TRUST

THE GOVERNMENT OF THE PHILIPPINE ISLANDS vs. ANASTASIA ABADILLA, ET AL.

G.R. No. L-21334, December 10, 1924

Facts:
The lands contested in this case was owned by one Luis Palad, a school teacher, who
obtained titled to the land by composicion gratuita in 1894. Palad executed a holographic will party
in Spanish and partly in Tagalog. Palad died, without descendants, but leaving a widow, the
appellant Dorotea Lopez, to whom he had been married. The Court of First Instance of Tayabas
ordered the protocolization of the will over the opposition of Leopoldo and Policarpio Palad,
collateral heirs of the deceased and of whom the appellants Palad are descendants.
The will contained a clause in Tagalog which, translated into English, reads:
That the cocoanut land in Colongcolong, which I have put under cultivation, be used by my wife
after my death during her life or until she marries, x x x x x I prepare and donate it to secondary
college to be erected in the capital of Tayabas; so this will be delivered by my wife and the
executors to the Ayuntamiento of this town, should there be any, and if not, to the civil governor
of this province in order to cause the manager thereof to comply with my wishes for the good of
many and the welfare of the town.
Dorotea Lopez remained in possession of the land and in married one Calixto Dolendo.
The collateral heirs of Luis Palad brought an action against the widow for the partition of
the lands here in question on the ground that she, by reason of her second marriage, had lost the
right to their exclusive use and possession. lots Nos. 3464, 3469, and 3470 are claimed by the
municipality of Tayabas and the governor of the province on one side, and by Maria, Eufemio,
Eugenia, Felix, Caridad, Segunda, and Emilia Palad on the other. Lot No. 3470 is also claimed by
Dorotea Lopez. During the pendency of the action an agreement was arrived at by the parties
under which the land which now constitutes lots Nos. 3464 and 3469 were turned over to the
municipality as its share of the inheritance under the will, and the remaining portion of the land in
controversy and which now forms lot No. 3470 was left in the possession of Dorotea Lopez. The
court below ordered the registration of the three lots in the name of the governor of the Province of
Tayabas in trust for a secondary school to be established in the municipality of Tayabas. The
claimants Palad and Dorotea Lopez appealed.
Issue:
Whether the trust instituted in the will is effective.
Ruling:
YES. It is a well-known rule that testamentary dispositions must be liberally construed so as
to give effect to the intention of the testator as revealed by the will itself. Applying this rule of
construction it seems evident that by the clause in question the testator proposed to create a trust
for the benefit of a secondary school to be established in the town of Tayabas, naming as trustee
the ayuntamiento (municipal corporation) of the town or if there be no ayuntamiento, then the civil
governor of the Province of Tayabas.
In order that a trust may become effective there must, of course, be a trustee and a cestui que
trust.
An ayuntamiento corresponds to what in English is termed a municipal corporation and it
may be conceded that the ordinary municipal government in these Island falls short of being such a
corporation. But we have provincial governors who like their predecessors, the civil governors, are
the chief executives of their respective provinces. It is true that in a few details the function and
power of the two offices may vary somewhat, but it cannot be successfully disputed that one office
is the legal successor of the other. It might as well be contended that when under the present
regime the title of the chief executive of the Philippine was changed from Civil Governor to that of
Governor-General, the latter was not the legal successor of the former. There can therefore be but
 TRUST
very little doubt that the governor of the Province of Tayabas, as the successor of the civil governor
of the province under the Spanish regime, may acts as trustee in the present case.
In regard to private trust it is not always necessary that the cestui que trust should be named,
or even be in esse at the time the trust is created in his favor. In this case, the cestui que trust is
the secondary school. The trustee (Civil Governor) must, if the secondary school is erected already,
transfer the lots to the said school.
Lots Nos. 3464 and 3469 should remain in favor of the Municipality of Tayabas as trustee until
the secondary school was erected. However, the ownership over the Lot 3470 has lawfully passed to
Dorothea on the ground of prescription.
 TRUST
MINDANAO DEVELOPMENT AUTHORITY vs.THE COURT OF APPEALS and FRANCISCO ANG BANSING
G.R. No. L-49087 April 5, 1982

Facts:
Francisco Ang Bansing was the owner of a big tract of land with an area of about 300,000
sq.m., situated in Barrio Panacan Davao City. On February 25, 1939, Ang Bansing sold a portion
thereof, with an area of about 5 hectares to Juan Cruz Yap Chuy The contract provided, among
others that Bansing agrees to work for the titling of the entire area of his land under his own
expenses and the expenses for the titling of the portion sold to him shall be under the expenses of
Juan Cruz Yap Chuy.

After the sale, the land of Bansing was surveyed and designated as Lot 664-B, Psd-1638. Lot
664-B was further subdivided into five (5) lots and the portion sold to Juan Cruz Yap Chuy shortened
to Juan Cruz, was designated as Lot 664B-3, with an area of 61.107 square meters, more or less. On
June 15-17 and December 15, 1939, a cadastral survey was made and Lot 664-B-3 was designated as
Lot 1846-C of the Davao Cadastre. On December 23, 1939, Juan Cruz sold Lot 1846-C to the
Commonwealth of the Philippines for the amount of P6,347.50.

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

On March 31, 1941, Bansing sold Lot 1846-A to Juan Cruz and TCT No. 1783 was cancelled.
TCT No. 1784 was issued in the name of Juan Cruz, for Lot 1846-A and TCT No. 1785 was issued in
the name of Ang Bansing for the remaining Lots 1846-B, 1846-C, 1846-D, and 1846-E. On February 25,
1965, the President of the Philippines issued Proclamation No. 459, transferring ownership of certain
parcels of land situated in Sasa Davao City, to the Mindanao Development Authority, now the
Southern Philippines Development Administration, subject to private rights, if any. Lot 1846-C, the
disputed parcel of land, was among the parcels of land transferred to the Mindanao Development
Authority in said proclamation. Thereafter, Atty. Hector L. Bisnar counsel for the Mindanao
Development Authority, wrote Ang Bansing requesting the latter to surrender the Owner's duplicate
copy of TCT No. 2601 so that Lot 1846-C could be formally transferred to his client but Ang Bansing
refused.

Issue:
Was there a Trust created?

Decision:
NONE. "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." It is fundamental
in the law of trusts that certain requirements must exist before an express trust will be recognized.
Basically, these elements include a competent trustor and trustee, an ascertainable trust res, and
sufficiently certain beneficiaries. Stilted formalities are unnecessary, but nevertheless each of the
above elements is required to be established, and, if any one of them is missing, it is fatal to the
trusts. 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
 TRUST
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."

In this case, the herein petitioner relies mainly upon the following stipulation in the deed of
sale executed by Ang Bansing in favor of Juan Cruz to prove that an express trust had been
established with Ang Bansing as the settlor and trustee and Juan Cruz as the cestui que trust or
beneficiary. The stipulation, however, is nothing but a condition that Ang Bansing shall pay the
expenses for the registration of his land and for Juan Cruz to shoulder the expenses for the
registration of the land sold to him. The stipulation does not categorically create an obligation on
the part of Ang Bansing to hold the property in trust for Juan Cruz.

Hence, there is no express trust. It is essential to the creation of an express trust that the
settlor presently and unequivocally make a disposition of property and make himself the trustee of
the property for the benefit of another.
 TRUST
LINA PEÑALBER vs. QUIRINO RAMOS, LETICIA PEÑALBER, and BARTEX INC
G.R. No. 178645, January 30, 2009

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

Petitioner allowed respondent spouses Ramos to manage the hardware store. Thereafter,
Mendoza put the Bonifacio property up for sale. As petitioner did not have available cash to buy the
property, she allegedly entered into a verbal agreement with respondent spouses Ramos that the lot
would be bought by the spouses for and in behalf of the petitioner, the consideration for said lot
would be paid from the accumulated earning of the store.

Respondent spouses Ramos allegedly entered into a contract of sale with Mendoza and title
covering said property was issued in the names of respondent spouses Ramos. Respondent spouses
Ramos returned the management of the hardware store to petitioner. On the bases of receipts and
disbursements, petitioner asserted that the Bonifacio property was fully paid out of the funds of the
store and if respondent spouses Ramos had given any amount for the purchase price of the said
property, they had already sufficiently reimbursed themselves from the funds of the store.
Consequently, petitioner demanded from respondent spouses Ramos the reconveyance of the title
to the Bonifacio property to her but the latter unjustifiably refused.

Petitioner insisted that respondent spouses Ramos were, in reality, mere trustees of the
Bonifacio property, thus, they were under a moral and legal obligation to reconvey title over the
said property to her. Petitioner maintains that she was able to prove the existence of a trust
agreement between her and respondent spouses Ramos. She calls attention to the fact that
respondent spouses Ramos could not account for the difference in the beginning inventory and the
second inventory of the stocks of the hardware store, and they failed to present proof to support
their allegation that the amount was used to pay the other obligations of petitioner. Petitioner
further alleges that based on the verbal agreement between her and respondent spouses Ramos, a
trust agreement was created and that the same is valid and enforceable.

Issue/s:
(1) Whether the existence of a trust agreement between her and respondent spouses
Ramos was clearly established
(2) Whether such trust agreement was valid and enforceable.

Decision:
A trust is defined as the right, enforceable solely in equity, to the beneficial enjoyment of
property, the legal title to which is vested in another, but the word "trust" is frequently employed to
indicate duties, relations, and responsibilities which are not strictly technical trusts.

The petitioner has the burden of proving her cause of action in the instant case and she may
not rely on the weakness of the defense of respondent spouses Ramos. The alleged verbal trust
agreement between petitioner and respondent spouses Ramos is in the nature of an express trust as
petitioner explicitly agreed therein to allow the respondent spouses Ramos to acquire title to the
Bonifacio property in their names, but to hold the same property for petitioner’s benefit. The
requirement in Article 1443 that the express trust concerning an immovable or an interest therein
be in writing is merely for purposes of proof, not for the validity of the trust agreement.
Therefore, the said article is in the nature of a statute of frauds. The term statute of frauds is
descriptive of statutes which require certain classes of contracts to be in writing. The statute does
 TRUST
not deprive the parties of the right to contract with respect to the matters therein involved, but
merely regulates the formalities of the contract necessary to render it enforceable. The effect of
non-compliance is simply that no action can be proved unless the requirement is complied with.
Oral evidence of the contract will be excluded upon timely objection.

Petitioner’s allegations as to the existence of an express trust agreement with respondent

spouses Ramos, supported only by her own and her son Johnson’s testimonies, do not hold water.
The resulting difference in the two inventories might have been caused by other factors and the
same is capable of other interpretations, the exclusion of which rested upon the shoulders of
petitioner alone who has the burden of proof in the instant case. This petitioner miserably failed to
do.
 TRUST
EMILIANO RAMOS, ET AL. vs. GREGORIA RAMOS, ET AL.

Facts:
Sps. Martin and Candida Ramos died in Oct. 1906 and Oct. 1888, respectively. They were
survived by their 3 legitimate children: Jose, Agustin, and Granada. Martin was also survived by his
7 natural children: Atanacia, Timoteo, Modesto, Manuel, Emiliano, Maria, and Federico. The most
valuable of the estate was Hacienda Calaza and Hacienda Ylaya. Rafael Ramos, a brother of Martin,
was appointed administrator. He turned over Hacienda Ylaya to Agustin and Hacienda Calaza to Jose.

Agustin supported the natural children, getting the money from the produce of Hacienda
Ylaya. Jose also gave them money as their shares from the products of Hacienda Calaza. Upon Jose's
death, his widow Gregoria continued to give the natural children money pertaining to their shares in
the products of Hacienda Calaza. However, she stopped doing so in 1951.

A project of partition was submitted and signed by the legitimate and natural children. To
the legitimate children were adjudicated parcels of land and some head of cattle, while to the
natural children were adjudicated personal properties consisting of cash. Inasmuch as the estate
had an appraised value of P74K, 1/2 thereof represented Martin's estate. One-third thereof was the
free portion. The shares of the 7 natural children were to be taken from that 1/3 free portion. The
court approved the project of partition.

The natural children claimed that they did not know that intestate proceedings were
instituted for the distribution of the estate of their father. Also, they only discovered that Hacienda
Calaza had a Torrens Title in the name of Jose's widow and daughter when they inquired from the
Register of Deeds sometime in 1956 or 1957.

They instituted this action against the heirs of Jose for reconveyance. It is predicated on the
theory that their shares were held in trust by Gregoria, et al. The CFI dismissed the complaint on
the ground of res judicata.

Issue: Were the shares of the natural children held in trust by Jose and his heirs?

Decision:
NO. Emiliano, et al. did not prove any express trust. The expediente of the intestate
proceeding, the decision, and the manifestation as to the receipt of shares negatives the existence
of an express trust. Those public documents prove that the estate of Martin was settled in that
proceeding and that adjudications were made to his 7 natural children. A trust must be proven by
clear, satisfactory, and convincing evidence. It cannot rest on vague and uncertain evidence or on
loose, equivocal, or indefinite declarations. An express trust cannot be proven by parol evidence.

Neither have they specified the kind of implied trust contemplated in their action. Whether
it is a resulting or constructive trust, its enforcement may be barred by laches. After the closure of
the intestate proceeding, Hacienda Calaza was claimed by Sps. Jose and Gregoria to the exclusion
of the natural children. After the death of Jose, the lots were adjudicated to his widow and
daughter, who leased them. The lessee transferred his lease rights to another, who sold the lease
rights to somebody else.

These transactions prove that the heirs of Jose had repudiated any trust which was
supposedly constituted over Hacienda Calaza in favor of the natural children. The instant action was
filed only in 1957. As to Atanacia, Modesto, and Manuel, the action was filed 43 years after it
accrued and, as to Maria and Emiliano, the action was filed 40 after it accrued. The delay was
inexcusable. The instant action is unquestionably barred by prescription and res judicata.
 TRUST
TEODORA MARIANO et. al. vs. THE HON. JUDGE JESUS R. DE VEGA

Facts:
The records show that spouses Urbano Panganiban and Roberta Espino owned, as conjugal
property, during their lifetime 29 parcels of unregistered land with improvements thereon, all
situated in Bulacan. On February 18, 1903, Roberta Espino died intestate and without debts in
Pulilan, Bulacan, where she was a resident before and at the time of her death. She left her
husband, Urbano Panganiban, and their two legitimate children, Mercedes and Gaudencia as her
only forced heirs. On September 18, 1952, Urbano Panganiban died also intestate and without debts
in Pulilan, Bulacan, leaving as his only compulsory heirs the children of Gaudencia (who together
with her sister Mercedes, had predeceased their father) who are now petitioners herein and his
legitimate children with his second wife, Atanacia Agustin, who are the private respondents herein.

28 years, 9 months and 1 day after Urbano’s death, petitioners instituted an action with the
then CFI of Bulacan for partition and delivery of possession of their corresponding shares in the
conjugal estate of decedents-spouses Urbano and Roberta consisting of subject 29 parcels of
unregistered land. Petitioners filed the case because since the death of Urbano, their grandfather,
in 1952, private respondents (his children by the second marriage) had taken possession of the
whole conjugal property and appropriated to themselves to the exclusion of petitioners the
products coming from the 29 parcels of land. 3 months from the filing of the civil case, respondent
judge issued the questioned order dismissing petitioners’ complaint on the ground of prescription.

Issue: Did private respondents openly and effectively repudiate the co-ownership or constructive
trust over the subject property?

Decision:
NO. This case is governed by the rules on co-ownership, since both parties are clearly co-
owners of the disputed properties, having inherited the same from a common ancestor.

Art. 494of the Civil Code provides:

"No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs
so long as he expressly or impliedly recognizes the co-ownership."

In view of their lack of a clear repudiation of the co-ownership, duly communicated to the
petitioners (the other co-owners), private respondents cannot acquire the shares of the petitioners
by prescription. The record in the Office of the Assessor is not the sufficient repudiation and
communication contemplated by the law. Neither may the private respondents’ possession of the
premises militate against petitioners’ claim. After all, co-owners are entitled to be in possession of
the premises.

The existence of the co-ownership here argues against the theory of implied trust, for then a
co-owner possesses co-owned property not in behalf of the other co-owners but in his own behalf.
 TRUST
MANUEL DIAZ, CONSTANCIA DIAZ vs. CARMEN GORRICHO and her husband FRANCISCO AGUADO
G.R. No. L-11229, March 29, 1958

Facts:
Lots Nos. 1941 and 3073 of the Cadastral Survey of Cabanatuan originally belonged to the
conjugal partnership of the spouses Francisco Diaz and Maria Sevilla, having been registered in their
name under Original Certificates of Title Nos. 3114 and 3396. Francisco Diaz died in 1919, survived
by his widow Maria Sevilla and their three children — Manuel Diaz born in 1911, Lolita Diaz born in
1913, and Constancia Diaz born in 1918. Sometime in 1935, appellee Carmen J. Gorricho filed an
action against Maria Sevilla and in connection therewith, a writ of attachment was issued upon the
shares of Maria Sevilla in said lots numbers 1941 and 3073. Thereafter, said parcels were sold at
public auction and purchased by the plaintiff herself, Carmen J. Gorricho. Maria Sevilla failed to
redeem within one year, whereupon the acting provincial sheriff executed a final deed of sale in
favor of Carmen J. Gorricho. In said final deed, however, the sheriff conveyed to Gorricbo the whole
of parcels numbers 1941 and 3073 instead of only the half-interest of Maria Sevilla therein. Pursuant
to said deed, Carmen J. Gorricho obtained Transfer Certificate of Title Nos. 1354 and 1355 in her
name on April 13, 1937, and has been possessing said land is as owner ever since.

In November, 1951, Maria Sevilla died. The following year, her children Manuel Diaz,
Constancia Diaz, and Sor Petra Diaz (Lolita Diaz) filed the action against Carmen Gorricho and her
husband Francisco Aguado to compel defendants to execute in their favor a deed of reconveyance
over an undivided one-half interest over the lots in question (the share therein of their deceased
father Francisco Diaz illegally conveyed by the provincial sheriff to Gorricho), which defendants
were allegedly holding in trust for them. Defendants answered denying the allegations of the
complaint and alleging, as a special defense, that plaintiffs' action has long prescribed. After trial,
the court below rendered judgment, holding that while a constructive trust in plaintiffs' favor arose
when defendant Gorricho took advantage of the error of the provincial sheriff in conveying to her
the whole of the parcels in question and obtained title in herself, the action of plaintiffs was,
however, barred by laches and prescription.

Issue: Does laches constitute a bar to actions to enforce a constructive trust?

Decision:

YES. Article 1456 of the new Civil Code, while not retroactive in character, merely expresses
a rule already recognized by our courts prior to the Code's promulgation. Appellants are, however,
in error in believing that like express trusts, such constructive trusts may not be barred by lapse of
time. The express trusts disable the trustee from acquiring for his own benefit the property
committed to his management or custody, at least while he does not openly repudiate the trust, and
makes such repudiation known to the beneficiary or cestui que trust. For this reason, the old Code
of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to
"continuing and subsisting" (i.e., unrepudiated) trusts. But in constructive trusts, the rule is that
laches constitutes a bar to actions to enforce the trust, and repudiation is not required, unless
there is concealment of the facts giving rise to the trust.

Laches may constitute a bar to an action to declare and enforce a resulting trust, but lapse
of time is only one of the many circumstances from which the conclusion of laches in the
enforcement of such a trust must be drawn, and each case must be determined in, the light of the
particular facts shown. No laches exists in respect of failure to assert a resulting trust of which a
beneficiary has no knowledge or of which he is not chargeable with knowledge. Continuous
recognition of a resulting trust precludes any defense of laches in a suit to declare and enforce the
trust. It has been held that the beneficiary of a resulting trust may, without prejudice to his right to
enforce the trust, prefer the trust to persist and demand no conveyance from the trustee. On the
 TRUST
other hand, it has been held that the one who permits a claim to establish a resulting trust to lie
dormant for an unreasonable length of time, land until the alleged trustee, has died, will not be
aided by a court of equity to establish his trust. The reason for the difference in treatment is
obvious. In express trusts, the delay of the beneficiary is directly attributable to the trustee who
undertakes to hold the property for the former, or who linked to the beneficiary by confidential or
fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until and
unless the latter is made aware that the trust has been repudiated. But in constructive trusts (that
are imposed by law), there is neither promise nor fiduciary relation; the so-called trustee does not
recognize any trust and has no intent to hold for the beneficiary; therefore, the latter is not
justified in delaying action to recover his property. It is his fault if he delays; hence, he may be
estopped by his own laches.

Appellants' cause of action to attack the sheriff's deed and cancel the transfer certificates of
title issued to the appellees accrued from the year of issuance and recording, 1937, and appellants
have, allowed fifteen (15) years to elapse before taking remedial action in 1952. Under the old
Code of Civil Procedure, in force at the time, the longest period extinctive prescription was only ten
years.

PNB vs. CA
 TRUST
G.R. No. 97995, January 21, 1993

Facts:
Since 1966, Private Respondent B.P. Mata & Co. Inc. (Mata) has acted as a manning or
crewing agent for several foreign firms, one of which is Star Kist Foods, Inc., USA (Star Kist). As part
of their agreement, Mata makes advances for the crew's medical expenses, National Seaman's Board
fees, Seaman's Welfare fund, and standby fees and for the crew's basic personal needs. Subsequently,
Mata sends monthly billings to its foreign principal Star Kist, which in turn reimburses Mata by
sending a telegraphic transfer through banks for credit to the latter's account.

In 1975, Security Pacific National Bank (SEPAC) of Los Angeles which had an agency
arrangement with Philippine National Bank (PNB), transmitted a cable message to the International
Department of PNB to pay the amount of US$14,000 to Mata by crediting the latter's account with
the Insular Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt of this cabled
message on February 24, 1975, PNB's International Department noticed an error and sent a service
message to SEPAC Bank. The latter replied with instructions that the amount of US$14,000 should
only be for US$1,400.

On the basis of the cable message dated February 24, 1975 Cashier's Check No. 269522 in the
amount of US$1,400 (P9,772.95) representing reimbursement from Star Kist, was issued by the Star
Kist for the account of Mata on February 25, 1975 through the Insular Bank of Asia and America
(IBAA). However, fourteen days after or on March 11, 1975, PNB effected another payment through
Cashier's Check No. 270271 in the amount of US$14,000 (P97,878.60) purporting to be another
transmittal of reimbursement from Star Kist, private respondent's foreign principal. Six years later,
or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000 (P97,878.60)
after it discovered its error in effecting the second payment.

On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against
Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it has a right to
recover the said amount it erroneously credited to respondent Mata. The Regional Trial Court of
Manila rendered judgment dismissing the complaint ruling that the instant case falls squarely under
Article 2154 on solutio indebiti and not under Article 1456 on constructive trust.

In affirming the lower court, the appellate court concluded that petitioner's demand for the
return of US$14,000 cannot prosper because its cause of action had already prescribed under Article
1145. Petitioner naturally opts for an interpretation under constructive trust as its action filed on
February 4, 1982 can still prosper, as it is well within the prescriptive period of ten (10) years as
provided by Article 1144, paragraph 2 of the Civil Code. Hence, this petition.

Issue: Whether or not petitioner may still claim the US$14,000 it erroneously paid private
respondent under a constructive trust.

Decision:
NO. The Court ruled that although only seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that under Article 1144, petitioner is well
within the prescriptive period for the enforcement of a constructive or implied trust, we rule that
petitioner's claim cannot prosper since it is already barred by laches. It is a well-settled rule now
that an action to enforce an implied trust, whether resulting or constructive, may be barred not
only by prescription but also by laches.

While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay. It is amazing that it took petitioner almost seven years before it discovered
that it had erroneously paid private respondent. Petitioner would attribute its mistake to the heavy
 TRUST
volume of international transactions handled by the Cable and Remittance Division of the
International Department of PNB. Such specious reasoning is not persuasive. It is unbelievable for a
bank, and a government bank at that, which regularly publishes its balanced financial statements
annually or more frequently, by the quarter, to notice its error only seven years later. As a universal
bank with worldwide operations, PNB cannot afford to commit such costly mistakes. Moreover, as
between parties where negligence is imputable to one and not to the other, the former must
perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of its own
negligence.

ROMANA CORTES, ET AL. vs. FLORENCIO G. OLIVA

 TRUST
G.R. No. L-10104, February 10, 1916

Facts:
Plaintiffs Romana Cortes, et. al. are the heirs of one Pio Oliva, deceased, who during his
lifetime was the owner of a large machine used for grinding sugar cane; he was also the joint owner
with his brother, Florencio Oliva, the defendant herein, of another smaller machine used for the
same purpose. Defendant was the manager of an hacienda while Pio Oliva was a tenant on the
hacienda. Owing to the unsettled conditions incident to the revolution, the hacienda was
abandoned together with the two machines in question and various other agricultural implements.
Pio Oliva died in 1898 in the pueblo of Calawang, Laguna, P. I., leaving as his heirs the plaintiffs
herein. When Florencio Oliva returned, he took them in an abandoned condition and badly in need
of repairs. On the large machine he expended approximately P163 and a less amount on the smaller
machine, and he kept both machines under shelter until work was received on the hacienda.

The plaintiffs contend that the defendant unlawfully took possession of these machines in
the year 1906 without their knowledge or consent; that from that date until the year 1912 he had
ground cane in the large machine to the value of P42,000, and that they, as the heirs of the true
owner of the machine, are entitled to P14,000 for the use of this machine, that being one third the
estimated value of the output; that the profits which would have accrued to them from the use of
the small machine during that period amounts to P3,500; that they are entitled to a judgment for
the recovery of the machines of their value; and further to a judgment for the sum of P17,500 for
the profits which should have accrued to them for the use of these machines from the year 1906 to
the year 1912. The defendant contends that he took possession of the machines in 1901, and has
them in his possession since that date under a claim of ownership; that he took possession because
his brother, Pio Oliva, was indebted to him at the time of his death.

The trial judge was of opinion that it had prescribed under the provisions of section 43 of the
new Code of Civil Procedure (Act No. 190).

Issue: Whether plaintiffs can maintain an action for possession of the machines against the
defendant

Decision:
As to larger machine, we are of opinion that the ruling of the trial judge was unquestionably
correct. We find nothing in the record which would justify us in disturbing the findings of fact by
the trial judge and there can be no doubt that accepting his finding of facts as correct, the
plaintiff's action for possession had prescribed long before the action was instituted (sec. 43 Act No.
190). We hold that, read in connection with all the evidence of record, it falls far short of sustaining
the contentions of the plaintiffs. We agree with the trial judge, who carefully reviewed the letter
together with all the rest of the evidence, and held that the letter, as a whole, clearly discloses
that defendant regarded himself as the lawful owner of the machine at the time when the letter
was written; and that the references to the principal and interest of the debt for which it was taken
was made by the defendant merely for the sake of showing that he had not wronged his brother or
his brother's heirs by taking the machines for the debt.

With reference to the smaller machine, which was originally owned jointly by the defendant
and his brother, the claim of prescription of the action brought by the plaintiffs is not satisfactorily
established. This machine having been originally the joint property of the defendant and his brother,
the fact that he held it in his possession for a long period of years, and exercised acts of ownership
with reference to it does not afford a sufficient ground for the inference he had possession under a
claim of exclusive ownership, and adverse to the claims of his brother's estate. Ordinarily possession
by one joint owner will not be presumed to be adverse to the others, but will, as a rule, be held to
be for the benefit of all. Much stronger evidence is required to show an adverse holding by one of
 TRUST
several joint owners than by a stranger; and in such cases, to sustain a plea of prescription, it must
always clearly appear that one who was originally a joint owner has repudiated the claims of his co-
owners, and that his co-owners were apprised or should have been apprised of his claim of adverse
and exclusive ownership before the alleged prescriptive period began to run. We do not think that
the evidence or record is sufficient to sustain a finding to that effect with reference to the small
machine. On their own allegations, however, plaintiffs cannot maintain an action for possession of
this machine against the defendant, who was originally a joint with his brother, their predecessor in
interest. Doubtless they have a right to have the machine sold and to a partition of the proceeds of
the sale, and an accounting for profits while in the exclusive possession of the defendant; and
liberally construed, the allegations of their complaint would seem to be sufficient, if supported by
competent evidence to entitle them to a judgment for such profits.