo
Labanon as trustee and Constancio Labanon as trustor was contained in not just one but two
written documents, the Assignment of Rights and Ownership as well as Maximo Labanons
April 25, 1962 Sworn Statement. In both documents, Maximo Labanon recognized
Constancio Labanons ownership and possession over the eastern portion of the property
covered by OCT No. P-14320, even as he recognized himself as the applicant for the
Homestead Patent over the land. Thus, Maximo Labanon maintained the title over the
property while acknowledging the true ownership of Constancio Labanon over the eastern
portion of the land. The existence of an express trust cannot be doubted nor disputed.

On the issue of prescription, we had the opportunity to rule in Bueno v.

Reyes that unrepudiated written express trusts are imprescriptible:
While there are some decisions which hold that an action upon a trust is
imprescriptible, without distinguishing between express and implied trusts, the better
rule, as laid down by this Court in other decisions, is that prescription does supervene
where the trust is merely an implied one. The reason has been expressed by Justice
J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real
property prescribed in 10 years, excepting only actions based on continuing or
subsisting trusts that were considered by section 38 as imprescriptible. As held in the
case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing or
subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred
only to express unrepudiated trusts, and did not include constructive trusts (that are
imposed by law) where no fiduciary relation exists and the trustee does not recognize
the trust at all.

This principle was amplified in Escay v. Court of Appeals this way: Express trusts
prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al. vs. Carmen Gorricho
et al., 54 0.G. p. 8429, Sec. 40, Code of Civil Procedure).
In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive
period for the enforcement of an express trust of ten (10) years starts upon the repudiation
of the trust by the trustee.
In the case at bar, Maximo Labanon never repudiated the express trust instituted
between him and Constancio Labanon. And after Maximo Labanons death, the trust could no
longer be renounced; thus, respondents right to enforce the trust agreement can no longer
be restricted nor prejudiced by prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo Labanons
Sworn Statement were executed after the Homestead Patent was applied for and eventually
granted with the issuance of Homestead Patent No. 67512 on June 6, 1942. Evidently, it was
the intent of Maximo Labanon to hold the title over the land in his name while recognizing
Constancio Labanons equitable ownership and actual possession of the eastern portion of
the land covered by OCT No. P-14320.
In addition, petitioners can no longer question the validity of the positive declaration
of Maximo Labanon in the Assignment of Rights and Ownership in favor of the late
Constancio Labanon, as the agreement was not impugned during the formers lifetime and
the recognition of his brothers rights over the eastern portion of the lot was further affirmed
and confirmed in the subsequent April 25, 1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of the settled precept that
[w]here one derives title to property from another, the act, declaration, or omission of the
latter, while holding the title, in relation to the property, is evidence against the
former. Thus, petitioners have accepted the declaration made by their predecessor-ininterest, Maximo Labanon, that the eastern portion of the land covered by OCT No. P-14320
is owned and possessed by and rightfully belongs to Constancio Labanon and the latters
heirs. Petitioners cannot now feign ignorance of such acknowledgment by their father,
Maximo.

Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied in the
Assignment of Rights and Ownership pursuant to Article 1371 of the Civil Code that
contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by their father
with respect to the subject property since they were merely subrogated to the rights and
obligations of their predecessor-in-interest. They simply stepped into the shoes of their
predecessor and must therefore recognize the rights of the heirs of Constancio over the
eastern portion of the lot. As the old adage goes, the spring cannot rise higher than its
source.
- Pigao vs. Rabanilla, 488 SCRA 547 (2006)
Facts: Sometime in 1947, the late Eusebio Pigao, petitioners father, together with his family,
settled on a 240 square meter lot located at 92 (now 102) K-5 th Street, Kamuning, Quezon City. The parcel
of land used to be government property owned by the Peoples Homesite and Housing Corporation (PHHC),
under Transfer Certificate of Title (TCT) No. 27287. Eusebio applied for the purchase of the subject lot and a
contract to sell for a consideration of P1,022.19 was thereafter entered into by Eusebio and PHHC.
In 1959, Eusebio executed a deed of assignment of rights over one-half of the property in favor of
respondent, for a consideration of P1,000. Respondent proceeded to occupy the front half portion,
established a residential building thereon, and paid the amortizations for the said portion.
In 1970, Eusebio executed a deed of mortgage over the same half-portion of the property in favor of
respondent. After the amortizations on the subject lot were fully paid in 1973, the PHHC issued a deed of
sale over the entire lot in favor of Eusebio. Consequently, TCT No. 197941 was issued in Eusebios name. In
1978, respondent executed an affidavit of adverse claim over the front half portion of the lot registered in
Eusebios name. This affidavit was duly annotated on TCT No. 197941. On June 17, 1979, Eusebio died and
was survived by his children, herein petitioners.
In 1988, after the Office of the Register of Deeds of Quezon City was gutted by fire, petitioner
Estrella Pigao applied for the reconstitution of the original of TCT No. 197941 that was burned. This was
approved in 1990 and TCT No. RT-11374 was issued, still in the name of Eusebio. This reconstituted title no
longer carried the annotation of the adverse claim of respondent.
In 1992, petitioners executed an extrajudicial settlement of Eusebios estate among themselves,
including the entire subject lot. As a consequence, TCT No. 56210 was issued for the entire lot in the name
of petitioners. Respondent continued to occupy the front half portion through his tenant, Gil Ymata. On
January 29, 1996, petitioners instituted civil case no. Q-96-26270 in the Regional Trial Court (RTC) of
Quezon City, Branch 95, against respondent and Ymata wherein they sought to quiet their title over the
entire lot and to recover possession of the front half portion. They averred that Eusebios deed of
assignment and deed of mortgage were clouds on their title which should be nullified. [5] The RTC ruled in
favor of petitioners.
The CA reversed the RTC decision and ruled in favor of respondent.
Issue: Whether or not THE [CA] ERRED IN DECLARING THAT A RELATIONSHIP OF IMPLIED TRUST OVER THE
[ONE-HALF] (1/2) PORTION OF THE SUBJECT LOT WAS CREATED BETWEEN EUSEBIO PIGAO AND
[RESPONDENT].[7]
xxx [A]fter the execution of the deed of assignment, [respondent] proceeded to buy the front half portion
from PHHC by paying the amortizations due thereon in exercise of the right which he purchased by way of

deed of assignment. He also established his residence on this portion since he was then secure in the
knowledge that he eventually will own the same portion having also purchased this right to own in the
deed of assignment. Therefore, when the purchase price for the entire lot was finally paid, the
deed of its conveyance was finally executed and the title to the entire lot was issued in
Eusebio Pigaos name, an implied trust relationship was created over the front half portion
between Pigao and [respondent].
Per 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 for the purpose of having the beneficial interest of
the property. The former party is referred to as the trustee, while the latter is referred to as the beneficiary.
In the case at bench, the trustee is Pigao, who, with the title to the entire lot issued to him, holds the front
half portion thereof in trust for [respondent], who is the beneficiary.
xxx xxx xxx[26]
The CA declared that Article 1448 of the Civil Code was applicable:
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.
In Morales v. Court of Appeals,[27] we extensively discussed the concept of trust:
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.
xxx xxx xxx
Trusts are either express or implied. Express trusts are created by the intention of the
trustor or of the parties, while 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. In turn, implied
trusts are either resulting or constructive trusts. Resulting trusts are based on the equitable
doctrine that valuable consideration and not legal title determines the equitable title or
interest and are presumed always to have been contemplated by the parties. They arise from
the nature or circumstances of the consideration involved in a transaction whereby one person
thereby becomes invested with legal title but is obligated in equity to hold his legal title for
the benefit of another.
xxx xxx xxx
A resulting trust is exemplified by Article 1448 of the Civil Code xxx
The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money
resulting trust. The trust is created in order to effectuate what the law presumes to have been
the intention of the parties in the circumstances that the person to whom the land was
conveyed holds it as trustee for the person who supplied the purchase money.
To give rise to a purchase money resulting trust, it is essential that there be:

1. an actual payment of money, property or services, or an equivalent, constituting valuable

consideration;
2. and such consideration must be furnished by the alleged beneficiary of a resulting trust.
There are recognized exceptions to the establishment of an implied resulting trust. The first is
stated in the last part of Article 1448 itself. Thus, where A pays the purchase money and title is conveyed
by absolute deed to A's child or to a person to whom A stands in loco parentis and who makes no express
promise, a trust does not result, the presumption being that a gift was intended. Another exception is, of
course, that in which an actual contrary intention is proved. Also where the purchase is made in violation
of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is
guilty of the fraud.[28]
Another exception to the establishment of an implied resulting trust under Article 1448 is when its
enforcement contravenes public policy. We have already ruled that the transfer of rights by Eusebio to
respondent was null and void ab initio for being contrary to public policy. As we held in Ramos v. Court of
Appeals:[29]
Otherwise stated, as an exception to the law on trusts, "[a] trust or a provision in the
terms of a trust is invalid if the enforcement of the trust or provision would be against public
policy, even though its performance does not involve the commission of a criminal or tortious act by the
trustee." The parties must necessarily be subject to the same limitations on allowable stipulations in
ordinary contracts, i.e., their stipulations must not be contrary to law, morals, good customs, public order,
or public policy. What the parties then cannot expressly provide in their contracts for being contrary to law
and public policy, they cannot impliedly or implicitly do so in the guise of a resulting trust. [30] (emphasis
supplied)
Admittedly, respondent shouldered half of the amortizations which were received by Eusebios wife [31] and
paid to the PHHC for the purchase of the lot. He also paid for the realty taxes for the said portion.
[32]
However, this was not an implied trust wherein petitioners held the title over the front half portion in
trust for respondent. Otherwise, it would again run against public policy.

- Gomez vs. Duyan, 453 SCRA 708 [2005]

SPS. FELIZA DUYAN GOMEZ and EUGENIO GOMEZ, petitioners, vs. PURISIMA DUYAN, ROLANDO DUYAN,
EMERITA DUYAN, DIGNA DUYAN, EDUARDO DUYAN, LUCRECIA DUYAN, ROBERTO DUYAN, CRESENCIA
DUYAN, RODRIGO DUYAN, REULGINA DUYAN, DOMINICIA DUYAN, AVECENCIO DUYAN, MARIA SALOME DUYAN
and DIVINA DUYAN, respondents.

Facts: The parties in this case are relatives residing at 96 General Avenue, Project 8, Quezon City
which consists of four houses situated in an eight hundred-square meter (800 sq.m.) lot, covered by TCT
No. 41717 issued by the Register of Deeds of Quezon City in the name of Eulogio Duyan (now deceased)
married to Purisima Duyan, one of the respondents in this case. The property in dispute which constitutes
one-half of the property previously covered by TCT No. 41717 is now covered by TCT No. 281115 issued in
the name of petitioner spouses.[4]

Eulogio Duyan and Feliza Duyan are siblings. In his desire to help his sister, Eulogio allowed her to
construct a house on the disputed lot sometime in 1968. [5] Petitioners acknowledged the fact that the

disputed property was owned by Eulogio and that they were staying in the disputed property solely due to
his benevolence. Accordingly, an instrument entitled Pagpapahayag was executed by the siblings on 5 May
1974. The instrument provides that in the event that the property will be registered in Felizas name, she
will continue to acknowledge Eulogio as the owner and will never assert ownership over the same, except
in accordance with her brothers wishes.[6] The pertinent portions of the instrument read:

Na napagkasunduan naming magcapatid na bouin ang documentong ito bilang katibayan ang lahat;
....
4. Na kaming magkapatid ay magtutulongan at magdadamayan maging sa hirap at ginhawa alang-alang sa
ikabubuti ng aming mga mahal sa buhay;
5. Na ito ay mailagay sa pangalan man ng aming Ama o pangalan ko ay itoy hindi ko pag-aari kundi ari ito
ng aking kuya, Eulogio V. Duyan, at6. Na ito ay aming igagalang maging saan man makarating ngayon at kailan man. [7]

On 11 May 1974, a deed of sale covering a residential house situated on the disputed lot was executed
by Eulogio and Regina Velasquez, a common-law wife of the former, in favor of petitioners for the sum of
One Thousand Pesos (P1,000.00). Thereafter, petitioners allegedly asserted ownership not only over the
said house but over the whole lot covered by TCT No. 41717. [8] This prompted Eulogios legal wife, Purisima,
to file a complaint for recovery of possession and damages against petitioners with the then Court of First
Instance of Rizal, Branch IV-B, Quezon City. [9]

Deciding the case in favor of Purisima, the trial court ordered petitioners to surrender possession of
the property to her. On appeal, the Court of Appeals dismissed the case after the parties entered into an
amicable settlement.[10]

On 25 January 1978, Eulogio and Purisima this time, as vendors, executed a Deed of Absolute Sale in
favor of petitioners with respect to the disputed lot for the sum of Twenty Thousand Pesos (P20,000.00).[11]

Purisima claims that the deed of sale was executed merely to give color of legality to petitioners stay
in the disputed property so that she and her children will not drive them away after they (Purisima and her
children) manifested their opposition to Eulogios decision to let them stay therein. [12] Petitioners claim
otherwise, contending that the sale was freely agreed upon by the parties thereto; hence, it was authentic
and validly executed.[13]

Subsequent to the
execution of the deed of sale or on 10 February 1978,
another Pagpapahayag was executed between Eulogio and Feliza, where the latter acknowledged that
the lot subject of the deed of sale [15] will eventually be transferred to respondents herein who are her
nephews and nieces and the children of Eulogio. [16] The pertinent portions of the second
Pagpapahayag read:
[14]

Na pagkatapos ng lahat ng hidwaan sa Husgado ay aming isasagawa agad and conwaring pagbibili muli ng
nasabing xxx aming binili sa aking capatid na si Gg. Eulogio V. Duyan. At pag mangyari ang nasabing
hatian ng lote, ay aming ilalagay agad sa pangalan ng aming mga pamangkin na sina Salome V. Duyan,
Divina V. Duyan, Cresencia V. Duyan, Reulgina V. Duyan, Domincia, Rodrigo at Avencio C. Duyan. [17]

Notwithstanding the second Pagpapahayag, petitioners caused the registration of the deed of sale
dated 25 January 1978 with the Register of Deeds of Quezon City. As a consequence, TCT No. 281115
covering the disputed lot was issued on 22 September 1981 in the name of petitioners. [18]

On 20 May 1991, respondents filed a suit for reconveyance of real property and cancellation of TCT No.
281115 with damages against petitioners before Branch 80 of the Quezon City RTC.

On 5 September 1994, the trial court rendered a decision, dismissing the complaint and ordering
respondents to pay jointly and severally defendants therein, now petitioners, the amount of Ten Thousand
Pesos (P10,000,00) as reasonable attorneys fees and to pay the costs of the suit. [19]

On appeal, the Court of Appeals reversed the decision and held that an implied trust arose in favor of
respondents over the disputed property by virtue of the Pagpapahayag dated 10 February 1978. It held
that the action for reconveyance of property was properly filed by respondents against petitioners. [21]

Petitioners motion for reconsideration[22] having been denied by the appellate court in
a Resolution[23] promulgated on 28 June 2000, the case was elevated to this Court by way of a petition for
review.

Petitioners in their petition for review[24] contend that the Court of Appeals acted with grave abuse of
discretion[25] when it reversed the RTC decision and that the error, if not corrected, will cause them great

injustice.[26] They claim that the Court of Appeals erred when it ordered the reconveyance by petitioners to
respondents of the property covered by TCT No. 281115 and declared the cancellation of said title [27].

The contention is without merit. The Court of Appeals did not err in ordering the reconveyance of the
property in dispute.

As found by the appellate court, the trial court failed to consider the law on trusts despite the
existence of uncontroverted evidence establishing the creation of a trust as it anchored its decision solely
on the indefeasibility of title aspect. Although it recognized the instruments creating the trust, the trial
court nevertheless held that:

In the document entitled Pagpapahayag (Exh. B), although the defendant Felisa Gomez stipulated therein
that she will not claim ownership over the lot covered by TCT No. 41717, even in the event that the same
will be transferred in her name, the same does not bar her totally from becoming as owner because of the
exception provided therein that she can still own the lot or part thereof in accordance with the wishes of
the deceased which was clearly manifested when the Absolute Deed of Sale of the half of the lot covered
by TCT No. 41717 was executed between the deceased and his spouse Purisima Duyan (plaintiff) and the
defendants.[28]

While citing the provisions of the Pagpapahayag dated 5 May 1974 and concluding therefrom that
Feliza was not actually prohibited from claiming ownership over the property, the trial court completely
disregarded and missed the import of the other Pagpapahayag dated 10 February 1978.

In express terms, Feliza undertook in the subsequent Pagpapahayag to convey the property subject of
the fictitious deed of sale to her own nephews and nieces who are the children of her brother Eulogio. To
reiterate, Feliza stated At pag mangyari ang nasabing hatian ng lote, ay aming ilalagay agad sa pangalan
ng aming mga pamangkin na sina Salome V. Duyan, Divina V. Duyan, Cresencia V. Duyan, Reulgina V.
Duyan, Domincia, Rodrigo at Avencio C. Duyan.[29] It must be noted that this Pagpapahayag was entered
into by Eulogio and Feliza after the supposed sale of the property on 25 January 1978. Based on the clear
provisions of this document, the intent of the siblings to create a trust was manifest with Eulogio as the
trustor, Feliza as the trustee and Eulogios children as the beneficiaries or the cestui qui trust[30] of the
res[31] which was the disputed property. This is based on the provision of the law on trusts which states
that:
Art. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as
regards property for the benefit of another person is known as the trustee; and the person for whose
benefit the trust has been created is referred to as the beneficiary. [32]

However, the trust created was not merely implied as held by the Court of Appeals but belongs to the
express kind. Based on the provisions of the Civil Code and jurisprudence, Express trusts are those
which the direct and positive acts of the parties create, by some writing, deed or will, or words
evincing an intention to create a trust.[33]

In this case, the provisions of the Pagpapahayag dated 10 February 1978 left no room for doubt. It was
clearly intended therein by Eulogio and Feliza that the property subject of the sale will subsequently be
placed by the latter in the name of respondents, thus creating a trust relationship over the property in
dispute.

Even if the word trust was not expressly used by the signatories to the 10 February
1978 Pagpapahayag and the document did not expressly state that a trust was being established by
reason thereof, the establishment of an express trust cannot be discounted. Under the Civil Code, No
particular words are required for the creation of an express trust, it being sufficient that a trust is clearly
intended.[34] In a decision penned by Justice Paras, this Court held that under the law on Trusts, it is not
necessary that the document expressly state and provide for the express trust, for it may even be created
orally, no particular words are required for its creation (Art. 1444, Civil Code). [35] The Pagpapahayag dated
10 February 1978 having been freely entered into by Eulogio and Feliza, it had the force of law between
them. It was therefore incumbent upon Feliza as trustee to comply with the provisions of the instrument
and have the subject property registered in the names of her nephews and nieces.

Petitioners subsequent act of registering the disputed property in their own names and resisting the
action for reconveyance later filed by respondents was clearly a betrayal of the provisions of the express
trust created by the 10 February 1978 Pagpapahayag. By these actions, petitioners not only failed to
comply with the provisions of the Pagpapahayag, but actually circumvented them.

It is worthy of note that petitioners never denied the existence, authenticity and due execution of the
10 February 1978 Pagpapahayag as they merely objected to the purpose of its presentation. [36] As held by
the appellate court:

Neither refutation nor denial of the existence of such document exist in the records of the case at bar.
Particularly, Feliza did not even raise any objection as to the due execution and authenticity of the
Pagpapahayag dated 10 February 1978. In relation thereto, it is worthy to note that an objection as to
the purpose of its presentation is not tantamount to an objection as to the authenticity and due
execution of the document. In view of the absence of such objection, the GOMEZES as signatories
thereto, are deemed bound by the stipulations therein. [37]

A trust is sacred and inviolable. The courts have therefore shielded fiduciary relations
against every manner of chicanery or detestable design cloaked by legal technicalities.
[38]
Considering this pronouncement of the Supreme Court and the betrayal by petitioners of the provisions
of the Pagpapahayag creating the trust in this case, the Court of Appeals rightly ordered the reconveyance
of the disputed property to respondents and the cancellation of TCT No. 21885.

Moreover, petitioners admitted in the Pagpapahayag itself that the 25 January 1978 sale was fictitious.
This is evident by the use of the phrase conwaring pagbibili[39] which means simulated or fictitious sale.
Thus, petitioners are estopped from claiming or asserting ownership over the subject property based on
the 25 January 1978 deed of sale. Felizas admission in the said Pagpapahayag of the falsity of the sale is
deemed conclusive upon her and her co-petitioner Eugenio Gomez. Under the Civil Code, Through estoppel
an admission or representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. [40] That admission cannot now be denied by Feliza as
against Eulogio and his successors-in-interest, the latter having relied upon her representation.

Petitioners argue that the action for reconveyance filed by respondents against them is not proper, the
latter not being the owners of the property in question. [41] Invoking the 25 January 1978 deed of sale
despite Felizas admission adverted to above that such sale was fictitious, petitioners assert that they are
the owners of the subject property. They claim that the best proof of ownership of a piece of land is the
certificate of title, and the TCT being in their name, they are the rightful owners thereof. [42] They further
argue that based on the case ofDela Pea vs. Court of Appeals[43] among others, reconveyance is a remedy
granted only to the owner of the property alleged to be wrongfully titled in anothers name. [44]

The argument begs the question. Reconveyance is precisely the proper action for respondents to take
against petitioners since the former are claiming that they are the rightful owners of the property in
question, not petitioners. By filing an action for reconveyance, a party seeks to show that the person who
secured the registration of the questioned property is not the real owner thereof. [45]

Petitioners cannot rely on the registration of the disputed property and the corresponding issuance of
a certificate of title in their name as vesting ownership on them simply because an express trust over the
property was created in favor of respondents. It has been held that a trustee who obtains a Torrens title
over the property held in trust by him for another cannot repudiate the trust by relying on the registration.
[46]

The law safeguards the rightful partys interest in titled land from fraud and improper technicalities by
allowing such party to bring an action for reconveyance of whatever he has been deprived of as long as

the property has not been transferred or conveyed to an innocent purchaser for value. [47] The action while
respecting the registration decree as incontrovertible, seeks to transfer or reconvey the land from the
registered owner to the rightful owner. [48] As this Court held in the case of Escobar vs. Locsin, The Torrens
system was never calculated to foment betrayal in the performance of a trust. [49]

In a further effort to bolster the claim that they own the property in dispute, petitioners attempt to
introduce new evidence annexed to their petition in the form of a purported declaration made by Eulogio
dated 19 February 1979.[50] The declaration purports to state that the previous instruments entered into by
him and the petitioners are void because he had already sold the lot to them. [51] This declaration, although
annexed to the Petition for Review appears nowhere in the records of the trial court and the appellate
court. This is a piece of factual evidence which should have been presented before the trial court to be
considered and to allow respondents the opportunity to rebut it or to present evidence to the contrary. The
Rules of Court specifically provides that The court shall consider no evidence which has not been formally
offered[52] The alleged declaration not having been formally offered in evidence is deemed to be a mere
scrap of paper which has no evidentiary value.

Lastly, petitioners contend that the conflict between the decision of the appellate court and that of the
trial court provides this Court with a ground to review the decisions of both courts. [53] That may be true but
the circumstance does not suffice to warrant the reversal of the Court of Appeals Decision. Quite the
contrary, the undisputed facts and the applicable law ineluctably support the conclusion that the appellate
court did not commit any reversible error.

- Morales vs. CA, 274 SCRA 282 (1997)

Doctrine:
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.
Facts:
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.
Issues:
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.

Held:
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 extra-judicial
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.
RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES, petitioners, vs. COURT
OF APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and ERLINDA
ORTIZ, respondents.

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners
urge this Court to reverse the 20 April 1994 decision of the Court of Appeals (Seventeenth
Division) in CA-G.R. CV No. 34936,[1] which affirmed in toto the 26 August 1991 decision of
the Regional Trial Court of Calbayog City in Civil Case No. 265.

Civil Case No. 265 was an action for recovery of possession of land and damages with a
prayer for a writ of preliminary mandatory injunction filed by private respondents herein,
spouses Ranulfo Ortiz, Jr. and Erlinda Ortiz, against Rodolfo Morales. The complaint prayed
that private respondents be declared the lawful owners of a parcel of land and the twostorey residential building standing thereon, and that Morales be ordered to remove
whatever improvements he constructed thereon, vacate the premises, and pay actual and
moral damages, litigation expenses, attorney's fees and costs of the suit.

On 2 February 1988, Priscila Morales, one of the daughters of late Rosendo Avelino and
Juana Ricaforte, filed a motion to intervene in Case No. 265. No opposition thereto having
been filed, the motion was granted on 4 March 1988.[2]

On 30 November 1988 Rodolfo Morales passed away. In its order of 9 February

1989[3] the trial court allowed his substitution by his heirs, Roda, Rosalia, Cesar and Priscila,

all surnamed Morales. Thereafter, pre-trial and trial on the merits were had and the case
was submitted for decision on 16 November 1990.

On 26 August 1991 the Trial Court rendered its decision [4] in favor of plaintiffs.
The following is trial courts summary of the evidence for the plaintiffs:
The evidence adduced by the Plaintiffs discloses that the Plaintiffs are the absolute and
exclusive owners of the premises in question having purchased the same from Celso Avelino,
evidenced by a Deed of Absolute Sale (Exh. C), a public instrument. They later caused the
transfer of its tax declaration in the name of the female plaintiff (Exh. I) and paid the realty
taxes thereon (Exh. K & series).
Celso Avelino (Plaintiffs predecessor in interest) purchased the land in question consisting of
two adjoining parcels while he was still a bachelor and the City Fiscal of Calbayog City from
Alejandra Mendiola and Celita Bartolome, through a Escritura de Venta (Exh. B). After the
purchase, he caused the transfer of the tax declarations of the two parcels in his name
(Exhs. D & E to G & H) as well as consolidated into one the two tax declarations in his name
(Exh. F). With the knowledge of the Intervenor and the defendant, (Cross-examination of
Morales, t.s.n. pp. 13-14) Celso Avelino caused the survey of the premises in question, in his
name, by the Bureau of Lands (Exh. J). He also built his residential house therein with Marcial
Aragon (now dead) as his master carpenter who was even scolded by him for constructing
the ceiling too low.
When the two-storey residential house was finished, he took his parents, Rosendo Avelino
and Juana Ricaforte, and his sister, Aurea, who took care of the couple, to live there until
their deaths. He also declared this residential house in his tax declaration to the premises in
question (Exh. F) and paid the corresponding realty taxes, keeping intact the receipts which
he comes to get or Aurea would go to Cebu to give it to him (t.s.n. Morales, pp. 4-6).
After being the City Fiscal of Calbayog, Celso Avelino became an Immigration Officer and
later as Judge of the Court of First Instance in Cebu with his sister, Aurea, taking care of the
premises in question. While he was already in Cebu, the defendant, without the knowledge
and consent of the former, constructed a small beauty shop in the premises in question.
Inasmuch as the Plaintiffs are the purchasers of the other real properties of Celso Avelino,
one of which is at Acedillo (now Sen. J.D. Avelino) street, after they were offered by Celso
Avelino to buy the premises in question, they examined the premises in question and talked
with the defendant about that fact, the latter encouraged them to purchase the premises in
question rather than the property going to somebody else they do not know and that he will
vacate the premises as soon as his uncle will notify him to do so. Thus, they paid the
purchase price and Exh. C was executed in their favor.
However, despite due notice from his uncle to vacate the premises in question (Exh. N), the
defendant refused to vacate or demolish the beauty shop unless he is
reimbursed P35,000.00 for it although it was valued at less than P5,000.00. So, the Plaintiffs

demanded, orally and in writing (Exhs. L & M) to vacate the premises. The defendant
refused.
As the plaintiffs were about to undertake urgent repairs on the dilapidated residential
building, the defendant had already occupied the same, taking in paying boarders and
claiming already ownership of the premises in question, thus they filed this case.
Plaintiffs, being the neighbors of Celso Avelino, of their own knowledge are certain that the
premises in question is indeed owned by their predecessor-in-interest because the male
plaintiff used to play in the premises when he was still in his teens while the female plaintiff
resided with the late Judge Avelino. Besides, their inquiries and documentary evidence
shown to them by Celso Avelino confirm this fact.Likewise, the defendant and Intervenor did
not reside in the premises in question because they reside respectively in Brgy. Tarobucan
and Brgy. Trinidad (Sabang), both of Calbayog City with their own residential houses there.
Due to the damages they sustained as a result of the filing of this case, the plaintiffs are
claiming P50,000.00 for mental anguish; monthly rental of the premises in question
of P1,500.00 starting from March 1987; litigation expenses of P5,000.00 and P10,000.00 for
Attorney's fees.[6]
The trial courts summary of the evidence for the defendants and intervenor is as
follows:
Defendants-Intervenors testimonial evidence tend to show that the premises is question
(land and two-storey building) is originally owned by the spouses, Rosendo Avelino and
Juana Ricaforte, who, through their son, Celso Avelino, through an Escritura de Venta (Exh. 2)
bought it from the Mendiolas on July 8, 1948. After the purchase the couple occupied it as
owners until they died. Juana died on May 31, 1965 while Rosendo died on June 4, 1980.
Upon their demise, their children: Trinidad A. Cruz, Concepcion A. Peralta, Priscila A. Morales
and Aurea Avelino (who died single) succeeded as owners thereof, except Celso Avelino who
did not reside in the premises because he was out of Calbayog for more than 30 years until
his death in Cebu City.
The premises in question was acquired by Celso Avelino who was entrusted by Rosendo with
the money to buy it. Rosendo let Celso buy it being the only son. The property is in the name
of Celso Avelino and Rosendo told his children about it (TSN, Morales, p. 21). In 1950
Rosendo secured gratuitous license (Exh. 1) and constructed the two-storey house, having
retired as Operator of the Bureau of Telecommunications, buying lumber from the father of
Simplicia Darotel and paying the wages of Antonio Nartea as a laborer.
In 1979, defendant Rodolfo Morales constructed beside the two-storey house and beauty
shop for his wife with the consent of Celso and the latters sisters.
Priscila Morales was aware that the premises in question was surveyed in the name of Celso
but she did not make any attempt, not even her father, to change the muniment of title to
Rosendo Avelino. Despite the fact that Intervenor has two sons who are lawyers, no extrajudicial settlement was filed over the premises in question since the death of Rosendo
Avelino up to the present.

Celso Avelino kept the receipts for the realty tax payments of the premises. Sometimes
Aurea would go to Cebu to deliver these receipts to Celso or the latter will come to get them.
Rodolfo also gave some of the receipts to Celso.
The sale of the subject premises to the Plaintiffs is fraudulent because it included her
(Intervenors) share and the beauty shop of her son, the defendant.
As a result of this case she is worried and suffered moral damages, lost her health, lacks
sleep and appetite and should be compensated for P80,000.00 and the expenses for
litigation in the amount ofP30,000.00 until the case is finished.
The Intervenor would not claim ownership of the premises if her son, the defendant is not
being made to vacate therefrom by the Plaintiffs.[7]
The trial court reached the aforementioned disposition on the basis of its findings of
facts and conclusions, which we quote:
During the ocular inspection of the premises in question on April 4, 1988, conducted by the
Court upon motion of the parties, the Court found that the two-storey residential building
urgently needed major general repairs and although the bedrooms seemed occupied by
lodgers, neither the defendant nor the Intervenor informed the Court where or in which of
the rooms they occupied.
Observing the questioned premises from the outside, it is easily deducible that it has not
been inhabited by a true or genuine owner for a long time because the two-story building
itself has been left to deteriorate or ruin steadily, the paint peeling off, the window shutters
to be replaced, the lumber of the eaves about to fall and the hollow-block fence to be
straightened out, a portion along Umbria street (West) cut in the middle with the other half
to the south is tilting while the premises inside the fence farther from the beauty shop to be
cleaned.
From the evidence adduced by the parties, the following facts are undisputed:
1. The identity of the premises in question which is a parcel of land together with the two
residential building standing thereon, located at corner Umbria St. (on the West) and
Rosales Blvd. (on the North), Brgy. Central, Calbayog City, with an area of 318 sq.
meters, presently covered by Tax Declaration No. 47606 in the name of the female
Plaintiff and also bounded on the East by lot 03-002 (1946) and on the South by lot 03006 (1950);
2. The Deeds of Conveyance of the questioned premises -- the Escritura de Venta (Exh. B)
from the Mendiolas to Celso Avelino and the Deed of Sale (Exh. C) from Celso Avelino to
the Plaintiffs- are both public instruments;
3. The couple, Rosendo and Juana Avelino as well as their daughter, Aurea, resided and even
died in the disputed premises;

4. The defendant, Rodolfo Morales, constructed the beauty parlor in the said premises and
later occupied the two-storey residential house;
5. Not one of the children or grandchildren of Rosendo Avelino ever contested the ownership
of Celso Avelino of the disputed premises;
6. There has no extra-judicial partition effected on the subject property since the death of
Rosendo Avelino although two of the Intervenor's children are full-pledged lawyers;
7. Since the premises in question had been acquired by Celso Avelino, it has been declared
in his name for taxation purposes and the receipts of the realty taxes thereon were
kept by him, some were either delivered to him by Aurea or by defendant; and
8. Ever since the Plaintiffs acquired the disputed premises, its tax declaration is now in the
name of the female Plaintiff with the current realty taxes thereon paid by her.
A very careful study and meticulous appraisal of the evidence adduced by both parties and
the applicable laws and jurisprudence show a preponderance of evidence conclusively in
favor of the Plaintiffs, due to the following facts and circumstances, all borne of the record.
One. While Plaintiff's claim of ownership over the premises in question is duly supported by
documentary evidences, such as the Deed of Conveyance (Exhs. B and C), Tax declarations
and payments of the realty taxes on the disputed property, both as to the land and the twostorey building (Exhs. D, E, F, G, H, and I and K and series) and the survey plan of the land
(Exh. J), Defendants-Intervenors claim of ownership is based merely on testimonial evidence
which is self-serving and cannot prevail over documentary evidence because it is a settled
rule in this jurisdiction that testimonial evidence cannot prevail over documentary evidence.
Two. While Plaintiffs evidence of ownership of the disputed premises is clear, positive,
categorical and credible, Intervenors testimony that the disputed premises was acquired by
his brother (p. 16); that the document of conveyance of the land and the building (p. 14) is
in the name of her brother; that it was surveyed in her brothers name with her knowledge
(pp. 13-14); that during the lifetime of her father the muniments of title of the premises was
never transferred in her fathers name (pp. 10-11 & 20); that not one of the heirs of Rosendo
Avelino ever contested Celso Avelinos ownership thereof, despite their knowledge (p.21);
that no extra-judicial partition or settlement was instituted by all the female children of
Rosendo Avelino, especially by the Intervenor herself even though two of her children are
full-pledge lawyers (p.15); and the fact that the Intervenor is not even interested to see the
document of the disputed premises (19), very clearly show that her claim is neither positive
nor categorical but is rather unconvincing.
Three. The foregoing testimony of the Intervenor also show that she is already in laches.
Four. The present condition of the premises, especially the two-storey building which has
been left to deteriorate or ruin steadily clearly betrays or belies Intervenor's pretense of
ownership of the disputed premises.

Five. If the premises in question is really owned in common by the children of Rosendo and
Juana Avelino, why is it that the surviving sisters of the Intervenor did not join her in this
case and intervene to protect their respective interests?
Six. On the witness chair, Intervenors demeanor and manner of testifying show that she was
evasive and shifty and not direct in her answers to simple questions that she was
admonished by the Court not be evasive and be direct or categorical in her answers; and
which rendered her testimony unworthy of full faith and credit.
Seven. That Plaintiffs predecessor-in-interest is the true and absolute owner of the disputed
premises having purchased it from the Mendiolas while he was the City Fiscal of Calbayog
and still a bachelor and later became an Immigration Officer and later became a CFI (now
RTC) Judge when the two-storey building was constructed by Marcial Aragon, thus he
declared both the land and the residential building in his name, had it surveyed in his name
and continuously paid the realty taxes thereon, is more in conformity with common
knowledge, experience and belief because it would be unnatural for a man to continuously
pay realty taxes for a property that does not belong to him. Thus, our Supreme Court,
ruled: Tax receipts are not true evidence of ownership, but no person in his right mind would
continue paying taxes for land which he thinks does not belong to him. (Ramos vs. Court of
Appeals, 112 SCRA 543).
Eight. Intervenors claim of implied trust is untenable because even from the different cases
mentioned in her Memorandum, it is very apparent that in order for implied trust to exist
there must be evidence of an equitable obligation of the trustee to convey, which
circumstance or requisite is absent in this case. What is instead clear from the evidence is
Celso Avelino's absolute ownership of the disputed property, both as to the land and the
residential house (Exh. F) which was sold to the Plaintiffs (Exh. C) while Intervenors selfserving and unconvincing testimony of co-ownership is not supported by any piece of
credible documentary evidence.
On the contrary, the last part of Art. 1448 of Our New Civil Code bolsters Plaintiffs ownership
over the disputed premises. It expressly provides: x x x . However, if the person to whom the
title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of
the child.(underscoring supplied)
Finally, from the testimony of the Intervenor (p.22) the truth is out in that the Intervenor is
putting up her pretense of ownership over the disputed premises only when the defendant
was being advised to vacate and only to shield him from vacating therefrom.
Dissatisfied with the trial courts decision, defendants heirs of Rodolfo Morales and
intervenor Priscila Morales, petitioners herein, appealed to the Court of Appeals.
In its decision of 20 April 1994[10] the Court of Appeals affirmed the decision of the trial
court.
Their motion to reconsider the decision having been denied in the resolution [11] of 14
September 1994 for lack of merit, petitioners filed the instant petition.

On 13 September 1995, after the filing of private respondents comment on the petition
and petitioners reply thereto, we resolved to deny the petition for failure of petitioners to
sufficiently show that the respondent Court of Appeals committed reversible error.
Undaunted, petitioners on 17 October 1995 filed a motion for reconsideration of our
resolution of 13 September 1995.
We required respondents to comment on the motion for reconsideration; however it was
not until 1 July 1996 and after we required their counsel to show cause why he should not be
disciplinarily dealt with for failure to file comment when said counsel filed the comment by
mail. Upon prior leave of court, petitioners filed a reply to the comment.
On 19 August 1996 we granted petitioners motion for reconsideration and required the
parties to submit their respective memoranda. Petitioners and private respondents
submitted their memoranda on 4 and 28 October 1996, respectively.
Issue: Did Celso Avelino purchase the land in question from the Mendiolas on 8 July 1948 as
a mere trustee for his parents and siblings or, simply put, is the property the former acquired
a trust property?

Held: 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.[12] The characteristics of a trust are:
1. It is a relationship;
2. it is a relationship of fiduciary character;
3. it is a relationship with respect to property, not one involving merely personal duties;
4. it involves the existence of equitable duties imposed upon the holder of the title to the
property to deal with it for the benefit of another; and
5. it arises as a result of a manifestation of intention to create the relationship. [13]
Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties, while implied trusts come into being by
operation of law,[14] 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.[15] In turn, implied trusts are either resulting or
constructive trusts. Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the equitable title or
interest and are presumed always to have been contemplated by the parties.
They arise from the nature or circumstances of the consideration involved in a
transaction whereby one person thereby becomes invested with legal title but is

obligated in equity to hold his legal title for the benefit of another. On the other
hand, constructive trusts are created by the construction of equity in order to
satisfy the demands of justice and prevent unjust enrichment. They arise contrary
to intention against one who, by fraud, duress or abuse of confidence, obtains or
holds the legal right to property which he ought not, in equity and good
conscience, to hold.[16]
A resulting trust is exemplified by Article 1448 of the Civil Code, which reads:
Art. 1448. There is an implied trust when property is sold, and the legal estate is
granted to one party but the price is paid by another for the purpose of having
the beneficial interest of the property. The former is the trustee, while the latter
is the beneficiary. However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of the sale, no trust is
implied by law, it being disputably presumed that there is a gift in favor of the
child.
The trust created under the first sentence of Article 1448 is sometimes referred to as
a purchase money resulting trust.[17] The trust is created in order to effectuate what the law
presumes to have been the intention of the parties in the circumstances that the person to
whom the land was conveyed holds it as trustee for the person who supplied the purchase
money.[18]
To give rise to a purchase money resulting trust, it is essential that there
be:
1. an actual payment of money, property or services, or an equivalent,
constituting valuable consideration;
2. and such consideration must be furnished by the alleged beneficiary of a
resulting trust.[19]
There are recognized exceptions to the establishment of an implied resulting trust. The
first is stated in the last part of Article 1448 itself. Thus, where A pays the purchase money
and title is conveyed by absolute deed to As child or to a person to whom A stands in loco
parentis and who makes no express promise, a trust does not result, the presumption being
that a gift was intended. Another exception is, of course, that in which an actual contrary
intention is proved. Also where the purchase is made in violation of an existing statute and
in evasion of its express provision, no trust can result in favor of the party who is guilty of
the fraud.[20]
As a rule, the burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily show the existence of the trust
and its elements.[21] While implied trusts may be proved by oral evidence, [22] the evidence
must be trustworthy and received by the courts with extreme caution, and should not be
made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated.[23]

In the instant case, petitioners theory is that Rosendo Avelino owned the money for the
purchase of the property and he requested Celso, his son, to buy the property allegedly in
trust for the former. The fact remains, however, that title to the property was conveyed to
Celso. Accordingly, the situation is governed by or falls within the exception under the third
sentence of Article 1448, which for convenience we quote:
... 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. (Underscoring supplied).
On this basis alone, the case for petitioners must fall. The preponderance of evidence, as
found by the trial court and affirmed by the Court of Appeals, established positive acts of
Celso Avelino indicating, without doubt, that he considered the property he purchased from
the Mendiolas as his exclusive property. He had its tax declaration transferred in his name,
caused the property surveyed for him by the Bureau of Lands, and faithfully paid the realty
taxes. Finally, he sold the property to private respondents.
The theory of implied trust with Celso Avelino as the trustor and his parents Rosendo
Avelino and Juan Ricaforte as trustees is not even alleged, expressly or impliedly, in the
verified Answer of Rodolfo Morales[24] nor in the Answer in Intervention of Priscila A. Morales.
[25]
In the former, Rodolfo alleged that:
A. [T]he lot and the two-storey building in question... which are actually possessed by
Rodolfo Morales, defendant herein, and by his parents -- Priscila A. Morales and Cesar
Morales -- and consequently, the ones now in litigation in the above-entitled case,
were originally and exclusively owned and possessed by his grandparents-Rosendo
Avelino and Juana Ricaforte;
B. [S]aid lot, together with an old house then thereon, were (sic) acquired by said couple
-- Rosendo Avelino and Juana Ricaforte -- on July 8, 1948, which they right away
possessed exclusively in the concept of owner;[26]
Priscila, on her part, merely reiterated the foregoing allegations in subparagraphs A and B of
paragraph 2 of her Answer in Intervention.[27]
Rodolfo and Priscila likewise even failed to suggest in their respective Special and
Affirmative Defenses that Celso Avelino held the property in trust despite Rodolfos claim
that:
4. [T]he alleged sale by Celso Avelino alone of the properties in question in favor of
plaintiff Erlinda Ortiz and the alleged TD-47606 in the name of Erlinda Ortiz, were
clandestine, fraudulent, null and void because, first, said documents cover the entire
properties in question of the late Rosendo Avelino and Juana Ricaforte; second, only
Celso Avelino sold the entire properties, without the knowledge and consent of said
Priscila A. Morales, Trinidad A. Cruz and Concepcion E. Peralta - children and heirs of
said Rosendo Avelino and Juana Ricaforte; and, third, said documents were also
made without the knowledge and consent of defendant Rodolfo Morales who has

prior and legal possession over the properties in question and who is a builder in
good faith of the shop building thereon.[28]
Not surprisingly, Priscila merely restated these allegations in paragraph 2 of her Special and
Affirmative Defenses. If truly they were convinced that Celso Avelino acquired the property
in trust for his parents, it would have been far easier for them to explicitly state such fact. [29]
The separate Answers of Rodolfo and Priscila do not likewise allege that Celso Avelino
committed any breach of the trust by having the property declared in his name and paying
the realty taxes thereon and by having the lot surveyed by the Bureau of Lands which gave
it a lot number: Lot 1949. [30] Even more telling is that in the Pre-Trial Order [31] of the trial
court, petitioners did not claim the existence of an implied trust; the parties merely agreed
that the main issues were:
a. Who is the owner of the premises in question?
b. Who is entitled to the possession thereof?
Yet, petitioners now want us to reverse the rulings of the courts below that Celso Avelino
was the absolute and exclusive owner of the property in question, on strength of, primarily,
their implied trust theory. The problem with petitioners is that they entirely forgot that the
trial court and the Court of Appeals did not base their rulings on this alone. As shown earlier,
the trial court pointed out numerous other flaws in petitioners theory, such as laches. Then,
too, the rule is settled that the burden of proving the existence of a trust is on the party
asserting its existence and that such proof must be clear and satisfactory. [32] As to that,
petitioners relied principally on testimonial evidence. It is, of course, doctrinally entrenched
that the evaluation of the testimony of witnesses by the trial court is received on appeal with
the highest respect, because it is the trial court that has the direct opportunity to observe
them on the stand and detect if they are telling the truth or lying through their teeth. The
assessment is accepted as correct by the appellate court and binds it, absent a clear
showing that it was reached arbitrarily. [33] In this case, petitioners failed to assail, much less
overcome, the following observation of the trial court:
Six. On the witness chair, Intervenors demeanor and manner of testifying show that she was
evasive and shifty and not direct in her answers to simple questions that she was
admonished by the Court not to be evasive and direct and categorical in her answers; and
which rendered her testimony unworthy of full faith and credit. [34]
Likewise fatal to petitioners cause is that Concepcion Peraltas sworn Confirmation dated
14 May 1987 cannot be considered hearsay evidence due to Concepcions failure to
testify. On the contrary, it is an exception to the hearsay rule under Section 38 of Rule 130 of
the Rules of Court, it having been offered as evidence of an act or declaration against
interest. As declarant Concepcion was a daughter of Rosendo Avelino and Juana Ricaforte,
and a sister of Celso Avelino and intervenor Priscila Morales, Concepcion was thus a co-heir
of her siblings, and would have had a share, equal to that of each of her co-heirs, in the
estate of Rosendo and Juana. However, Concepcion explicitly declared therein thus:

That my aforenamed brother [Celso Avelino], during the time when he was City Fiscal of
Calbayog City and still a bachelor, out of his own money, bought the parcels of land located
at corner Umbria Street and Rosales Blvd., Brgy. Central, Calbayog City, from Culets
Mendiola de Bartolome and Alejandra Fua Mendiola by virtue of a Deed of Sale entered as
Doc. No. 37; Page No. 20; Book No. XI; Series of 1948 in the Notarial Book of Atty. Celedonio
Alcazar, Notary Public of Calbayog, Samar; Likewise, out of his own money, he constructed a
residential building on the lot which building is made of strong materials.
If indeed the property was merely held in trust by Celso for his parents, Concepcion would
have been entitled to a proportionate part thereof as co-heir. However, by her Confirmation,
Concepcion made a solemn declaration against interest. Petitioners, realizing that the
Confirmation was admissible, attempted to cushion its impact by offering in evidence as
Exhibit 4[35]Concepcions affidavit, dated 16 June 1987, wherein Concepcion stated:
3. The property in question (particularly the house), however forms part of the state of our
deceased parents, and, therefore, full and complete conveyance of the right, title and
interest in and to such property can only be effected with the agreement of the other heirs,
namely, my sisters Trinidad A. Cruz and Priscila A. Morales, and myself.
Note that Concepcion seemed to be certain that only the house formed part of the estate of
her deceased parents. In light of the equivocal nature of Concepcions later affidavit, the trial
court and the Court of Appeals did not then err in giving more weight to Concepcions earlier
Confirmation.
At bottom, the crux of the matter is whether petitioners discharged their
burden to prove the existence of an implied trust. We rule in the
negative. Priscilas justification for her and her sisters failure to assert coownership of the property based on the theory of implied trust is, to say the least,
flimsy. In light of their assertion that Celso Avelino did not have actual possession
of the property because he was away from Calbayog continuously for more than
30 years until he died on October 31, 1987, [36] and the established fact that the
tax declarations of the property were in Celsos name and the latter paid the
realty taxes thereon, there existed no valid and cogent reason why Priscila and
her sisters did not do anything to have their respective shares in the property
conveyed to them after the death of Rosendo Avelino in 1980. Neither is there any
evidence that during his lifetime Rosendo demanded from Celso that the latter
convey the land to the former, which Rosendo could have done after Juanas death
on 31 May 1965. This omission was mute and eloquent proof of Rosendos
recognition that Celso was the real buyer of the property in 1948 and the absolute
and exclusive owner thereof.

- Pacheco vs. Arro, 85 Phil. 505 NOTE: Full Text (Short Case)
DOLORES PACHECO, in her capacity as guardian of the minors Concepcion, Alicia, and Herminia
Yulo, petitioner, vs. SANTIAGO ARRO ET AL., respondents.

DEMETRIA FIRMEZA, accompanied by her husband, Basilio Rivera, respondent-movant.

FACTS
On 13 October 1947, this Court declared the record of this case reconstituted. As reconstituted it
shows that on 31 January 1941, a petition for a writ of certiorari was filed by Dolores Pacheco, as guardian
of the minors Concepcion, Alicia and Herminia surnamed Yulo, daughters of the late Jose Yulo y
Regalado, for the review of a judgment rendered by the Court of Appeals which affirmed the one
rendered on 21 March 1939 by the Court of First Instance of Occidental Negros, ordering Jose Yulo y
Regalado to execute deeds of assignment in favor of the plaintiffs for each and every lot claimed by them,
the numbers of which appear opposite their names in the complaint filed by them.
The decision of the Court of Appeals reads as follows: THE DECISION OF THE CA IS IN
SPANISH ITS USELESS TO PASTE IT HERE
The foregoing discloses that the respondents, the plaintiffs in civil case No. 6088 of the Court of
First Instance of Occidental Negros and the appellees in CA-G.R. No. 5700 of the Court of Appeals, filed
answers in the cadastral case No. 11, G.L.R.O. cadastral record No. 100, claiming lots as their property and
began to present evidence before a referee appointed by the court in support of their respective claims.
Upon the assurance and promise made in open court by Dr. Mariano Yulo, who represented the late
predecessor-in-interest of the petitioners in the cadastral case, the defendant in civil case No. 6088 and the
appellant in CA-G.R. No. 5700, that after the change of Zamora and Quennon Streets of the municipality
of Isabela, province of Occidental Negros, into T. Yulo and G. Regalado Streets, respectively, the names of
the deceased parents of the defendant Jose Yulo y Regalado, the latter would convey and assign the lots to
the claimants, the herein respondents withdrew their claims, and the cadastral court confirmed the title to
the lots and decreed their registration in the name of the defendant Jose Yulo y Regalado. In other words,
the plaintiffs and appellees in the courts below and now respondents asserted title to each lot claimed by
them and began to present evidence to prove title thereto in the cadastral case, but because of the promise
referred to made in open court by the representative of the defendant-appellant, the predecessor-ininterest of the petitioners, the respondents withdrew their claims relying upon such promise. That
finding is of fact and cannot be reviewed by this Court. 1 It does not appear it is not even hinted that
the admission as evidence of the copy of the transcript of the stenographic notes taken by the official
stenographer, upon which that finding is predicated, was objected to by the predecessor-in-interest of the
petitioners. The original transcript was part of the record of the cadastral case and the trial court admitted
it as evidence and based the judgment rendered in the case upon it. The fact that the copy of the
transcript (Exhibit B) attached to the record of this case is not certified or authenticated by the clerk of
court who is the legal keeper thereof is no reason for disregarding it as evidence, for the original
transcript attached to the record of the cadastral case must have been read and taken into consideration by
the judge of the trial court. At any rate, there having been no objection to the admission of the
unauthenticate copy of the transcript, the question of its admissibility cannot now be raised. The
uncontroverted and undisputed finding of the trial court, confirmed by the Court of Appeals, that the
predecessor-in-interest of the petitioners had complied with the promise by executing deeds of donation

or assignment to some of the claimants, as shown in or by Exhibits D, E, F, G, H, and I, is a strong proof or

corroboration of the truth or authenticity of the contents of the unauthenticated copy of the transcript of
the stenographic notes referred to marked Exhibit B. In these circumstances, its probative value cannot be
disregarded much less assailed.
Counsel asserts that a trustee does not have title to the property which is the subject of the trust,
because title to such property is vested in the cestui que trust. Hence he argues if the predecessor-ininterest of the petitioners was a trustee, he or his successors-in-interest could not and cannot be compelled
in an action for specific performance to convey or assign the property the subject of the trust
because in an action for specific performance counsel contends the party to be compelled to perform
is the owner or has the title to the property sought to be conveyed or assigned.
The juridical concept of a trust, which in a broad sense involves, arises from, or is the result of, a
fiduciary relation between the trustee and the cestui que trust as regards certain property real, personal,
funds or money, or choses in action must not be confused with an action for specific performance.
When the claim to the lots in the cadastral case was withdrawn by the respondents relying upon the
assurance and promise made in open court by Dr. Mariano Yulo in behalf of Jose Yulo y Regalado, the
predecessor-in-interest of the petitioners, a trust or a fiduciary relation between them arose, or resulted
therefrom, or was created thereby. The trustee cannot invoke the statute of limitations to bar the action
and defeat the right of the cestui que trust. If the pretense of counsel for the petitioners that the promise
above adverted to cannot prevail over the final decree of the cadastral court holding the predecessor-ininterest of the petitioners to be the owner of the lots claimed by the respondents were to be sustained and
upheld, then actions to compel a party to assign or convey the undivided share in a parcel of land
registered in his name to his co-owner or co-heir could no longer be brought and could no longer succeed
and prosper.
It is contended that lot 224 was claimed in the cadastral case by the predecessor-in-interest of the
petitioners alone, and not as adjudged in this case by the trial court and confirmed by the Court of
Appeals that it was also claimed by one of the respondents, one of the plaintiffs in the court below. This
also is a question of fact which cannot be reviewed in these proceedings.
The judgment under review is affirmed, with costs against the petitioners.
- 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. (Tolentino, Civil
Code of the Philippines, Vol. IV, p. 669, 1991 ed. citing 54 Am Jur 21)
B. Characteristics:
i. Fiduciary relationship
Concept of trust.

A trust is the fiduciary relationship between one person having an equitable ownership in
property and another 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 (see 54 Am. Jur. 21.) for the benefit of the former.
It is a legal arrangement whereby a person transfers his legal title to property to another
to be administered by the latter for the benefit of a third party. It is a right of property held by one
party for the benefit of another.
(1) Trust implies confidence in a relationship. The word trust is often employed in a
broader or popular sense as denoting confidence, fiduciary relationship, etc. and is often
used in reference to the confidential aspect of any kind of a bailment or possession by one person
of the property of another. (Ibid., 22.) It indicates duties, relations, and responsibilities which are
not strictly technical trusts. (89 C.J.S. 712; Salao vs. Salao, 70 SCRA 65 [1976].)
In its more technical significance, the word still implies such confidence in a relationship
intentionally created, involving a trustee, a beneficiary, and a trust property and not one involving merely personal duties, imposing equitable duties upon the trustee with respect to the
property to deal with it for the benefit of the beneficiary.
(2) Trust cannot be established in violation of law. A trust is the right, enforceable in equity,
to the beneficial enjoyment of property the legal title to which is in another. Trust is founded in
equity and can never result from acts violative of law. Thus, no trust can result from a contract of
partnership formed for an illegal purpose. Since the contract is null and void, no rights and
obligations can arise therefrom. (Deluao vs. Casteel, 26 SCRA 415 [1968] and 29 SCRA 350 [1969].)
ii. Created by operation of law or agreement Art. 1441
ART. 1441. Trusts are either express or implied. Ex- press trusts are created by the intention of
the trustor or of the parties. Implied trusts come into being by operation of law.
Classification of trusts.
1

Creation. From the viewpoint of the creative force bringing them into existence, they may
be either:
a

express trust (Arts. 1443-1446.) or one which can come into existence only by the execution
of an intention to create it by the trustor or the parties; or

(b) implied trust, or one which comes into being by opera- tion of law (Arts. 1447-1457.); this
latter trust being either:
1

resulting trust or one in which the intention to create a trust is implied or presumed in
law (infra.); or

constructive trust or one imposed by law irrespective of, and even contrary to, any
such intention for the purpose of promoting justice, frustrating fraud, or pre- venting
unjust enrichment. (infra.) It is otherwise known in American law as a trust ex
maleficio, trust ex delicto, and de son tort. (see Sumaoang vs. Judge, RTC, 215 SCRA 136
[1992].)

In other words, a trust intentional in fact is an express trust; one intentional in law is a resulting
trust; and one imposed irrespective of intention is a constructive trust.
The classification of voluntary and involuntary trusts is sometimes employed in referring to
express trusts and implied trusts. (see 54 Am. Jur. 22-23.)
2

Effectivity. From the viewpoint of whether they become effective after the death of the
trustor or during his life, they may be either:
a

testamentary trust or one which is to take effect upon the trustors death. It is usually
included as part of the will and does not have a separate trust deed (see Tuazon vs.
Caluag, [Unrep.] 96 Phil. 981 [1955]; Lorenzo vs. Posadas, 64 Phil. 353 [1937].); or

trust inter vivos (sometimes called living trust) or one established effective during the
owners life. The grantor executes a trust deed, and once the trust is created, legal title
to the trust property passes to the named trustee with duty to administer the property for
the benefit of the beneficiary.

Revocability. From the viewpoint of whether they may be revoked by the trustor, they may
be either:
a

Revocable trust or one which can be revoked or cancelled by the trustor or another
individual given the power; or

(b) Irreovocable trust or one which may not be terminated during the specified term of the
trust.
Whether a trust is revocable or irrevocable depends on the wordings or language used in the
creation of the trust. It will be presumed revocable unless the creator has expressed a contrary
intention in the trust deed.
Elements of express trust.

Basically, these elements include:(1) A competent trustor and trustee; (2) An ascertainable trust
res; and (3) Sufficiently certain beneficiaries.

The trustee must also have some power of administration other than a mere duty to perform a
contract although the contract is for some third-party beneficiary. A declaration of terms is
essential and these must be stated with reasonable certainty in order that the trustee may
administer, and that the court, if called upon so to do, may enforce the trust. (Mindanao
Development Authority vs. Court of Appeals, 113 SCRA 429 [1982].) Since the trustee takes title
to property and administers it, it follows that he must be capable of owning property.
Consideration, is not required to establish a trust.
iii. Relationship with respect to property
Trust property.
The juridical concept of a trust arises from or is the result of a fiduciary relation between the
trustee who holds legal title and the cestui que trust who has the equitable title as regards certain
property.
(1) The subject-matter of a trust may be any property of value real, personal, funds or money,
or choses in action.(see Pacheco vs. Arro, 85 Phil. 505 [1950]; Salao vs. Salao, 70 SCRA 65 [1976].).
The property so held is referred to as the trust property or trust res. Corpus and principal
are names also used for the trust property.
(2) The trust res must consist of property actually in existence in which the trustor has a
transferable interest or title although it may, as a rule, be any kind of transferable property either
realty or personalty including undivided, future, or contingent interest therein. But a trust res
cannot be a mere expectancy without right or interest or a mere interest in the performance of a
contract although such interest is in the nature of a property right. (54 Am. Jur. 44.)
iv. Legal title is held by one, and the equitable or beneficial title held by another
Nature of ownership of trustee and beneficiary.
A trust is a very important and curious instance of duplicate ownership.
(1) Ownership by two persons at the same time. The trust property is owned by two persons at the
same time, the relation between the two owners being such that one of them with legal title under
an obligation to use his ownership for the benefit of the other. The former is called the trustee,
and his ownership is trust-ownership;3 the other is called the beneficiary, and his is beneficial
ownership.4
(2) Ownership of trustee, a mere matter of form and nominal. The trustee is destitute of any right of
enjoyment of the trust property. His ownership, therefore, is a mere matter of form rather than of
substance, and nominal rather than real. If we have to regard the essence of the matter, a trustee is

not an owner at all, but a sort of an agent, upon whom the law has conferred the power and
imposed the duty of administering the property of another person.5
(3) Trustee, not mere agent. In legal theory, however, the trustee is not a mere agent but an owner.
He is a person to whom the property of someone else is fictitiously attributed by the law, to the
extent that the rights and powers thus vested in a nominal owner shall be used by him on behalf
of the real owner. (see Salmond, Jurisprudence, 10th ed., p. 275.)
(4) Transfer of equitable title. The interests of the beneficiary in the trust can, in general, be
reached by his creditors, and he can sell or otherwise dispose of them. The beneficiary can
transfer only the interests he holds the equitable title.
(5) Rights of beneficiary. Depending on the terms of the trust instrument, the beneficiary may
receive the income from the assets of the trust, the assets themselves, or both.

A. Parties
i. Trustor
ii. Trustee Marcos Araneta vs. CA, 563 SCRA 41 (2008)
iii. Beneficiary or cestui que trust
Persons involved in the creation of an express trust.
Generally, at least three (3) people are needed for an express trust.
(1) The trustor (creator/settlor/grantor) or the person who intentionally creates or establishes the
trust. He transfers legal ownership of property to a person for the benefit of a third party, who
owns the equitable little;
(2) The trustee or the person who takes and holds the legal title to the property in trust solely for
the benefit of another, with certain powers and subject to certain duties; and
(3) The beneficiary or cestui que trust or the person who has the equitable title or interest in the
property and enjoys the benefit of the administration of the trust by the trustee. (see 65 C.J. 232;
54 Am. Jur. 99, 114.) He may be a natural person or a legal entity. The trust may provide for more
than one beneficiary.
B. Classification
i. Creation
a

Express

Arts. 1441 created by the parties, or by the intention of the trustor; (see above for

commentary)

ART. 1441. Trusts are either express or implied. Ex- press trusts are created by
the intention of the trustor or of the parties. Implied trusts come into being by
operation of law.

Arts. 1443-1446
CHAPTER 2
EXPRESS TRUSTS
Art. 1443. No express trusts concerning an immovable or any interest therein
may be proved by parol evidence.
Art. 1444. No particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended.
Art. 1445. No trust shall fail because the trustee appointed declines the
designation, unless the contrary should appear in the instrument constituting
the trust.
Art. 1446. Acceptance by the beneficiary is necessary. Nevertheless, if the trust
imposes no onerous condition upon the beneficiary, his acceptance shall be
presumed, if there is no proof to the contrary.

GERSIP Association, Inc. v. Government Service Insurance System (GSIS), G.R. No.
189827 (October 16, 2013)

G.R. No. 189827

October 16, 2013

GERSIP ASSOCIATION, INC., LETICIA ALMAZAN, ANGELA NARVAEZ, MARIA B.

PINEDA,

LETICIA

DE

MESA

AND

ALFREDO

D.

PINEDA,

GOVERNMENT INSURANCE SERVICE SYSTEM, Respondent.

DECISION
VILLARAMA, J.:
FACTS:

Petitioners,

vs.

Respondent GSIS is a social insurance institution created under Commonwealth Act No. 186, 5
tasked with providing and administering a pension fund for government employees and
managing the General Insurance Fund.
On March 19, 1981, the GSIS Board of Trustees (GSIS Board) approved the proposed GSIS
Provident Fund Plan (Plan) to provide supplementary benefits to GSIS employees upon their
retirement, disability or separation from the service, and payment of definite amounts to their
beneficiaries in the event of death. It likewise adopted the "Provident Fund Rules and
Regulations" (PFRR) which became effective on April 1, 1981.6
Under the Plan, employees who are members of the Provident Fund (Fund) contribute
through salary deduction a sum equivalent to five percent (5%) of their monthly salary while
respondents monthly contribution is fixed at 45% of each members monthly salary. A
Committee of Trustees (Committee) appointed by respondent administers the Fund by
investing it "in a prudent manner to ensure the preservation of the Fund capital and the
adequacy of its earnings."7
Out of the earnings realized by the Fund, twenty percent (20%) of the proportionate earnings
of respondents contributions is deducted and credited to a General Reserve Fund (GRF) and
the remainder is credited to the accounts of the members in proportion to the amounts
standing to their credit at the beginning of each quarter. Upon retirement, members are
entitled to withdraw the entire amount of their contributions and proportionate share of the
accumulated earnings thereon, and 100% of respondents contributions with its
proportionate earnings.8
On March 30, 2001, petitioner GERSIP Association, Inc.9 (GERSIP), composed of retired GSIS
employees and officers, wrote the President and General Manager of respondent requesting
the liquidation and partition of the GRF. In his letter-reply 10 dated August 14, 2001, then
President and General Manager Winston F. Garcia explained that there exists a trust relation
rather than co-ownership with respect to the Fund. He stressed that the PFRR authorizes a
reduction of 20% earnings for the GRF, not a total liquidation of the fund itself. Moreover, the
GRF, being an integral part of the Fund, must be maintained as a general policy to serve its
purpose of providing supplementary benefits to retired, separated and disabled GSIS
employees and, in the event of death, payment of definite amounts to their beneficiaries.
Petitioners initially filed a civil suit before the Regional Trial Court (RTC) of Quezon City
(Civil Case No. Q-01-45533) but on motion of respondent said case was dismissed on the
ground that it is the GSIS Board which has jurisdiction over the controversy.11
On October 30, 2002, petitioners filed a Petition12 with the GSIS Board alleging that they have
not been paid their portion of the GRF upon their retirement, to which they are entitled as
"co-owners" of the Fund. They thus prayed for a judgment: (1) ordering respondent to render
and/or submit a report of accounting of the Fund and the GRF and to furnish copies thereof

to petitioners, pursuant to Section 5, Article VIII of the PFRR; (2) directing respondent to
partition, settle, release and pay to the members of petitioner GERSIP their proportionate
share of the GRF, or their corresponding share of the accumulated earnings thereon, and in
addition, 100% of respondents contributions to the Fund, plus the proportionate earnings
thereon, all with interests at the legal rate computed from the retirement dates of each
individual member until fully paid, conformably with Section 1(b), Article V of the PFRR;
and (3) holding respondent liable for reasonable attorneys fees equivalent to 15% of the total
amount claimed, appearance fee of P3,000 per appearance and cost of suit.
In its Answer,13 respondent asserted that petitioners as retiring members of the Fund were
entitled only to the benefits provided in Section 1(b), Article V of the PFRR and that their
claim is not covered by Section 8(a) to (d), Article IV which enumerates the purposes for
which the GRF is allocated. Respondent further contended that there is no legal basis for
petitioners theory that they are co-owners and not just beneficiaries of the Fund.
On October 27, 2004, the GSIS Board denied the petition for lack of merit. It held that the
execution of the Trust Agreement 14 between respondent and the Committee is a clear
indication that the parties intended to establish an express trust, not a co-ownership, with
respondent as Trustor, the Committee as Trustee of the Fund and the members as
Beneficiaries. As to the GRF, the Board said that it answers only for the contingent claims
mentioned in Section 8, Article IV and there is no requirement in the PFRR for the accounting
and partition of GRF.15
When their motion for reconsideration was denied by the GSIS Board, petitioners filed a
petition for review in the CA under Rule 43 of the 1997 Rules of Civil Procedure, as amended.
By Decision dated June 30, 2009, the CA affirmed the ruling of the GSIS Board. Petitioners
motion for reconsideration was likewise denied.
Hence, this petition arguing that:
1) The GSIS Provident fund is not a "trust" but a co-ownership.
2) The Reserve Fund of the GSIS Provident Fund is not required by law; there is no necessity
for it.
3) Partial partition of the Reserve Fund is not inconsistent with maintaining the GSIS
Provident Fund.
4) The petitioners, as members of the Provident Fund, are legally entitled to accounting and
audit of the Fund.16
Petitioners assert that since the GSIS Provident Fund is an employee fringe benefit package
incorporated in the collective bargaining agreements (CBA), the members own not only their

personal contributions to the Fund but also 100% of GSIS management contributions remitted
in their names and for their benefit, plus all the earnings of both personal contributions and
the earnings of the management contribution, 20% of which is allotted by respondent to the
GRF. Upon the remittance by respondent of its contributions to the Fund, the same ceased to
be part of management funds but becomes part of the equity of the members for whom they
were remitted as a contractual obligation.
As to the GRF, petitioners contend that unlike modern insurance companies, there is no law
or rule requiring the GSIS Provident Fund to maintain a Reserve Fund. Hence, upon their
retirement, members are entitled also to that part of earnings from respondents
contributions which are remitted to the GRF, or at least the remaining balance thereof
pertaining to the share of each member.
Petitioners further argue that the Trust Agreement cited by the respondent is a misnomer.
They point out that such contract was entered only between the respondent and the first
trustees, and it merely defined the latters functions in running the affairs of the Fund. As a
contractual obligation of the respondent under the CBA, its contributions to the Fund become
part of the equity of the member in whose name it was remitted. Respondent thus has no
legal title to the funds and it has no basis to impose any condition on how to avail of the Fund
benefits, or to refuse its accounting and audit.
Resolution of the present controversy hinges on the determination of the nature of the funds
contributed and its accumulated earnings under the Plan.
A provident fund is a type of retirement plan where both the employer and employee make
fixed contributions. Out of the accumulated fund and its earnings, employees receive benefits
upon their retirement, separation from service or disability.
The GSIS Provident Fund was established through Resolution No. 201 of the GSIS
Board.1wphi1 The GSIS Board likewise adopted a set of rules and regulations (PFRR) to
govern the membership, fund contributions and investment, payment of benefits and the
trustees.

On July 23, 1981, a Trust Agreement17 was executed between respondent and the Committee.
The latter was tasked to administer, manage and invest the Fund, out of which it shall pay the
benefits due to members or their beneficiaries in accordance with the policies, rules and
regulations approved by respondent. The Agreement likewise explicitly declares:
SECTION 2. - The COMMITTEE OF TRUSTEES shall hold title and manage the
FUND in trust for the exclusive benefit of the members and their beneficiaries as
provided for in the PLAN. No part of the FUND shall be used for, or diverted to any

purpose or purposes other than for the exclusive benefits of such members and their
beneficiaries.18 (Emphasis supplied.)
Respondents contention that it had thereby created an express trust was upheld by the GSIS
Board and the CA. The appellate court further ruled that the rules on co-ownership do not
apply and there is nothing in the PFRR that allows the distribution of the GRF in proportion
to the members share therein.
ISSUE: WON The GSIS Provident fund is not a "trust" but a co-ownership
HELD: A TRUST.
We sustain the rulings of the GSIS Board and CA.
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.19
A trust fund refers to money or property set aside as a trust for the benefit of another and
held by a trustee.20 Under the Civil Code, trusts are classified as either express or implied. An
express trust is created by the intention of the trustor or of the parties, while an implied trust
comes into being by operation of law.21

There is no doubt that respondent intended to establish a trust fund from the employees
contributions (5% of monthly salary) and its own contributions (45% of each members
monthly salary and all unremitted Employees Welfare contributions). We cannot accept
petitioners submission that respondent could not impose terms and conditions on the
availment of benefits from the Fund on the ground that members already own respondents
contributions from the moment such was remitted to their account. Petitioners assertion that
the Plan was a purely contractual obligation on the part of respondent is likewise mistaken.
Republic Act No. 8291, otherwise known as "The Government Service Insurance System Act
of 1997," mandated respondent to maintain a provident fund subject to rules and regulations
it may adopt. Thus:
SECTION 41. Powers and Functions of the GSIS. The GSIS shall exercise the
following powers and functions:
xxxx
(s) to maintain a provident fund , which consists of contributions made by both the
GSIS and its officials and employees and their earnings, for the payment of benefits to

such officials and employees or their heirs under such terms and conditions as it may
prescribe; (Emphasis supplied.)
In Development Bank of the Philippines v. Commission on Audit,22 this Court recognized DBPs
establishment of a trust fund to cover the retirement benefits of certain employees. We noted
that as the trustor, DBP vested in the trustees legal title over the Fund as well as control over
the investment of the money and assets of the Fund. The Trust Agreement therein also stated
that the principal and income must be used to satisfy all of the liabilities to the beneficiary
officials and employees under the Gratuity Plan.23
Here, petitioners as beneficiaries of the Fund contend that they became co-owners of the
entire Fund including respondents contributions and its accumulated earnings. On this
premise, they demand a proportionate share in the GRF which was deducted from the
earnings on respondents contributions.
Under the PFRR, however, the GRF is allocated for specific purposes and not intended for
distribution to members. Section 8,24 Article IV thus provides:
Section 8. Earnings. At the beginning of each quarter, the earnings realized by the Fund in the
previous quarter just ended shall be credited to the accounts of the members in proportion to
the amounts standing to their credit as of the beginning of the same quarter after deducting
therefrom twenty per cent (20%) of the proportionate earnings of the Systems contributions,
which deduction shall be credited to a General Reserve Fund. Whenever circumstances
warrant, however, the Committee may reduce the percentage to be credited to the General
Reserve Fund for any given quarter; provided that in no case shall such percentage be lower
than five per cent (5%) of the proportionate earnings of the Systems contributions for the
quarter. When and as long as the total amount in the General Reserve Fund is equivalent to at
least ten per cent (10%) of the total assets of the Fund, the Committee may authorize all the
earnings for any given quarter to be credited to the members.
The General Reserve Fund shall be used for the following purposes:
(a) To cover the deficiency, if any, between the amount standing to the credit of a member
who dies or is separated from the service due to permanent and total disability, and the
amount due him under Article V Section 425;
(b) To make up for any investment losses and write-offs of bad debts, in accordance with
policies to be promulgated by the Board;
(c) To pay the benefits of separated employees in accordance with Article IV, Section 3 26;
and
(d) For other purposes as may be approved by the Board, provided that such purposes is
consistent with Article IV, Section 427.

It is clear that while respondents monthly contributions are credited to the account of each
member, and the same were received by petitioners upon their retirement, they were entitled
to only a proportionate share of the earnings thereon. The benefits of retiring members of the
Fund are covered by Section 1(b), Article V which states:
(b) Retirement. In the event the separation from the System is due to retirement under
existing laws, such as P.D. 1146, R.A. 660 or R.A. 1616, irrespective of the length of
membership to the Fund, the retiree shall be entitled to withdraw the entire amount of
his contributions to the Fund, as well as the corresponding proportionate share of the
accumulated earnings thereon, and in addition, 100% of the Systems contributions, plus
the proportionate earnings thereon.
We find nothing illegal or anomalous in the creation of the GRF to address certain
contingencies and ensure the Funds continuing viability. Petitioners right to receive
retirement benefits under the Plan was subject to well-defined rules and regulations that were
made known to and accepted by them when they applied for membership in the Fund.
Petitioners have the right to demand for an accounting of the Fund including the GRF. Under
Section 5,28 Article VIII of the PFRR, the Committee is required to prepare an annual report
showing the income and expenses and the financial condition of the Fund as of the end of
each calendar year. Said report shall be submitted to the GSIS Board and shall be available to
members. There is, however, no allegation or evidence that the Committee failed to comply
with the submission of such annual report, or that such report was not made available to
members.

JOSEPH GOYANKO, JR., as administrator of the Estate of Joseph

Goyanko, Sr., petitioner,vs. UNITED COCONUT PLANTERS BANK,
MANGO AVENUE BRANCH, respondent.
Facts:
In 1995, the late Joseph Goyanko, Sr., (Goyanko) invested Two Million Pesos (P2,000,000.00)
with Philippine Asia Lending Investors, Inc. family, represented by the petitioner, and his
illegitimate family presented conflicting claims to PALII for the release of the investment.
Pending the investigation of the conflicting claims, PALII deposited the proceeds of the
investment with UCPB on October 29, 1996 5 under the name "Phil Asia: ITF (In Trust For)
The Heirs of Joseph Goyanko, Sr." (ACCOUNT). On September 27, 1997, the deposit under
the ACCOUNT was P1,509,318.76.
On December 11, 1997, UCPB allowed PALII to withdraw One Million Five Hundred Thousand
Pesos (P1,500,000.00) from the Account, leaving a balance of only P9,318.76. When UCPB
refused the demand to restore the amount withdrawn plus legal interest from December 11,
1997, the petitioner filed a complaint before the RTC. In its answer to the complaint, UCPB
admitted, among others, the opening of the ACCOUNT under the name "ITF (In Trust For) The

Heirs of Joseph Goyanko, Sr.," (ITF HEIRS) and the withdrawal on December 11,
1997. EISCaD
The RTC Ruling
In its August 27, 2003 decision, the RTC dismissed the petitioner's complaint and awarded
UCPB attorney's fees, litigation expenses and the costs of the suit
The CA's Ruling
Before the CA, the petitioner maintained that by opening the ACCOUNT, PALII
established a trust by which it was the "trustee" and the HEIRS are the "trustorsbeneficiaries;" thus, UCPB should be liable for allowing the withdrawal.
The Case for UCPB
UCPB posits, in defense, that the ACCOUNT involves an ordinary deposit contract between
PALII and UCPB only, which created a debtor-creditor relationship obligating UCPB to return
the proceeds to the account holder-PALII. Thus, it was not negligent in handling the
ACCOUNT when it allowed the withdrawal. The mere designation of the ACCOUNT as "ITF" is
insufficient to establish the existence of an express trust or charge it with knowledge of the
relation between PALII and the HEIRS. CAaDSI
UCPB also argues that the petitioner changed the theory of his case. Before the CA, the
petitioner argued that the HEIRS are the trustors-beneficiaries, and PALII is the trustee. Here,
the petitioner maintains that PALII is the trustor, UCPB is the trustee, and the HEIRS are the
beneficiaries. Contrary to the petitioner's assertion, the records failed to show that PALII and
UCPB executed a trust agreement, and PALII's letters made it clear that PALII, on its own,
intended to turn-over the proceeds of the ACCOUNT to its rightful owners.
Issue:
Whether or not UCPB should be held liable for the amount withdrawn because a trust
agreement existed between PALII and UCPB, in favor of the HEIRS, when PALII opened the
ACCOUNT with UCPB.
Held:
No
We first address the procedural issues. We stress the settled rule that a petition for review
on certiorari under Rule 45 of the Rules of Court resolves only questions of law, not
questions of fact. 15 A question, to be one of law, must not examine the probative value of
the evidence presented by the parties; 16 otherwise, the question is one of fact. 17 Whether
an express trust exists in this case is a question of fact whose resolution is not proper in a
petition under Rule 45. Reinforcing this is the equally settled rule that factual findings of the
lower tribunals are conclusive on the parties and are not generally reviewable by this
Court, 18 especially when, as here, the CA affirmed these findings. The plain reason is that
this Court is not a trier of facts. 19 While this Court has, at times, permitted exceptions from
the restriction, 20 we find that none of these exceptions obtain in the present case. HIAEaC
Second, we find that the petitioner changed the theory of his case. The petitioner argued
before the lower courts that an express trust exists between PALII as the trustee and the
HEIRS as the trustor-beneficiary. 21 The petitioner now asserts that the express trust exists
between PALII as the trustor and UCPB as the trustee, with the HEIRS as the
beneficiaries. 22 At this stage of the case, such change of theory is simply not allowed as it
violates basic rules of fair play, justice and due process. Our rulings are clear "a party who
deliberately adopts a certain theory upon which the case was decided by the lower court will
not be permitted to change [it] on appeal"; 23 otherwise, the lower courts will effectively be
deprived of the opportunity to decide the merits of the case fairly. 24 Besides, courts of

justice are devoid of jurisdiction to resolve a question not in issue. 25 For these reasons, the
petition must fail. Independently of these, the petition must still be denied.
No express trust exists; UCPB exercised the required diligence in handling the
ACCOUNT; petitioner has no cause of action against UCPB
A trust, either express or implied, 26 is the fiduciary relationship ". . . between one person
having an equitable ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter." 27Express or direct trusts are
created by the direct and positive acts of the trustor or of the parties. 28 No written words
are required to create an express trust. This is clear from Article 1444 of the Civil
Code, 29 but, the creation of an express trust must be firmly shown; it cannot be assumed
from loose and vague declarations or circumstances capable of other interpretations. 30
In Rizal Surety & Insurance Co. v. CA, 31 we laid down the requirements before an express
trust will be recognized: aEHADT
Basically, these elements include a competent trustor and trustee,
an ascertainable trust res, and sufficiently certain beneficiaries. . .
. each of the above elements is required to be established, and, if
any one of them is missing, it is fatal to the trusts (sic).
Furthermore, there must be a present and complete disposition of
the trust property, notwithstanding that the enjoyment in the
beneficiary will take place in the future. It is essential, too, that the
purpose be an active one to prevent trust from being executed into a legal
estate or interest, and one that is not in contravention of some prohibition
of statute or rule of public policy. There must also be some power of
administration other than a mere duty to perform a contract
although the contract is for a third-party beneficiary. A
declaration of terms is essential, and these must be stated with
reasonable certainty in order that the trustee may administer, and
that the court, if called upon so to do, may enforce, the trust. [emphasis
ours]
Under these standards, we hold that no express trust was created. First, while an
ascertainable trust res and sufficiently certain beneficiaries may exist, a competent
trustor and trustee do not. Second, UCPB, as trustee of the ACCOUNT, was never under
any equitable duty to deal with or given any power of administration over it. On the
contrary, it was PALII that undertook the duty to hold the title to the ACCOUNT for the
benefit of the HEIRS. Third, PALII, as the trustor, did not have the right to the beneficial
enjoyment of the ACCOUNT.Finally, the terms by which UCPB is to administer the
ACCOUNT was not shown with reasonable certainty. While we agree with the petitioner
that a trust's beneficiaries need not be particularly identified for a trust to exist, the
intention to create an express trust must first be firmly established, along with
the other elements laid above; absent these, no express trust exists.
Contrary to the petitioner's contention, PALII's letters and UCPB's records established UCPB's
participation as a mere depositary of the proceeds of the investment. In the March 28, 1996
letter, PALII manifested its intention to pursue an active role in and up to the turnover of
those proceeds to their rightful owners, 32 while in the November 15, 1996 letter, PALII
begged the petitioner to trust it with the safekeeping of the investment proceeds and
documents. 33 Had it been PALII's intention to create a trust in favor of the HEIRS, it would
have relinquished any right or claim over the proceeds in UCPB's favor as the trustee. As
matters stand, PALII never did. cTESIa

UCPB's records and the testimony of UCPB's witness 34 likewise lead us to the same
conclusion. While the words "ITF HEIRS" may have created the impression that a trust
account was created, a closer scrutiny reveals that it is an ordinary savings account. 35 We
give credence to UCPB's explanation that the word "ITF" was merely used to distinguish the
ACCOUNT from PALII's other accounts with UCPB. A trust can be created without using the
word "trust" or "trustee," but the mere use of these words does not automatically reveal an
intention to create a trust. 36If at all, these words showed a trustee-beneficiary relationship
between PALII and the HEIRS.
Contrary to the petitioner's position, UCPB did not become a trustee by the mere opening of
the ACCOUNT. While this may seem to be the case, by reason of the fiduciary nature of the
bank's relationship with its depositors, 37 this fiduciary relationship does not "convert the
contract between the bank and its depositors from a simple loan to a trust agreement,
whether express or implied." 38 It simply means that the bank is obliged to observe "high
standards of integrity and performance" in complying with its obligations under the contract
of simple loan. 39 Per Article 1980 of the Civil Code, 40 a creditor-debtor relationship exists
between the bank and its depositor. 41 The savings deposit agreement is between the bank
and the depositor; 42 by receiving the deposit, the bank impliedly agrees to pay upon
demand and only upon the depositor's order. 43
Since the records and the petitioner's own admission showed that the ACCOUNT was opened
by PALII, UCPB's receipt of the deposit signified that it agreed to pay PALII upon its demand
and only upon its order. Thus, when UCPB allowed PALII to withdraw from the ACCOUNT, it
was merely performing its contractual obligation under their savings deposit agreement. No
negligence or bad faith 44 can be imputed to UCPB for this action. As far as UCPB was
concerned, PALII is the account holder and not the HEIRS. As we held in Fulton Iron Works
Co. v. China Banking Corporation, 45 the bank's duty is to its creditor-depositor and not to
third persons. Third persons, like the HEIRS here, who may have a right to the money
deposited, cannot hold the bank responsible unless there is a court order or
garnishment. 46 The petitioner's recourse is to go before a court of competent jurisdiction to
prove his valid right over the money deposited. EAaHTI
In these lights, we find the third assignment of error mooted. A cause of action requires that
there be a right existing in favor of the plaintiff, the defendant's obligation to respect that
right, and an act or omission of the defendant in breach of that right. 47 We reiterate that
UCPB's obligation was towards PALII as its creditor-depositor. While the HEIRS may have a
valid claim over the proceeds of the investment, the obligation to turn-over those proceeds
lies with PALII. Since no trust exists, the petitioner's complaint was correctly dismissed and
the CA did not commit any reversible error in affirming the RTC decision. One final note, the
burden to prove the existence of an express trust lies with the petitioner. 48 For his failure to
discharge this burden, the petition must fail.

MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, husband

and children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all surnamed
TOSINO, APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO DEAN; PEDRO
TORBELA, represented by his heirs, namely: JOSE and DIONISIO, both surnamed
TORBELA; EUFROSINA TORBELA ROSARIO, represented by her heirs, namely:
ESTEBAN T. ROSARIO, MANUEL T. ROSARIO, ROMULO T. ROSARIO and ANDREA
ROSARIO-HADUCA; LEONILA TORBELA TAMIN; FERNANDO TORBELA, represented
by his heirs, namely: SERGIO T. TORBELA, EUTROPIA T. VELASCO, PILAR T.

ZULUETA, CANDIDO T. TORBELA, FLORENTINA T. TORBELA and PANTALEON T.

TORBELA;
DOLORES
TORBELA
TABLADA;
LEONORA
TORBELA
AGUSTIN,
represented by her heirs, namely: PATRICIO, SEGUNDO, CONSUELO and FELIX, all
surnamed AGUSTIN; and SEVERINA TORBELA ILDEFONSO, petitioners, vs.
SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, respondents.
Facts: The controversy began with a parcel of land, with an area of 374 square meters,
located in Urdaneta City, Pangasinan (Lot No. 356-A). It was originally part of a larger parcel
of land, known as Lot No. 356 of the Cadastral Survey of Urdaneta, measuring 749 square
meters, and covered by Original Certificate of Title (OCT) No. 16676, 8 in the name of
Valeriano Semilla (Valeriano), married to Potenciana Acosta. Under unexplained
circumstances, Valeriano gave Lot No. 356-A to his sister Marta Semilla, married to Eugenio
Torbela (spouses Torbela). Upon the deaths of the spouses Torbela, Lot No. 356-A was
adjudicated in equal shares among their children, the Torbela siblings, by virtue of a Deed of
Extrajudicial Partition 9 dated December 3, 1962.
On December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim 10 over
Lot No. 356-A in favor of Dr. Rosario. According to the said Deed, the Torbela siblings "for and
in consideration of the sum of NINE PESOS (P9.00) . . . transfer[red] and convey[ed] . . . unto
the said Andres T. Rosario, that undivided portion of THREE HUNDRED SEVENTY-FOUR square
meters of that parcel of land embraced in Original Certificate of Title No. 16676 of the land
records of Pangasinan . . . ." 11 Four days later, on December 16, 1964, OCT No. 16676 in
Valeriano's name was partially cancelled as to Lot No. 356-A and TCT No. 52751 12 was
issued in Dr. Rosario's name covering the said property.
Another Deed of Absolute Quitclaim 13 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. The Deed stated:
ECSHID
That for and in consideration of the sum of one peso (P1.00), Philippine Currency and the
fact that I only borrowed the above described parcel of land from MARIA TORBELA, married
to Eulogio Tosino, EUFROSINA TORBELA, married to Pedro Rosario, PEDRO TORBELA, married
to Petra Pagador, LEONILA TORBELA, married to Fortunato Tamen, FERNANDO TORBELA,
married to Victoriana Tablada, DOLORES TORBELA, widow, LEONORA TORBELA, married to
Matias Agustin and SEVERINA TORBELA, married to Jorge Ildefonso, . . . by these presents do
hereby cede, transfer and convey by way of this ABSOLUTE QUITCLAIM unto the said Maria,
Eufrosina, Pedro, Leonila, Fernando, Dolores, Leonora and Severina, all surnamed Torbela the
parcel of land described above. 14 (Emphasis ours.)
The aforequoted Deed was notarized, but was not immediately annotated on TCT No. 52751.
Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from the Development
Bank of the Philippines (DBP) on February 21, 1965 in the sum of P70,200.00, secured by a
mortgage constituted on Lot No. 356-A. The mortgage was annotated on TCT No. 52751 on
September 21, 1965 as Entry No. 243537. 15 Dr. Rosario used the proceeds of the loan for
the construction of improvements on Lot No. 356-A.

On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of Adverse Claim, 16 on
behalf of the Torbela siblings. Cornelio deposed in said Affidavit:
3.That ANDRES T. ROSARIO later quitclaimed his rights in favor of the former owners by
virtue of a Deed of Absolute Quitclaim which he executed before Notary Public Banaga, and
entered in his Notarial Registry as Dec. No. 43; Page No. 9; Book No. I; Series of 1964;

4.That it is the desire of the parties, my aforestated kins, to register ownership over the
above-described property or to perfect their title over the same but their Deed could not be
registered because the registered owner now, ANDRES T. ROSARIO mortgaged the property
with the DEVELOPMENT BANK OF THE PHILIPPINES, on September 21, 1965, and for which
reason, the Title is still impounded and held by the said bank;
5.That pending payment of the obligation with the DEVELOPMENT BANK OF THE PHILIPPINES
or redemption of the Title from said bank, I, CORNELIO T. TOSINO, in behalf of my mother
MARIA TORBELA-TOSINO, and my Aunts EUFROSINA TORBELA, LEONILA TORBELA-TAMEN,
DOLORES TORBELA, LEONORA TORBELA-AGUSTIN, SEVERINA TORBELA-ILDEFONSO, and my
Uncles PEDRO TORBELA and FERNANDO, also surnamed TORBELA, I request the Register of
Deeds of Pangasinan to annotate their adverse claim at the back of Transfer Certificate of
Title No. 52751, based on the annexed document, Deed of Absolute Quitclaim by ANDRES T.
ROSARIO, dated December 28, 1964, marked as Annex "A" and made a part of this Affidavit,
and it is also requested that the DEVELOPMENT BANK OF THE PHILIPPINES be informed
accordingly. 17
The very next day, on May 17, 1967, the Torbela siblings had Cornelio's Affidavit of Adverse
Claim dated May 16, 1967 and Dr. Rosario's Deed of Absolute Quitclaim dated December 28,
1964 annotated on TCT No. 52751 as Entry Nos. 274471 18 and 274472, 19 respectively.
The construction of a four-storey building on Lot No. 356-A was eventually completed. The
building was initially used as a hospital, but was later converted to a commercial building.
Part of the building was leased to PT&T; and the rest to Mrs. Andrea Rosario-Haduca, Dr.
Rosario's sister, who operated the Rose Inn Hotel and Restaurant.
Dr. Rosario was able to fully pay his loan from DBP. Under Entry No. 520197 on TCT No.
52751 20 dated March 6, 1981, the mortgage appearing under Entry No. 243537 was
cancelled per the Cancellation and Discharge of Mortgage executed by DBP in favor of Dr.
Rosario and ratified before a notary public on July 11, 1980. cDCHaS
In the meantime, Dr. Rosario acquired another loan from the Philippine National Bank (PNB)
sometime in 1979-1981. Records do not reveal though the original amount of the loan from
PNB, but the loan agreement was amended on March 5, 1981 and the loan amount was
increased to P450,000.00. The loan was secured by mortgages constituted on the following
properties: (1) Lot No. 356-A, covered by TCT No. 52751 in Dr. Rosario's name; (2) Lot No.
4489, with an area of 1,862 square meters, located in Dagupan City, Pangasinan, covered by
TCT No. 24832; and (3) Lot No. 5-F-8-C-2-B-2-A, with an area of 1,001 square meters, located
in Nancayasan, Urdaneta, Pangasinan, covered by TCT No. 104189. 21 The amended loan
agreement and mortgage on Lot No. 356-A was annotated on TCT No. 52751 on March 6,
1981 as Entry No. 520099. 22

Five days later, on March 11, 1981, another annotation, Entry No. 520469, 23 was made on
TCT No. 52751, canceling the adverse claim on Lot No. 356-A under Entry Nos. 274471274472, on the basis of the Cancellation and Discharge of Mortgage executed by Dr. Rosario
on March 5, 1981. Entry No. 520469 consisted of both stamped and handwritten portions,
and exactly reads:
Entry No. 520469. Cancellation of Adverse Claim executed by Andres Rosario in favor of
same. The incumbrance/mortgage appearing under Entry No. 274471-72 is now cancelled as
per Cancellation and Discharge of Mortgage Ratified before Notary Public Mauro G. Meris on
March 5, 1981: Doc. No. 215; Page No. 44; Book No. 1; Series of 1981.
Lingayen, Pangasinan, 3-11, 19981 *
[Signed: Pedro dela Cruz]
Register of Deeds 24
On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a
third loan in the amount of P1,200,000.00 from Banco Filipino Savings and Mortgage Bank
(Banco Filipino). To secure said loan, the spouses Rosario again constituted mortgages on Lot
No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The mortgage on Lot No. 356-A was
annotated on TCT No. 52751 as Entry No. 533283 25 on December 18, 1981. Since the
construction of a two-storey commercial building on Lot No. 5-F-8-C-2-B-2-A was still
incomplete, the loan value thereof as collateral was deducted from the approved loan
amount. Thus, the spouses Rosario could only avail of the maximum loan amount of
P830,064.00 from Banco Filipino.
Because Banco Filipino paid the balance of Dr. Rosario's loan from PNB, the mortgage on Lot
No. 356-A in favor of PNB was cancelled per Entry No. 533478 26 on TCT No. 52751 dated
December 23, 1981.
On February 13, 1986, the Torbela siblings filed before the Regional Trial Court (RTC) of
Urdaneta, Pangasinan, a Complaint for recovery of ownership and possession of Lot No. 356A, plus damages, against the spouses Rosario, which was docketed as Civil Case No. U-4359.
On the same day, Entry Nos. 593493 and 593494 were made on TCT No. 52751 that read as
follows:

Entry No. 593494 Complaint Civil Case No. U-4359 (For: Recovery of Ownership and
Possession and Damages. (Sup. Paper).
Entry No. 593493 Notice of Lis Pendens The parcel of land described in this title is
subject to Lis Pendens executed by Liliosa B. Rosario, CLAO, Trial Attorney dated February
13, 1986. Filed to TCT No. 52751 February 13, 1986-1986 February 13 3:30 p.m.
(SGD.) PACIFICO M. BRAGANZA
Register of Deeds 27

The spouses Rosario afterwards failed to pay their loan from Banco Filipino. As of April 2,
1987, the spouses Rosario's outstanding principal obligation and penalty charges amounted
to P743,296.82 and P151,524.00, respectively. 28
Banco Filipino extrajudicially foreclosed the mortgages on Lot No. 356-A, Lot No. 4489, and
Lot No. 5-F-8-C-2-B-2-A. During the public auction on April 2, 1987, Banco Filipino was the
lone bidder for the three foreclosed properties for the price of P1,372,387.04. The Certificate
of Sale 29 dated April 2, 1987, in favor of Banco Filipino, was annotated on TCT No. 52751 on
April 14, 1987 as Entry No. 610623. 30
On December 9, 1987, the Torbela siblings filed before the RTC their Amended Complaint, 31
impleading Banco Filipino as additional defendant in Civil Case No. U-4359 and praying that
the spouses Rosario be ordered to redeem Lot No. 356-A from Banco Filipino. cSIADH
The spouses Rosario instituted before the RTC on March 4, 1988 a case for annulment of
extrajudicial foreclosure and damages, with prayer for a writ of preliminary injunction and
temporary restraining order, against Banco Filipino, the Provincial Ex Officio Sheriff and his
Deputy, and the Register of Deeds of Pangasinan. The case was docketed as Civil Case No.
U-4667. Another notice of lis pendens was annotated on TCT No. 52751 on March 10, 1988
as Entry No. 627059, viz.:
Entry No. 627059 Lis Pendens Dr. Andres T. Rosario and Lena Duque Rosario, Plaintiff
versus Banco Filipino, et al. Civil Case No. U-4667 or Annulment of Extrajudicial Foreclosure
of Real Estate Mortgage The parcel of land described in this title is subject to Notice of Lis
Pendens subscribed and sworn to before Notary Public Mauro G. Meris, as Doc. No. 21; Page
No. 5; Book 111; S-1988. March 7, 1988-1988 * March 10, 1:00 p.m.
(SGD.) RUFINO M. MORENO, SR.
Register of Deeds 32
The Torbela siblings intervened in Civil Case No. U-4667. Eventually, on October 17, 1990,
the RTC issued an Order 33 dismissing without prejudice Civil Case No. U-4667 due to the
spouses Rosario's failure to prosecute.
Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco Filipino, but their
efforts were unsuccessful. Upon the expiration of the one-year redemption period in April
1988, the Certificate of Final Sale 34 and Affidavit of Consolidation 35 covering all three
foreclosed properties were executed on May 24, 1988 and May 25, 1988, respectively.
On June 7, 1988, new certificates of title were issued in the name of Banco Filipino,
particularly, TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No. 165813 for Lot No. 356A. 36
The Torbela siblings thereafter filed before the RTC on August 29, 1988 a Complaint 37 for
annulment of the Certificate of Final Sale dated May 24, 1988, judicial cancellation of TCT
No. 165813, and damages, against Banco Filipino, the Ex Officio Provincial Sheriff, and the
Register of Deeds of Pangasinan, which was docketed as Civil Case No. U-4733.
On June 19, 1991, Banco Filipino filed before the RTC of Urdaneta City a Petition for the
issuance of a writ of possession. In said Petition, docketed as Pet. Case No. U-822, Banco

Filipino prayed that a writ of possession be issued in its favor over Lot No. 5-F-8-C-2-B-2-A
and Lot No. 356-A, plus the improvements thereon, and the spouses Rosario and other
persons presently in possession of said properties be directed to abide by said writ.
The RTC jointly heard Civil Case Nos. U-4359 and U-4733 and Pet. Case No. U-822. The
Decision 38 on these three cases was promulgated on January 15, 1992, the dispositive
portion of which reads:
WHEREFORE, judgment is rendered:

1.Declaring the real estate mortgage over Lot 356-A covered by TCT 52751 executed by
Spouses Andres Rosario in favor of Banco Filipino, legal and valid;
2.Declaring the sheriff's sale dated April 2, 1987 over Lot 356-A covered by TCT 52751 and
subsequent final Deed of Sale dated May 14, 1988 over Lot 356-A covered by TCT No. 52751
legal and valid;
3.Declaring Banco Filipino the owner of Lot 356-A covered by TCT No. 52751 (now TCT
165813);
4.Banco Filipino is entitled to a Writ of Possession over Lot 356-A together with the
improvements thereon (Rose Inn Building). The Branch Clerk of Court is hereby ordered to
issue a writ of possession in favor of Banco Filipino;
5.[The Torbela siblings] are hereby ordered to render accounting to Banco Filipino the rental
they received from tenants of Rose Inn Building from May 14, 1988;
6.[The Torbela siblings] are hereby ordered to pay Banco Filipino the sum of P20,000.00 as
attorney's fees;
7.Banco Filipino is hereby ordered to give [the Torbela siblings] the right of first refusal over
Lot 356-A. The Register of Deeds is hereby ordered to annotate the right of [the Torbela
siblings] at the back of TCT No. 165813 after payment of the required fees; cCSEaA
8.Dr. Rosario and Lena Rosario are hereby ordered to reimburse [the Torbela siblings] the
market value of Lot 356-A as of December, 1964 minus payments made by the former;
9.Dismissing the complaint of [the Torbela siblings] against Banco Filipino, Pedro Habon and
Rufino Moreno in Civil Case No. U-4733; and against Banco Filipino in Civil Case No. U-4359.
39
The RTC released an Amended Decision 40 dated January 29, 1992, adding the following
paragraph to the dispositive:

Banco Filipino is entitled to a Writ of Possession over Lot-5-F-8-C-2-[B]-2-A of the subdivision

plan (LRC) Psd-122471, covered by Transfer Certificate of Title 104189 of the Registry of
Deeds of Pangasinan[.] 41

The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment before the Court
of Appeals. Their appeal was docketed as CA-G.R. CV No. 39770.
In its Decision 42 dated June 29, 1999, the Court of Appeals decreed:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with
modification.
Issue:
Whether or not Dr. Rosario has the authority to mortgage Lot 356-A.
Held:
No.
There was an express trust between the Torbela siblings and Dr. Rosario.
There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their
parents, the Torbela spouses, who, in turn, acquired the same from the first registered owner
of Lot No. 356-A, Valeriano.
Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim on December 12, 1964 in
which they transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of
P9.00. However, the Torbela siblings explained that they only executed the Deed as an
accommodation so that Dr. Rosario could have Lot No. 356-A registered in his name and use
said property to secure a loan from DBP, the proceeds of which would be used for building a
hospital on Lot No. 356-A a claim supported by testimonial and documentary evidence,
and borne out by the sequence of events immediately following the execution by the Torbela
siblings of said Deed. On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was
already issued in Dr. Rosario's name. On December 28, 1964, Dr. Rosario executed his own
Deed of Absolute Quitclaim, in which he expressly acknowledged that he "only borrowed" Lot
No. 356-A and was transferring and conveying the same back to the Torbela siblings for the
consideration of P1.00. On February 21, 1965, Dr. Rosario's loan in the amount of
P70,200.00, secured by a mortgage on Lot No. 356-A, was approved by DBP. Soon thereafter,
construction of a hospital building started on Lot No. 356-A. DIESHT
Among the notable evidence presented by the Torbela siblings is the testimony of Atty.
Lorenza Alcantara (Atty. Alcantara), who had no apparent personal interest in the present
case. Atty. Alcantara, when she was still a boarder at the house of Eufrosina Torbela Rosario
(Dr. Rosario's mother), was consulted by the Torbela siblings as regards the extrajudicial
partition of Lot No. 356-A. She also witnessed the execution of the two Deeds of Absolute
Quitclaim by the Torbela siblings and Dr. Rosario.
In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his purported
title to Lot No. 356-A. In Lee Tek Sheng v. Court of Appeals, 53 the Court made a clear
distinction between title and the certificate of title:
The certificate referred to is that document issued by the Register of Deeds known as the
Transfer Certificate of Title (TCT). By title, the law refers to ownership which is represented
by that document. Petitioner apparently confuses certificate with title. Placing a parcel of

land under the mantle of the Torrens system does not mean that ownership thereof can no
longer be disputed. Ownership is different from a certificate of title. The TCT is only the best
proof of ownership of a piece of land. Besides, the certificate cannot always be considered as
conclusive evidence of ownership. Mere issuance of the certificate of title in the name of any
person does not foreclose the possibility that the real property may be under co-ownership
with persons not named in the certificate or that the registrant may only be a trustee or that
other parties may have acquired interest subsequent to the issuance of the certificate of
title. To repeat, registration is not the equivalent of title, but is only the best evidence
thereof. Title as a concept of ownership should not be confused with the certificate of title as
evidence of such ownership although both are interchangeably used. . . . . 54 (Emphases
supplied.)
Registration does not vest title; it is merely the evidence of such title. Land registration laws
do not give the holder any better title than what he actually has. 55 Consequently, Dr.
Rosario must still prove herein his acquisition of title to Lot No. 356-A, apart from his
submission of TCT No. 52751 in his name.
Dr. Rosario testified that he obtained Lot No. 356-A after paying the Torbela siblings
P25,000.00, pursuant to a verbal agreement with the latter. The Court though observes that
Dr. Rosario's testimony on the execution and existence of the verbal agreement with the
Torbela siblings lacks significant details (such as the names of the parties present, dates,
places, etc.) and is not corroborated by independent evidence.
In addition, Dr. Rosario acknowledged the execution of the two Deeds of Absolute Quitclaim
dated December 12, 1964 and December 28, 1964, even affirming his own signature on the
latter Deed. The Parol Evidence Rule provides that when the terms of the agreement have
been reduced into writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement. 56 Dr. Rosario may not modify, explain, or
add to the terms in the two written Deeds of Absolute Quitclaim since he did not put in issue
in his pleadings (1) an intrinsic ambiguity, mistake, or imperfection in the Deeds; (2) failure
of the Deeds to express the true intent and the agreement of the parties thereto; (3) the
validity of the Deeds; or (4) the existence of other terms agreed to by the Torbela siblings
and Dr. Rosario after the execution of the Deeds. 57
Even if the Court considers Dr. Rosario's testimony on his alleged verbal agreement with the
Torbela siblings, the Court finds the same unsatisfactory. Dr. Rosario averred that the two
Deeds were executed only because he was "planning to secure loan from the Development
Bank of the Philippines and Philippine National Bank and the bank needed absolute
quitclaim[.]" 58 While Dr. Rosario's explanation makes sense for the first Deed of Absolute
Quitclaim dated December 12, 1964 executed by the Torbela siblings (which transferred Lot
No. 356-A to Dr. Rosario for P9.00.00), the same could not be said for the second Deed of
Absolute Quitclaim dated December 28, 1964 executed by Dr. Rosario. In fact, Dr. Rosario's
Deed of Absolute Quitclaim (in which he admitted that he only borrowed Lot No. 356-A and
was transferring the same to the Torbela siblings for P1.00.00) would actually work against
the approval of Dr. Rosario's loan by the banks. Since Dr. Rosario's Deed of Absolute
Quitclaim dated December 28, 1964 is a declaration against his self-interest, it must be
taken as favoring the truthfulness of the contents of said Deed. 59 HIEASa

It can also be said that Dr. Rosario is estopped from claiming or asserting ownership over Lot
No. 356-A based on his Deed of Absolute Quitclaim dated December 28, 1964. Dr. Rosario's
admission in the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive
upon him. Under Article 1431 of the Civil Code, "[t]hrough estoppel an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon." 60 That admission cannot now be denied
by Dr. Rosario as against the Torbela siblings, the latter having relied upon his
representation.
Considering the foregoing, the Court agrees with the RTC and the Court of Appeals that Dr.
Rosario only holds Lot No. 356-A in trust for the Torbela siblings.

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between parties may either be express or implied.
An express trust is created by the intention of the trustor or of the parties, while an implied
trust comes into being by operation of law. 61
Express trusts are created by direct and positive acts of the parties, by some writing or
deed, or will, or by words either expressly or impliedly evincing an intention to create a trust.
Under Article 1444 of the Civil Code, "[n]o particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly intended." 62 It is possible to create
a trust without using the word "trust" or "trustee." Conversely, the mere fact that these
words are used does not necessarily indicate an intention to create a trust. The question in
each case is whether the trustor manifested an intention to create the kind of relationship
which to lawyers is known as trust. It is immaterial whether or not he knows that the
relationship which he intends to create is called a trust, and whether or not he knows the
precise characteristics of the relationship which is called a trust. 63
In Tamayo v. Callejo, 64 the Court recognized that a trust may have a constructive or implied
nature in the beginning, but the registered owner's subsequent express acknowledgement in
a public document of a previous sale of the property to another party, had the effect of
imparting to the aforementioned trust the nature of an express trust. The same situation
exists in this case. When Dr. Rosario was able to register Lot No. 356-A in his name under
TCT No. 52751 on 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. Rosario's 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.
Rosario's name under TCT No. 52751 and Dr. Rosario kept possession of said property,
together with the improvements thereon.

PHILIPPINE NATIONAL BANK, petitioner, vs. MERELO B. AZNAR; MATIAS B. AZNAR

III; JOSE L. AZNAR (deceased), represented by his heirs; RAMON A. BARCENILLA;
ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represented by his heirs; and
RICARDO GABUYA (deceased), represented by his heirs, respondents.
Facts: 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 described as follows:
"A parcel of land (Lot No. 3597 of the Talisay-Minglanilla Estate, G.L.R.O. Record No. 3732)
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. . . containing an area
of SEVENTY[-]EIGHT THOUSAND ONE HUNDRED EIGHTY[-]FIVE SQUARE METERS (78,185)
more or less. . . " covered by Transfer Certificate of Title No. 8921 in the name of Rural
Insurance & Surety Co., Inc.";
"A parcel of land (Lot 7380 of the Talisay Minglanilla Estate, G.L.R.O. Record No. 3732),
situated in the Municipality of Talisay, Province of Cebu, Island of Cebu. . . containing an area
of THREE HUNDRED TWENTY[-]NINE THOUSAND FIVE HUNDRED FORTY[-]SEVEN SQUARE
METERS (329,547), more or less. . . " covered by Transfer Certificate of Title No. 8922 in the
name of Rural Insurance & Surety Co., Inc." and
"A parcel of land (Lot 1323 of the subdivision plan Psd-No. 5988), situated in the District of
Lahug, City of Cebu, Island of Cebu. . . containing an area of FIFTY[-]FIVE THOUSAND SIX
HUNDRED FIFTY[-]THREE (55,653) SQUARE METERS, more or less." covered by Transfer
Certificate of Title No. 24576 in the name of Rural Insurance & Surety Co., Inc."
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. Such annotation was made pursuant to the
Minutes of the Special Meeting of the Board of Directors of RISCO (hereinafter referred to as
the "Minutes") on March 14, 1961, pertinent portion of which states:

xxx xxx xxx

3.The President then explained that in a special meeting of the stockholders previously
called for the purpose of putting up certain amount of P212,720.00 for the rehabilitation of
the Company, the following stockholders contributed the amounts indicated opposite their
names:
CONTRIBUTED SURPLUS
MERELO B. AZNAR

P50,000.00

MATIAS B. AZNAR

50,000.00

JOSE L. AZNAR

27,720.00

RAMON A. BARCENILLA

25,000.00

ROSARIO T. BARCENILLA

25,000.00

JOSE B. ENAD 17,500.00

RICARDO GABUYA

17,500.00

212,720.00
xxx xxx xxx
And that the respective contributions above-mentioned shall 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 in
pursuance of the Provisions of Land Registration Act, (Act No. 496, as amended) until such
time their respective contributions are refunded to them completely.
xxx xxx xxx"
Thereafter, various subsequent annotations were made on the same titles, including the
Notice of Attachment and Writ of Execution both dated August 3, 1962 in favor of herein
defendant PNB, to wit:
On TCT No. 8921 for Lot 3597:

Entry No. 7416-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
versus Iluminada Gonzales, et al., Defendants", attaching all rights, interest and
participation of the defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of
the two parcels of land covered by T.C.T. Nos. 8921, Attachment No. 330 and 185.
Date of Instrument August 3, 1962.
Date of Inscription August 3, 1962, 3:00 P.M.
Entry No. 7417-V-4-D.B. Writ of Execution By the Court of First Instance of Manila,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00) plus interest
etc., in connection with Civil Case No. 47725, File No. T-8021.
Date of Instrument July 21, 1962.
Date of Inscription August 3, 1962, 3:00 P.M.
Entry No. 7512-V-4-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil
Case Nos. IV-74065, 73929, 74129, 72818, in the Municipal Court of the City of Manila,
entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
Defendants", attaching all rights, interests and participation of the defendants, to the
parcels of land covered by T.C.T. Nos. 8921 & 8922 Attachment No. 186, File No. T-8921.

Date of the Instrument August 16, 1962.

Date of Inscription August 16, 1962, 2:50 P.M.
Entry No. 7513-V-4-D.B. Writ of Execution By the Municipal Court of the City of Manila,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants, to
make the sum of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from
July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74613 annotated above.
File No. T-8921
Date of the Instrument August 11, 1962.
Date of the Inscription August 16, 1962, 2:50 P.M.
On TCT No. 8922 for Lot 7380:
(Same as the annotations on TCT 8921)
On TCT No. 24576 for Lot 1328 (Corrected to Lot 1323-c per court order):
Entry No. 1660-V-7-D.B. Notice of Attachment by the Provincial Sheriff of Cebu, Civil
Case No. 47725, Court of First Instance of Manila, entitled "Philippine National Bank, Plaintiff,
versus, Iluminada Gonzales, et al., Defendants", attaching all rights, interest, and
participation of the defendants Iluminada Gonzales and Rural Insurance & Surety Co., Inc. of
the parcel of land herein described.
Attachment No. 330 & 185.
Date of Instrument August 3, 1962.
Date of Inscription August 3, 1962, 3:00 P.M.
Entry No. 1661-V-7-D.B. Writ of Execution by the Court of First Instance of Manila
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the defendants to
make the sum of Seventy[-]One Thousand Three Hundred Pesos (P71,300.00), plus interest,
etc., in connection with Civil Case No. 47725.
File No. T-8921.
Date of the Instrument July 21, 1962.
Date of the Inscription August 3, 1962 3:00 P.M.
Entry No. 1861-V-7-D.B. Notice of Attachment By the Provincial Sheriff of Cebu, Civil
Case Nos. IV-74065, 73929, 74129, 72613 & 72871, in the Municipal Court of the City of
Manila, entitled "Jose Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
Defendants", attaching all rights, interest and participation of the defendants, to the parcel
of land herein described.
Attachment No. 186.
File No. T-8921.

Date of the Instrument August 16, 1962.

Date of the Inscription August 16, 1962 2:50 P.M.
Entry No. 1862-V-7-D.B. Writ of Execution by the Municipal Court of Manila,
commanding the Provincial Sheriff of Cebu, of the lands and buildings of the Defendants, to
make the sum of Three Thousand Pesos (P3,000.00), with interest at 12% per annum from
July 20, 1959, in connection with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871
annotated above.
File No. T-8921.
Date of the Instrument August 11, 1962.
Date of the Inscription August 16, 1962 at 2:50 P.M.
As a result, a Certificate of Sale was issued in favor of Philippine National Bank, being the
lone and highest bidder of the three (3) parcels of land known as Lot Nos. 3597 and 7380,
covered by T.C.T. Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot
No. 1328-C covered by T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One
Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of Sale dated
May 27, 1991 in favor of the Philippine National Bank was also issued and Transfer
Certificate of Title No. 24576 for Lot 1328-C (corrected to 1323-C) was cancelled and a new
certificate of title, TCT 119848 was issued in the name of PNB on August 26, 1991.
This prompted plaintiffs-appellees to file the instant complaint seeking the quieting of their
supposed title to the subject properties, declaratory relief, cancellation of TCT and
reconveyance with temporary restraining order and preliminary injunction. Plaintiffs alleged
that the subsequent annotations on the titles are subject to the prior annotation of their
liens and encumbrances. Plaintiffs further contended that the subsequent writs and
processes annotated on the titles are all null and void for want of valid service upon RISCO
and on them, as stockholders. They argued that the Final Deed of Sale and TCT No. 119848
are null and void as these were issued only after 28 years and that any right which PNB may
have over the properties had long become stale.
Defendant PNB on the other hand countered that plaintiffs have no right of action for
quieting of title since the order of the court directing the issuance of titles to PNB had
already become final and executory and their validity cannot be attacked except in a direct
proceeding for their annulment. Defendant further asserted that plaintiffs, as mere
stockholders of RISCO do not have any legal or equitable right over the properties of the
corporation. PNB posited that even if plaintiff's monetary lien had not expired, their only
recourse was to require the reimbursement or refund of their contribution. 5
Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings 6 on October 5,
1998. Thus, the trial court rendered the November 18, 1998 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.
PNB appealed the adverse ruling to the Court of Appeals which, in its September 29, 2005
Decision, set aside the judgment of the trial court. Although the Court of Appeals agreed

with the trial court that a judgment on the pleadings was proper, the appellate court opined
that the monetary contributions made by Aznar, et al., to RISCO can only be characterized
as a loan secured by a lien on the subject lots, rather than an express trust. Thus, it directed
PNB to pay Aznar, et al., the amount of their contributions plus legal interest from the time
of acquisition of the property until finality of judgment.
Issue:
Whether or not the language of the minutes created an express trust.
Held:
No.
We are not persuaded by the contention of Aznar, et al., that the language of the subject
Minutes created an express trust.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in
another. It is a fiduciary relationship that obliges the trustee to deal with the property for the
benefit of the beneficiary. 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. 22 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."
In other words, the creation of an express trust must be manifested with reasonable
certainty and cannot be inferred from loose and vague declarations or from ambiguous
circumstances susceptible of other interpretations. 23
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."
As a consequence thereof, a corporation has a personality separate and distinct from those
of its stockholders and other corporations to which it may be connected. 24 Thus, we had
previously ruled in Magsaysay-Labrador v. Court of Appeals 25 that the interest of the

stockholders over the properties of the corporation is merely inchoate and therefore does
not entitle them to intervene in litigation involving corporate property, to wit:
Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent, remote,
conjectural, consequential and collateral. At the very least, their interest is purely inchoate,
or in sheer expectancy of a right in the management of the corporation and to share in the
profits thereof and in the properties and assets thereof on dissolution, after payment of the
corporate debts and obligations.
While a share of stock represents a proportionate or aliquot interest in the property of the
corporation, it does not vest the owner thereof with any legal right or title to any of the
property, his interest in the corporate property being equitable or beneficial in nature.
Shareholders are in no legal sense the owners of corporate property, which is owned by the
corporation as a distinct legal person. 26

In the case at bar, there is no allegation, much less any proof, that the corporate existence
of RISCO has ceased and the corporate property has been liquidated and distributed to the
stockholders. The records only indicate that, as per Securities and Exchange Commission
(SEC) Certification 27 dated June 18, 1997, the SEC merely suspended RISCO's Certificate of
Registration beginning on September 5, 1988 due to its non-submission of SEC required
reports and its failure to operate for a continuous period of at least five years.
Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the
properties at issue in this case on the strength of the Minutes which, at most, is merely
evidence of a loan agreement between them and the company. There is no indication or
even a suggestion that the ownership of said properties were transferred to them which
would require no less that the said properties be registered under their names. For this
reason, the complaint should be dismissed since Aznar, et al., have no cause to seek a
quieting of title over the subject properties.
PROSPERO RINGOR, SATURNINO RINGOR, ANDRES RINGOR, substituted by
SHAKUNTALA DEBIE, CLARO ALEJO, GERONIMA and SANDIE LOUR, all surnamed
RINGOR, RAYMUNDA RINGOR, LUISA R. RIMANDO, EMILIANA R. TIU and HEIRS OF
JOSE M. RINGOR, INC., petitioners, vs. CONCORDIA, FELIPA, EMETERIA, all
surnamed RINGOR, MARCELINA RINGOR, in behalf of her deceased father,
AGAPITO RINGOR, AVELINA, CRESENCIA, and FELIMON, all surnamed ALMASEN, in
behalf of their deceased mother, ESPIRITA RINGOR, and TEOFILO M. ABALOS, in
behalf of his deceased mother, GENOVEVA RINGOR, respondents.
Facts: The controversy involves lands in San Fabian, Pangasinan, owned by the late Jacobo
Ringor. By his first wife, Gavina Laranang, he had two children, Juan and Catalina. He did not
have offsprings by his second and third wives. Catalina predeceased her father Jacobo who
died sometime in 1935, leaving Juan his lone heir.
Juan married Gavina Marcella. They had seven (7) children, namely: Jose (the father and
predecessor-in-interest of herein petitioners), Genoveva, Felipa, Concordia, Agapito,
Emeteria and Espirita. Genoveva and Agapito are represented in this case by Teofilo Abalos

and Marcelina Ringor, their respective children. Espirita is represented by her children,
Avelina, Cresencia and Felimon Almasen.
Jacobo applied for the registration of his lands under the Torrens system. He filed three land
registration cases alone, with his son Juan, or his grandson Jose, applying jointly with him.
SaHcAC

The first application, docketed as Expediente 241, G.L.R.O. Record No. 13152 was applied for
alone by Jacobo. While Jacobo was the only applicant in Expediente 241, on November 22,
1921, in Decree No. 119561, Parcels 1 and 2 of the lands in Expediente 241 were
adjudicated to Jacobo and his son, Juan, in equal shares as pro-indiviso co-owners. 3 On
March 6, 1922, OCT No. 23689 was issued in the names of Jacobo and Juan. 4 With Jacobos
thumbmark, in a Compraventa dated November 6, 1928, the one-half () undivided interest
of Jacobo in the said Parcels 1 and 2 was sold and transferred to Jose. The OCT was
eventually cancelled and replaced by TCT No. 15918, dated November 6, 1928. The sale to
Jose was registered only on February 15, 1940. 5
Decree No. 119562 awarded full ownership of Parcel 3 to Jacobo. 6 Thus, OCT No. 23690
pertaining to Parcel 3, was issued in Jacobos name. 7 By another Compraventa also dated
November 6, 1928, and with the same circumstances as the Compraventa in Parcels 1 and
2, the entire interest of Jacobo in Parcel 3 was likewise sold and transferred to Jose.
Thereafter, TCT No. 5090 was issued in the name of Jose. 8 All the lands declared to Jacobo
in Expediente 241 were allegedly sold to Jose for P6,000. 9
In the second application, Expediente 244, G.L.R.O. Record No. 13168, Jacobo named Jose as
the applicant. In Decree No. 65500, the five (5) parcels of land in Expediente 244 were
adjudicated to Jose as a donacion de su abuelo (donation of his grandfather). 10 On April
18, 1918, OCT No. 18797 was issued exclusively to Jose. 11
The third application docketed as Expediente 4449, G.L.R.O. Record No. 23643, was filed in
the names of Jacobo and his only son Juan. 12 It covered three parcels of land. Juan died on
July 16, 1922, a year before the decision of the land registration court was issued. On
October 10, 1923, in Decree No. 147191, half of Parcel 1 was adjudicated to Jacobo and the
other half to Jose and later, three-fourths () of parcels 2 and 3 to Jacobo and one-fourth ()
to Jose. 13 Although Juan was one of the named applicants, it later appeared that Joses
name was substituted for Juans name because of an erroneous information that Jose was
the only successor-in-interest of Juan. 14 Thus, on February 29, 1924, OCT Nos. 25885 and
25886 were issued in the names of Jacobo and Jose respectively. 15
Subsequently, in a Compraventa dated November 3, 1928, Jacobo allegedly sold and
transferred to Jose his one-half () undivided interest in Parcel 1 covered by OCT No. 25885.
Jacobos thumbmark appeared on the Compraventa. 16 These lands are now covered by TCT
No. 15916, in the name of petitioner corporation, Heirs of Jose M. Ringor, Inc., organized
after the initiation of the instant case. 17 By another Compraventa also dated November 3,
1928, the three-fourths () undivided interests of Jacobo in Parcels 2 and 3 covered by OCT
No. 25886 were likewise sold and transferred to Jose. The Compraventas were duly
registered sometime in 1940. The OCTs were cancelled and new TCTs were issued in the

name of Jose. Jacobo allegedly sold to Jose for P800 all the lands declared to him in
Expediente 4449. 18
During trial, witnesses attested that even after the decisions in the three land registration
cases and the Compraventas, Jacobo remained in possession of the lands and continued
administering them as he did prior to their registration. He unfailingly gave a share of the
produce to all the 7 children of his son Juan. According to witness Julio Monsis, 19 Jacobo did
not partition the lands since the latter said that he still needed them. 20 When Jacobo died
on June 7, 1935, the lands under the three land registration applications, including those
which petitioners sought to partition in their counterclaim before the trial court, remained
undivided. Jose, as the eldest grandchild, assumed and continued the administration of the
lands. 21 He also conscientiously gave his 5 younger sisters and only brother Agapito, their
share in the produce and income from the lands. 22 Herein respondents claim they
repeatedly asked Jose for partitioning of the land; however, every time they did, Jose always
answered that it was not going to be easy because there would be big and small shares.
23 Respondents explained that they did not zealously press for the immediate partition of
the lands because Jose constantly assured them that he would never cheat them and
because they respected him highly. 24
Jose died on April 30, 1971. Respondents demanded from Joses children, herein petitioners,
the partition and delivery of their share in the estate left by Jacobo and under Joses
administration. The petitioners refused and attempts at amicable settlement failed. 25 On
March 27, 1973, respondents filed a Complaint for partition and reconveyance with
damages, docketed as Civil Case No. D-3037. An Amended Complaint was admitted by the
lower court in its Order of August 6, 1973. 26
In their Complaint, herein respondents claimed that (1) they are all grandchildren and/or
great grandchildren of Jacobo, who left intestate the disputed lands with a total area of
322,775 sq. m., all located in San Fabian, Pangasinan, and declared for tax purposes in the
name of Jose Ringor; (2) that the late Jose Ringor had always been the administrator and
trustee of Jacobo; 27 (3) that after Jacobos death, they asked for their shares of the
intestate properties but was refused; and (4) that Jose as trustee and overseer of all these
properties was answerable to the respondents for their just shares in the intestate properties
of Jacobo. 28 They asked for (a) the partition of their corresponding shares, the cancellation
of OCT No. 18797 issued in the name of Jose Ringor under Expediente 244 and that these be
subdivided among the seven children of Jose Ringor, and the six children and grandchildren
of Juan Ringor; (b) the payment to plaintiffs of whatever may be found as chargeable to the
late Jose Ringor as trustee, as well as liability for administering these properties from the
time of Joses death up to the time the case is terminated; and (c) the payment of attorneys
fees, surveyors expenses and cost of the suit. 29

In their Answer, herein petitioners insisted that they rightfully own and possess the disputed
lands. They alleged that their father acquired legitimate title to and remained in continuous,
uninterrupted and exclusive possession and enjoyment of the said parcels of land in the
concept of an owner at varying times since 1917, 1923, and 1928, as evidenced by the
certificates of title issued more than thirty (30) years ago and in some cases more than fifty
(50) years ago, before the present suit was instituted by respondents. They claimed that

Jacobo sold the parcels of land under Expediente Nos. 4449 and 241 to Jose for valuable
consideration on November 3 and 6, 1928, respectively, evidenced by notarial deeds of sale
duly registered in the Registry of Deeds of Pangasinan. The other disputed lands sought to
be divided, petitioners assured, were held by Jose as exclusive owner.
In their Amended Answer, petitioners averred that the parcels of land in the exclusive name
of Jose are his exclusive properties acquired by him either by inheritance, homestead patent,
or purchase. They claimed that Jose had long acquired indefeasible and incontrovertible title
to the said properties in accordance with the provisions of the Land Registration Act. These
are evidenced by OCT No. 18797 issued March 6, 1919 for Lots Nos. 1, 2, 3, 4, 5, Plan Psu6099; OCT No. 23797 on May 6, 1922 for Plan Psu-15467; TCT No. 5090 issued December
12, 1929 for Lot No. 3, Plan Psu-6095; TCT No. 15918 issued February 15, 1940 for Lots Nos.
1 & 2, Plan Psu-6095 Amd; TCT No. 15917 on February 15, 1940 for Lots Nos. 1 & 2, Plan
Psu-35491; and TCT No. 15916 issued February 15, 1940 for Plan Psu-31271, now TCT No.
93019 issued November 22, 1971. Further, according to petitioners, whatever cause or right
of action, if any, the respondents had with respect to the properties owned and possessed
by them and their late father, including those based on constructive trust, it had long been
barred by prescription and laches and/or prior judgments since it is an incontrovertible fact
that Jose had been, for more than thirty (30) years and in some cases for more than fifty (50)
years, the exclusive registered owner of the registered properties. 30 Lastly, petitioners
asserted that respondents claim of express trust concerning the properties in question could
not be proved by parol evidence
While trial of the case was in progress, Julio Monsis, alleging he was the only child of Macaria
Discipulo and Jacobo, filed a Complaint in Intervention. So did Leocadia Ringor, alleging she
was the only child of Jacobo with Marcelina Gimeno. When Julio died on February 3, 1977, he
was survived by his wife Felipa and their legitimate children Maria, Federico, Eusebio,
Paciencia, Panfilo and Fermin, all surnamed Monsis. On July 8, 1982, herein respondents filed
an Amendment to their Amended Complaint impleading as additional party-defendants, the
Heirs of Jose M. Ringor, Inc. 31
On February 10, 1995, the RTC decided in favor of respondents.

The trial court concluded that Jacobo created an express trust over his entire property in
favor of his grandchildren. It found that Jose held the subject lands as co-owner and trustee
of the express trust. The trial court held that the notarial deeds of sale executed between
Jacobo and Jose in Expediente 241 were false and simulated. It noted that Jose registered the
deed of sale twelve years after their execution and five years after Jacobos death. More
important, the trial court declared that Jacobo continued to occupy and exercise acts of
ownership over the same parcels of land until his death despite the supposed sale to Jose.
On Expediente 244, the trial court observed that the document evidencing that Jacobo
donated the lands therein to Jose was never presented to the registration court, nor was any
explanation given for the failure to register the alleged donation. Hence, the donation was
declared invalid.
On Expediente 4449, the trial court observed that although the applicants were Jacobo and
Juan, the land was erroneously adjudicated to Jacobo and Jose because it was made to

appear that Jose was the only child who succeeded Juan, who died a year before the
application was adjudicated, when in fact Juan had seven children. Jacobo knew of this error,
yet he did nothing to correct it.
The trial court concluded that all these incidents and circumstances served as indicia that
Jacobo cared little if the lands were in his name or someone elses. As far as he was
concerned, all these lands belonged to him such that notwithstanding the subsequent
compraventas, he continued to possess and administer the lands and all the profits from
them were at his disposal. Thus, the trial court continued, from the acts of Jacobo and his full
exercise of dominion over the lands until his death, it could be deduced that the
compraventas were without consideration and this was why the compraventas were not
registered during Jacobos lifetime. The trial court noted that even after the registration of
the compraventas, until his own death, Jose continued Jacobos practice of sharing the
produce of the land with his siblings, a recognition that even Jose considered that his siblings
were beneficial co-owners of the lands under his care. 33
The trial court reasoned that despite the absence of a document proving the express trust,
the same was proven by parol evidence. The trial court explained that the prohibition in
Article 1443 34 of the New Civil Code that no express trust concerning an immovable or
any interest therein may be proved by parol evidence is a prohibition for purposes of
presenting proof on the matter, but it could be waived by a party. 35 It went on to say that
the failure to object to parol evidence during trial and the cross-examination of the witnesses
is a waiver of the prohibition. Furthermore, it said that Jose, as trustee, did not repudiate the
trust, such that the trust remained, and since the trust continued to exist, an action to
compel the trustee to convey the properties has not prescribed nor is it barred by laches. 36
Before the Court of Appeals, petitioners contended that the lower court erred when (1) it
ruled that Jacobo Ringor constituted an express trust over the disputed properties
abovecited in favor of respondents as the beneficiaries and with Jose Ringor as trustee; and
(2) it gave weight to the oral evidence of herein respondents to prove the existence of an
express trust in their favor.
The Court of Appeals affirmed the lower courts decision. The Motion for Reconsideration of
petitioners was also denied.
Issues:
Whether or not express trust necessarily be in writing.
Held:
1 NO.
At the outset, petitioners urge this Court to review the factual findings of the case. It is a
well-established principle, however, that in an appeal via certiorari only questions of law
may be raised. 38 The findings of fact of the Court of Appeals especially when not at
variance with those of the trial court may not, generally be reviewed by this Court. The
findings of fact of the lower court are conclusive on us, absent any palpable error or patent
arbitrariness. In this case, we find no tenable route but to leave the findings of fact of the
lower courts untouched, and move on to the resolution of the other issues.

Petitioners main contention is that the trial and appellate courts had no basis to conclude
that Jacobo constituted an express trust because respondents did not present any deed,
instrument or document expressly declaring that a trust was constituted. Petitioners anchor
their assertion on the Civil Code, particularly their interpretation of Articles 1440, 39 1441,
40 1443, 41 1444, 42 1445, 43 and 1446, 44 as they point out that in these provisions, for
an express trust over an immovable to exist, four elements must be present, namely: (1) a
trustor or settlor who executes the instrument creating the trust; (2) a trustee, who is the
person expressly designated to carry out the trust; (3) the trust res, consisting of duly
identified and definite real properties; and (4) the cestui que trust, or beneficiaries whose
identity must be clear. Petitioners aver that these elements are indispensable for an express
trust to exist. Petitioners then lament that respondents did not present during trial or even
attach to the records of the case, any deed, instrument or document that Jacobo intended to
create a trust. Petitioners, in their petition, insist that the intent to create a trust must be in
writing; and they claimed that they objected, from the beginning, to the introduction of any
oral testimony to prove the establishment of an express trust.
Respondents, for their part, argue that Jacobo created an express trust. Respondents cite the
three applications for registration of the lands referred to the Expedientes 241, 244 and
4449 and the three Compraventas as documentary proofs that an express trust was created
by Jacobo. According to them, this conclusion can be gleaned clearly when Jacobo exercised
acts of ownership over all the disputed lands even after the alleged donation and deeds of
sale in favor of Jose, and when Jacobo religiously gave shares of the income and produce of
the disputed lands to the respondents, a practice Jose continued until three years before his
death. TIaCcD
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. 45 It is created not necessarily by some written words, but by the direct and
positive acts of the parties. No particular words are required, it being sufficient that
a trust was clearly intended. 46 Unless required by a statutory provision, such as
the Statute of Frauds, a writing is not a requisite for the creation of a trust. 47
Such a statute providing that no instruments concerning lands shall be created
or declared unless by written instruments signed by the party creating the trust,
or by his attorney, is not to be construed as precluding a creation of a trust by
oral agreement, but merely as rendering such a trust unenforceable. 48 Contrary to
the claim of petitioners, oral testimony is allowed to prove that a trust exists. It is not error
for the court to rely on parol evidence, i.e., the oral testimonies of witnesses Emeteria
Ringor, Julio Monsis and Teofilo Abalos which the appellate court also relied on to arrive at
the conclusion that an express trust exists. What is crucial is the intention to create a
trust. While oftentimes the intention is manifested by the trustor in express or explicit
language, such intention may be manifested by inference from what the trustor has said or
done, from the nature of the transaction, or from the circumstances surrounding the creation
of the purported trust. 49
However, an inference of the intention to create a trust, made from language, conduct or
circumstances, must be made with reasonable certainty. 50 It cannot rest on vague,
uncertain or indefinite declarations. An inference of intention to create a trust, predicated
only on circumstances, can be made only where they admit of no other interpretation. 51 In
the present case, credible witnesses testified that (1) the lands subject of Expedientes 241

and 4449 were made and transferred in the name of Jose merely for convenience since Juan
predeceased Jacobo; (2) despite the Compraventas, transferring all the lands in Joses name,
Jacobo continued to perform all the acts of ownership including possession, use and
administration of the lands; (3) Jacobo did not want to partition the lands because he was
still using them; (4) when Jacobo died, Jose took over the administration of the lands and
conscientiously and unfailingly gave his siblings their share in the produce of the lands, in
recognition of their share as co-owners; and (5) Jose did not repudiate the claim of his
siblings and only explained upon their expression of the desire for partitioning, that it was
not going to be an easy task.
From all these premises and the fact that Jose did not repudiate the claim of his co-heirs, it
can be concluded that as far as the lands covered by Expediente Nos. 241 and 4449 are
concerned, when Jacobo transferred these lands to Jose, in what the lower court said were
simulated or falsified sales, Jacobos intention impressed upon the titles of Jose a trust in
favor of the true party-beneficiaries, including herein respondents.
Under the doctrine of partial performance recognized in this jurisdiction, the objection to the
oral character of a trust may be overcome or removed where there has been partial
performance of the terms of the trust as to raise an equity in the promisee. 52 A trustee may
perform the provisions of the trust, and if he does, the beneficiary is protected in benefits
that he has received from such performance. 53 Thus, when a verbal contract has been
completed, executed or partially consummated, its enforceability will not be barred by the
Statute of Frauds, which applies only to an executory agreement. 54 Noteworthy, despite the
compraventas transferring the lands in his name, Jose unfailingly gave his siblings their
share of the produce of the lands. Furthermore, not only did he fail to repudiate the trust, he
also assured his co-heirs that it was the inconvenience of partitioning that kept him from
transferring the shares of his siblings to them. Accordingly, with respect to the lands covered
by Expediente Nos. 241 and 4449, an express trust exists with Jose Ringor as trustee in favor
of all the heirs of Jacobo Ringor. As far as prescription or laches are concerned, they pose no
hindrance or limitation to the enforcement of an express trust. 55
Finally, on the lands covered in Expediente 244, we note that as a donacion de su abuelo,
the donation impaired the hereditary rights of succession of Joses co-heirs. Nevertheless,
these were transferred to Jose by final judgment of the land registration court. Despite the
registration in Joses name, Jose did not take possession over them from the date of
registration to the time of Jacobos death. Instead, while alive, Jacobo retained possession,
and continued the administration of the lands. Considering then these circumstances, Article
1449 of the New Civil Code on implied trusts is the pertinent law. It provides that, [t]here is
also an implied trust when a donation is made to a person but it appears that although the
legal estate is transmitted to the donee, he nevertheless is either to have no beneficial
interest or only a part thereof. Article 1449 creates a resulting trust where the donee
becomes the trustee of the real beneficiary. 56 Generally, resulting trusts do not prescribe
except when the trustee repudiates the trust. 57 Further, the action to reconvey does not
prescribe so long as the property stands in the name of the trustee. 58 To allow prescription
would be tantamount to allowing a trustee to acquire title against his principal and true
owner. 59 Here, Jose did not repudiate the trust, and the titles of the disputed lands are still
registered in Joses name or in the name of the Heirs of Jose M. Ringor, Inc.

Petitioners contend, however, that the court a quo virtually nullified all the land titles in
Joses name when it declared that the disputed lands belong to the intestate estate of
Jacobo and Jose and his siblings were co-owners thereof. This, petitioners aver, violates the
principle of res judicata and the indefeasibility of the Torrens title. DSacAE
Nothing is farther from the truth than this contention. A trustee who obtains a Torrens title
over a property held in trust for him by another cannot repudiate the trust by relying on the
registration. 60 A Torrens Certificate of Title in Joses name did not vest ownership of the
land upon him. The Torrens system does not create or vest title. It only confirms and records
title already existing and vested. It does not protect a usurper from the true owner. 61 The
Torrens system was not intended to foment betrayal in the performance of a trust. 62 It does
not permit one to enrich himself at the expense of another. Where one does not have a
rightful claim to the property, the Torrens system of registration can confirm or record
nothing. 63 Petitioners cannot rely on the registration of the lands in Joses name nor in the
name of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not
repudiate a trust by relying on a Torrens title he held in trust for his co-heirs. 64 The
beneficiaries are entitled to enforce the trust, notwithstanding the irrevocability of the
Torrens title. The intended trust must be sustained.
To recapitulate, we find no reversible error in the assailed decision of the appellate court. We
are in agreement in sustaining the findings and conclusions of the court a quo. The trial
court found in favor of herein respondents claim that the deeds of sale that caused the
registration of the TCTs in Expedientes 241 and 4449 in Joses name were invalid. The deeds
were false, simulated and clearly without consideration. The trial court also found that Jose
owned only about three hectares of land which he farmed, and he had no other means for
his alleged purchases. He was never in business, nor gainfully employed in the government
or in the private sector. Neither were the children of Jose propertied nor employed. 65 In
fine, we sustain its findings on the invalidity of the deeds of sale for being simulated and
false.
As for the donations of the lands in Expediente 244, the basis of which was an alleged
donacion de su abuelo the trial court concluded they were invalid donations because no
deed of donation was ever shown. The trial court noted that the documents evidencing the
donations were never presented for registration simply because there was never a donation
to Jose and because at the time the application was filed, Jacobos only son, Juan, was still
alive. The donation was allegedly made merely to facilitate the registration of the lands in
Joses name. 66 As found by the trial court and sustained by the appellate court, it was
merely for convenience that Jacobo registered the lands in the name of Jose. He did not
intend to relinquish his rights to the lands. His intention was clearly to keep the lands for
himself until his death, and it was to be understood that Jose was merely a trustee. We are
not inclined to disturb these findings and conclusions of the trial court, sustained by the
Court of Appeals, which persuasively convince us that the transfers of the lands in
Expedientes 241 and 4449 were simulated sales, and in Expediente 244 the transfers were
invalid donations.

b. Implied Arts. 1447-1457 created by operation of law

ART. 1447. The enumeration of the following cases of implied trust does not
exclude others established by the general law of trust, but the limitation laid
down in Article 1442 shall be applicable.
Concept of implied trust.
Implied trusts are those which, without being express, are deducible from the nature of
the transaction as matters of intent, or which are superinduced on the transaction by
operation of law, as matters of equity, independently of the particular intention of the
parties. (89 C.J.S. 724; Philippine National Bank vs. Court of Appeals, 217 SCRA 347
[1993].)
Implied trusts are not created voluntarily, but imposed by law or inferred from the
conduct or dealings of the parties. The concept of implied trusts is that from the facts
and circumstances of a given case, the existence of a trust relationship is inferred in
order to effect the presumed intention of the parties. Thus, there is no implied trust
where a contrary intention is proved. (Abellana vs. Ponce, 437 SCRA 531 [2004].)
Kinds of implied trust.
Implied trusts are ordinarily subdivided into:
(1) Resulting trust. It is broadly defined as a trust which is raised or created by the
act or construction of law. In its more restricted sense, it is a trust raised by implication
of law and pre- sumed always to have been contemplated by the parties, the intention
as to which is to be found in the nature of their transaction, but not expressed in the
deed or instrument of conveyance. (89 C.J.S. 725.)
This kind of trust is based on the equitable doctrine that valuable consideration and not
legal title determines the equitable title or interest. (Olaco vs. Co Cho Chit, 220 SCRA
656 [1993].) The trust is said to result in law from the act of the parties. Examples of this
kind of trust are found in Articles 1448, 1449, 1451, 1452, and 1453; and
(2) Constructive trust. It is also a trust raised by construction of law or arising by
operation by law. In a more restricted sense, and as contra-distinguished from a
resulting trust, constructive trust is a trust not created by any words, either expressly or
impliedly, evincing a direct intention to create a trust but by the construction of equity in
order to satisfy the demands of justice and prevent unjust enrichment. It does not arise
by agreement or intention but by operation of law against one who, by fraud, duress, or
abuse of confidence obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold. (Ibid.; Vda. de Esconde vs. Court of Appeals, 253
SCRA 66 [1996]; Vda. de Retuerto vs. Barz, 372 SCRA 712 [2001]; 89 C.J.S. 726-727.)

If a person obtains legal title to property by fraud or concealment, courts of equity will
impress upon the title a so- called constructive trust in favor of the defrauded party.
This kind of trust is illustrated in Articles 1450, 1454, 1455, and 1456.
However, a trust will not be created when for the purpose of evading the law prohibiting
one from taking or holding real property he takes conveyance thereof in the name of a
third person. (Kiel vs. Estate of P.S. Sabert, 46 Phil. 193 [1924].) For example, a
homestead applicant is required by law to occupy and cultivate the land for his own
benefit, and not for the benefit of someone else. Hence, a trust created in favor of one
already disqualified from applying additional homestead under the Public Land Act (Sec.
112, CA No. 141.) is null and void considering that it is in direct violation of the Act as
regards the acquisition of homestead patent. (Sollega de Romero vs. Court of Appeals,
319 SCRA 180 [1999].)
A constructive trust is not a trust in a technical sense. (see Art. 1456; Ramos vs.
Ramos, 61 SCRA 284 [1974]; see Sinaon vs. Sorongon, 136 SCRA 407 [1985];
Salvatierra vs. Court of Appeals, 261 SCRA 45 [1996].) It is substantially an appropriate
remedy against unjust enrichment.1 (see Sumaoang vs. Judge, RTC, 215 SCRA 136
[1992].)
While in an express trust, a beneficiary and a trustee are linked by a confidential or
fiduciary relation, in a constructive trust, there is neither a promise nor any fiduciary
relation to speak of and the so-called trustee neither accepts any trust nor intends
holding the property for the beneficiary. (Phil. National Bank vs. Court of Appeals, 217
SCRA 347 [1993].)
Constructive trusts are illustrated in Articles 1450, 1454, 1455, and 1456.

i) resulting bare or passive trust there is an intent to create a trust but it is not
effective as an express trust
- Heirs of Francisco Narvasa Sr., et al. vs. Emiliana Imbornal, G.R. No. 182908,
August 6, 2014, 732 SCRA 171.

Facts: Basilia Imbornal (Basilia) had four (4) children, namely, Alejandra, Balbina,
Catalina, and Pablo. Francisco I. Narvasa, Sr. (Francisco) and Pedro Ferrer (Pedro)
were the children of Alejandra, while petitioner Petra Imbornal (Petra) was the daughter

of Balbina. Petitioners are the heirs and successors-in-interest of Francisco, Pedro, and
Petra (Francisco, et al.). On the other hand, respondents Emiliana, Victoriano, Felipe,
Mateo, Raymundo, Maria, and Eduardo, all surnamed Imbornal, are the descendants of
Pablo. During her lifetime, Basilia owned a parcel of land situated at Sabangan,
Barangay Nibaliw West, San Fabian, Pangasinan with an area of 4,144 square meters
(sq. m.), more or less(Sabangan property), which she conveyed to her three (3)
daughters Balbina, Alejandra, and Catalina (Imbornal sisters) sometime in 1920.
Catalinas husband Ciriaco, applied for and was granted a homestead patent over a
31,367-sq. m. riparian land (Motherland) On December 5, 1933, OCT No. 1462 was
issued in his name and later was cancelled, and TCT No. 101495 was issued in the
name of Ciriacos heirs. Ciriaco and his heirs had since occupied the northern portion of
the Motherland, while respondents occupied the southern portion. Sometime in 1949,
the First Accretion, approximately 59,772 sq. m. in area,adjoined the southern portion of
the Motherland. On August 15, 1952, OCT No. P-318 was issued in the name of
respondent Victoriano, married to Esperanza Narvarte, covering the First Accretion.
Decades later, or in 1971, the Second Accretion, which had an area of 32,307 sq. m.,
more or less, abutted the First Accretion on its southern portion.19 On November 10,
1978, OCT No. 21481 was issued in the names of all the respondents covering the
Second Accretion. Claiming rights over the entire Motherland, Francisco, et al., filed an
Amended Complaint for reconveyance, partition, and/or damages against respondents.
They anchored their claim on the allegation that Ciriaco, with the help of his wife
Catalina, urged Balbina and Alejandra to sell the Sabangan property, and that Ciriaco
used the proceeds therefrom to fund histhen-pending homestead patent application
over the Motherland. In return, Ciriaco agreed that once his homestead patent is
approved, he will be deemed to be holding the Motherland which now included both
accretions in trust for the Imbornal sisters. Likewise, Francisco, et al. alleged that
through deceit, fraud, falsehood, and misrepresentation, respondent Victoriano, with
respect to the First Accretion, and the respondents collectively, with regard to the
Second Accretion, had illegally registered the said accretions in their names,
notwithstanding the fact that they were not the riparian owners (as they did not own the
Motherland to which the accretions merely formed adjacent to). In this relation
Francisco, et al. explained that they did not assert their inheritance claims over the
Motherland and the two (2) accretions because they respected respondents rights, until
they discovered in 1983 that respondents have repudiated their (Francisco, et al.s)
shares thereon.22 Thus, bewailing that respondents have refused them their rights not
only with respect to the Motherland, but also to the subsequent accretions, Francisco, et
al. prayed for the reconveyance of said properties, or, in the alternative, the payment of
their value, as well as the award of moral damages in the amount of P100,000.00,
actual damages in the amount of P150,000.00, including attorneys fees and other
costs. RTC rendered a Decision in favor of Francisco, et al. and thereby directed
respondents to: (a) reconvey to Francisco, et al. their respective portions in the

Motherland and in the accretions thereon, or their pecuniary equivalent; and (b) pay
actual damages in the amount of P100,000.00, moral damages in the amount of
P100,000.00, and attorneys fees in the sum of P10,000.00, as well as costs of suit. On
appeal, the CA rendered a Decision reversing and setting aside the RTC Decision and
entering a new one declaring: (a) the descendants of Ciriaco as the exclusive owners of
the Motherland; (b) the descendants of respondent Victoriano as the exclusive owners
of the First Accretion; and (c)the descendants of Pablo (i.e., respondents collectively) as
the exclusive owners of the Second Accretion. Hence this petition.

Issue(s): One of the issues raised is whether or not implied trust existed between
the Imbornal sisters and Ciriaco.

Held: NO. An implied trust arises, not from any presumed intention of the parties, but by
operation of law in order to satisfy the demands of justice and equity and to protect
against unfair dealing or downright fraud. Article 1456 of the Civil Code states that[i]f
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 burden of proving the existence of a trust is on the party asserting
its existence, and such proof must be clear and satisfactorily show the existence of the
trust and its elements. While implied trusts may be proven by oral evidence, the
evidence must be trustworthy and received by the courts with extreme caution, and
should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy
evidence is required because oral evidence can easily be fabricated. In this case, it
cannot be said, merely on the basis of the oral evidence offered by Francisco, et al. that
the Motherland had been either mistakenly or fraudulently registered in favor of Ciriaco.
Accordingly, it cannot be said either that he was merely a trustee of an implied trust
holding the Motherland for the benefit of the Imbornal sisters or their heirs. Homestead
patent award requires proof that the applicant meets the stringent conditions set forth
under Commonwealth Act No. 141, as amended, which includes actual possession,
cultivation, and improvement of the homestead. It must be presumed, therefore, that
Ciriaco underwent the rigid process and duly satisfied the strict conditions necessary for
the grant of his homestead patent application. As such, it is highly implausible that the
Motherland had been acquired and registered by mistake or through fraud as would
create an implied trust between the Imbornal sisters and Ciriaco, especially considering
the dearth of evidence showing that the Imbornal sisters entered into the possession of
the Motherland, or a portion thereof, or asserted any right over the same at any point
during their lifetime. Hence, when OCT No. 1462 covering the Motherland was issued in
his name pursuant to Homestead Patent No. 24991 on December 15, 1933, Ciriacos

title to the Motherland had become indefeasible. It bears to stress that the proceedings
for land registration that led to the issuance of Homestead Patent No. 24991 and
eventually, OCT No. 1462 in Ciriacos name are presumptively regular and proper,
which presumption has not been overcome by the evidence presented by Francisco, et
al. In this light, the Court cannot fully accept and accord evidentiary value to the oral
testimony offered by Francisco, et al. on the alleged verbal agreement between their
predecessors, the Imbornal sisters, and Ciriaco with respect to the Motherland.
Weighed against the presumed regularity of the award of the homestead patent to
Ciriaco and the lack of evidence showing that the same was acquired and registered by
mistake or through fraud, the oral evidence of Francisco, et al. would not effectively
establish their claims of ownership. It has been held that oral testimony as to a certain
fact, depending as it does exclusively on human memory, is not as reliable as written or
documentary evidence, especially since the purported agreement transpired decades
ago, or in the 1920s. Hence, with respect to the Motherland, the CA did not err in
holding that Ciriaco and his heirs are the owners thereof, without prejudice to the rights
of any subsequent purchasers for value of the said property.

- Tong vs. Go Tiat Kun, G.R. No. 196023, 722 SCRA 623

Juan Tong v. Go Tiat Kun

FACTS: The petitioners are nine of the ten children of Spouses Juan Tong. Sometime in
1957, Juan Tong purchased Lot 998 to be used for the familys lumber business called
Juan Tong Lumber. However, since he was a Chinese citizen and was disqualified
from acquiring the said lot, the title to the property will be registered in the name of his
eldest son, Luis, Sr., who at that time was already of age and was the only Filipino
citizen among his children. Accordingly, a TCT was issued in the name of Luis, Sr.
Meanwhile, Luis, Sr. died and the respondents, being his surviving heirs, claimed
ownership over Lot 998 by succession, alleging that no trust agreement exists and it
was Luis, Sr. who bought Lot 998.
Subsequently, the respondents agreed to subdivide Lot 998 (A&B), thus, two new titles
were issued and was sold Lot 998-B to Fine Rock Development Corporation (FRDC),
which in turn sold the same to Visayas Goodwill Credit Corporation (VGCC). It was only

after the petitioners received a letter from VGCC, on August 31, 1995, that they
discovered about the breach of the trust agreement committed by the respondents.
To protect their rights, the petitioners filed an action for Annulment of Sales, Titles,
Reconveyance and Damages of Lot 998-B docketed as Civil Case No. 22730 against
Luis, Jr., FRDC and VGCC.

After trial, the court a quo rendered its judgment in favor of the petitioners, ruling that
there was an implied resulting trust between Juan Tong, Luis, Sr.
The CA reveresed the decision and also ruled that even granting that an implied
resulting trust was created; the petitioners are still barred by prescription because the
said resulting trust was terminated upon the death of Luis, Sr. and was then converted
into a constructive trust.[11] Since in an action for reconveyance based on a
constructive trust prescribes in ten years from the issuance of the Torrens title over the
property, counting from the death of Luis, Sr. in 1981, the action has already prescribed.

ISSUE: Whether or not there was a constructive trust, hence the action for
reconveyance has prescribed

HELD: It is well-settled that title to property does not vest ownership but it is a mere
proof that such property has been registered. And, the fact that the petitioners are in
possession of all the tax receipts and tax declarations of Lot 998 all the more amplify
their claim of ownership over Lot 998-A. Although these tax declarations or realty tax
payments of property are not conclusive evidence of ownership, nevertheless, they are
good indicia of possession in the concept of owner, for no one in his right mind would be
paying taxes for a property that is not in his actual or at least constructive possession.
Such realty tax payments constitute proof that the holder has a claim of title over the
property. Therefore, the action for reconveyance of Lot 998-A, which forms part of Lot
998, is imprescriptible and the petitioners are not estopped from claiming ownership
thereof.

- Banco Filipino Savings and Mortgage Bank v. Tala Realty Services Corporation,
G.R. No. 158866, 181933, 187551, September 9, 2013

Banco Filipino Savings and Mortgage Bank (Banco Filipino) filed before 17 Regional
Trial Courts (RTC) 17 complaints for reconveyance of different properties against Tala
Realty Services Corporation (Tala Realty) et al.
Banco Filipinos complaints commonly alleged that in 1979, expansion of its operations
required the purchase of real properties for the purpose of acquiring sites for more
branches; that as Sections 25(a) and 34 of the General Banking Act limit a banks
allowable investments in real estate to 50% of its capital assets, its board of directors
decided to warehouse some of its existing properties and branch sites. Thus, Nancy L.
Ty, a major stockholder and director, persuaded Pedro Aguirre and his brother Tomas
Aguirre, both major stockholders of Banco Filipino, to organize and incorporate Tala
Realty to hold and purchase real properties in trust for Banco Filipino; that after the
transfer of Banco Filipino properties to Tala Realty, the Aguirres sister Remedios
prodded her brother Tomas to, as he did, endorse to her his shares in Tala Realty and
registered them in the name of her controlled corporation, Add International.
Thus, Nancy, Remedios, and Pedro Aguirre controlled Tala Realty, with Nancy
exercising control through her nominees Pilar, Cynthia, and Dolly, while Remedios
exercised control through Add International and her nominee Elizabeth. Pedro Aguirre
exercised control through his own nominees, the latest being Tala Realtys president,
Rubencito del Mundo.
In the course of the implementation of their trust agreement, Banco Filipino sold to Tala
Realty some of its properties. Tala Realty simultaneously leased to Banco Filipino the
properties for 20 years, renewable for another 20 years at the option of Banco Filipino
with a right of first refusal in the event Tala Realty decided to sell them.
Tala Realty repudiated the trust, claimed the titles for itself, and demanded payment of
rentals, deposits, and goodwill, with a threat to eject Banco Filipino. Thus arose Banco
Filipinos 17 complaints for reconveyance against Tala Realty.

ISSUE:
Whether or not the trust agreement is void
HELD:
In Tala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, the
Court, by Decision dated November 22, 2002, ruling on one of several ejectment cases
filed by Tala Realty against Banco Filipino arising from the same trust agreement in the
reconveyance cases subject of the present petitions, held that the trust agreement is
void and cannot thus be enforced.
An implied trust could not have been formed between the Bank and Tala as the Court
has held that where the purchase is made in violation of an existing statute and in
evasion of its express provision, no trust can result in favor of the party who is guilty of
the fraud.
The bank cannot use the defense of nor seek enforcement of its alleged implied trust
with Tala since its purpose was contrary to law. As admitted by the Bank, it
warehoused its branch site holdings to Tala to enable it to pursue its expansion
program and purchase new branch sites including its main branch in Makati, and at the
same time avoid the real property holdings limit under Sections 25(a) and 34 of the
General Banking Act which it had already reached.
Clearly, the Bank was well aware of the limitations on its real estate holdings under the
General Banking Act and that its warehousing agreement with Tala was a scheme to
circumvent the limitation. Thus, the Bank opted not to put the agreement in writing and
call a spade a spade, but instead phrased its right to reconveyance of the subject
property at any time as a first preference to buy at the same transfer price. This
agreement which the Bank claims to be an implied trust is contrary to law. Thus, while
the Court finds the sale and lease of the subject property genuine and binding upon the
parties, the Court cannot enforce the implied trust even assuming the parties intended
to create it. In the words of the Court in the Ramos case, the courts will not assist the
payor in achieving his improper purpose by enforcing a resultant trust for him in
accordance with the clean hands doctrine. The Bank cannot thus demand
reconveyance of the property based on its alleged implied trust relationship with Tala.

- Dico, Sr. v. Vizcaya Management Corporation, 701 SCRA 367, July 17, 2013
FACTS:
Celso Dico was the registered owner of Lot No. 486 of the Cadiz Cadastre, comprising
an area of 67,300 square meters and covered by Transfer Certificate of Title (TCT) No.
22922 of the land records of Negros Occidental. Lot No. 486 was adjacent to Lot No.
29-B and Lot No. 1412 (formerly Lot No. 1118-B), both also of the Cadiz Cadastre.
Celso and his wife Angeles resided on Lot No. 486 since 1958. On May 30, 1964,
Angeles filed in the District Office of the Bureau of Lands in Bacolod City, her free patent
application covering a portion of Lot No. 29-B. On his part, Celso also filed in the same
office an application for free patent covering Lot No. 1412. It does not appear, however,
that the Bureau of Lands acted on their applications. 2
Respondent Vizcaya Management Corporation (VMC) was the registered owner under
TCT No. T-41835 of Lot No. 29-B, also of the Cadiz Cadastre, comprising an area of
369,606 square meters, more or less.3 VMC derived its title to Lot No. 29-B from
Eduardo and Cesar, both surnamed Lopez, the registered owners under TCT No. T14827, which emanated from TCT No. RT-9933 (16739) in the names of Victoria,
Eduardo and Cesar, all surnamed Lopez. TCT No. RT-9933 (16739) was a transfer from
TCT No. T-14281, which had been transferred from Original Certificate of Title (OCT)
No. 21331 in the name of Negros Philippines Lumber Company. OCT No. 21331 was
issued pursuant to Decree No. 190483 of G.L.R.O. Cadastral Record No. 196.
VMC likewise claimed to be the owner of Lot No. 1412, formerly known as Lot No. 1118B, also of the Cadiz Cadastre, containing an area of 85,239 square meters, more or
less, and registered in its name under TCT No. T-41834. 4
Lot Nos. 1426-B, with an area of 6,635 square meters covered by TCT No. T-24135,
and 1426-C, with an area of 6,107 square meters covered by TCT No. T-24136, appear
to be registered in the names of Eduardo Lopez and Cesar Lopez, who had earlier
formed VMC.
In 1967, VMC, then newly formed, caused the consolidation and subdivision of Lot No.
29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C. The consolidation-subdivision
plan was prepared by Engr. Ricardo Quilop and filed in the Land Registration
Commission (LRC), renamed National Land Titles and Deeds Registration
Administration, but presently known as the Land Registration Authority. The
consolidation-subdivision plan was assigned the number (LRC) PCS-6611. On July 26,
1967, LRC Commissioner Antonio L. Noblejas approved the consolidation-subdivision

plan, resulting in Lot No. 29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C being
consolidated and subdivided as follows: Lot No. 1 with an area of 238,518 square
meters under TCT No. T-47854; Lot No. 2 with an area of 216,176 square meters under
TCT No. T-47855; Lot No. 3 with an area of 11,496 square meters under TCT No. T47856; and Lot No. 4 with an area of 15,392 square meters under TCT No. T-47857. 5 In
all, the total landholding of VMC after the consolidation was 481,583 square meters.
VMC proceeded to develop the Don Eusebio Subdivision project using Lot No. 1 of the
consolidation-subdivision plan under (LRC) PCS-6611. The subdivision plan under
PSD-102560 subdivided Lot No. 1 into 547 small lots. Subsequently, VMC also
developed the Cristina Village Subdivision project using Lots Nos. 2, 3, and 4 under
(LRC) PCS-6611. Under PSD-12746 of the subdivision plan for Cristina Village
Subdivision, consolidated Lots Nos. 2, 3, and 4 were subdivided into 348 small lots.
Starting 1971, VMC sold lots in its Don Eusebio Subdivision and Cristina Village
Subdivision.
In 1981, VMC filed against the Dicos a complaint for unlawful detainer in the City Court
of Cadiz (Civil Case No. 649). On April 24, 1981, the City Court of Cadiz rendered its
decision in favor of VMC, ordering the Dicos to demolish the concrete water gate or
sluice gate (locally known as trampahan) located inside Lot No. 1, Block 3 of the
Cristina Village Subdivision. Inasmuch as the Dicos did not appeal, the decision
attained finality. On July 3, 1981, the City Court of Cadiz issued a writ of execution. On
November 11, 1985, a second alias writ of execution was issued.
On May 12, 1986, the Dicos commenced an action for the annulment and cancellation
of the titles of VMC (Civil Case No. 180-C), impleading VMC, the National Land Titles
and Deeds Registration Administration, and the Director of the Bureau of Lands. On
March 12, 1987, the Dicos amended the complaint. They averred, among others, that
they were the registered owners of Lot No. 486 and the possessors-by-succession of
Lot No. 1412 (formerly Lot No. 1118) and Lot No. 489; that VMC had land-grabbed a
portion of their Lot No. 486 totaling 111,966 square meters allegedly brought about by
the expansion of Cristina Village Subdivision; and that on May 30, 1964 they had filed
free patent applications in the Bureau of Lands for Lot No. 1412 and Lot No. 489. 6 They
prayed that the possession of Lot No. 486, Lot No. 1412, and Lot No. 489 be restored to
them; and that the judgment in Civil Case No. 649 be annulled.
Celso died during the pendency of the action, and was substituted by Angeles and their
children pursuant to the order of November 22, 1991.
Issues

Hence, this appeal, wherein the Dicos contend that the CA erred in holding that
prescription and/or laches already barred them from asserting their right; 12 in accepting
the theory of VMC that the consolidation of Lot No. 1246-B and Lot No. 1246-C had
resulted from a merely typographical error;13 in reversing the decision of the RTC
despite its finding that VMC had committed land grabbing; 14 and in reversing the RTC
based on non-existing evidence that was contradicted by the evidence on records. 15
In its comment,16 VMC counters that the petition for review should not be given due
course because petitioners came to court with unclean hands; that the petition was filed
out of time even with the extension given by the Court; that the petition was fatally
defective in form and in substance; and that the dismissal of the complaint was in
accord with applicable laws and jurisprudence.
In their reply,17 the Dicos reiterate that the findings and conclusions of the RTC were
supported by evidence establishing fraud, encroachment and other anomalies
perpetrated by VMC; that the rules of procedure must not be rigidly applied to override
substantial justice; and that VMC could not validly invoke the indefeasibility of its titles to
defeat their right over the encroached land.
The decisive issue is whether prescription already barred petitioners cause of action. All
the other issues are subsumed therein.
Ruling
We find and hold that the action of the Dicos for reconveyance was properly dismissed.
To start with, the CAs explanations for reversing the RTC were very thorough, wellfounded and well-reasoned, to wit:
Granting arguendo that fraud intervened in the procurement of the Certificates of Title to
Lot No. 29-B and plaintiffs-appellees had the personality to seek the reconveyance
thereof on the basis of implied or constructive trust, their complaint filed on May 12,
1986, or about 29 years after the issuance of the certificate of title to defendantappellant, indeed came too late. They were deemed to have discovered the fraud as
early as September 20, 1934 when TCT No. RT-9933 (16739) of the Lopezes was
recorded or on November 10, 1956 when TCT No. T-41835 of defendant-appellant was
registered. Their right to seek reconveyance of a portion of Lot No. 29-B, if it existed at
all, had already prescribed.
Plaintiffs-appellees also contend that defendant-appellant secured its Certificate of Title
to Lot No. 1412 through fraud. They contend that Celso Dico had filed with the Bureau

of Lands his Free Patent Application (Exh. "D", pp. 733-735, Records Vol. 3) with
respect to Lot No. 1412. On the other hand, the evidence on record shows that Lot No.
1412, formerly Lot No. 1118-B, appears to have been already registered in the name of
defendant-appellant under TCT No. T-41834 (Exh. "11").
We fail to see the fraud allegedly committed by defendant-appellant in securing its
Certificate of Title to Lot No. 1412. In their vain effort to show that Celso Dico filed a
Free Patent Application for Lot No. 1412, plaintiffs-appellees presented his alleged Free
Patent Application, Exhibit "D". Said Exhibit "D", however, is without evidentiary weight
since while the name of plaintiff-appellee Angeles Dico, as applicant therein, appears in
the Application for Free Patent, the Joint Affidavit in support thereof, and Notice of
Application for Free Patent, the signature of one Celso Dico was only clearly superimposed thereon to make it appear he was the applicant. Exhibit "D" is, in fact, a forged
document.
Thus, the court a quo erred when it concluded that defendant-appellants title to Lot No.
1412 came from a doubtful source. There is no evidence on record that clearly showed
the fraud allegedly employed by defendant-appellant when it secured its title to Lot No.
1412. Moreover, plaintiffs-appellees have not established their personality to seek the
reconveyance of Lot No. 1412 as they are not the registered owners thereof.
In fine, Lots Nos. 29-B and 1412 did not revert to the government, as they are already
the private properties of defendant-appellant corporation.
Anent the issue of encroachment on Lot No. 486 by defendant-appellant, the court a
quo found that defendant-appellant encroached on Lot 486 when it consolidated and
subdivided the contested lots.
The court a quo ruled, thus:
"From the evidence presented as revealed by the records of the case, this Court is of
the judicious finding that defendant Viscaya (sic) had encroached on lot 486 considering
that even if it claims it has a title over lot 29-B, still it had exceeded its area of
possession over lot 29-B. Exhibits "J", "K" and "L" reveal that lot 29-B only contains an
area of 369,606 square meters, however, when defendant Vizcaya caused the
consolidation of their lots the total area which is supposed to be 369,606 square meters
was increased. Basing on defendants exhibits "3" to "6" this Court finds that TCT No.
1735 (lot 1) has an area of 238,518 square meters, TCT No. 1736 (Lot 2), 216,176
square meters, TCT No. 1737 (Lot 3) 11,496 square meters and TCT No. 1738, 15,392
square meters which when added together will sum up to a total of 481,582 square

meters, clearly exceeding the original area of 369,606 square meters appearing and
described in
Exhibits "J":, "K" and "L".
"Likewise, this Court further finds after an exhausted (sic) examination of the records,
that defendant Vizcaya increased the area on the plan of Cristina Village Subdivision
which is Lot 2 contrary to what is contained in TCT No. 1736 (Exhibits "P-1" and "4")
containing an area of only 216,176 square meters.
"The increase in area in the title of defendant Vizcaya is 111,976 square meters. This
area was taken from the portion of Lot 486 of the plaintiffs covered by TCT No. T-22922
(Exh. "E") and which was derived from OCT No. 0-3146 (21337) adjacent to Lot 29-B
(Exh. "J") and later became Lot 2 covered by TCT No. (T-47855) 1736, Lot 1 covered by
TCT No. (T-47854) 1735 (Exh. "P") Lot 3 covered by TCT No. (T-47856) 1737 (Exh. "P2") and Lot 4 covered by TCT No. (T-47857) 1738 (Exh. "P-3"). To the mind of this
Court, the intrustion (sic) of the defendants over the area of Lot 486 is a clear and willful
manipulation hatched between defendant Vizcaya and its surveyor without regard to the
existing technical and (sic) descriptions of the adjacent lot, particularly the lot belonging
to the plaintiffs. Upon close examination of all the evidence on record, it appears that
the method and scheme employed in order to hide and confuse the increase in the area
was to consolidate lots 29-B, 1246-B, 1246-C and 1412 and then subdivide these lots
into several parts to become lots 1, 2, 3 and 4 with its corresponding titles, technical
descriptions and already containing variable but increased areas can no longer be
ascertained or if ascertained the same can be done with greater difficulty as the one
tasked to unravel these confusing mazes (sic) of lots will have to dig deep into the
history of the original titles. What this Court finds amusing, however, is the fact that Lots
1246-B and 1246-C were consolidated with Lots 29-B and 1412 which former lots are
located in Barangay Tinampa-an, Cadiz City while Lots 29-B and 1412 are located in
the City Proper and are non adjacent or contigeous (sic) lots.
"The claim of the defendants that the plaintiffs cannot establish a better right or title to
real properties over and above a valid and existing title, cannot be given credence by
this Court considering that a torrens title cannot cover fraud, and more particularly so,
because Lot 486 is also titled property registered in the name of the plaintiff Dico." (pp.
30-31, Decision; pp. 79-80, Rollo)
We do not agree with the above findings of the court a quo. The documentary evidence
found in the records reveals that defendant-appellant had two lots titled in its name,
namely: Lot No. 29-B comprising an area of 369,606 square meters, containing identical
technical description as appearing in plaintiffs-appellees Exhs. "J", "K" and "L" and Lot

No. 1412, formerly 1118-B, comprising an area of 85,239 square meters covered by
TCT No. T-41834 (Exh. "11"). Further, Eduardo and Cesar Lopez were the registered
owners of Lot No. 1426-B comprising an area of 6,635 square meters, covered by TCT
No. T-21435 (Exh. "9") and Lot No. 1426-C comprising an area of 6,107 square meters,
covered by TCT No. T-21436 (Exh. "10"). As contended by defendant-appellant, it
caused the consolidation and subdivision of these four lots following the approved
consolidation-subdivision plan (Exh. "7", p. 958, Records Vol. 4) it submitted to the then
Land Registration Commission. The said approved consolidation-subdivision plan was
assigned the number (LRC) PCS-6611. Hence, adding the land area of the four
consolidated lots, the total landholding of defendant-appellant after the approved
consolidation-subdivision plan would be 467,587 square meters only.
Defendant-appellants approved consolidation-subdivision plan (Exh. "7") reveals that it
was a consolidation-subdivision of Lots Nos. 29-B (Exh. "L"; Exh. "8"), PSD-5573; 1426B (Exh. "9") & 1426-C (Exh. "10"), PSD-44080, and 1412 (Exh. "11"), all of Cadiz
Cadastre, which contained a total area of 481,583 square meters. However, the total
land area of the four consolidated lots as added above is only 467,587 square meters.
Clearly, there exists an excess of 13,996 square meters, which was included in the
approved consolidation-subdivision plan of defendant-appellant. Worth noting is the fact
that defendant-appellants approved consolidation-subdivision plan contained a
handwritten entry which stated that the "x x x area is increased by 13996 sq.m" (Exh.
"7", p. 958, Records Vol. 4).
Thus, the court a quo erred when it concluded that there was an excess of 111,959
square meters in defendant-appellants landholdings. We agree with the contention of
defendant-appellant that the basis for computing its total landholding should not be
limited to the land area of Lot No. 29-B since three (3) other individual lots were
included in the consolidation-subdivision survey. The evidence on record reveals that
Lots Nos. 1412, 1426-B and 1426-C were included in the approved consolidationsubdivision plan (Exh. "7").
Further, the Trial Courts finding that defendant-appellant encroached by 111,959 square
meters on Lot 486 belonging to plaintiffs-appellees finds no justifiable support from the
evidence on record. Lot No. 486 under TCT No. T-22922 (Exh. "E", p. 736, Records Vol.
3) in the name of Celso Dico contained an area of 67,300 square meters only. Following
the Trial Courts reasoning, defendant-appellant shall return to plaintiffs-appellees
111,959 square meters it allegedly land grabbed from Lot No. 486. Thus, Lot No. 486
would now contain an area of 179,259 square meters, substantially increased by
111,959 square meters which is clearly beyond what is stated in TCT No. T-22922.

As We have found earlier, the excess in defendant-appellants landholding is only

13,996 square meters.
It is likewise the contention of plaintiffs-appellees that PCS-6611 does not exist in the
records of the then Land Registration Commission, as evidenced by the Certifications
(Exhs. "Q" and "R", pp. 758-758A, Records Vol. 3) issued by the Subdivision and
Consolidation Division, Vault Section I, Land Registration Authority.
The court a quo ruled:
"x x x. Thus, the defendants failed to overcome the preponderance of evidence
presented by the plaintiffs, particularly on Certifications (Exhs. "Q" and "R") certifying to
the effect that Pcs-6611 is not existing x x x" (p. 34, Decision).
We cannot agree with conclusion of the court a quo. The evidence on record clearly
reveals that defendant-appellant presented a copy of the approved consolidationsubdivision plan (Exh. "7") prominently showing the number (LRC) PCS-6611 assigned
by the Land Registration Commission, which is located at the bottom-right portion of the
document. The Certifications (Exhs. "Q" and "R") issued by the then Land Registration
Authority are not conclusive proof of the non-existence of the original of the
consolidation-subdivision plan (LRC) PCS-6611 together with all the survey records
pertaining thereto. As correctly pointed out by defendant-appellant, the person who
issued said certifications was not presented in court to identify and affirm the veracity of
their contents. Thus, as between the approved consolidation-subdivision plan (Exh. "7")
and the certifications (Exhs. "Q" and "R"), the former carries greater evidentiary weight.
Granting arguendo that no records pertaining to (LRC) PCS-6611 could be found in the
Vault Section of the then Land Registration Commission, the existence of (LRC) PCS6611 was already established with the presentation in evidence of a copy of the said
approved consolidation-subdivision plan (Exh. "7") prominently reflecting therein the
number (LRC) PCS-6611 assigned by the Land Registration Commission. The
authenticity and existence of (LRC) PCS-6611 within the records of the Land
Registration Commission (now Land Registration Authority) was established by the fact
that it was used as a basis for the approval of the consolidation-subdivision plan for the
Don Eusebio Subdivision under (LRC) PSD-102560 (Exh. "14", "14-A", "14-B", pp. 983985, Records, Vol. 4) and Cristina Village Subdivision under (LRC) PCS-12746 (Exh.
"16", p. 982, Records, Vol. 4). In Exhibits "14" and "16", (LRC) PCS-6611 was clearly
reflected as the source of the consolidated lots.

Lastly, defendant-appellant contends that the court a quo erred in finding that there was
no typographical error committed in designating Lots Nos. 1246-B and 1246-C instead
of 1426-B and 1426-C, respectively, in its approved consolidation-subdivision plan.
The court a quo ruled:
"x x x. What this Court finds amusing, however, is the fact that Lots 1246-B and 1246-C
were consolidated with Lots 29-B and 1412 which former lots are located in Barangay
Tinampa-an, Cadiz City while Lots 29-B and 1412 are located in the City Proper and are
non adjacent or contigeous (sic) lots.
"x x x x
"Granting arguendo, that the denomination of Lots 1246-B and 1246-C are merely
typographical errors of Lots 1426-B and 1426-C as claimed by defendant Vizcaya, this
Court, upon judicious evaluation of the records cannot accept the argument relied upon
by the defendants since it is obvious from the evidence that defendant Vizcaya employs
a retained surveyor for purposes of their subdivision, and despite the technical
knowledge of its surveyor it did not bother to correct the error if indeed it is one, on the
lots subject matter of the case, but had invoked the said ground only during the litigation
proper" (pp. 30-35, Decision; pp. 179-184, Rollo).
Defendant-appellant contends that it failed to correct this typographical error as such
fact came to its knowledge only during the trial and two years after issuance of TCT No.
T-47854-57 (Exhs. "P", "P-1" to "P-3"; Exhs. "3" to "6", pp. 750-756 Records Vol. 3),
these Certificates of Title were subsequently cancelled and new TCTs were issued. On
the other hand, plaintiffs-appellees contend that Lots Nos. 1246-B and 1246-C could not
be possibly consolidated with Lot No. 29-B because the former lots were situated some
4 kilometers away from defendant-appellants subdivision area, besides being owned by
other persons.
We agree with defendant-appellant.
While we agree with plaintiffs-appellees assertion that consolidation of non-contiguous
and non-adjacent lots are not possible especially so when the lots are situated
considerably far from each other, the case at hand does not fall under this scenario. As
correctly explained by defendant-appellant there was a typographical error in the
technical description of its consolidated lots in that what was stated therein as included
in the consolidation plan were Lots Nos. 1246-B and 1246-C, Psd-44080, instead of
Lots Nos. 1426-B and 1426-C, Psd-44080.

Worth noting are the technical description of the subject lots before and after their
consolidation.
Transfer Certificate of Title No. T-24135 (Exh. "9") covering Lot No. 1426-B reads:
"A parcel of land (Lot No. 1426-B of the subdivision plan Psd-44080, being a portion of
Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O. Cad. Record No. 196), situated in
the Poblacion, Municipality of Cadiz, Province of Negros Occidental, Bounded on the
NE., by Lot 1426-A of the subdivision plan; on the SE., by Lot No. 1423 of Cadiz, Cad.;
and on the SW., by Lot 1426-C of the subdivision plan. x x x"
Transfer Certificate of Title No. T-24136 (Exh. "10") covering Lot No. 1426-C reads.
"A parcel of land (Lot No. 1426-C of the subdivision plan Psd-44080, being a portion of
Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O. Cad. Record No. 196), situated in
the Poblacion, Municipality of Cadiz, Province of Negros Occidental, Bounded on the
NE., by Lot 1426-B of the subdivision plan; on the SE., by Lot 1423 of Cadiz Cad., and
on the SW., by Calle Cabahug. x x x."
On the other hand, the technical descriptions of the properties covered by Transfer
Certificates of Title Nos. T-47854 to T-47857 pertaining to Lot Nos. 1 to 4 (Exhs. "P", "P1" to "P-3) read:
Transfer Certification of Title No. T-14754:
"A parcel of land (Lot 1 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros x x x containing an area of two hundred thirty-eight thousand five hundred
eighteen (238, 518) square meters, more or less. x x x."
Transfer Certificate of Title No. T-14755:
"A parcel of land (Lot 2 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196, situated in the City of Cadiz, Island
of Negros x x x containing an area of TWO HUNDRED SIXTEEN THOUSAND ONE
HUNDRED SEVENTY-SIX (216,176) Square Meters, more or less. x x x."
Transfer Certificate of Title No. T-14756:

"A parcel of land (Lot 3 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros x x x containing an area of eleven thousand four hundred ninety-six (11,496)
square meters, more or less. x x x."
Transfer Certificate of Title No. T-14757:
"A parcel of land (Lot 4 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros. Bounded on the NE., points 31 to 1 and 1 to 6 by Lot 1426-A, Psd-44080 x x
x containing an area of fifteen thousand three hundred ninety-two (15,932) square
meters, more or less. x x x."
As can be gleaned clearly from the foregoing, Lots Nos. 1426-B and 1426-C came from
Psd-44080. In the same way that Lots Nos. 1246-B and 1246-C came from Psd-44080.
Defendant-appellant submitted a certified copy of the Cadastral Map of Cadiz (Exh.
"12", p. 986, Records Vol. 4) showing that adjacent to Lot No. 29-B was Lot No. 1426
and being continguous, these lots could be consolidated. Even plaintiffs-appellees
witness Engr. Luvimin Canoy testified on the possibility that a typographical error might
have been committed in listing the lot numbers in the title (pp. 39-41, TSN, September
9, 1992).
There was no evidence to the effect that defendant-appellant caused the erroneous
designation of Lots Nos. 1426-B and 1426-C as Lots Nos. 1246-B and 1246-C,
respectively, when it consolidated these lots. The error indeed was only typographical
as the subject lots all came from Psd-44080. In the absence of evidence that defendantappellant employed fraud in consolidating these lots, a typographical error in the
designation of lot numbers in the Certificates of Title would not warrant their
cancellation. An amendment may cure the error. It has been aptly ruled in one case that
in the interest of justice and equity, the title-holder may not be made to bear the
unfavorable effect of the mistake or negligence of the States agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third persons (Republic vs.
Court of Appeals, 301 SCRA 366).18
We have examined the factual bases of the CA in reaching its decision, and have found
that its aforequoted findings of fact and conclusions were based on the evidence
presented at the trial. In view of this, the Court accepts the findings of fact and
conclusions of the CA, not just because we are not a trier of facts, but, more importantly,
because the CA creditably performed its main task of conducting a thorough review of

the evidence and records of the case in order to eruditely and carefully address each of
the issues raised and argued by the Dicos.
Secondly, the CA correctly pointed out that under Article 1456 of the Civil Code, the
person obtaining property through mistake or fraud is considered by force of law a
trustee of an implied trust for the benefit of the person from whom the property comes.
Under Article 1144, Civil Code, an action upon an obligation created by law must be
brought within 10 years from the time the right of action accrues. Consequently, an
action for reconveyance based on implied or constructive trust prescribes in 10 years.
Here, the CA observed that even granting that fraud intervened in the issuance of the
transfer certificates of title, and even assuming that the Dicos had the personality to
demand the reconveyance of the affected property on the basis of implied or
constructive trust, the filing of their complaint for that purpose only on May 12, 1986
proved too late for them.
That observation was correct and in accord with law and jurisprudence.1wphi1 Verily,
the reckoning point for purposes of the Dicos demand of reconveyance based on fraud
was their discovery of the fraud. Such discovery was properly pegged on the date of the
registration of the transfer certificates of title in the adverse parties names, because
registration was a constructive notice to the whole world. 19 The long period of 29 years
that had meanwhile lapsed from the issuance of the pertinent transfer certificate of title
on September 30, 1934 (the date of recording of TCT No. RT-9933 (16739) in the name
of the Lopezes) or on November 10, 1956 (the date of recording of TCT No. T-41835 in
VMCs name) was way beyond the prescriptive period of 10 years.
And, lastly, the insistence of the Dicos that prescription could not be used by the CA to
bar their claim for reconveyance by virtue of VMCs failure to aver them m a motion to
dismiss or m the answer was unwarranted.
We agree with VMC's contention to the contrary. Although defenses and objections not
pleaded in a motion to dismiss or in an answer are deemed waived, it was really
incorrect for the Dicos to insist that prescription could not be appreciated against them
for that reason. Their insistence was contrary to Section l, Rule 9 of the Rules of Court,
which provides as follows:
Section 1. Defenses and objections not pleaded.- Defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between the same parties

for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim. (2a)
Under the rule, the defenses of lack of jurisdiction over the subject matter, litis
pendentia, res judicata, and prescription of action may be raised at any stage of the
proceedings, even for the first time on appeal, except that the objection to the lack of
jurisdiction over the subject matter may be barred by laches
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated
on September II, 2002; and ORDERS the petitioners to pay the costs of suit.

G.R. No. 202247

June 19, 2013

SIME DARBY PILIPINAS, INC., Petitioner, vs. JESUS B. MENDOZA, Respondent.

The Facts
Petitioner Sime Darby Pilipinas, Inc. (Sime Darby) employed Jesus B. Mendoza (Mendoza) as sales
manager to handle sales, marketing, and distribution of the company's tires and rubber products. On
3 July 1987, Sime Darby bought a Class "A" club share 4 in Alabang Country Club (ACC) from
Margarita de Araneta as evidenced by a Deed of Absolute Sale. 5 The share, however, was placed
under the name of Mendoza in trust for Sime Darby since the By-Laws 6 of ACC state that only
natural persons may own a club share. 7 As part of the arrangement, Mendoza endorsed the Club
Share Certificate8 in blank and executed a Deed of Assignment, 9 also in blank, and handed over the
documents to Sime Darby. From the time of purchase in 1987, Sime Darby paid for the monthly dues
and other assessments on the club share.
When Mendoza retired in April 1995, Sime Darby fully paid Mendoza his separation pay amounting
to more thanP3,000,000. Nine years later, or sometime in July 2004, Sime Darby found an interested
buyer of the club share for P1,101,363.64. Before the sale could push through, the broker required
Sime Darby to secure an authorization to sell from Mendoza since the club share was still registered
in Mendozas name. However, Mendoza refused to sign the required authority to sell or special
power of attorney unless Sime Darby paid him the amount ofP300,000, claiming that this
represented his unpaid separation benefits. As a result, the sale did not push through and Sime
Darby was compelled to return the payment to the prospective buyer.
On 13 September 2005, Sime Darby filed a complaint 10 for damages with writ of preliminary
injunction against Mendoza with the Regional Trial Court (RTC) of Makati City. On 15 November
2005, Mendoza filed an Answer alleging ownership of the club share. On 3 January 2006, the RTC
denied Sime Darbys prayer for restraining order and preliminary injunction. On 30 April 2007, the
trial court rendered a Decision in favor of Sime Darby. Mendoza filed an appeal with the Court of
Appeals. On 30 March 2012, the appellate court reversed the ruling of the trial court. Hence, the
instant petition.

The Issues
The issues for our resolution are: (1) whether Sime Darby is entitled to damages and injunctive relief
against Mendoza, its former employee; and (2) whether the appellate court erred in declaring that
Mendoza is the owner of the club share.
The Courts Ruling
The petition has merit.
In the present case, petitioner Sime Darby has sufficiently established its right over the subject club
share. Sime Darby presented evidence that it acquired the Class "A" club share of ACC in 1987
through a Deed of Sale. Being a corporation which is expressly disallowed by ACCs By-Laws to
acquire and register the club share under its name, Sime Darby had the share registered under the
name of respondent Mendoza, Sime Darbys former sales manager, under a trust arrangement.
Such fact was clearly proved when in the application form 17 dated 17 July 1987 of the ACC for the
purchase of the club share, Sime Darby placed its name in full as the owner of the share and
Mendoza as the assignee of the club share. Also, in connection with the application for membership,
Sime Darby sent a letter18 dated 17 September 1987 addressed to ACC confirming that "Mendoza,
as Sime Darbys Sales Manager, is entitled to club membership benefit of the Company."
Even during the trial, at Mendozas cross-examination, Mendoza identified his signature over the
printed words "name of assignee" as his own and when confronted with his Reply-Affidavit, he did
not refute Sime Darbys ownership of the club share as well as Sime Darbys payment of the monthly
billings from the time the share was purchased. 19 Further, Mendoza admitted signing the club share
certificate and the assignment of rights, both in blank, and turning it over to Sime Darby. Clearly,
these circumstances show that there existed a trust relationship between the parties.
While the share was bought by Sime Darby and placed under the name of Mendoza, his title is only
limited to the usufruct, or the use and enjoyment of the clubs facilities and privileges while employed
with the company. In Thomson v. Court of Appeals, 20 we held that a trust arises in favor of one who
pays the purchase price of a property in the name of another, because of the presumption that he
who pays for a thing intends a beneficial interest for himself. While Sime Darby paid for the purchase
price of the club share, Mendoza was given the legal title. Thus, a resulting trust is presumed as a
matter of law. The burden then shifts to the transferee to show otherwise.
Mendoza, as the transferee, claimed that he only signed the assignment of rights in blank in order to
give Sime Darby the right of first refusal in case he decides to sell the share later on. A right of first
refusal, in this case, would mean that Sime Darby has a right to match the purchase price offer of
Mendozas prospective buyer of the club share and Sime Darby may buy back the share at that
price. However, Mendozas contention of the right of first refusal is a self-serving statement. He did
not present any document to show that there was such an agreement between him and the
company, not even an acknowledgment from Sime Darby that it actually intended the club share to
be given to him as a reward for his performance and past service.

It can be gathered then that Sime Darby did not intend to give up its beneficial interest and right over
the share. The company merely wanted Mendoza to hold the share in trust since Sime Darby, as a
corporation, cannot register a club share in its own name under the rules of the ACC. At the same
time, Mendoza, as a senior manager of the company, was extended the privilege of availing a club
membership, as generously practiced by Sime Darby.
1wphi1

However, Mendoza violated Sime Darbys beneficial interest and right over the club share after he
was informed by Atty. Ronald E. Javier of Sime Darbys plan to sell the share to an interested buyer.
Mendoza refused to give an authorization to sell the club share unless he was paid P300,000
allegedly representing his unpaid retirement benefit. In August 2004, Mendoza tried to appropriate
the club share and demanded from ACC that he be recognized as the true owner of the share as the
named member in the stock certificate as well as in the annual report issued by ACC. Despite being
informed by Sime Darby to stop using the facilities and privileges of the club share, Mendoza
continued to do so. Thus, in order to prevent further damage and prejudice to itself, Sime Darby
properly sought injunction in this case.

CHU JR V CAPARAS G.R. No. 175428April 15, 2013

FACTS: At the root of the case is a parcel of land located at Maguyam, Silang, Cavite, originally owned
and registered in the name of Miguela Reyes. The petitioners filed a complaint to recover possession of
the subject property against the respondents, with a prayer to annul the sale of the subject property
executed between the respondents. In the complaint, the petitioners alleged that they are the successorsin-interest of Miguela over the subject property, which Caparas held in trust for Miguela. The petitioners
also averred that the subject property was erroneously included in the sale of land between the
respondents.
The petitioners evidence showed that the subject property was previously part of the tract of land owned
by Miguela at Maguyam, Silang, Cavite. Miguela sold to Caparas the eastern portion of the land. Miguela
retained for herself the rest of the subject property, located at the western portion of the original property.
Further, the deed of conveyance executed between Miguela and Caparas described the boundaries of the
parcel of land purchased by Caparas as: "sa ibaba ay Faustino Amparo, sa silangan ay Silang at Carmona
boundary, sa ilaya ay Aquilino Ligaya, at sa kanluran ay ang natitirang lupa ni Miguela Reyes."
The petitioners asserted that more than fourteen years later, Caparas caused the preparation of a
consolidated survey plan (Caparas survey plan) under her name for several parcels of land (consolidated
parcels of land) located at Silang-Carmona, Cavite, with a total land area of 40,697 square meters. Under
the Caparas survey plan, the parcel of land supposedly retained by Miguela was erroneously transferred to
the eastern portion of the original land and now allegedly owned by Caparas.
The petitioners also alleged that Caparas sold to the spouses Perez the consolidated parcels of land in a
deed. Considering the alleged error in the Caparas survey plan, the petitioners demanded the
reconveyance of the subject property from Caparas and the spouses Perez, who refused to reconvey the
subject property.

After an ex parte hearing, the RTC ruled in the petitioners favor.12 The RTC, however, refused to
approve, for lack of authority, the new survey plan for the subject property13 that the petitioners
submitted.
The spouses Perez averred that the parcel of land sold to the petitioners was not the subject property
whose title had been confirmed in their (spouses Perezs) names. In the alternative, the spouses Perez
claimed that they bought the subject property in good faith and for value and had been in open,
continuous, public and adverse possession of it since 1991.
ISSUE:
1

Whether or not the parcel of land sold to the petitioners is the subject property included in the
consolidated parcels of land sold to the spouses Perez.

HELD/RATIO:
1

NO. The petitioners action against Caparas and the spouses Perez for reconveyance, based on
trust, must fail for lack of basis. An action for reconveyance is a legal and equitable remedy that
seeks to transfer or reconvey property, wrongfully registered in another persons name, to its
rightful owner. To warrant reconveyance of the land, the plaintiff must allege and prove, among
others, ownership of the land in dispute and the defendants erroneous, fraudulent or wrongful
registration of the property.

In the present petition, the petitioners failed to prove that the parcel of land they owned was the
subject property. Logically, there is nothing to reconvey as what the spouses Perez registered in their
names did not include the parcel of land which the petitioners, by their evidence, own.
We also see no trust, express or implied, created between the petitioners and the spouses Perez over
the subject property. A trust by operation of law is the right to the beneficial enjoyment of a property
whose legal title is vested in another. A trust presumes the existence of a conflict involving one and
the same property between two parties, one having the rightful ownership and the other holding the
legal title. There is no trust created when the property owned by one party is separate and distinct
from that which has been registered in anothers name.
In this case, the Caparas survey plan and the deed of sale between the petitioners and Miguela showed
that the parcel of land sold to the petitioners is distinct from the consolidated parcels of land sold by
Caparas to the spouses Perez.
Even granting that the Caparas survey plan did erroneously switch the positions of the petitioners and
the spouses Perezs respective landholdings, we agree with the RTC that reconveyance was still an
inappropriate remedy. The petitioners recourse should have been to file the proper action before the
Department of Environment and Natural Resources-Land Management Bureau for the cancellation of
the Caparas survey plan and for the approval of a new survey plan that correctly reflects the position
of their respective landholdings. For until the Caparas survey plan has been cancelled, the petitioners
claim of encroachment has no basis.

Another perspective, too, that must be considered is Miguelas act in selling to the petitioners Lot No.
3 using the Caparas survey plan, which can be regarded as a ratification of any perceived error under
the circumstances.
On November 10, 1995, the petitioners filed a complaint to recover possession of the subject
property5 against the respondents, with a prayer to annul the sale of the subject property executed
between the respondents. In the complaint, the petitioners alleged that they are the successors-ininterest of Miguela over the subject property, which Caparas held in trust for Miguela. The petitioners
also averred that the subject property was erroneously included in the sale of land between the
respondents.
The respondents failed to file an answer to the complaint and were declared in default. The RTC
thus allowed the petitioners to present their evidence ex parte against the respondents.
The petitioners evidence showed that the subject property was previously part of the 51,151-square
meter tract of land owned by Miguela at Maguyam, Silang, Cavite. On July 5, 1975, Miguela sold to
Caparas 25,000 square meters of the eastern portion of the 51,151-square meter tract of land.
Miguela retained for herself the balance (or 26, 151 square meters) of the subject property, located
at the western portion of the original 51,151-square meter property. Further, the deed of conveyance
executed between Miguela and Caparas, entitled "Kasulatan ng Tuluyang Bilihan ng
Lupa,"6 described the boundaries of the parcel of land purchased by Caparas as: "sa ibaba ay
Faustino Amparo, sa silangan ay Silang at Carmona boundary, sa ilaya ay Aquilino Ligaya, at sa
kanluran ay ang natitirang lupa ni Miguela Reyes."7
The petitioners asserted that more than fourteen (14) years later, Caparas caused the preparation of
a consolidated survey plan8 (Caparas survey plan) under her name for several parcels of land
(consolidated parcels of land) located at Silang-Carmona, Cavite, with a total land area of 40,697
square meters. Under the Caparas survey plan, the parcel of land supposedly retained by Miguela
was erroneously transferred to the eastern portion of the original 51,151-square meter tract of land.
As a result of the error, the subject property was included in the consolidated parcels of land owned
by Caparas. The petitioners asserted that Caparas admitted the wrongful inclusion of the subject
property owned by Miguela in the consolidated parcels of land through Caparas "Sinumpaang
Salaysay ng Pagpapatotoo"9 dated August 27, 1990.
The petitioners also alleged that on November 8, 1991, Caparas sold to the spouses Perez the
consolidated parcels of land in a deed entitled "Kasulatan ng Bilihang Tuluyan." The petitioners
claimed that included in the aforesaid sale was a parcel of land with boundary description similar to
the 25,000-square meter parcel of land sold by Miguela to Caparas.
According to the petitioners, Miguela, on July 24, 1994, sold the subject property to the
petitioners10 for which they (the petitioners) secured a tax declaration (TD No. 22477A).11 Considering the alleged error in the Caparas survey plan, the petitioners demanded the
reconveyance of the subject property from Caparas and the spouses Perez, who refused to
reconvey the subject property.
After an ex parte hearing, the RTC ruled in the petitioners favor. 12 The RTC, however, refused to
approve, for lack of authority, the new survey plan for the subject property 13 that the petitioners
submitted.
The spouses Perez filed a petition for relief from judgment 14 on the ground of excusable negligence.
The spouses Perez averred that the parcel of land sold to the petitioners was not the subject

property whose title had been confirmed in their (spouses Perezs) names. 15 In the alternative, the
spouses Perez claimed that they bought the subject property in good faith and for value and had
been in open, continuous, public and adverse possession of it since 1991.
The Issue
In sum, the core issue for determination is: whether the parcel of land sold to the petitioners is the
subject property included in the consolidated parcels of land sold to the spouses Perez.
The Courts Ruling
In the present petition, the petitioners failed to prove that the parcel of land they owned was the
subject property. Logically, there is nothing to reconvey as what the spouses Perez registered in their
names did not include the parcel of land which the petitioners, by their evidence, own.
We also see no trust, express or implied, created between the petitioners and the spouses Perez
over the subject property. A trust by operation of law is the right to the beneficial enjoyment of a
property whose legal title is vested in another.37 A trust presumes the existence of a conflict involving
one and the same property between two parties, one having the rightful ownership and the other
holding the legal title. There is no trust created when the property owned by one party is separate
and distinct from that which has been registered in anothers name.
In this case, the Caparas survey plan and the deed of sale between the petitioners and Miguela
showed that the parcel of land sold to the petitioners is distinct from the consolidated parcels of land
sold by Caparas to the spouses Perez.
Although we are aware of an apparent discrepancy between the boundary description of the parcel
of land described in the "Kasulatan ng Tuluyang Bilihan ng Lupa" executed between Caparas and
Miguela, the "Kasulatan ng Tuluyang Bilihan ng Lupa" executed between Caparas and the spouses
Perez, and Caparas TD on the one hand, and the boundary description of the consolidated parcels
of land stated in the Caparas survey plan and the spouses Perezs title on the other hand, we find
the discrepancy more imagined than real. This perceived discrepancy does not help the petitioners
cause in light of the evidence that the deed of sale between the petitioners and Miguela used the
Caparas survey plan that clearly identified the parcel of land sold to them was different from the
subject property.

G.R. No. 182177

March 30, 2011

RICHARD JUAN, Petitioner, vs. GABRIEL YAP, SR., Respondent.

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

On 30 June 1998, petitioner, represented by Solon, sought the extrajudicial foreclosure of the
mortgage. Although petitioner and respondent participated in the auction sale, the properties were
sold to petitioner for tendering the highest bid of P2.2 million.3 No certificate of sale was issued to
petitioner, however, for his failure to pay the sales commission. 4
On 15 February 1999, respondent and the Caeda spouses executed a memorandum of agreement
(MOA) where (1) the Caeda spouses acknowledged respondent as their "real mortgagee-creditor x
x x while Richard Juan [petitioner] is merely a trustee" 5 of respondent; (2) respondent agreed to allow
the Caeda spouses to redeem the foreclosed properties for P1.2 million; and (3) the Caeda
spouses and respondent agreed to initiate judicial action "either to annul or reform the [Contract] or
to compel Richard Juan to reconvey the mortgagees rights" 6 to respondent as trustor. Three days
later, the Caeda spouses and respondent sued petitioner in the Regional Trial Court of Cebu City
(trial court) to declare respondent as trustee of petitioner vis a vis the Contract, annul petitioners bid
for the foreclosed properties, declare the Contract "superseded or novated" by the MOA, and require
petitioner to pay damages, attorneys fees and the costs. The Caeda spouses consigned with the
trial court the amount of P1.68 million as redemption payment.
In his Answer, petitioner insisted on his rights over the mortgaged properties. Petitioner also
counterclaimed for damages and attorneys fees and the turn-over of the owners copy of the titles
for the mortgaged properties.
The Ruling of the Trial Court
The trial court ruled against respondent and his co-plaintiffs and granted reliefs to petitioner by
declaring petitioner the "true and real" mortgagee, ordering respondent to pay moral damages and
attorneys fees, and requiring respondent to deliver the titles in question to petitioner.7
Ruling of the Court of Appeals
The CA granted the petition, set aside the trial courts ruling, declared respondent the Contracts
mortgagee, directed the trial court to release the redemption payment to respondent, and ordered
petitioner to pay damages and attorneys fees.8
The Issues
The petition raises the following questions:
1. Whether an implied trust arose between petitioner and respondent, binding petitioner to
hold the beneficial title over the mortgaged properties in trust for respondent; and
2. Whether respondent is entitled to collect damages.
The Ruling of the Court
We hold in the affirmative on both questions, and thus affirm the CA.
Conflicting
Rule 45 Review

Rulings

Below

Justify

The question of the existence of an implied trust is factual, 11 hence, ordinarily outside the purview of
a Rule 45 review of purely legal questions. 12 Nevertheless, our review is justified by the need to

make a definitive finding on this factual issue in light of the conflicting rulings rendered by the courts
below.13
Implied Trust in Mortgage Contracts
An implied trust arising from mortgage contracts is not among the trust relationships the Civil Code
enumerates.14The Code itself provides, however, that such listing "does not exclude others
established by the general law on trust x x x." 15 Under the general principles on trust, equity converts
the holder of property right as trustee for the benefit of another if the circumstances of its acquisition
makes the holder ineligible "in x x x good conscience [to] hold and enjoy [it]." 16 As implied trusts are
remedies against unjust enrichment, the "only problem of great importance in the field of constructive
trusts is whether in the numerous and varying factual situations presented x x x there is a wrongful
holding of property and hence, a threatened unjust enrichment of the defendant." 17
Applying these principles, this Court recognized unconventional implied trusts in contracts involving
the purchase of housing units by officers of tenants associations in breach of their obligations, 18 the
partitioning of realty contrary to the terms of a compromise agreement, 19 and the execution of a sales
contract indicating a buyer distinct from the provider of the purchase money.20 In all these cases, the
formal holders of title were deemed trustees obliged to transfer title to the beneficiaries in whose
favor the trusts were deemed created. We see no reason to bar the recognition of the same
obligation in a mortgage contract meeting the standards for the creation of an implied trust.

- Alejandro Ty vs. Sylvia Ty, 553 SCRA 306 (2008)

FACTS:
Alexander Ty, son of Alejandro B. Ty and Bella Torres, died of cancer at the age of
34. He was survived by his wife, Sylvia Ty, and his only daughter, Krizia Katrina Ty. A few
months after his death, a petition for the settlement of his intestate estate was filed by
Sylvia Ty in the Regional Trial Court of Quezon City. Upon petition of Sylvia Ty, as
Administratrix, for settlement and distribution of the intestate estate of Alexander in the
County of Los Angeles, the Superior Court of California ordered the distribution of the
Hollywood condominium unit, the Montebello lot, and the 1986 Toyota pick-up truck to Sylvia
Ty and Krizia Katrina Ty.
Sylvia Ty submitted to the intestate Court in Quezon City an inventory of the assets of
Alexanders estate, consisting of shares of stocks and a schedule of real estate properties,
which included the following:
1. EDSA Property a parcel of land with an area of 1,728 square meters situated in EDSA,
Greenhills, Mandaluyong, Metro Manila, registered in the name of Alexander Ty when he was
still single, and covered by TCT No. 0006585;
2. Meridien Condominium A residential condominium with an area of 167.5 square meters
situated in 29 Annapolis Street, Greenhills, Mandaluyong, Metro Manila, registered in the
name of the spouses Alexander Ty and Sylvia Ty, and covered by Condominium Certificate of
Title No. 3395;

3. Wack-Wack Property A residential land with an area of 1,584 square meters situated in
Notre Dame, Wack-Wack, Mandaluyong, Metro Manila, registered in the name of the spouses
Alexander Ty and Sylvia Ty, and covered by TCT No. 62670.
Sylvia Ty asked the intestate Court to sell or mortgage the properties of the estate in
order to pay the additional estate tax of P4,714,560.02 assessed by the BIR. Apparently, this
action did not sit well with her father-in-law.
Alejandro Ty, father of the deceased Alexander Ty, filed a complaint for recovery of
properties with prayer for preliminary injunction and/or temporary restraining order.
Sylvia Ty, as Administratrix of the Intestate Estate of Alexander Ty, tendered her
opposition to the application for preliminary injunction. She claimed that plaintiff Alejandro
Ty had no actual or existing right, which entitles him to the writ of preliminary injunction, for
the reason that no express trust concerning an immovable maybe proved by parole
evidence under the law. In addition, Sylvia Ty argued that the claim is barred by laches, and
more than that, that irreparable injury will be suffered by the estate of Alexander Ty should
the injunction be issued.
To the aforementioned opposition, plaintiff filed a reply, reiterating the arguments set
forth in his complaint, and denying that his cause of action is barred by laches.
Regional Trial Court granted the application for a writ of preliminary injunction.
As to the complaint for recovery of properties, it is asserted by plaintiff Alejandro Ty
that he owns the EDSA property, as well as the Meridien Condominium, and the Wack-Wack
property, which were included in the inventory of the estate of Alexander Ty. Plaintiff alleged
that he bought the EDSA property from a certain Purificacion Z. Yujuico; and that he
registered the said property in the name of his son, Alexander Ty, who was to hold said
property in trust for his brothers and sisters in the event of his (plaintiffs) sudden
demise. Plaintiff further alleged that at the time the EDSA property was purchased, his son
and name-sake was still studying in the United States, and was financially dependent on
him.
As to the two other properties, plaintiff averred that he bought the Meridien
Condominium sometime in 1985 and the Wack-Wack property sometime in 1987; that titles
to the aforementioned properties were also placed in the name of his son, Alexander Ty, who
was also to hold these properties in trust for his brothers and sisters. Plaintiff asserted that
at [the] time the subject properties were purchased, Alexander Ty and Sylvia Ty were earning
minimal income, and were thus financially incapable of purchasing said properties. To bolster
his claim, plaintiff presented the income tax returns of Alexander from 1980-1984, and the
profit and loss statement of defendants Joji San General Merchandising.
Plaintiff added that defendant acted in bad faith in including the subject properties in
the inventory of Alexander Tys estate, for she was well aware that Alexander was simply
holding the said properties in trust for his siblings.
In her answer, defendant denied that the subject properties were held in trust by
Alexander Ty for his siblings. She contended that, contrary to plaintiffs allegations, Alexander
purchased the EDSA property with his own money; that Alexander was financially capable of

purchasing the EDSA property as he had been managing the family corporations ever since
he was 18 years old, aside from the fact that he was personally into the business of
importing luxury cars. As to the Meridien Condominium and Wack-Wack property, defendant
likewise argued that she and Alexander Ty, having been engaged in various profitable
business endeavors, they had the financial capacity to acquire said properties.
By way of affirmative defenses, defendant asserted that the alleged verbal trust
agreement over the subject properties between the plaintiff and Alexander Ty is not
enforceable under the Statute of Frauds; that plaintiff is barred from proving the alleged
verbal trust under the Dead Mans Statute; that the claim is also barred by laches; that
defendants title over the subject properties cannot be the subject of a collateral attack; and
that plaintiff and counsel are engaged in forum-shopping.
A motion for leave to intervene, and a complaint-in-intervention were filed by
Angelina Piguing-Ty, legal wife of plaintiff Alejandro Ty. In this motion, plaintiff-intervenor
prayed that she be allowed to intervene on the ground that the subject properties were
acquired during the subsistence of her marriage with the plaintiff, hence said properties are
conjugal. Trial Court granted said motion.
RTC rendered its decision declaring plaintiff as the true and lawful owner of the
subject properties and ordering the defendant to transfer or convey the subject properties in
favor of plaintiff and the Register of Deeds for Mandaluyong City to transfer and issue in the
name of plaintiff the corresponding certificates of title as well as to pay plaintiff the amount
of P100,000.00, as moral damages and P200,000.00, as attorneys fees plus the cost of the
suit.
Sylvia S. Ty appealed from the RTC Decision to the CA. The CA then turned to the
critical, crucial and pivotal issue of whether a trust, express or implied, was established by
the plaintiff-appellee in favor of his late son and name-sake Alexander Ty.
The CA proceeded to distinguish express from implied trust, then found that no
express trust can be involved here since nothing in writing was presented to prove it and the
case involves real property. It then stated that it disagrees with the court a quos application
of Art. 1448 of the Civil Code on implied trust, the so-called purchase money resulting trust,
stating that the very Article provides the exception that obtains when the person to whom
the title is conveyed is the child, legitimate or illegitimate, of the one paying the price of the
sale, in which case no trust is implied by law, it being disputably presumed that there is a
gift in favor of the child.
The CA therefore reasoned that even assuming that plaintiff-appellee paid at least
part of the price of the EDSA property, the law still presumes that the conveyance was a
discretion (a gift of devise) in favor of Alexander.
As to plaintiff-appellees argument that there was no donation as shown by his
exercise of dominion over the property, the CA held that no credible evidence was presented
to substantiate the claim.

Regarding the residence condominium and the Wack-Wack property, the CA stated
that it did not agree either with the findings of the trial court that an implied trust was
created over these properties.
The CA therefore reversed and set aside the judgment appealed from and entered
another one dismissing the complaint. CA resolved to deny therein plaintiff-appellees motion
for reconsideration. Hence, this petition.
ISSUE: Whether or not there was an implied trust under Art. 1448 of the Civil Code
HELD: No.
Article 1448 of the Civil Code provides:
Art. 1448. There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of
having the beneficial interest of the property. The former is the trustee, while the
latter is the beneficiary. However, if the person to whom the title is conveyed is a
child, legitimate or illegitimate, of one paying the price of the sale, no trust is
implied by law, it being disputably presumed that there is a gift in favor of the
child.
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.
- Fabiola Severino vs. Guillermo Severino, 44 Phil., 343
FACTS:
Melecio Severino owned a land, by which brother Guillermo served as administrator.
Upon the death of Melecio, Guillermo continued occupation of the land, and in a cadastral
proceeding successfully had the land Titled in his favor, considering that he has possessed it
for 30 years. This action now is brought by the natural daughter and sole heir of Melecio,
Fabiola Severino, to compel defendant Guillermo to convey the lands in her favor.
Meanwhile, administratrix of Melecios estate, Felicitas Villanueva, also intervened so the

land will be conveyed in the estates name. Defendant argues that the land was owned in
common by their father and did not solely belong to Melecio and that his Title is indefeasible
under the Land Registration Act.
ISSUE: Whether or not defendant Guillermo has rights over the property
HELD: NO
The relation of an agent to a principal is fiduciary, and the agent is estopped from
acquiring or asserting Title adverse to the principal. His position is analogous to a trustee,
and that whatever he does inures to the benefit of the cestui que vie.
In Gilbert v. Hewetson, a trustee or agent is utterly disabled from acquiring for his
own any property committed in his custody. This is entirely independent of the fact whether
any fraud has intervened. No fraud in fact need be show. The rule stands on moral obligation
to refrain from placing ones self in conflicts of self-interest and integrity. It seeks to remove
the temptation that might arise out of ones relation to serve anothers interest for his own
benefit.
Here, while the legal title of Guillermo is not questioned, it must be deemed as to
inure to the benefit of the estate of Melecio Severino, as the cestui que vie with superior
equitable right.
It must be noted that the property shall inure to the ESTATES benefit and not to the
daughter who brought the action since it is the estate who will apportion all the claims.
Moreover, the legitimacy of Fabiola as a natural child is also being questioned.
- Virgilio Gaston et al., vs. Republic Planters Bank et al., 158 SCRA 626
FACTS:
Petitioners are sugar producers, sugarcane planters and millers, who have come to
this Court in their individual capacities and in representation of other sugar producers,
planters and millers. Respondent Philippine Sugar Commission (PHILSUCOM, for short) was
formerly the government office tasked with the function of regulating and supervising the
sugar industry until it was superseded by its co-respondent Sugar Regulatory Administration
(SRA, for brevity) under Executive Order No. 18 on May 28, 1986. Although said Executive
Order abolished the PHILSUCOM, its existence as a juridical entity was mandated to continue
for three (3) more years "for the purpose of prosecuting and defending suits by or against it
and enables it to settle and close its affairs, to dispose of and convey its property and to
distribute its assets."
Respondent Republic Planters Bank (briefly, the Bank) is a commercial banking
corporation.
Angel H. Severino, Jr., et al., who are sugarcane planters planting and milling their
sugarcane in different mill districts of Negros Occidental, were allowed to intervene by the
Court, since they have common cause with petitioners and respondents having interposed
no objection to their intervention. Subsequently, the National Federation of Sugar Planters
(NFSP) also moved to intervene, which the Court allowed.

Petitioners and Intervenors have come to this Court praying for a Writ of mandamus
commanding respondents:
TO IMPLEMENT AND ACCOMPLISH THE PRIVATIZATION OF REPUBLIC PLANTERS BANK
BY THE TRANSFER AND DISTRIBUTION OF THE SHARES OF STOCK IN THE SAID BANK; NOW
HELD BY AND STILL CARRIED IN THE NAME OF THE PHILIPPINE SUGAR COMMISSION, TO THE
SUGAR PRODUCERS, PLANTERS AND MILLERS, WHO ARE THE TRUE BENEFICIAL OWNERS OF
THE 761,416 COMMON SHARES VALUED AT P36,548.000.00, AND 53,005,045 PREFERRED
SHARES (A, B & C) WITH A TOTAL PAR VALUE OF P254,424,224.72, OR A TOTAL INVESTMENT
OF P290,972,224.72, THE SAID INVESTMENT HAVING BEEN FUNDED BY THE DEDUCTION OF
Pl.00 PER PICUL FROM SUGAR PROCEEDS OF THE SUGAR PRODUCERS COMMENCING THE
YEAR 1978-79 UNTIL THE PRESENT AS STABILIZATION FUND PURSUANT TO P.D. # 388.
Respondent Bank does not take issue with either petitioners or its correspondents as
it has no beneficial or equitable interest that may be affected by the ruling in this Petition,
but welcomes the filing of the Petition since it will settle finally the issue of legal ownership
of the questioned shares of stock.
Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition
arguing that no trust results from Section 7 of P.D. No. 388; that the stabilization fees
collected are considered government funds under the Government Auditing Code; that the
transfer of shares of stock from PHILSUCOM to the sugar producers would be irregular, if not
illegal; and that this suit is barred by laches.
ISSUE: Whether or not the stabilization fees collected from sugar planters and millers
pursuant to Section 7 of P.D. No. 388 are funds in trust for them, or public funds.
HELD:
Section 7 of P.D. No. 388 does provide that the stabilization fees collected "shall be
administered in trust by the Commission." However, while the element of an intent to create
a trust is present, a resulting trust in favor of the sugar producers, millers and planters
cannot be said to have ensued because the presumptive intention of the parties is not
reasonably ascertainable from the language of the statute itself.
The doctrine of resulting trusts is founded on the presumed intention of the parties;
and as a general rule, it arises where, and only where such may be reasonably presumed to
be the intention of the parties, as determined from the facts and circumstances existing at
the time of the transaction out of which it is sought to be established (89 C.J.S. 947).
No implied trust in favor of the sugar producers either can be deduced from the
imposition of the levy. "The essential Idea of an implied trust involves a certain antagonism
between the cestui que trust and the trustee even when the trust has not arisen out of fraud
nor out of any transaction of a fraudulent or immoral character (65 CJ 222). It is not clearly
shown from the statute itself that the PHILSUCOM imposed on itself the obligation of holding
the stabilization fund for the benefit of the sugar producers. It must be categorically
demonstrated that the very administrative agency which is the source of such regulation

would place a burden on itself (Batchelder v. Central Bank of the Philippines, L-25071, July
29,1972,46 SCRA 102, citing People v. Que Po Lay, 94 Phil. 640 [1954]).
The stabilization fees in question are levied by the State upon sugar millers, planters
and producers for a special purpose that of "financing the growth and development of the
sugar industry and all its components, stabilization of the domestic market including the
foreign market the fact that the State has taken possession of moneys pursuant to law is
sufficient to constitute them state funds, even though they are held for a special purpose
(Lawrence vs. American Surety Co., 263 Mich 586, 249 ALR 535, cited in 42 Am. Jur. Sec. 2,
p. 718). Having been levied for a special purpose, the revenues collected are to be treated
as a special fund, to be, in the language of the statute, "administered in trust' for the
purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is
to be transferred to the general funds of the Government. That is the essence of the trust
intended (See 1987 Constitution, Article VI, Sec. 29(3), lifted from the 1935 Constitution,
Article VI, Sec. 23(l]). 2
The character of the Stabilization Fund as a special fund is emphasized by the fact
that the funds are deposited in the Philippine National Bank and not in the Philippine
Treasury, moneys from which may be paid out only in pursuance of an appropriation made
by law (1987) Constitution, Article VI, Sec. 29[1],1973 Constitution, Article VIII, Sec. 18[l]).
That the fees were collected from sugar producers, planters and millers, and that the
funds were channeled to the purchase of shares of stock in respondent Bank do not convert
the funds into a trust fired for their benefit nor make them the beneficial owners of the
shares so purchased. It is but rational that the fees be collected from them since it is also
they who are to be benefited from the expenditure of the funds derived from it. The
investment in shares of respondent Bank is not alien to the purpose intended because of the
Bank's character as a commodity bank for sugar conceived for the industry's growth and
development. Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the
amount levied under P.D. No. 388 is to be utilized for the "payment of salaries and wages of
personnel, fringe benefits and allowances of officers and employees of PHILSUCOM" thereby
immediately negating the claim that the entire amount levied is in trust for sugar,
producers, planters and millers.
To rule in petitioners' favor would contravene the general principle that revenues
derived from taxes cannot be used for purely private purposes or for the exclusive benefit of
private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar
industry, "and all its components, stabilization of the domestic market," including the foreign
market the industry being of vital importance to the country's economy and to national
interest.