Liguez vs.
CA (void contracts) Facts: Plaintiff averred to be a legal owner, pursuant to a deed of
Held: CA erred in applying to the present case the pari delicto rule. First,
because it can not be said that both parties here had equal guilt when we
consider that as against the deceased Salvador P. Lopez, who was a man
advanced in years and mature experience, the appellant was a mere
minor, 16 yrs of age, when the donation was made; that there is no finding
made by CA that she was fully aware of the terms of the bargain entered
into by and Lopez and her parents; that, her acceptance in the deed of
donation (Art. 741) did not necessarily imply knowledge of conditions and
terms not set forth therein; and that the substance of the testimony of the
instrumental witnesses is that it was the appellant's parents who insisted on
the donation before allowing her to live with Lopez. These facts are more
suggestive of seduction than of immoral bargaining on the part of
appellant. It must not be forgotten that illegality is not presumed, but must
be duly and adequately proved. Second, the rule that parties to an illegal
contract, if equally guilty, will not be aided by the law but will both be left
where it finds them, has been interpreted by this Court as barring the party
from pleading the illegality of the bargain either as a cause of action or as
a defense.
CA correctly held that Lopez could not donate the entirety of the property
in litigation, to the prejudice of his wife Maria Ngo, because said property
was conjugal in character and the right of the husband to donate
community property is strictly limited by law
ART. 1409. The conjugal partnership shall also be chargeable with anything
which may have been given or promised by the husband alone to the
children born of the marriage in order to obtain employment for them or
give then, a profession or by both spouses by common consent, should
they not have stipulated that such expenditures should be borne in whole
or in part by the separate property of one of them."
.ART. 1415. The husband may dispose of the property of the conjugal
partnership for the purposes mentioned in Article 1409.)
ART. 1413. In addition to his powers as manager the husband may for a
valuable consideration alienate and encumber the property of the
conjugal partnership without the consent of the wife.
The text of the articles makes it plain that the donation made by the
husband in contravention of law is not void in its entirety, but only in so far
as it prejudices the interest of the wife. In this regard, as Manresa points out
the law asks no distinction between gratuitous transfers and conveyances
for a consideration. To determine the prejudice to the widow, it must be
shown that the value of her share in the property donated can not be
paid out of the husband's share of the community profits. The requisite
data, however, are not available to us and necessitate a remand of the
records to the court of origin that settled the estate of the late Salvador P.
Lopez.
The decisions appealed from are reversed and set aside, and the
appellant Conchita Liguez declared entitled to so much of the donated
property as may be found, upon proper liquidation, not to prejudice the
share of the widow Maria Ngo in the conjugal partnership with Salvador P.
Lopez or the legitimes of the forced heirs of the latter.
2) No, even if the plaintiffs can still invoke the Constitution to set aside the
donation of a land, executed in her favor by the late owner, Salvador P.
Lopez, on 18 May 1943. The defense interposed was that the donation was
null and void for having an illicit causa or consideration, which was the
plaintiff's entering into marital relations with Salvador P. Lopez, a married
man; and that the property had been adjudicated to the appellees as
heirs of Lopez by the court of First Instance, since 1949.
The Court of Appeals rejected the appellant's claim on the basis of the
well- known rule "in pari delicto non oritur actio" as embodied in Article
1306 of 1889 (reproduced in Article 1412 of the new Civil Code):
ART. 1412. If the act in which the unlawful or forbidden cause consists does
not constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtue of the contract, or demand the
performance of the other's undertaking;(2) When only one of the
contracting parties is at fault, he cannot recover, what he has given by
reason of the contract, or ask for fulfillment of what has been promised
him. The other, who is not at fault, may demand the return of what he has
given without any obligation to comply with his promise.
Relloza vs Gaw
DOCTRINE: The “In Pari Delicto” doctrine provides that the proposition is
universal that no action arises, in equity or at law, from an illegal contract;
no suit can be maintained for its specific performance, or to recover the
property agreed to be sold or delivered, or the money agreed to be paid,
or damages for its violation.
FACTS: On February 2, 1944, Dionisio Rellosa sold to Gaw Chee Hun a
parcel of land, together with the house erected thereon, situated in the
City of Manila, Philippines, for the sum of P25,000. The vendor remained in
possession of the property under a contract of lease entered into on the
same date between the same parties.
Alleging that the sale was executed subject to the condition that the
vendee, being a Chinese citizen, would obtain the approval of the
Japanese Military Administration in accordance with (seirei) No. 6 issued
on April 2, 1943, by the Japanese authorities, and said approval has not
been obtained, and that, even if said requirement were met, the sale
would at all events be void under article XIII, section 5, of our Constitution.
The vendor instituted the present action in the Court of First Instance of
Manila seeking the annulment of the sale
ISSUES: 1. Whether the sale was void because it is against the constitution
2. Whether the petitioner have the sale declared null and void and
recover the property considering the effect of the law governing rescission
of contracts
HELD: 1) Yes, the court held that under the Constitution, aliens may not
acquire private or public agricultural lands, including residential lands. This
matter has been once more submitted to the court for deliberation, but
the ruling was reaffirmed. This ruling fully disposes of the question touching
on the validity of the sale of the property herein involved.
sale in question, they are now prevented from doing so if their purpose is to
recover the lands that they have voluntarily parted with, because of their
guilty knowledge that what they were doing was in violation of the
Constitution. They cannot escape this conclusion because they are
presumed to know the law.
Phil. Banking Corp vs Lui She
DOCTRINE: Even if the contract appears to be valid, if the provisions is
against a constitutional prohibition, the same should be considered null
and void.
FACTS Justina Santos executed on a contract of lease in favor of Wong,
covering the portion then already leased to him and another portion
fronting Florentino Torres street. The lease was for 50 years, although the
lessee was given the right to withdraw at any time from the agreement.
On December 21 she executed another contract giving Wong the option
to buy the leased premises for P120,000, payable within ten years at a
monthly installment of P1,000. The option, written in Tagalog, imposed on
him the obligation to pay for the food of the dogs and the salaries of the
maids in her household, the charge not to exceed P1,800 a month. The
option was conditioned on his obtaining Philippine citizenship, a petition for
which was then pending in the Court of First Instance of Rizal.It appears,
however, that this application for naturalization was withdrawn when it was
discovered that he was not a resident of Rizal. On October 28, 1958 she
filed a petition to adopt him and his children on the erroneous belief that
adoption would confer on them Philippine citizenship. The error was
discovered and the proceedings were abandoned.
In two wills executed on August 24 and 29, 1959, she bade her legatees to
respect the contracts she had entered into with Wong, but in a codicil of a
later date (November 4, 1959) she appears to have a change of heart.
Claiming that the various contracts were made by her because of
machinations and inducements practiced by him, she now directed her
executor to secure the annulment of the contracts.
ISSUE Whether the contracts involving Wong were valid
HELD: No, the contracts show nothing that is necessarily illegal, but
considered collectively, they reveal an insidious pattern to subvert by
indirection what the Constitution directly prohibits. To be sure, a lease to an
alien for a reasonable period is valid. So is an option giving an alien the
right to buy real property on condition that he is granted Philippine
citizenship.
But if an alien is given not only a lease of, but also an option to buy,
a piece of land, by virtue of which the Filipino owner cannot sell or
otherwise dispose of his property, this to last for 50 years, then it becomes
clear that the arrangement is a virtual transfer of ownership whereby the
owner divests himself in stages not only of the right to enjoy the land but
also of the right to dispose of it— rights the sum total of which make up
ownership. If this can be done, then the Constitutional ban against alien
landholding in the Philippines, is indeed in grave peril.
Frenzel vs Catito
DOCTRINE A contract that violates the Constitution and the law, is null and
void and vests no rights and creates no obligations. It produces no legal
effect at all. The petitioner, being a party to an illegal contract, cannot
come into a court of law and ask to have his illegal objective carried out
FACTS:Petitioner Alfred Fritz Frenzel is an Australian citizen of German
descent. He was so enamored with Ederlina that he bought her numerous
properties such as house and lot in Quezon City and in Davao City. He also
put up a beauty parlor business in the name of Ederlina. Alfred was
unaware that Ederlina was married until her spouse Klaus Muller wrote a
letter to Alfred begging the latter to leave her wife alone.
When Alfred and Ederlinas relationship started deteriorating. Ederlina had
not been able to secure a divorce from Klaus. The latter could charge her
for bigamy and could even involve Alfred, who himself was still married. To
avoid complications, Alfred decided to live separately from Ederlina and
cut off all contacts with her.
On October 15, 1985, Alfred wrote to Ederlinas father, complaining that
Ederlina had taken all his life savings and because of this, he was virtually
penniless. He further accused the Catito family of acquiring for themselves
the properties he had purchased with his own money. He demanded the
return of all the amounts that Ederlina and her family had stolen and turn
over all the properties acquired by him and Ederlina during their coverture.
ISSUE: Whether the petitioner could recover the money used in purchasing
the several properties
HELD: No, even if, as claimed by the petitioner, the sales in question were
entered into by him as the real vendee, the said transactions are in
violation of the Constitution; hence, are null and void ab initio. A contract
that violates the Constitution and the law, is null and void and vests no
rights and creates no obligations. It produces no legal effect at all. The
petitioner, being a party to an illegal contract, cannot come into a court
of law and ask to have his illegal objective carried out. One who loses his
money or property by knowingly engaging in a contract or transaction
which involves his own moral turpitude may not maintain an action for his
losses. To him who moves in deliberation and premeditation, the law is
unyielding. The law will not aid either party to an illegal contract or
agreement; it leaves the parties where it finds them
NATURAL OBLIGATIONS
Villaroel vs Estrada
On May 9, 1912, Alejandro F. Callao, mother of defendant John F.
Villarroel, obtained from the spouses Mariano Estrada and Severina a loan
of P1, 000 payable after seven years (Exhibito A). Alejandra died, leaving
as sole heir to the defendant. Spouses Mariano Estrada and Severina also
died, leaving as sole heir to the plaintiff Bernardino Estrada. On August 9,
1930, the defendant signed a document (Exhibito B) by which the
applicant must declare in the amount of P1, 000, with an interest of 12
percent per year. This action relates to the recovery of this amount. The
Court of First Instance of Laguna, which was filed in this action, condemn
the defendant to pay the claimed amount of P1, 000 with legal interest of
12 percent per year since the August 9, 1930 until full pay. He appealed
the sentence. It will be noted that the parties in the present case are,
respectively, the only heirs and creditors of the original debtor. This action is
brought under the defendant's liability as the only son of the original
debtor in favor of the plaintiff contracted, sole heir of primitive loa
creditors. It is recognized that the amount of P1, 000 to which contracts this
obligation is the same debt of the mother's parents sued the plaintiff.
Although the action to recover the original debt has prescribed and when
the lawsuit was filed in this case, the question raised in this appeal is
primarily whether, notwithstanding such requirement, the action taken is
appropriate. However, this action is based on the original obligation
contracted by the mother of the defendant, who has already prescribed,
but in which the defendant contracted the August 9, 1930 (Exhibito B) by
assuming the fulfillment of that obligation, as prescribed. Being the only
defendant in the original herdero debtor eligible successor into his
inheritance, that debt brought by his mother in law, although it lost its
effectiveness by prescription, is now, however, for a moral obligation, that
is consideration enough to create and make effective and enforceable
obligation voluntarily contracted its August 9, 1930 in Exhibito B. The rule
that a new promise to pay a debt prrescrita must be made by the same
person obligated or otherwise legally authorized by it, is not applicable to
the present case is not required in compliance with the mandatory
obligation orignalmente but which would give it voluntarily assumed this
obligation. It confirms the judgment appealed from, with costs against the
appellant. IT IS SO ORDERED
Fisher vs Robb
FACTS:Defendant John C. Robb was told by the board of directors of the
Philippine Greyhound Club, Inc. to make a business trip to Shanghai to
study the operation of a dog racing course. In Shanghai, defendant met
plaintiff A.O. Fisher who was a manager of a dog racing course. Plaintiff
upon knowing defendant’s purpose of his trip, became interested in the
Philippine Greyhound Club and asked defendant if he could be one of the
stockholders. Defendant answered in affirmative which thereupon filed a
blank subscription and sent Greyhound Club Php3,000 in payment of the
first installment of his subscription. Upon receiving a call from the said club,
he paid the second installment amounting to Php2,000. Due to
manipulations of those who control the said club and during defendant’s
absence, the company was changed to “Philippine Racing Club.”
Defendant endeavored the investments of those who subscribed,
particularly of that of plaintiff. Defendant,. through sending a letter,
assured plaintiff for any loss which he might suffer in connection with
Philippine Greyhound Club in the same that he could not expect anyone
to reimburse him for his own losses which were more than that of plaintiff
ISSUE Whether a moral obligation will sustain an express executory promise
HELD: NO. Defendant, although morally responsible because of the failure
of the enterprise, is not a consideration under Article 1261 of the Civil Code
as an essential element for the legal existence for an onerous contract
which could bind the promisor to comply with his promise.
Article 1261 states, “there is no contract unless the following requisites
exists: consent of the contracting parties; definite object; consideration.” In
the present case, it does not appear that plaintiff consented to the said
form of reimbursement. The first requisite of 1261 is lacking.
With regards of the third requisite, it is now a well-established rule that a
mere moral obligation arising from wholly ethical motives not connected
with any legal obligation will not furnish a consideration from an executory
promise.
Estoppel
Kalalo vs Luz
Facts:Octavio A. Kalalo, a licensed civil engineer doing business under the
firm name of O. A. Kalalo and Associates, entered into an agreement with
defendant-appellant Alfredo J . Luz a licensed architect, doing business
under firm name of A. J. Luz and Associates, whereby the former was to
render engineering design services to the latter for fees, as stipulated in the
agreement. The fees agreed upon were percentages of the architect's
fee, to wit: structural engineering, 12-½%; electrical engineering, 2-½%. The
agreement was subsequently supplemented by a "clarification to letter-
proposal". 10 projects was rendered by Kalalo to Luz. Appellee sent to
appellant a statement of account to which was attached an itemized
statement of defendant-appellant's account according to which the total
engineering fee asked by appellee for services rendered.appellant sent
appellee a check for said amount, which appellee refused to accept as
full payment of the balance of the fees due him. The assessment of the
proper fees and the balance due to appellee after deducting the
admitted payments made by appellant, the trial court, upon agreement
of the parties, authorized the case to be heard before a Commissioner.
The trial court favored plaintiff and against the defendant, Issues:1)
whether under the facts stated in the Report, the doctrine of estoppel
would apply; and (2) whether the recommendation in the Report that the
payment of the amount. due to the plaintiff in dollars was legally
permissible, and if not, at what rate of exchange it should be paid in pesos.
Held: We find merit in the stand of appellee. Ruling: (1) Under article 1431
of the Civil Code, in order that estoppel may apply the person, to whom
representations have been made and who claims the estoppel in his favor
must have relied or acted on such representations. Said article provides:
Art. 1431. 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. An essential element of estoppel is
that the person invoking it has been influenced and has relied on the
representations or conduct of the person sought to be estopped, and this
element is wanting in the instant case. The essential elements of estoppel in
pais may be considered in relation to the party sought to be estopped,
and in relation to the party invoking the estoppel in his favor. As related to
the party to be estopped, the essential elements are: (1) conduct
amounting to false representation or concealment of material facts or at
least calculated to convey the impression that the facts are otherwise
than, and inconsistent with, those which the party subsequently attempts
to assert; (2) intent, or at least expectation that his conduct shall be acted
upon by, or at least influence, the other party; and (3) knowledge, actual
or constructive, of the real facts. As related to the party claiming the
estoppel, the essential elements are (1) lack of knowledge and of the
means of knowledge of the truth as the facts in questions; (2) (reliance, in
good faith, upon the conduct or statements of the party to be estopped;
(3) action or inaction based thereon of such character as To change the
position or status of the party claiming the estoppel, to his injury, detriment
or prejudice. The first essential element in relation to the party sought to be
estopped does not obtain in the instant case, for, as appears in the Report
of the Commissioner, appellee testified "that when he wrote Exhibit 1 and
prepared Exhibit 1-A, he had not yet consulted the services of his counsel
and it was only upon advice of counsel that the terms of the contract
were interpreted to him resulting in his subsequent letters to the defendant
demanding payments of his fees pursuant to the contract. In the instant
case, it has been shown that Exhibit 1-A was written through mistake by
appellee and that the latter is not estopped by it. Hence, even if said
Exhibit 1-A be considered as practical construction of the contract by
appellee, he cannot be bound by such erroneous interpretation. It has
been held that if by mistake the parties followed a practice in violation of
the terms of the agreement, the court should not perpetuate the error. (2)
In the Commissioner's report, it is specifically recommended that the
appellant be ordered to pay the plaintiff the sum of "$28,000. 00 or its
equivalent as the fee of the plaintiff under Exhibit A on the IRRI project." It is
clear from this report of the Commissioner that no payment for the
account of this $28,000.00 had been made. Indeed, it is not shown in the
record that the peso equivalent of the $28,000.00 had been fixed or
agreed upon by the parties at the different times when the appellant had
made partial payments to the appellee.
Manila Lodge No. 761 vs CA
FACTS: The Philippine Commission enacted Act No. 1306 which authorized
the City of Manila to reclaim a portion of Manila Bay. The reclaimed area
was to form part of the Luneta extension. The act provided that the
reclaimed area shall be the property of the City of Manila, and the city is
authorized to set aside a tract of the reclaimed land for a hotel site and to
lease or to sell the same. Later, the City of Manila conveyed a portion of
the reclaimed area to Petitioner. Then Petitioner sold the land, together
with all the improvements, to the Tarlac Development Corporation (TDC).
ISSUE:W/N the subject property was patrimonial property of the City of
Manila.
HELD: The petitions were denied for lack of merit. The court found it
necessary to analyze all the provisions of Act No. 1360, as amended, in
order to unravel the legislative intent. The grant made by Act No. 1360 of
the reclaimed land to the City of Manila is a grant of a “public” nature.
Such grants have always been strictly construed against the grantee
because it is a gratuitous donation of public money or resources, which
resulted in an unfair advantage to the grantee. In the case at bar, the
area reclaimed would be filled at the expense of the Insular Government
and without cost to the City of Manila. Hence, the letter of the statute
should be narrowed to exclude matters which, if included, would defeat
the policy of legislation.
Annotation 32 SCRA 542
ANNOTATION SCRA- The Annotation is about the "Significant Applications
of Extinctive Prescription." It starts at 32 SCRA 526. For our puposes, what is
significant is the part that is discussed from 32 SCRA 542.- Limitation of
Actions in Implied or Constructive Trust- In a long line of cases, the Supreme
Court used to adopt the view that the right of action of a cestui que trust
against the trustee in an implied or constructive trust does not prescribe.
But as early as 1956 a minority in the SC viewed with doubt the continued
validity of the principle of imprescriptibility of actions based on constructive
or implied trusts.- In a 1958 case, SC through JBL Reyes, expressed the view
that in a constructive trust, imposed as it is by law, where no promise or
fiduciary relation exists, the so-called trustee does not recognize any trust
and has no interest to hold for the beneficiary; thus, the beneficiary can be
barred to enforce the trust, unless there's concealment of the facts giving
rise to the trust.- Despite SC view in Diaz v Gorricho and reiterated in
subsequent cases, to the effect that an action upon a constructive trust is
subject to prescription, a contrary view appeared to have been adopted
in at least 3 cases decided subsequent to the Diaz doctrine- In Juan et al v
Zuñiga: When an heir through fraudulent representation, or by pretending
to be the sole heir of the deceased, succeeded in having the title over a
real property registered in his name to the exclusion of the other heirs, a
constructive trust is created in favor of the defrauded heir and grants to
the latter the right to vindicate the property regardless of the lapse of
time.- In Caladiao v Vda de Blas: SC declared that an action to compel
reconveyance of property with Torrens Title does not prescribe if the
registered owner had obtained registration in bad faith and the property is
still in the latter's name., bec the registration is in the nature of a continuing
and subsisting trust- The consensus of opinion: The prescription of action for
recvonveyance based on implied or constructive trust is now a settled
question in our jurisdiction. Correspondingly, where implied trust is present,
the action to recover the propertyprescribes after the lapse of 10 years
unless a fiduciary relation exists and the trustee recognizes the trust.
TRUSTS
Salao vs Salao
Facts:The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit,
Malabon, Rizal begot four children named Patricio, Alejandra, Juan (Banli)
and Ambrosia. Manuel Salao died in 1885. His eldest son, Patricio, died in
1886 survived by his only child. Valentin Salao.
After Valentina’s death, her estate was administered by her daughter
Ambrosia.
The documentary evidence proves that in 1911 or prior to the death of
Valentina Ignacio her two children, Juan Y. Salao, Sr. and Ambrosia Salao,
secured a Torrens title, OCT No. 185 of the Registry of Deeds of Pampanga,
in their names
The property in question is the forty-seven-hectare fishpond located at Sitio
Calunuran, Lubao, Pampanga, wherein Benita Salao-Marcelo daughter of
Valentin Salao claimed 1/3 interest on the said fishpond.
The defendant Juan Y. Salao Jr. inherited from his father Juan Y. Salao, Sr.
½ of the fishpond and the other half from the donation of his auntie
Ambrosia Salao.
It was alleged in the said case that Juan Y. Salao, Sr and Ambrosia Salao
had engaged in the fishpond business. Where they obtained the capital
and that Valentin Salao and Alejandra Salao were included in that joint
venture, that the funds used were the earnings of the properties
supposedly inherited from Manuel Salao, and that those earnings were
used in the acquisition of the Calunuran fishpond. There is no documentary
evidence to support that theory.
The lawyer of Benita Salao and the Children of Victorina Salao in a letter
dated January 26, 1951 informed Juan S. Salao, Jr. that his clients had a
one-third share in the two fishponds and that when Juani took possession
thereof in 1945, in which he refused to give Benita and Victorina’s children
their one-third share of the net fruits which allegedly amounted to
P200,000. However, there was no mention on the deeds as to the share of
Valentin and Alejandra.
Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated
that Valentin Salao did not have any interest in the two fishponds and that
the sole owners thereof his father Banli and his aunt Ambrosia, as shown in
the Torrens titles issued in 1911 and 1917, and that he Juani was the donee
of Ambrosia’s one-half share.
Benita Salao and her nephews and niece asked for the annulment of the
donation to Juan S. Salao, Jr. and for the reconveyance to them of the
Calunuran fishpond as Valentin Salao’s supposed one-third share in the
145 hectares of fishpond registered in the names of Juan Y. Salao, Sr. and
Ambrosia Salao.
Issue :Whether or not the Calunuran fishpond was held in trust for Valentin
Salao by Juan Y. Salao, Sr. and Ambrosia Salao.
Whether or not plaintiffs’ action for reconveyance had already prescribed.
Held:1. There was no resulting trust in this case because there never was
any intention on the part of Juan Y. Salao, Sr., Ambrosia Salao and Valentin
Salao to create any trust. There was no constructive trust because the
registration of the two fishponds in the names of Juan and Ambrosia was
not vitiated by fraud or mistake. This is not a case where to satisfy the
demands of justice it is necessary to consider the Calunuran fishpond ”
being held in trust by the heirs of Juan Y. Salao, Sr. for the heirs of Valentin
Salao.
Ratio:A Torrens Title is generally a conclusive evidence of the ownership of
the land referred to therein. (Sec. 47, Act 496). A strong presumption exists
that Torrens titles were regularly issued and that they are valid. In order to
maintain an action for reconveyance, proof as to the fiduciary relation of
the parties must be clear and convincing.
The plaintiffs utterly failed to prove by clear, satisfactory and convincing
evidence. It cannot rest on vague and uncertain evidence or on loose,
equivocal or indefinite declarations.
Trust and trustee; establishment of trust by parol evidence; certainty of
proof. — Where a trust is to be established by oral proof, the testimony
supporting it must be sufficiently strong to prove the right of the alleged
beneficiary with as much certainty as if a document proving the trust were
shown. A trust cannot be established, contrary to the recitals of a Torrens
title, upon vague and inconclusive proof.
Trusts; evidence needed to establish trust on parol testimony. — In order to
establish a trust in real property by parol evidence, the proof should be as
fully convincing as if the act giving rise to the trust obligation were proven
by an authentic document. Such a trust cannot be established upon
testimony consisting in large part of insecure surmises based on ancient
hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110).
The foregoing rulings are good under article 1457 of the Civil Code which,
as already noted, allows an implied trust to be proven by oral evidence.
Trustworthy oral evidence is required to prove an implied trust because,
oral evidence can be easily fabricated.
On the other hand, a Torrens title is generally a conclusive of the ownership
of the land referred to therein (Sec. 47, Act 496). A strong presumption
exists. that Torrens titles were regularly issued and that they are valid. In
order to maintain an action for reconveyance, proof as to the fiduciary
relation of the parties must be clear and convincing.
The real purpose of the Torrens system is, to quiet title to land. “Once a title
is registered, the owner may rest secure, without the necessity of waiting in
the portals of the court, or sitting in the mirador de su casa, to avoid the
possibility of losing his land”.
2. Reconveyance had already prescribed. Plaintiffs’ action is clearly
barred by prescription or laches.
Ratio: Under Act No. 190, whose statute of limitation would apply if there
were an implied trust in this case, the longest period of extinctive
prescription was only ten year.
The Calunuran fishpond was registered in 1911. The written extrajudicial
demand for its reconveyance was made by the plaintiffs in 1951. Their
action was filed in 1952 or after the lapse of more than forty years from the
date of registration. The plaintiffs and their predecessor-in-interest, Valentin
Salao, slept on their rights if they had any rights at all. Vigilanti prospiciunt
jura or the law protects him who is watchful of his rights (92 C.J.S. 1011,
citing Esguerra vs. Tecson, 21 Phil. 518, 521).
“Undue delay in the enforcement of a right is strongly persuasive of a lack
of merit in the claim, since it is human nature for a person to assert his rights
most strongly when they are threatened or invaded”. “Laches or
unreasonable delay on the part of a plaintiff in seeking to enforce a right is
not only persuasive of a want of merit but may, according to the
circumstances, be destructive of the right itself.”
Having reached the conclusion that the plaintiffs are not entitled to the
reconveyance of the Calunuran fishpond, it is no longer to Pass upon the
validity of the donation made by Ambrosia Salao to Juan S. Salao, Jr. of
her one-half share in the two fishponds The plaintiffs have no right and
personality to assil that donation.
Even if the donation were declared void, the plaintiffs would not have any
successional rights to Ambrosia’s share. The sole legal heir of Ambrosia was
her nephew, Juan, Jr., her nearest relative within the third degree. Valentin
Salao, if living in 1945 when Ambrosia died, would have been also her legal
heir, together with his first cousin, Juan, Jr. (Juani). Benita Salao, the
daughter of Valentin, could not represent him in the succession to the
estate of Ambrosia since in the collateral line, representation takes place
only in favor of the children of brothers or sisters whether they be of the full
or half blood is (Art 972, Civil Code). The nephew excludes a grandniece
like Benita Salao or great-gandnephews like the plaintiffs Alcuriza (Pavia vs.
Iturralde 5 Phil. 176).
Fabian vs Fabian
FACTS: Pablo Fabian bought from the Philippine Government lot 164 of the
Friar Lands Estate in Muntinlupa, Rizal. By virtue of this purchase, he was
issued sale certificate 547. He died on August 2, 1928, survived by four
children, namely, Esperanza, Benita I, Benita II, and Silbina.On October 5,
1928 Silbina Fabian and Teodora Fabian, niece of the deceased,
executed an affidavit. On the strength of this affidavit, sale certificate 547
was assigned to them.
The acting Director of Lands, on behalf of the Government, sold lot 164 to
Silbina Fabian Teodora Fabian. The vendees spouses forthwith took
physical possession thereof, cultivated it, and appropriated the produce.
In that same year, they declared the lot in their names for taxation
purposes. In 1937 the RD of Rizal issued a TCT over lot 164 in their names.
They later subdivided the lot into 2 equal parts.
The plaintiffs filed the present action for reconveyance against the
defendants spouses, averring that Silbina and Teodora, through fraud
perpetrated in their affidavit aforesaid. That by virtue of this affidavit, the
said defendants succeeded in having the sale certificate assigned to
them and thereafter in having lot 164 covered by said certificate
transferred in their names; and that by virtue also of these assignment and
transfer, the defendants succeeded fraudulently in having lot 164
registered in their names. They further allege that the land has not been
transferred to an innocent purchaser for value. A reconveyance thereof is
prayed for.
In their answer, the defendants spouses claim that Pablo Fabian was not
the owner of lot 164 at the time of his death on August 2, 1928 because he
had not paid in full the amortizations on the lot; that they are the absolute
owners thereof, having purchased it from the Government, and from that
year having exercised all the attributes of ownership thereof up to the
present; and that the present action for reconveyance has already
prescribed. The dismissal of the complaint is prayed for.
The lower court rendered judgment declaring that the defendants spouses
had acquired a valid and complete title to the property by acquisitive
prescription, and accordingly dismissed the complaint. The latter’s motion
for reconsideration was thereafter denied. Hence, the present recourse.
ISSUE:(1) Was Pablo Fabian the owner of lot 164 at the time of his death, in
the face of the fact, admitted by the defendants-appellees, that he had
not then paid the entire purchase price thereof?
(2) May laches constitute a bar to an action to enforce a constructive
trust?
(3) Has title to the land vested in the appellees through the mode of
acquisitive prescription?
HELD: The judgment a quo, dismissing the complaint, is affirmed
1. YES. Lot 164 was a part of the Friar Lands Estate of Muntinlupa, Rizal; its
sale to Pablo Fabian was therefore governed by Act 1120, otherwise
known as the Friar Lands Act. While under section 15 of the said Act, title to
the land sold is reserved to the Government until the purchaser makes full
payment of all the required installments and the interest thereon, this legal
reservation refers to the bare, naked title. The equitable and beneficial title
really went to the purchaser the moment he paid the first installment and
was given a certificate of sale. The reservation of the title in favor of the
Government is made merely to protect the interest of the Government so
as to preclude or prevent the purchaser from encumbering or disposing of
the lot purchased before the payment in full of the purchase price.
Outside of this protection the Government retains no right as an owner. For
instance, after issuance of the sales certificate and pending payment in
full of the purchase price, the Government may not sell the lot to another.
It may not even encumber it. It may not occupy the land to use or
cultivate; neither may it lease it or even participate or share in its fruits. In
other words, the Government does not and cannot exercise the rights and
prerogatives of owner. And when said purchaser finally pays the final
installment on the purchase price and is given a deed of conveyance and
a certificate of title, the title at least in equity, retroacts to the time he first
occupied the land, paid the first installment and was issued the
corresponding certificate of sale. In other words, pending the completion
of the payment of the purchase price, the purchaser is entitled to all the
benefits and advantages which may accrue to the land as well as suffer
the losses that may befall it.
That Pablo Fabian had paid five annual installments to the Government,
and in fact been issued a sale certificatein his name, are conceded. He
was therefore the owner of lot 164 at the time of his death. He left four
daughters, namely, Esperanza, Benita I, Benita II and Silbina to whom all his
rights and interest over lot 164 passed upon his demise.
In case a holder of a certificate dies before the giving of the deed and
does not leave a widow, then the interest of the holder of the certificate
shall descend and deed shall issue to the person who under the laws of the
Philippine Islands would have taken had the title been perfected before
the death of the holder of the certificate, upon proof of the holders thus
entitled of compliance with all the requirements of the certificate
2. The assignment and sale of the lot to the defendants Silbina and
Teodora were therefore null and void. To the extent of the participation of
the appellants, application must be made of the principle that if property
is acquired through fraud, the person obtaining it is considered a trustee of
an implied trust for the benefit of the person from whom the property
comes.
Laches may bar an action brought to enforce a constructive trust such as
the one in the case at bar. Illuminating are the following excerpts from a
decision penned by Mr. Justice Reyes:
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
a concealment of the facts giving rise to the trust …
The assignment of sale certificate was effected in October 1928; and the
actual transfer of lot 164 was made on the following November 14. It was
only on July 8, 1960, 32 big years later, that the appellants for the first time
came forward with their claim to the land. The record does not reveal, and
it is not seriously asserted, that the appellees concealed the facts giving
rise to the trust. Upon the contrary, paragraph 13 of the stipulation of facts
of the parties states with striking clarity “that defendants herein have been
in possession of the land in question since 1928 up to the present publicly
and continuously under claim of ownership; they have cultivated it,
harvested and appropriated the fruits for themselves.”
3. it is already settled in this jurisdiction that an action for reconveyance of
real property based upon a constructive or implied trusts, resulting from
fraud, may be barred by the statute of limitations. the discovery in that
case being deemed to have taken place when new certificates of title
were issued exclusively in the names of the respondents therein.
[A]lthough, as a general rule, an action for partition among co-heirs does
not prescribe, this is true only as long as the defendants do not hold the
property in question under an adverse title. The statute of limitations
operates, as in other cases, from the moment such adverse title is asserted
by the possessor of the property
Inasmuch as petitioners seek to annul the aforementioned deed of “extra-
judicial settlement” upon the ground of fraud in the execution thereof, the
action therefor may be filed within four (4) years from the discovery of the
fraud. Upon the undisputed facts in the case at bar, not only had laches
set in when the appellants instituted their action for, reconveyance in 1960,
but as well their right to enforce the constructive trust had already
prescribed.
It logically follows from the above disquisition that acquisitive prescription
has likewise operated to vest absolute title in the appellees, pursuant to
the provisions of section 41 of Act 190 that:
Ten years actual adverse possession by any person claiming to be the
owner for that time of any land or interest in land, uninterruptedly
continued for ten years by occupancy, descent, grants, or otherwise, in
whatever way such occupancy may have commenced or continued,
shall vest in every actual occupant or possessor of such land a full and
complete title
Upon the foregoing disquisition, we hold not only that the appellants’
action to enforce the constructive trust created in their favor has
prescribed, but as well that a valid, full and complete title has vested in the
appellees by acquisitive prescription.
NOTES: 1. 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 (see Gayondato vs. Insular Treasurer, 49 Phil.
244). Appellants are, however, in error in believing that like express trust,
such constructive trusts may not be barred by lapse of time. The American
law on trusts has always maintained a distinction between express trusts
created by the intention of the parties, and the implied or constructive
trusts that are exclusively created by law, the latter not being trusts in their
technical sense. 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 does not apply to “continuing and subsisting” (i.e.,
unrepudiated) trusts.
Bueno Vs Reyes
FACTS: Francisco Reyes filed an answer in a Cadastral Case claiming lot
No. 2857 as property belonging to himself and to his two brothers, Juan
and Mateo. The case was heard without opposition, and the lot was
adjudicated in favor of the claimants in whose names an OCT was issued
to.
Twenty-three years thereafter, the plaintiffs filed the action below for
reconveyance of the subject land. They allege in their complaint that the
said lot originally belonged to Jorge Bueno, who died leaving three
children, namely, Brigida, Eugenia and Rufino to whom the property
descended by intestate succession; that subsequently Brigida and Eugenia
died, leaving their respective children, who are now the plaintiffs-
appellants together with Rufino; that Francisco Reyes was Eugenia’s
husband and the father of the plaintiffs surnamed Reyes, “who [by]
agreement among the heirs of Jorge Bueno was entrusted in filing the
answer in the cadastral proceedings and in obtaining the title thereto for
and in behalf of all the heirs of Jorge Bueno, including his wife Eugenia
Bueno.” (Par. V of the complaint.)
That as agreed upon with said Francisco Reyes, said Francisco Reyes
declared the said parcel of land above-described in his name, and either
in bad faith or by mistake filed an answer in the cadastral proceedings
and obtained title thereto in his name and those of brothers, Mateo and
Juan, who connived and consented to the malicious or erroneous acts of
the late Francisco Reyes, knowing fully well that said parcel of land was
never owned by them and has never been in their possession, and
knowing further that said parcel of land belonged to, and possessed by
the wife of Francisco Reyes in conjunction with her sister and brother,
Brigida and Rufino, respectively;
That the fact that Francisco Reyes, Mateo Reyes and Juan Reyes are
declared owners of the has only been discovered during this year when
Mateo Reyes and Juan Reyes, the defendants herein, including Francisco
Reyes who was dead long ago, filed with this Court a petition for the
issuance of a writ of possession against a wrong person by the name of
Mateo R. Reyes, who now admittedly (sic) not the possessor of the lot but
plaintiffs herein, and the plaintiffs have demanded from the defendants
the reconveyance and/or the quitclaiming of their undivided shares as
appearing in said Certificate of Title No. but then, they refused, and
continue to refuge to do so.
The plaintiffs’ complaint was dismissed, upon motion of the defendants,
alleging that there is already prescription of action. Hence, this petition.
ISSUE: WON the lower court erred in the dismissal of the complaint on the
ground of prescription.
HELD: The order appealed from is set aside and the case is remanded for
further proceedings
Both the appellees and the court below proceeded on the theory that the
action for reconveyance was predicated on the existence of an implied
trust, and that such an action prescribes in 10 years. The appellants
counter, in this appeal, that the trust was not implied but express, and that
in any case even an implied trust, according to some decisions of this
Court, is imprescriptible.
1. NO. If any trust can be deduced at all from the foregoing facts it was
an implied one, arising by operation of law not from any presumed
intention of the parties but to satisfy the demands of justice and equity and
as a protection against unfair dealing or downright fraud. Indeed, in this
kind of implied trust, commonly denominated constructive, as
distinguished from resulting, trust, there exists a certain antagonism
between the cestui que trust and the trustee. Thus, for instance, under
Article 1456 of the Civil Code:
“if property is acquired through mistake or fraud, the person obtaining it is,
by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.” In a number of cases this
Court has held that registration of property by one person in his name,
whether by mistake or fraud, the real owner being another person,
impresses upon the title so acquired the character of a constructive trust
for the real owner, which would justify an action for reconveyance.
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 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.
The foregoing, of course, are not facts already established by evidence.
But they are alleged in the complaint and therefore deemed
hypothetically admitted for purposes of the motion to dismiss filed by the
defendants. To be sure, there are contradictory allegations of fact in the
answer, but these are matters of defense that must be sunbstantiated at
the trial. At the very least the grounds upon which the order of dismissal is
based do not appear to us to be indubitable; and it would be more in
keeping with justice to afford the plaintiffs as well as the defendants the
opportunity to lay their respective claims and defenses before the Court in
a full-blown litigation.
NOTES: Upon the general proposition that an action for reconveyance
such as the present is subject to prescription in ten years the appellees and
the court a quo are correct. The question here, however, is: from what time
should the prescriptive period be counted, in the light of the allegations in
the complaint? It should be remembered that the constructive trust arose
by reason of the “bad faith or mistake” of the deceased Francisco H.
Reyes, compounded by the connivance of the appellees Juan and Mateo
Reyes. Consequently, the cause of action upon such trust must be
deemed to have accrued only upon the discovery of such bad faith or
mistake, or to put it more specific upon the discovery by the appellants
that Francisco H. Reyes, in violation of their agreement with him, had
obtained registration of the disputed property in his own name and in the
names of his brothers. It would not do to say that the cadastral proceeding
itself, by virtue of its nature as a proceeding in rem, was constructive notice
to the appellants, for as far as they were concerned the cadastral answer
they had authorized Francisco H. Reyes to file was not adverse to them;
and neither he nor the appellees may invoke the constructive-notice rule
on the basis of their own breach of the authority thus given. On top of all
this, it was the appellants and not the appellees who were in possession of
the property as owners, continuously up to 1962, when for the first time the
latter appeared upon the scene and tried to get such possession, thereby
revealing to them the fact of the mistaken or fraudulent registration.
Tamayo vs Callejo
**an implied trust that became an express trust.
Before 19112, the Tamayos sold a piece of land to Fernando Domantay,
who took possession of the land. When Vicente died after the sale and his
widow waived her rights to the remaining portion of the property to their
children Mariano and Marcos, the two brothers applied to register the land
in their name, saying they inherited it from their father, including the part
that was sold to Domantay. In 1918 Domantay sold the land to Callejo.
In 1940 Mariano Tamayo sold the land to Estacio, whose surveyor went to
the land in 1952 to segregate it; that same year Callejo registered his
adverse claim to the land. Tamayo pleaded the statute of limitations as
defense, but the court found that in 1918, when they had the land
registered in their name, Mariano Tamayo, on his behalf and that of his
brother, executed a public document acknowledging that his deceased
parents had sold a parcel of the land to Domantay.
Though there was no clear evidence to create a trust, ruling out an express
trust, the admission of the sale in a public document turned the implied
trust into an express one. An express trust, the court held, was a
“continuing and subsisting trust” until repudiated, in which case the period
of prescription begins to run only from the time of repudiation.
2. implied trust:
— those which, without being expressed, are deducible from the nature of
the transaction as matters of intent, or superinduced on the transaction by
operation of law as a matter of equity, independently of the intent of the
parties
1448. when property is sold, and titled to one, but the price is paid by
another person, for the purpose of having the beneficial interest of the
property. Resulting trust.
1449. when a donation is made to a person, who either has no beneficial
interest or only a part thereon. Resulting trust.
1450. when property is paid by one for the benefit of another, and the title
is given to the one who paid for it, but only to secure the payment of the
debt. In this case the one who borrowed the money may, after paying his
debt, compel a conveyance of the property. Constructive trust , meant to
prevent unjust enrichment.
1451. when one inherits land but he has it titled to another. Resulting trust,
because there is intent.
1452. when two or more people agree to buy property and, with their
consent, have it titled only to one of them. Resulting trust.
1453. when property is given to a person in reliance upon his declared
intention to hold it or transfer it to another. Resulting trust.
1454. when property is conveyed to another to secure the performance of
an obligation. When the obligation becomes due, and the grantor offers
to fulfill it, he may demand the reconveyance of the property.
Constructive trust.
1455. when any trustee, guardian or other person holding a fiduciary
relationship uses trust funds to buy property and has it titled to him or to a
third person. Constructive trust.
1456. if property is acquired through mistake or fraud.
Two kinds of implied trust:
1. resulting trust – presumed to have been contemplated by the
parties, the intent found in the nature of the transaction, though not
expressed in the deed or instrument of conveyance; found in articles 1448-
1455
2. constructive trust – raised by construction of law, or by operation
of law
— created not by intent, but by the construction of equity in order to satisfy
the demands of justice (Art. 1456)
CASES:
Mindanao Dev’t Authority v CA:
A landowner, in selling his property to another, made a written promise to
work for the titling of the land, but it was not done. The land was later sold
to the government, which tried to claim it after 28 years. The court ruled
that there was no express trust, because the written promise did not
categorically create an obligation on the part of the landowner to hold
the property in trust for the other. Neither was the subject matter of the
supposed trust clearly described.
There might have been an implied trust created, because the land was
registered in the landowner’s name though it belonged to another. An
implied trust, however, prescribes in 10 years, and 28 years had lapsed by
the time the local government tried to claim the land.
**dissent: prescription does not run against the government.
Fabian v Fabian:
A daughter and a niece, through fraud and misrepresentation, claimed
ownership of the deceased’s land. The other children filed an action to
recover the land, but only after 32 years. The court ruled that although the
trustee was supposed to hold the land in trust for the rightful owner in case
of fraud, the court ruled that action for reconveyance of property based
upon a constructive trust may be barred by the statute of limitations.
Action may be filed within four years from the discovery of the fraud, which
is deemed to have taken place when new certificates of titles were issued
in the names of the respondents.
“In constructive trusts, laches constitute a bar to action to enforce the trust,
and repudiation is not required, unless there is a concealment of facts
giving rise to the trust.”
Also, acquisitive prescription took effect. Section 41 of Act 190 says 10
years actual adverse possession by a person claiming actual ownership of
the land vests to the actual occupant a full and complete title.
Bueno v Reyes:
**while implied trusts prescribe, the date of computation is from the
discovery of the fraud.
A man claimed as his and his brothers’ land that was inherited by his wife
from her father. Since the family was in possession of the land, it was not
found out until 23 years later, by which time the man had died. The
brothers Reyes raised laches and prescription as a defense, but the court
held that while implied trusts prescribe, the prescriptive period begins upon
discovery of the fraud.
In this case, the cadastral registration was not a “constructive notice”
because Francisco Reyes was trusted to answer the cadastral notice and
they may not invoke the constructive notice rule on the basis of their own
breach of the authority given. Also, the appellants were the ones in
possession of the land until the fraud was revealed to them. The case was
remanded to the lower court for further proceedings.
Tala Realty Services Corporation v Banco Filipino Savings and Mortgage
Bank:
**the court will not enforce an implied trust when it is contrary to law.
Restrained from purchasing more real estate as part of its expansion
program, Banco Filipino formed a realty corporation into which it
“unloaded” its “extra” branches. The realty corporation, Tala, then leased
the branches to the bank.
After Banco Filipino was taken over and foreclosed by the Central Bank,
Tala claimed the bank branches, since the documents show a simple sale.
It charged the bank rent and, when the bank failed to pay, filed an
ejectment case.
The bank however reopened later and claimed the branches, in particular
the Bulacan branch, saying there was an implied trust between the bank
and Tala.
The court ruled that the sale was valid since all the elements were present,
but the intent was to create an implied trust for the reconveyance of the
property. However, since the “warehousing agreement” was in
contravention of the law, the bank may not ask the court to enforce an
implied trust. Neither may Tala collect from the bank, since it was equally
guilty in having tried to circumvent the law through the warehousing
agreement.