Pacheco v. Arro, 85 Phil.
505 in his name to his co-owner or co-heir could no longer be
PETITIONERS: Dolores Pacheco, in her capacity as
guardian of the minors Concepcion, Alicia, and Herminia
Yulo (SUCCESSORS-IN-INTEREST)
RESPONDENTS: Santiago Arro et al. (CLAIMANTS)
***Jose Yulo y Regalado (PREDECESSOR IN INTEREST)
FACTS:
● Arro et al filed answers in a cadastral case, claiming lots
as their property and began to present evidence before
a referee. Dr. Mariano Yulo, who represented the late
Jose Yulo y Regalado in the cadastral case, assured and
promised that after the change of the street names from
Zamora and Quennon streets to T.Yulo and G. Regalado
streets, Jose Yulo y Regalado would convey and assign
the lots to the claimants (Arro et al).
● Because of this, Arro et al withdrew their claims and
the cadastral court confirmed the title to the lost and
decreed their registration in the name of Jose Yulo y
Regalado.
● The representative of Jose Yulo complied with the
promise by executing deeds of donation or assignment
to some of the claimants. ***2/3 of this case is in
Spanish; I’m guessing that the part where the
CLAIMANTS filed a complaint was explained there. CFI
ordered the PREDECESSOR-IN-INTEREST to execute
deeds of assigned in favour of the CLAIMANTS for each
and every lot claimed by them. CA affirmed.
● Pacheco contend that since a trustee does not have
title to the property which is the subject of the trust,
because title to such property is vested in the cestui que
trust, if the PREDECESSOR-IN-INTEREST of the
SUCCESSORS-IN-INTEREST was a trustee, he or his
successors-in-interest could not and cannot be
compelled in an action for specific performance to
convey or assign the property – the subject of the trust –
because in an action for specific performance the party
to be compelled to perform is the owner of has title to
the property sought to be conveyed or assigned.
ISSUE: ● Whether or not the SUCCESSORS-IN-INTEREST
may be compelled in an action for specific performance
to convey or assign the property.
RULING: YES. Judgment affirmed.
The juridical concept of a trust, which in a broad sense
involves, arises from, or is the result of, a fiduciary
relation between the trustee and the cestui que trust as
regards certain property – real, personal, funds or
money, or choses in action – must not be confused with
an action for specific performance.
When the claim to the lots in the cadastral case was
withdrawn by the CLAIMANTS relying upon the
assurance and promise made in open court by Dr.
Mariano Yulo in behalf of the PREDECESSOR-IN-
INTEREST, a trust or a fiduciary relation between them
arose, or resulted therefrom, or was created thereby.
The trustee cannot invoke the statute of limitations to
bar the action and defeat the right of the cestui que trust.
If the pretense of counsel for the SUCCESSORS-IN-
INTEREST that the promise above adverted to cannot
prevail over the final decree of the cadastral court
holding the PREDECESSOR-IN-INTEREST of the
SUCCESSORS-IN-INTEREST to be the owner of the lots
claimed by the CLAIMANTS were to be sustained and
upheld, then actions to compel a party to assign or
convey the undivided share in a parcel of land registered
brought and could no longer succeed and prosper.
Guy v. CA 539 SCRA 584
The petition composed five (5) consolidated cases which
stemmed from Civil Case No. 04-109444 filed with the
Regional Trial Court. But the focus of the case with
respect to trust is GR 176650. The petition filed by Gilbert
Guy (Gilbert) and Lincoln Continental Development
Corporation, Inc. (Lincoln Continental) questioning the
decision of the Court of Appeals (CA) in affirming the
Regional Trial Court (RTC) in dismissing their complaint
against the respondents.
FACTS:
Gilbert, petitioner, is the son of Francisco and Simny Guy.
Respondents, Geraldine,Gladys and Grace are his sisters.
The family feud involves the ownership and control of
20,160 shares of stock of Northern Islands Co., Inc.
(Northern Islands).Northern Islands is a family-owned
corporation. In November 1986, they
incorporatedLincoln Continental as a holding company of
the 50% shares of stock of Northern Islands intrust for
their daughters, respondents. In December 1986, upon
instruction of spouses Guy,Atty. Andres Gatmaitan,
president of Lincoln Continental, indorsed in blank Stock
CertificateNo. 132 (covering 8,400 shares) and Stock
Certificate No. 133 (covering 11,760 shares)
anddelivered them to Simny.In 1984, spouses Guy found
that their son Gilbert has been disposing of the assets of
their corporations without authority. In order to protect
the assets of Northern Islands, the20,160 shares covered
by the two Stock Certificates were then registered in the
names of respondent sisters, thus enabling them to
assume an active role in the management of Northern
Islands.Thereafter, Simny was elected President; Grace
as Vice-President for Finance;Geraldine as Corporate
Treasurer; and Gladys as Corporate Secretary. Gilbert
retained hisposition as Executive Vice President. This
development started the warfare between Gilbertand his
sisters.Lincoln Continental filed a Complaint for
Annulment of the Transfer of Shares of Stock against
respondents. The complaint basically alleges that Lincoln
Continental owns20,160 shares of stock of Northern
Islands; and that respondents, in order to oust
Gilbertfrom the management of Northern Islands, falsely
transferred the said shares of stock inrespondent sisters’
names.The trial court held that the complaint was
baseless and an unwarranted suit amongfamily
members. That based on the evidence, Gilbert was only
entrusted to hold thedisputed shares of stock in his name
for the benefit of the other family members; and that
itwas only when Gilbert started to dispose of the assets
of the family’s corporations withouttheir knowledge that
respondent sisters caused the registration of the shares
in their respective names.On appeal, the Court of
Appeals affirmed the Trial Court. Hence this petition.
ISSUES:
Whether or not Gilbert was merely trust for the Guy
sisters
RULING:
One thing is clear. It was established before the trial
court, affirmed by the Court of Appeals, that Lincoln
Continental held the disputed shares of stock of
Northern Islands merely in trust for the Guy sisters. In
fact, the evidence proffered by Lincoln Continental itself
supports this conclusion. It bears emphasis that this
factual finding by the trial court was affirmed by the
Court of Appeals, being supported by evidence, and is,
therefore, final and conclusive upon this Court.
- ART. 1440. A person who establishes a trust is called the
trustor; one in whom confidence is reposed as regards
property for the benefit of another person is known as
the trustee; and the person for whose benefit the trust
has been created is referred to as the beneficiary.
In the early case of Gayondato v. Treasurer of the
Philippine Islands, this Court defines trust, in its technical
sense, as a right of property, real or personal, held by one
party for the benefit of another. Differently stated, a
trust is a fiduciary relationship with respect to property,
subjecting the person holding the same to the obligation
of dealing with the property for the benefit of another
person.
Both Lincoln Continental and Gilbert claim that the latter
holds legal title to the shares in question. But record
shows that there is no evidence to support their claim.
Rather, the evidence on record clearly indicates that the
stock certificates representing the contested shares are
in respondent’s possession. Significantly, there is no
proof to support his allegation that the transfer of the
shares of stock to respondent sisters is fraudulent. As
aptly held by the Court of Appeals, fraud is never
presumed but must be established by clear and
convincing evidence. Gilbert failed to discharge this
burden. We, agree with the Court of Appeals that
respondent sisters own the shares of stocks, Gilbert
being their mere trustee.
Goyanko v. UCPB, 690 SCRA 79
Facts:
 Petition for review on certiorari1
 The late Joseph Goyanko, Sr. (Goyanko) invested Two
Million Pesos (P2,000,000.00) with Philippine Asia
Lending Investors, Inc.
 Family, represented by the petitioner, and his
illegitimate family presented conflicting claims to
PALII for the release of the investment.
 Pending the investigation of the conflicting claims,
PALII deposited the proceeds of the investment with
UCPB on October 29, 19965 under the name "Phil
Asia: ITF (In Trust For) The Heirs of Joseph Goyanko,
Sr." (ACCOUNT).
 On September 27, 1997, the deposit under the
ACCOUNT was P1,509,318.76.
 On December 11, 1997, UCPB allowed PALII to
withdraw One Million Five Hundred Thousand Pesos
(P1,500,000.00) from the Account, leaving a balance
of only P9,318.76.
 When UCPB refused the demand to restore the
amount withdrawn plus legal interest from December
11, 1997, the petitioner filed a complaint before the
RTC.
 In its answer to the complaint, UCPB admitted, among
others, the opening of the ACCOUNT under the name
"ITF (In Trust For) The Heirs of Joseph Goyanko,
Sr.," (ITF HEIRS) and the withdrawal on December 11,
1997.
 RTC dismissed the petitioners complaint and awarded
UCPB attorneys fees, litigation expenses and the costs
of the suit, not having considered the words "ITF
HEIRS" sufficient to charge UCPB with knowledge of
any trust relation between PALII and Goyankos
heirs (HEIRS) and concluded that UCPB merely
performed its duty as a depository bank in allowing
PALII to withdraw from the ACCOUNT, as the contract
of deposit was officially only between PALII, in its own
capacity, and UCPB.
 On appeal, petitioner maintained that by opening the
ACCOUNT, PALII established a trust by which it was
the "trustee" and the HEIRS are the "trustors-
beneficiaries;" thus, UCPB should be liable for
allowing the withdrawal.
 CA partially granted the petitioners appeal;
o affirmed the August 27, 2003 decision of
the RTC, but deleted the award of
attorneys fees and litigation expenses;
o held that no express trust was created
between the HEIRS and PALII. For a trust
to be established, the law requires,
among others, a competent trustor and
trustee and a clear intention to create a
trust, which were absent in this case;
o Quoting the RTC with approval, the CA
noted that the contract of deposit was
only between PALII in its own capacity
and UCPB, and the words "ITF HEIRS"
were insufficient to establish the
existence of a trust. The CA concluded
that as no trust existed, expressly or
impliedly, UCPB is not liable for the
amount withdrawn.
 MR was denied.
 petitioner argues in his petition for review on
certiorari that an express trust was created, as clearly
shown by PALIIs March 28, 1996 and November 15,
1996 letters, emphasizes that from the established
definition of a trust, citing jurisprudence,10 PALII is
clearly the trustor as it created the trust, UCPB is the
trustee as it is the party in whom confidence is
reposed as regards the property for the benefit of
another and the HEIRS are the beneficiaries as they
are the persons for whose benefit the trust is created.
 UCPB posits, in defense:
 that the ACCOUNT involves an ordinary deposit
contract between PALII and UCPB only, which
created a debtor-creditor relationship obligating
UCPB to return the proceeds to the account
holder-PALII;
 it was not negligent in handling the ACCOUNT
when it allowed the withdrawal and the mere
designation of the ACCOUNT as "ITF" is
insufficient to establish the existence of an
express trust or charge it with knowledge of the
relation between PALII and the HEIRS;
 petitioner changed the theory of his case as
before the CA, the petitioner argued that the
HEIRS are the trustors-beneficiaries, and PALII is
the trustee while in here, the petitioner
maintains that PALII is the trustor, UCPB is the
trustee, and the HEIRS are the beneficiaries; c
 ontrary to the petitioners assertion, the records
failed to show that PALII and UCPB executed a
trust agreement, and PALIIs letters made it clear
that PALII, on its own, intended to turn-over the
proceeds of the ACCOUNT to its rightful owners.
ISSUE: WON an express trust was created between PALII
as trustor and UCPB as trustee.
HELD
No. A trust, either express or implied,26 is the fiduciary
relationship "x x x between one person having an
equitable ownership of property and another person
owning the legal title to such property, the equitable
ownership of the former entitling him to the
performance of certain duties and the exercise of certain
powers by the latter."27 Express or direct trusts are
created by the direct and positive acts of the trustor or
of the parties.28 No written words are required to create
an express trust. This is clear from Article 1444 of the Civil
Code,29 but, the creation of an express trust must be
firmly shown; it cannot be assumed from loose and
vague declarations or circumstances capable of other
interpretations.30?r?l1
In Rizal Surety & Insurance Co. v. CA,31 we laid down the
requirements before an express trust will be
recognized:cralawlibrary
Basically, these elements include a competent trustor
and trustee, an ascertainable trust res, and sufficiently
certain beneficiaries. xxx each of the above elements is
required to be established, and, if any one of them is
missing, it is fatal to the trusts (sic). Furthermore, there
must be a present and complete disposition of the trust
property, notwithstanding that the enjoyment in the
beneficiary will take place in the future. It is essential,
too, that the purpose be an active one to prevent trust
from being executed into a legal estate or interest, and
one that is not in contravention of some prohibition of
statute or rule of public policy. There must also be some
power of administration other than a mere duty to
perform a contract although the contract is for a
thirdparty beneficiary. A declaration of terms is
essential, and these must be stated with reasonable
certainty in order that the trustee may administer, and
that the court, if called upon so to do, may enforce, the
trust. [emphasis ours]
Under these standards, we hold that no express trust was
created. First, while an ascertainable trust res and
sufficiently certain beneficiaries may exist, a competent
trustor and trustee do not. Second, UCPB, as trustee of
the ACCOUNT, was never under any equitable duty to
deal with or given any power of administration over it.
On the contrary, it was PALII that undertook the duty to
hold the title to the ACCOUNT for the benefit of the
HEIRS. Third, PALII, as the trustor, did not have the right
to the beneficial enjoyment of the ACCOUNT. Finally, the
terms by which UCPB is to administer the ACCOUNT was
not shown with reasonable certainty. While we agree
with the petitioner that a trusts beneficiaries need not be
particularly identified for a trust to exist, the intention to
create an express trust must first be firmly established,
along with the other elements laid above; absent these,
no express trust exists.
Mindanao Dev. Authority v. CA, 113 SCRA 429
Petitioner: MDA (Beneficiary)
Respondent/s: CA; Ang Bansing (Trustor); Juan Cruz
(Trustee)
Facts:
- February 25, 1939 respondent Francisco Ang Bansing
sold a portion of his land with an area of about 5 hectares
to Juan Cruz Yap Chuy. Both agreed that the former will
work for the titling of the entire area of my land under
his own expenses and the latter will shoulder the
expense in the registration of the land under his name.
- On February 25, 1965, Proclamation No. 459 was
issued, which mandates the government to transfer
ownership of land situated in Sasa Davao City, to
petitioner Mindanao Development Authority, now the
Southern Philippines Development Administration, and
the land sold to Juan Cruz was among the parcels of land
to be transferred.
- On March 31, 1969 counsel for petitioner Mindanao
Development Authority wrote to respondent Ang Basing
to surrender the TCT for the disputed lot but the latter
refused, hence on April 11, 1969, Mindanao
Development Authority filed a complaint against
Francisco Ang Bansing before the Court of First Instance
of Davao City for the reconveyance of the title over Lot
1846-C, petitioner argued that defendant acted in the
capacity of and/or served as trustee for any and all
parties who become successor-in-interest to Juan Cruz
Yap Chuy.
- CFI Davao rendered decision in favor of petitioner,
stating that express trust had been established and
ordered the reconveyance of the title to Lot 1846-C of
the Davao Cadastre to the petitioner Mindanao
Development Authority. Upon appeal, CA reversed the
decision, stating that there was no express trust. Hence
this present petition.
Issue: WON there was an express trust in the sale of lot
between respondent Ang Bansing and Juan Cruz.
Ruling:
- No, no express trust had been created between Ang
Banging and Juan Cruz over Lot 1846-C of the Davao
Cadastre.
- "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. these elements include a competent trustor
and trustee, an ascertainable trust res, and sufficiently
certain beneficiaries. Furthermore, there must be a
present and complete disposition of the trust property,
notwithstanding that the enjoyment in the beneficiary
will take place in the future. It is essential, too, that the
purpose be an active one to prevent trust from being
executed into a legal estate or interest, and one that is
not in contravention of some prohibition of statute or
rule of public policy. There must also be some power of
administration other than a mere duty to perform a
contract although the contract is for a third-party
beneficiary. A declaration of terms is essential, and these
must be stated with reasonable certainty in order that
the trustee may administer, and that the court, if called
upon so to do, may enforce, the trust."
- 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 above-quoted 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.
Development Bank of the Phils. V. COA, 422 SCRA 459
FACTS:
● The Development Bank of the Philippines (DBP) Board
of Governors adopted Resolution No. 794 creating the
DBP Gratuity Plan and authorizing the setting up of a
retirement fund to cover the benefits due to DBP retiring
officials and employees under Commonwealth Act No.
186.
● a Trust Indenture was entered into by and between the
DBPand the Board of Trustees of the Gratuity Plan Fund,
vesting in the latter the control and administration of the
Fund. The trustee, subsequently, appointed the DBP
Trust Services Department (DBP-TSD) as the investment
manager thru an Investment Management Agreement,
with the end in view of making the income and principal
of the Fund sufficient to meet the liabilities of DBP under
the Gratuity Plan.
● The Bank established a Special Loan Program availed
thru the facilities of the DBP Provident Fund and funded
by placements from the Gratuity Plan Fund.
● DBP-TSD paid to the investor-members a total of P11,
626,414.25 representing the net earnings of the
investments for the years 1991 and 1992.
● The payments were disallowed by the Auditor under
Audit Observation Memorandum No. 93-2 dated March
1, 1993, on the ground that the distribution of income of
the Gratuity Plan Fund (GPF) to future retirees of DBP is
irregular and constituted the use of public funds for
private purposes.
● The Auditor recommended that the DBP record in its
books as miscellaneous income the income of the
Gratuity Plan Fund (Fund).The Auditor reasoned that the
Fund is still owned by the Bank, the Board of Trustees is
a mere administrator of the Fund in the same way that
the Trust Services Department where the fund was
invested was a mere investor and neither can the
employees, who have still an inchoate interest in the
Fund be considered as rightful owner of the Fund.
● Former DBP Chairman Alfredo C. Antonio asked COA to
lift the disallowance of the P11,626,414.25 distributed as
dividends under the SLP on the ground that the latter
was simply a normal loan transaction.
● The COA en banc affirmed AOM No. 93-2.
● DBP filed a special civil action for certiorari to set aside
the COA decision.
In a trust, one person has an equitable ownership in the
property while another person owns the legal title to
such property, the equitable ownership of the former
entitling him to the performance of certain duties and
the exercise of certain powers by the latter. A person
who establishes a trust is the trustor. One in whom
confidence is reposed as regards property for the benefit
of another is the trustee. The person for whose benefit
the trust is created is the beneficiary. In the
present case, DBP, as the trustor, vested in the trustees
of the Fund legal title over the Fund as well as control
over the investment of the money and assets of the
Fund. The powers and duties granted to the trustees of
the Fund under the Agreement were plainly more than
just administrative, to wit:
1. The BANK hereby vests the control and administration
of the Fund in the TRUSTEEs for the accomplishment of
the purposes for which said Fund is intended in defraying
the benefits of the PLAN in accordance with its
provisions, and the TRUSTEES hereby accept the trust
2. The TRUSTEES shall receive and hold legal title to the
money and/or property comprising the Fund, and shall
hold the same in trust for its beneficiaries, in accordance
with, and for the uses and purposes stated in the
provisions of the PLAN.
Clearly, the trustees received and collected any income
and profit derived from the Fund, and they maintained
separate books of account for this purpose. The principal
and income of the Fund will not revert to DBP even if the
trust is subsequently modified or terminated. The
Agreement states that the principal and income must be
used to satisfy all of the liabilities to the beneficiary
officials and employees. The beneficiaries or cestui que
trust of the Fund are the DBP officials and employees
who will retire under Commonwealth Act No. 186.
The Agreement indisputably transferred legal title over
the income and properties of the Fund to the Funds
trustees. Thus, COAs directive to record the income of
the Fund in DBPs books of account as the miscellaneous
income of DBP constitutes grave abuse of discretion. The
income of the Fund does not form part of the revenues
or profits of DBP, and DBP may not use such income for
its own benefit. The principal and income of the Fund
together constitute the resor subject matter of the trust.
The Agreement established the Fund precisely so that it
would eventually be sufficient to pay for the retirement
benefits of DBP employees under RA 1616 without
additional outlay from DBP. COA itself acknowledged the
authority of DBP to set up the Fund. However, COAs
subsequent directive would divest the Fund of income,
and defeat the purpose for the Funds creation.
NOTE: A trust is a fiduciary relationship with respect to
property which involves the existence of equitable duties
imposed upon the holder of the title to the property to
deal with it for the benefit of another. A trust is either
express or implied. Express trusts are those which the
direct and positive acts of the parties create, by some
writing or deed, or will, or by words evincing an intention
to create a trust. In the present case, the DBP Board of
Governors (now Board of Directors) Resolution No. 794
and the Agreement executed by former DBP Chairman
Rafael Sison and the trustees of the Plan created an
express trust, specifically, an employees trust. An
employees trust is a trust maintained by an employer to
provide retirement, pension or other benefits to its
employees. It is a separate taxable entity established for
the exclusive benefit of the employees. Resolution No.
794 shows that DBP intended to establish a trust fund to
cover the retirement benefits of certain
employees under Republic Act No. 1616 (RA 1616). The
principal and income of the Fund would be separate and
distinct from the funds of DBP.
Peñalber v. Ramos, 577 SCRA 509
FACTS: Petitioner is the mother of respondent Leticia and
the mother-in-law of respondent Quirino, husband of
Leticia. Respondent Bartex, Inc., on the other hand, is a
domestic corporation which bought from respondent
spouses Ramos one of the two properties involved in this
case. On 18 February 1987, petitioner filed before the
RTC a Complaint for Declaration of Nullity of Deeds and
Titles, Reconveyance, Damages, with Application for a
Writ of Preliminary Prohibitory Injunction against the
respondents. First cause of action: Petitioner alleged on
her complaint that she was the owner of a parcel of land
referred to as Ugac properties. She averred that in the
middle part of 1986, she discovered her title to the said
parcel of land was cancelled because a new transfer of
certificate of title was issued in its stead in the name of
respondent spouses Ramos. The basis of cancellation of
her title was a Deed of Donation which petitioner
purportedly executed in favor of respondent spouses
Ramos on April 27, 1983. Petitioner insisted that her
signature on the said Deed of Donation was a forgery
When petitioner confronted the respondent spouses
Ramos about the false donation, the latter pleaded that
they would just pay for the Ugac properties in the
amount of P1 Million. Petitioner agreed. Petitioner found
out around January 10 1987 that respondent Sps. Ramos
were selling the Ugac properties to respondent Bartex
Inc. Petitioner then sent her son Johnson Paredes to
caution reapondent Bartex Inc that Sps. Ramos were not
the owners. Petitioner also warned respondent Sps.
Ramos not to sell said properties or otherwise she will
file the necessary action against them. Petitioner
executed an Affidavit of Adverse Claim over the Ugac
Properties on January 19, 1987 and caused the same to
be annotated on TCT No. T-58043 (TCT issued in the
name of Sps. Ramos) on the same day. Respondent Sps.
Ramos still executed a deed of absolute sale for a total
price of P150,000.00 to Bartex, Inc and a new transfer
certificate of title was issued in favor of Bartex Inc.
Second cause of action: Petitioner claimed that for many
years prior to 1984, she operated a hardware store in a
building she owned along Bonifacio St., Tuguegarao,
Cagayan. The commercial lot (Bonifacio property) is
owned by and registered in the name of Maria Mendoza
(Mendoza), from whom petitioner rented the same.
March 22, 1982 – petitioner allowed respondent spouses
Ramos to manage the hardware store. 1984 – 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 with the following terms:
[1.] The lot would be bought [by herein respondent
spouses Ramos] for and in behalf of [herein petitioner];
[2.] The consideration of P80,000.00 for said lot would be
paid by [respondent spouses Ramos] from the
accumulated earnings of the store; [3.] Since
[respondent spouses Ramos] have the better credit
standing, they would be made to appear in the Deed of
Sale as the vendees so that the title to be issued in their
names could be used by [them] to secure a loan with
which to build a bigger building and expand the business
of [petitioner]. In accordance with the above agreement,
respondent spouses Ramos allegedly entered into a
contract of sale with Mendoza over the Bonifacio
property, and on October 24 1984, a transfer certificate
of title was issued in the names of respondent spouses
Ramos.
On September 20 1984, the management of the
hardware store was returned 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, therefore, prayed that she be declared
the owner of the Bonifacio property; TCT No. T-62769, in
the name of respondent spouses, be declared null and
void; and the Register of Deeds for the Province of
Cagayan be directed to issue another title in her name.
On the first cause of action, respondent Sps. Ramos
alleged that petitioner, together with her son mortgaged
the Ugac properties to DBP for the amount of
P150,000.00 on August 19 , 1990. When the mortgage
was about to foreclose, petitioner asked respondents to
redeem the mortgaged property or pay her mortgage
debt to DBP. In return, petitioner promised to cede,
convey and transfer full ownership of the Ugac
properties to them. Respondents paid the debt and in
compliance with her promise, petitioner transferred the
Ugac properties to respondents by way of Deed of
Donation. After accepting the donation and having the
Deed of Donation registered, TCT No. T- 58043 was
issued to respondent spouses Ramos and they then took
actual and physical possession of the Ugac properties.
With regard to the second cause of action, respondent
spouses Ramos contended that they were given not only
the management, but also the full ownership of the
hardware store by the petitioner, on the condition that
the stocks and merchandise of the store will be
inventoried, and out of the proceeds of the sales thereof,
respondent spouses Ramos shall pay petitioners
outstanding obligations and liabilities. After settling and
paying the obligations and liabilities of petitioner,
respondent spouses Ramos bought the Bonifacio
property from Mendoza out of their own funds. RTC –
dismissed first cause of action and ruled in favor of
petitioner on the second cause of action CA –in so far as
second cause of action is concerned,reversed the
decision of RTC. According to the Court of Appeals: It
appears that before management of the store was
transferred to [herein respondent spouses Ramos], a
beginning inventory of the stocks of the hardware store
was made by [herein petitioners] other children showing
stocks amounting to Php226,951.05. After management
of the hardware store was returned to [petitioner], a
second inventory was made with stocks amounting to
Php110,004.88 showing a difference of Php116,946.15.
Contrary, however, to the finding of the trial court, We
find that said inventory showing such difference is not
conclusive proof to show that the said amount was used
to pay the purchase price of the subject lot. In fact, as
testified by Johnson Paredes, son of [petitioner] who
made the computation on the alleged inventories, it is
not known if the goods, representing the amount of
Php116,946.17, were actually sold or not. It may have
been taken without actually being sold. However, an
inference of the intention to create a trust, made from
language, conduct or circumstances, must be made with
reasonable certainty. It cannot rest on vague, uncertain
or indefinite declarations.An inference of intention to
create a trust, predicated only on circumstances, can be
made only where they admit of no other interpretation.
Here, [petitioner] failed to establish with reasonable
certainty her claim that the purchase of the subject lot
was pursuant to a verbal trust agreement with
respondent spouses Ramos.
ISSUE: WON the existence of a trust agreement between
her and respondent spouses Ramos was clearly
established, and such trust agreement was valid and
enforceable.
RULING: NO. In its technical legal sense, 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. A person who establishes a
trust is called the trustor; one in whom confidence is
reposed is known as the trustee; and the person for
whose benefit the trust has been created is referred to
as the beneficiary. There is a fiduciary relation between
the trustee and the beneficiary (cestui que trust) as
regards certain property, real, personal, money or choses
in action.
From the allegations of the petitioners Complaint, 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 petitioners benefit. Given that the alleged
trust concerns an immovable property, however,
respondent spouses Ramos counter that the same is
unenforceable since the agreement was made verbally
and no parol evidence may be admitted to prove the
existence of an express trust concerning an immovable
property or any interest therein.
On this score, we subscribe to the ruling of the RTC in its
Order dated July 17, 2000 that said spouses were
deemed to have waived their objection to the parol
evidence as they failed to timely object when petitioner
testified on the said verbal agreement. 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 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. But if the parties to the
action, during the trial, make no objection to the
admissibility of the oral evidence to support the contract
covered by the statute, and thereby permit such contract
to be proved orally, it will be just as binding upon the
parties as if it had been reduced to writing. Per
petitioners testimony, the Bonifacio property was
offered for sale by its owner Mendoza. Petitioner told
respondent spouses Ramos that she was going to buy the
lot, but the title to the same will be in the latters names.
The money from the hardware store managed by
respondent spouses Ramos shall be used to buy the
Bonifacio property, which shall then be mortgaged by the
respondent spouses Ramos so that they could obtain a
loan for building a bigger store. The purchase price of
P80,000.00 was paid for the Bonifacio property. On
September 20 1984, the respondent spouses Ramos
returned the management of the store to petitioner.
Thereafter, petitioner allowed her son Johnson to
inventory the stocks of the store. Johnson found out that
the purchase price of P80,000.00 for the Bonifacio
property was already fully paid. When petitioner told the
respondent spouses Ramos to transfer the title to the
Bonifacio property in her name, the respondent spouses
Ramos refused, thus, prompting petitioner to file a
complaint against them.
Similarly, Johnson testified that on March 22 1982,
petitioner turned over the management of the hardware
store to respondent spouses Ramos. During that time, an
inventory of the stocks of the store was made and the
total value of the said stocks were determined to be
P226,951.05. When respondent spouses Ramos returned
the management of the store to petitioner on 20
September 1984, another inventory of the stocks was
made, with the total value of the stocks falling to
P110,004.88. The difference of P116,946.16 was
attributed to the purchase of the Bonifacio property by
the respondent spouses Ramos using the profits from the
sales of the store. A careful perusal of the records of the
case reveals that respondent spouses Ramos did indeed
fail to interpose their objections regarding the
admissibility of the afore-mentioned testimonies when
the same were offered to prove the alleged verbal trust
agreement between them and petitioner. Consequently,
these testimonies were rendered admissible in evidence.
Nevertheless, while admissibility of evidence is an affair
of logic and law, determined as it is by its relevance and
competence, the weight to be given to such evidence,
once admitted, still depends on judicial evaluation. Thus,
despite the admissibility of the said testimonies, the
Court holds that the same carried little weight in proving
the alleged verbal trust agreement between petitioner
and respondent spouses.
Tan Senguan and Co. v. Phil. Trust Co., 58 Phil. 700
Facts:
- Plaintiff Tan Sen Guan & Co. secured a judgment for a
sum of P21,426 against the Mindoro Sugar Co. of which
the Philippine Trust is the trustee. The plaintiff entered
into an agreement with the defendant Philippine Trust
Co. wherein the former assigned, transferred, and sold to
the latter the full amount of said judgment against
Mindoro Sugar Co. together with all its rights thereto and
the latter offered satisfactory consideration thereto.
- The agreement further stipulated that upon signing of
the agreement, Phil Trust shall pay Tan Sen the sum of
P5000; should the Mindoro Sugar be sold or its
ownership be transferred, an additional P10,000pesos
will be paid to Tan Sen upon perfection of the sale; in
case any other creditor of Mindoro Sugar obtains in the
payment of his credit a greater proportion than the price
paid to Tan Sen, the Phil Trust shall pay to the latter
whatever sum may be necessary to be proportioned the
claim of the creditor. However, if the Mindoro Sugar is
sold to any person who does not pay anything to the
creditors or pay them equal or less than 70% of their
claim, or should the creditors obtain from other sources
the payment of their claim equal to or less than 70
percent, the Phil Trust will only pay to Tan Sen the
additional sum of P10,000 upon the sale or transfer of
the Mindoro Sugar as above stated. The properties of
Mindoro Sugar were later on sold at public auction to the
Roman Catholic Archbishop of Manila and base on the
agreement plaintiff Tan Sen brought suit against
defendant Phil Trust for the sum of P10,000.
Defendant’s argument: Only a portion of the Mindoro
Sugar’s properties were sold.
CFI: Absolved the defendant on two grounds: (a) in the
contract, it was only bound as a trustee and notas an
individual; (b) that it has not been proved that all the
properties of the Mindoro Sugar had been sold.
Issue:
W/N PHILTRUST is not personally responsible for the
claim of the plaintiff based on the deed of assignment
because of having executed the same in its capacity as
trustee of the properties of the Mindoro Sugar.
Held: SC reversed CFI’s ruling.
NO. The Phil Trust Company in its individual capacity is
responsible for the contract as there was no express
stipulation that the trust estate and notthe trustee
should be held liable on the contract in question. Not
only is there no express stipulation that the trustee
should not be held responsible but the ‘Wherefore’
clause of the contract states the judgment was expressly
assigned in favor of Phil Trust Company and not Phil Trust
Company, “the trustee”. It therefore follows that
appellant had a right to proceed directly against the Phil
Trust on its contract and has no claim against either
Mindoro Sugar or the trust estate.
In the absence of an express stipulation that the trust
estate and not the trustee shall be liable on the contract,
the trustee is liable in its individual capacity. [But take
note that in order for a trustee to be liable as such, the
trust must be express.]
Rizal Surety & Insurance v. CA, 261 SCRA 69
FACTS
 December 5, 1961, the Reparations Commission
(hereinafter referred to as REPACOM) sold to private
respondent Transocean Transport Corporation the
vessel M/V TRANSOCEAN SHIPPER payable in
twenty (20) annual installments.
 June 22, 1974, the said vessel was insured with
petitioner Rizal Surety & Insurance Company for
US$3,500,000.00, with stipulated value in Philippine
Currency of P23,763,000.00 under Marine Hull Policy
MH-1322 and MH-1331.
 The said policies named REPACOM and herein private
respondent as the insured.
 Subsequently, petitioner reinsured the vessel with a
foreign insurance firm.
 During the effectivity of the aforementioned marine
insurance policies, the vessel M/V TRANSOCEAN
SHIPPER was lost in the Mediterranean Sea and the
insured filed claims against herein petitioner for the
insurance proceeds.
 Shortly thereafter, a partial compromise agreement
was entered into between the REPACOM and
respondent Transocean regarding the insurance
proceeds.
 On April 18, 1975, anticipating payment of the
insurance proceeds in dollars, private respondent
requested the Central Bank (CB) to allow it to retain
the expected dollar insurance proceeds for a period
of three (3) months, to enable it to complete its study
and decide on how to utilize the said amount.
 The CB granted the request subject to conditions, one
of which was that the proceeds be deposited with a
local commercial bank in a special dollar account up
to and until July 31, 1975.
 On November 18, 1975, Transocean and REPACOM
requested Rizal Surety to pay the insurance proceeds
in their joint names, despite problems regarding the
amount of their respective claims.
 On January 1976, Rizal Surety informed Transocean
and REPACOM that the entire insurance proceeds for
the loss of the vessel (both from local insurance
companies and reinsurers and from the foreign
insurer) had been deposited with Prudential Bank.
 Transocean and REPACOM entered into a partial
compromise agreement and agreed to divide and
distribute the insurance proceeds in such a manner
that each would receive as its initial share thereof that
portion not disputed by the other party (thus,
REPACOM - US$434,618.00, and private respondent
US$1,931,153.00).
 With the authority of CB, private respondent and
REPACOM transferred the balance of the insurance
proceeds, amounting to US$718,078.20, into an
interest-bearing special dollar account with any local
commercial bank.
 REPACOM and private respondent then requested
the petitioner to remit the said US$718,078.20 to the
Philippine National Bank, Escolta Branch for their joint
account.
 Petitioner indicated that it would effect the requested
remittance when both REPACOM and private
respondent shall have unconditionally and
absolutely released petitioner from all liabilities
under its policies by executing and delivering the
Loss and Subrogation Receipt prepared by petitioner.
 Because the parties proposed certain amendments
and corrections to the Loss and Subrogation Receipt,
a revised version thereof was finally presented to the
Office of the Solicitor General, and on May 25, 1977,
then Acting Solicitor General Vicente V. Mendoza
wrote petitioner demanding that:
o it pays interest on the dollar balance per
the CB letter-authority from the date of
receipt of the authorization by the
Central Bank at the authorized rates;
o as trustee of the said funds it was
petitioner’s duty to see to it that the
same earned the interest authorized by
the Central Bank;
o as trustee, petitioner was morally and
legally bound to deposit the funds under
terms most advantageous to the
beneficiaries
o if it did not wish to transfer the deposit
from the Prudential Bank and Trust
Company, the sister company, to
another bank where it could earn
interest, it was its obligation to require
the Prudential Bank and Trust Company,
at least, to place the deposit to an
interest-bearing account; and
o demanded in behalf of the Reparations
Commission payment of interest on the
dollar deposit from the date of receipt of
the authorization by the Central Bank at
the authorized rates.
 Petitioner through counsel rejected the Acting
Solicitor Generals demand, asserting that:
o (i) there was no trust relationship,
express or implied, involved in the
transaction;
o (ii) there was no obligation on the part of
petitioner to transfer the dollar deposit
into an interest-bearing account
because the CB authorization was given
to REPACOM and not to petitioner;
o (iii) REPACOM did not ask petitioner to
place the dollars in an interest-bearing
account; and
o (iv) no Loss and Subrogation Receipt was
executed.
  RTC of Manila held that a trust relationship
existed between petitioner as trustee and
private respondent and REPACOM as
beneficiaries.
 CA upheld the judgment of the trial court, and
confirmed that a trust had in fact been
established and that petitioner became liable for
interest on the dollar account in its capacity as
trustee, not as insurer. MR denied.
ISSUE
WON trust relationship existed between petitioner as
trustee and private respondent and REPACOM as
beneficiaries.
HELD
Yes.
We hold that the courts below were correct in concluding
that a trust relationship existed. It is basic in law that a
trust is the right, enforceable solely in equity, to the
beneficial enjoyment of property, the legal title to which
is vested in another. It is a fiduciary relationship
concerning property which obliges a person holding it
(i.e., the trustee) to deal with the property for the benefit
of another (i.e., the beneficiary). The Civil Code provides
that:
Article 1441. Trusts are either express or implied.
Express trusts are created by the intention of the trustor
or of the parties. x x x.
Article 1444. No particular words are required for the
creation of an express trust, it being sufficient that a trust
is clearly intended.
Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to
create a trust.[27]
The evidence on record is clear that petitioner held on to
the dollar balance of the insurance proceeds because (1)
private respondent and REPACOM requested it to do so
as they had not yet agreed on the amount of their
respective claims, and the Final Compromise Agreement
was yet to be executed, and (2) they had not, prior to
January 31, 1977, signed the Loss and Subrogation
Receipt in favor of petitioner.
Furthermore, petitioners letter dated November 20,
1975 addressed to the CB expressly stated that the
deposit in Prudential Bank was being made in its name
for the joint account of the private respondent and
REPACOM. Petitioner never claimed ownership over the
funds in said deposit. In fact, it made several tenders of
payment to the private respondent and REPACOM, albeit
the latter declined to accept since the dispute as to their
respective claims could not yet be resolved at that time.
By its own allegation, petitioner held on to the dollar
balance of the insurance proceeds to protect its interest,
as it was not yet granted the right of subrogation over
the total loss of the vessel. As petitioner continued
holding on to the deposit for the benefit of private
respondent and REPACOM, petitioner obviously
recognized its fiduciary relationship with said parties.
This is the essence of the trust flowing from the actions
and communications of petitioner.
In Mindanao Development Authority vs. Court of
Appeals,[28] this Court held:
x x x It is fundamental in the law of trusts that certain
requirements must exist before an express trust will be
recognized. Basically, these elements include a
competent trustor and trustee, an ascertainable trust
res, and sufficiently certain beneficiaries. Stilted
formalities are unnecessary, but nevertheless each of the
above elements is required to be established, and, if any
one of them is missing, it is fatal to the trusts (sic).
Furthermore, there must be a present and complete
disposition of the trust property, notwithstanding that
the enjoyment in the beneficiary will take place in the
future. It is essential, too, that the purpose be an active
one to prevent trust from being executed into a legal
estate or interest, and one that is not in contravention
of some prohibition of statute or rule of public policy.
There must also be some power of administration other
than a mere duty to perform a contract although the
contract is for a third-party beneficiary. A declaration of
terms is essential, and these must be stated with
reasonable certainty in order that the trustee may
administer, and that the court, if called upon so to do,
may enforce, the trust. (citing Sec. 31, Trusts, Am Jur 2d,
pp. 278-279.)
Undeniably, all the above-mentioned elements are
present in the instant case. Petitioners argument that it
was never a party to the Partial Compromise Agreement
is unavailing, since, upon being furnished a copy of the
same, it undoubtedly became aware if it was not already
aware even prior thereto that the parties to said
agreement considered petitioner as their trustee in
respect of said dollar balance; in short, it is all too
evident that petitioner fully grasped the situation and
realized that private respondent and REPACOM were
constituting petitioner their trustee. Yet, petitioner not
only did not manifest any objection thereto, but it
instead proceeded to accept its role and responsibility
as such trustee by implementing the compromise
agreement. Equally as significant, petitioner never
committed any act amounting to an unequivocal
repudiation of its role as trustee.
Lorenzo v. Posadas, 64 Phil. 353
Petitioner: Pablo Lorenzo (Trustee)
Defendant: Juan Posadas Jr., collector of internal
revenue
Trustor: Thomas Hanley
Facts:
- on May 27, 1922, Thomas Hanley died in Zamboanga ,
leaving a will and considerable amount of real and
personal properties. where on June 14, 1922, CFI
Zamboanga began the proceedings for the probate of his
will and acted on the instructions to take care of his
property for 10 years and after which pass it to his
nephew, Matthew Hanley. The lower court first
appointed petitioner as trusteee on February 29, 1932.
- defendant Collector of Internal Revenue alleged that
the estate left by deceased has penalties for deliquency
in payment amounted to P2,052.74. Hence, on March 15,
1932, defendant filed a motion in the testamentary
proceedings pending before the Court of First Instance of
Zamboanga praying petitioner herein pay to the
Government the said sum of P2,052.74. The motion was
granted and petitioner paid the protested amount at the
same time that unless the amount was promptly
refunded suit would be brought for its recovery.
defendant overruled the plaintiff's protest and refused to
refund the said amount, arguing that . Hence petitioner
went to court and filed a complaint against defendant
but the lower court dismissed his complaint as well as
defendants counterclaim. both parties appeled.
Petitioner argued that the lower court erred in not
allowing as lawful deductions, in the determination of
the net amount of the estate subject to said tax, the
amounts allowed by the court as compensation to the
"trustees" and paid to them from the decedent's estate.
Issue: WON In determining the net value of the estate
subject to tax, it is proper to deduct the compensation
due to trustees?
Ruling:
- No, Certain items are required by law to be deducted
from the appraised gross in arriving at the net value of
the estate on which the inheritance tax is to be
computed.
- In the case at bar, the defendant and the trial court
allowed a deduction of only P480.81. This sum
represents the expenses and disbursements of the
executors until March 10, 1924, among which were their
fees and the proven debts of the deceased. The plaintiff
contends that the compensation and fees of the trustees,
which aggregate P1,187.28 should also be deducted
under section 1539 of the Revised Administrative Code
which provides, in part, as follows: "In order to
determine the net sum which must bear the tax, when
an inheritance is concerned, there shall be deducted, in
case of a resident, . . . the judicial expenses of the
testamentary or intestate proceedings, . . . ."
- A trustee, no doubt, is entitled to receive a fair
compensation for his services (Barney vs. Saunders, 16
How., 535; 14 Law. ed., 1047). But from this it does not
follow that the compensation due him may lawfully be
deducted in arriving at the net value of the estate subject
to tax. There is no statute in the Philippines which
requires trustees' commissions to be deducted in
determining the net value of the estate subject to
inheritance tax (61 C. J., p. 1705). Furthermore, though a
testamentary trust has been created, it does not appear
that the testator intended that the duties of his
executors and trustees should be separated.
- On the contrary, in paragraph 5 of his will, the testator
expressed the desire that his real estate be handled and
managed by his executors until the expiration of the
period of ten years therein provided. Judicial expenses
are expenses of administration (61 C. J., p. 1705) but, in
State vs. Hennepin County Probate Court (112 N. W.,
878; 101 Minn., 485), it was said: ". . . The compensation
of a trustee, earned, not in the administration of the
estate, but in the management thereof for the benefit of
the legatees or devises, does not come properly within
the class or reason for exempting administration
expenses. . . . Service rendered in that behalf have no
reference to closing the estate for the purpose of a
distribution thereof to those entitled to it, and are not
required or essential to the perfection of the rights of the
heirs or legatees. . . . Trusts . . . of the character of that
here before the court, are created for the the benefit of
those to whom the property ultimately passes, are of
voluntary creation, and intended for the preservation of
the estate. No sound reason is given to support the
contention that such expenses should be taken into
consideration in fixing the value of the estate for the
purpose of this tax."
Government v. Abadilla, 46 Phil. 642
FACTS:
● Lot 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.
● Based on evidence, the lands in question were
originally owned by one Luis Palad, a school teacher, who
obtained titled to the land by composicion gratuita in
1894. On January 25, 1892, Palad executed a holographic
will party, which states: “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. Xxxxx and if the times aforementioned
should arrive, 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.”
● Palad died on December 3, 1896, without descendants,
but leaving a widow, the appellant Dorotea Lopez.
● On July 27, 1987, 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.
● On April 20, 1903, the aforesaid 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. In the same
action the municipality of Tayabas intervened claiming
the land.
● 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.
RULING:
1) In order that a trust may become effective there must,
of course, be a trustee and a cestui que trust, and counsel
for the appellants Palad argues that we here have
neither; that there is no ayuntamiento, no Gobernador
Civil of the province, and no secondary school in the town
of Tayabas.chanrobles virtual law library 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 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.
chanrobles virtual law library 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.
2) But counsel argues that assuming all this to be true the
collateral heirs of the deceased would nevertheless
be entitled to the income of the land until the cestui
que trust is actually in esse
. We do not think so. If the trustee holds the legal
title and the devise is valid, the natural heirs of the
deceased have no remaining interest in the land
except their right to the reversion in the event the devise
for some reason should fail, an event which has
not as yet taken place. From a reading of the
testamentary clause under discussion it seems quite
evident that the intention of the testator was to
have income of the property accumulate for the
benefit of the proposed school until the same should be
established.
3) Therefore, the judgment appealed from must be
affirmed in regard to lots Nos. 3464 and 3469.
chanrobles virtual law library As to lot No. 3470, it may
be noted that though the Statute of Limitation
does not run as between trustee and cestui que trust
as long as the trust relations subsist, it may run
as between the trust and third persons. Contending that
the Colongcolong land was community property
of her marriage with Luis Palad and that lot No.
3470 represented her share thereof, Dorotea Lopez has
held possession of said lot, adverse to all other
claimants, since the year 1904 and has now
acquired title by prescription
SEC v. Laigo, 768 SCRA 633
“Assets in the trust fund shall at all times remain for the
sole benefit of the planholders. The trust fund assets
cannot be used to satisfy claims of other creditors of the
pre-need company.”
FACTS: Legacy Consolidated Plans, Inc. (Legacy), being a
pre-need provider, complied with the trust fund
requirement of the petitioner, Securities and Exchange
Commission (SEC), and entered into a trust agreement
with the Land Bank of the Philippines (LBP). The industry
collapsed and Legacy was unable to pay its obligation to
the planholders.. Private respondents, as planholders,
filed a petition for involuntary insolvency against Legacy
before the the Regional Trial Court (RTC). Accordingly,
Legacy was declared insolvent and was ordered to
submit an inventory of its assets and liabilities pursuant
to the Insolvency Law. The RTC ordered the SEC to submit
the documents pertaining to Legacy's assets and
liabilities. The SEC opposed the inclusion of the trust fund
in the inventory of corporate assets on the ground that
to do so would contravene the New Rules on Registration
and Sale of Pre-Need Plans which treated trust funds as
principally established for the exclusive purpose of
guaranteeing the delivery of benefits due to the
planholders. It was added that the inclusion of the trust
fund in the insolvent's estate and its being opened to
claims by non-planholders would contravene the
purpose for its establishment. Despite the opposition of
the SEC, respondent Judge Reynaldo M. Laigo (Judge
Laigo) ordered the insolvency Assignee to take
possession of the trust fund. Judge Laigo viewed the trust
fund as Legacy's corporate assets and included it in the
insolvent's estate. The SEC contended that Judge Laigo
gravely abused his discretion in treating the trust fund as
part of the insolvency estate of Legacy. It argued that the
trust fund should redound exclusively to the benefit of
the planholders, who are the ultimate beneficial owners.
RTC: ordered the insolvency Assignee to take possession
of the trust fund.
ISSUE: WON the trust fund can be used to satisfy the
claims of other creditors of Legacy?
RULING: No. The contention of SEC finds support under
Section 30 of the Pre-Need Code where in it clearly
provides that the proceeds of trust funds shall redound
solely to the planholders. In no case shall the trust fund
assets be used to satisfy claims of other creditors of the
pre-need company. It must be stressed that a person is
considered as a beneficiary of a trust if there is a manifest
intention to give such a person the beneficial interest
over the trust properties. This categorical declaration
doubtless indicates that the intention of the trustor is to
make the planholders the beneficiaries of the trust
properties, and not Legacy. It is clear that because the
beneficial ownership is vested in the planholders and the
legal ownership in the trustee, LBP, Legacy, as trustor, is
left without any iota of interest in the trust fund. Legacy
is out of the picture and exists only as a representative of
the trustee, LBP, with the limited role of facilitating the
delivery of the benefits of the trust fund to the
beneficiaries -the planholders. The trust fund should not
revert to Legacy, which has no beneficial interest over it.
Not being an asset of Legacy, the trust fund is immune
from its reach and cannot be included by the RTC in the
insolvency estate
Miguel J. Osorio Pension Foundation, Inc. v. CA, 621
SCRA 606
Facts:
- Petitioner MJOPFI, a non-stock and non-profit
corporation, was organized for the purpose of holding
title to and administering the employees’ trust or
retirement funds (Employees’ Trust Fund) established for
the benefit of the employees of Victorias Milling
Company, Inc. (VMC).
- Petitioner, as trustee, claims that the income earned by
the Employees’ Trust Fund is tax exempt under Section
53(b) of the National Internal Revenue Code (Tax Code).
- Petitioner bought the Madrigal Business Park (MBP lot)
through VMC. Petitioner alleges that its investment in
the MBP lot came about upon the invitation of VMC and
that its share in the lot is 49.59%. Petitioner’s investment
manager, the Citytrust Banking Corporation (Citytrust),
in submitting its Portfolio Mix Analysis, regularly
reported the Employees’ Trust Fund’s share in the MBP
lot.
- On 26 March 1997, VMC eventually sold the MBP lot to
Metrobank.
- Petitioner claims that it is a co-owner of the MBP lot as
trustee of the Employees’ Trust Fund, based on the
notarized Memorandum of Agreement. Petitioner
maintains that its ownership of the MBP lot is supported
by the excerpts of the minutes and the resolutions of
petitioner’s Board Meetings.
Petitioner further contends that there is no dispute that
the Employees’ Trust Fund is exempt from income tax.
Since petitioner, as trustee, purchased 49.59% of the
MBP lot using funds of the Employees’ Trust Fund,
petitioner asserts that the Employees’ Trust Fund's
49.59% share in the income tax paid (or P3,037,697.40
rounded off to P3,037,500) should be refunded.
Petitioner filed a Petition for tax refund before the CTA.
CTA: denied petitioner's claim for refund of withheld
creditable tax of P3,037,500 arising from the sale of real
property of which petitioner claims to be a co-owner as
trustee of the employees' trust or retirement funds.
CA: agreed with the CTA that pieces of documentary
evidence submitted by petitioner are largely self-serving
and can be contrived easily. The CA ruled that these
documents failed to show that the funds used to
purchase the
MBP lot came from the Employees’ Trust Fund.
ISSUE:
Whether or not petitioner, as trustee of the Employee’s
Trust Fund, is the beneficial owner of 49.59% of the MBP
lot
RULING:
Yes.
- SC ruled that petitioner, as trustee of the Employees’
Trust Fund, has more than sufficiently established that it
has an agreement with VMC and VFC to purchase jointly
the MBP lot and to register the MBP lot solely in the
name of VMC for the benefit of petitioner, VMC and VFC.
- Art. 1452. If two or more persons agree to purchase a
property and by common consent the legal title is taken
in the name of one of them for the benefit of all, a trust
is created by force of law in favor of the others in
proportion to the interest of each. For Article 1452 to
apply, all that a co-owner needs to show is that there is
“common consent” among the purchasing co-owners to
put the legal title to the purchased property in the name
of one co-owner for the benefit of all. Once this
“common consent” is shown, “ a trust is created by force
of law.”
- The BIR has no option but to recognize such legal trust
as well as the beneficial ownership of the real owners
because the trust is created by force of law. The fact that
the title is registered solely in the name of one person is
not conclusive that he alone owns the property. Thus,
this case turns on whether petitioner can sufficiently
establish that petitioner, as trustee of the Employees’
Trust Fund, has a common agreement with VMC and VFC
that petitioner, VMC and VFC shall jointly purchase the
MBP lot and put the title to the MBP lot in the name of
VMC for the benefit petitioner, VMC and VFC.
- The CTA ruled that the documents presented by
petitioner cannot prove its co-ownership over the MBP
lot especially that the TCT, Deed of Absolute Sale and the
Remittance Return disclosed that VMC is the sole owner
and taxpayer. However, the appellate courts failed to
consider the genuineness and due execution of the
notarized Memorandum of Agreement acknowledging
petitioner’s ownership of the MBP lot. The BIR failed to
present any clear and convincing evidence to prove that
the notarized Memorandum of Agreement is fictitious or
has no legal effect. Likewise, VMC, the registered owner,
did not repudiate petitioner’s share in the MBP lot.
Further, Citytrust, a reputable banking institution, has
prepared a Portfolio Mix Analysis for the years 1994 to
1997 showing that petitioner invested P5,504,748.25 in
the MBP lot. Absent any proof that the Citytrust bank
records have been tampered or falsified, and the BIR has
presented none, the Portfolio Mix Analysis should be
given probative value.
CIR v. CA, 207 SCRA 487
FACTS
 Private Respondent, GCL Retirement Plan (GCL, for
brevity) is an employees' trust maintained by the
employer, GCL Inc., to provide retirement, pension,
disability and death benefits to its employees.
 The Plan as submitted was approved and qualified as
exempt from income tax by Petitioner Commissioner
of Internal Revenue in accordance with Rep. Act No.
4917.
 In 1984, Respondent GCL made investments and
earned therefrom interest income from which was
witheld the fifteen per centum (15%) final witholding
tax imposed by Pres. Decree No. 1959,2 which took
effect on 15 October 1984.
 On 15 January 1985, Respondent GCL filed with
Petitioner a claim for refund in the amounts of
P1,312.66 withheld by Anscor Capital and Investment
Corp., and P2,064.15 by Commercial Bank of Manila.
 On 12 February 1985, it filed a second claim for refund
of the amount of P7,925.00 withheld by Anscor,
stating in both letters that it disagreed with the
collection of the 15% final withholding tax from the
interest income as it is an entity fully exempt from
income tax as provided under Rep. Act No. 4917 in
relation to Section 56 (b) 3 of the Tax Code.
 Refund requested was denied by CIR.
 On appeal, Court of Tax Appeals (CTA) ruled in favor
of GCL, holding that employees' trusts are exempt
from the 15% final withholding tax on interest income
and ordering a refund of the tax withheld.
 CA upheld the CTA Decision.
ISSUE
WON the employees’ trusts were not exempted from
income tax and therefor subject to the final withholding
tax.
HELD
Yes, the employees’ trusts were exempted from income
tax and therefor, not subject to the final withholding tax.
To begin with, it is significant to note that the GCL Plan
was qualified as exempt from income tax by the
Commissioner of Internal Revenue in accordance with
Rep. Act No. 4917 approved on 17 June 1967. This law
specifically provided:
Sec. 1. Any provision of law to the contrary
notwithstanding, the retirement benefits received by
officials and employees of private firms, whether
individual or corporate, in accordance with a reasonable
private benefit plan maintained by the employer shall be
exempt from all taxes and shall not be liable to
attachment, levy or seizure by or under any legal or
equitable process whatsoever except to pay a debt of the
official or employee concerned to the private benefit
plan or that arising from liability imposed in a criminal
action; . . . (emphasis ours).
In so far as employees' trusts are concerned, the
foregoing provision should be taken in relation to then
Section 56(b) (now 53[b]) of the Tax Code, as amended
by Rep. Act No. 1983, supra, which took effect on 22
June 1957. This provision specifically exempted
employee's trusts from income tax and is repeated
hereunder for emphasis:
Sec. 56. Imposition of Tax. — (a) Application of tax. —
The taxes imposed by this Title upon individuals shall
apply to the income of estates or of any kind of property
held in trust.
xxx xxx xxx
(b) Exception. — The tax imposed by this Title shall not
apply to employee's trust which forms part of a pension,
stock bonus or profit-sharing plan of an employer for the
benefit of some or all of his
employees . . .
The tax-exemption privilege of employees' trusts, as
distinguished from any other kind of property held in
trust, springs from the foregoing provision. It is
unambiguous. Manifest therefrom is that the tax law has
singled out employees' trusts for tax exemption.
And rightly so, by virtue of the raison de'etre behind the
creation of employees' trusts. Employees' trusts or
benefit plans normally provide economic assistance to
employees upon the occurrence of certain
contingencies, particularly, old age retirement, death,
sickness, or disability. It provides security against certain
hazards to which members of the Plan may be exposed.
It is an independent and additional source of protection
for the working group. What is more, it is established for
their exclusive benefit and for no other purpose.
The tax advantage in Rep. Act No. 1983, Section 56(b),
was conceived in order to encourage the formation and
establishment of such private Plans for the benefit of
laborers and employees outside of the Social Security
Act. Enlightening is a portion of the explanatory note to
H.B. No. 6503, now R.A. 1983, reading:
Considering that under Section 17 of the social Security
Act, all contributions collected and payments of sickness,
unemployment, retirement, disability and death benefits
made thereunder together with the income of the
pension trust are exempt from any tax, assessment, fee,
or charge, it is proposed that a similar system providing
for retirement, etc. benefits for employees outside the
Social Security Act be exempted from income taxes.
(Congressional Record, House of Representatives, Vol.
IV, Part. 2, No. 57, p. 1859, May 3, 1957; cited in
Commissioner of Internal Revenue v. Visayan Electric Co.,
et al., G.R. No. L-22611, 27 May 1968, 23 SCRA 715);
emphasis supplied.
It is evident that tax-exemption is likewise to be enjoyed
by the income of the pension trust. Otherwise, taxation
of those earnings would result in a diminution
accumulated income and reduce whatever the trust
beneficiaries would receive out of the trust fund. This
would run afoul of the very intendment of the law.
The deletion in Pres. Decree No. 1959 of the provisos
regarding tax exemption and preferential tax rates under
the old law, therefore, can not be deemed to extent to
employees' trusts. Said Decree, being a general law, can
not repeal by implication a specific provision, Section
56(b) now 53 [b]) in relation to Rep. Act No. 4917
granting exemption from income tax to employees'
trusts. Rep. Act 1983, which excepted employees' trusts
in its Section 56 (b) was effective on 22 June 1957 while
Rep. Act No. 4917 was enacted on 17 June 1967, long
before the issuance of Pres. Decree No. 1959 on 15
October 1984. A subsequent statute, general in character
as to its terms and application, is not to be construed as
repealing a special or specific enactment, unless the
legislative purpose to do so is manifested. This is so even
if the provisions of the latter are sufficiently
comprehensive to include what was set forth in the
special act (Villegas v. Subido, G.R. No. L-31711, 30
September 1971, 41 SCRA 190).
Morales v. CA, 274 SCRA 282
Facts:
- Private respondents Ranulfo Ortiz, Jr. and Erlinda Ortiz
purchased a land from one Celso Avelino where the latter
purchased the said lot from his parents. After the sale,
respondents examined the premises and talked with
petitioner Rodulfo Morales regarding the sale. Petitioner
promised to vacate the premise but despite due notice
from petitioner's uncle, Celso Avelino, petitioner refused
to abandon the premise or demolish the improvements
the latter made and that petitioner claimed ownership of
the same.
- Respondents then filed a complaint for recovery of
possession of the land against petitioner. When
petitioner died, he was substituted by his heirs and one
of which is co-petitioner Pricislla Morales.
- Trial court rendered decision in favor of respondents.
Petitioners appealed to CA but CA affirmed such
decision. Hence, this present case. Petitioners argues
that there is an implied trust when Celso Avelino
purchase the such land from his parents in favor of the
trustor, Resendo Avelino and his heirs
Issue: WON there was an implied trust when Celso
Avelino purchased the house and lot in question as a
mere trustee, for the benefit of the trustor, his father,
Rosendo Avelino, and the latter’s heirs.
Ruling:
- No, Express trusts are created by the intention of the
trustor or of the parties, while implied trusts come into
being by operation of law, either through implication of
an intention to create a trust as a matter of law or
through the imposition of the trust irrespective of, and
even contrary to, any such intention. In turn, implied
trusts are either resulting or constructive trusts.
Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable title or interest and are presumed always to
have been contemplated by the parties. They arise from
the nature or circumstances of the consideration
involved in a transaction whereby one person thereby
becomes invested with legal title but is obligated in
equity to hold his legal title for the benefit of another. On
the other hand, constructive trusts are created by the
construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise
contrary to intention against one who, by fraud, duress
or abuse of confidence, obtains or holds the legal right to
property which he ought not, in equity and good
conscience, to hold.
- The preponderance of evidence, as found by the trial
court and affirmed by the Court of Appeals, established
positive acts of Celso Avelino indicating, without doubt,
that he considered the property he purchased from the
Mendiolas as his exclusive property. He had its tax
declaration transferred in his name, caused the property
surveyed for him by the Bureau of Lands, and faithfully
paid the realty taxes. Finally, he sold the property to
private respondents.
- The theory of implied trust with Celso Avelino as the
trustor and his parents Rosendo Avelino and Juan
Ricaforte as trustees is not even alleged, expressly or
impliedly, in the verified Answer of Rodolfo Morales nor
in the Answer in Intervention of Priscila A. Morales
- Art. 1448. There is an implied trust when property is
sold, and the legal estate is granted to one party but the
price is paid by another for the purpose of having the
beneficial interest of the property. The former is the
trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of
the sale, no trust is implied by law, it being disputably
presumed that there is a gift in favor of the child
Pascual v. Meneses, 20 SCRA 219
Cuaycong v. Cuaycong, 21 SCRA 1192
FACTS:
Eduardo Cuaycong, married to Clotilde de Leon, died
without issue but with three brothers and a sister
surviving him: Lino, Justo, Meliton and Basilisa. Upon his
death, his properties were distributed to his heirs as he
willed except two haciendas the Haciendas Sta. Cruz and
Pusod both known as Hacienda Bacayan. Lino Cuaycong
died and was survived by his children. Praxedes
Cuaycong, married to Jose Betia, is already deceased and
is survived by her children, all surnamed Betia. Anastacio
Cuaycong, also deceased, is survived by his children, all
surnamed Cuaycong. Meliton and Basilisa died without
any issue. On October 3, 1961, the surviving children of
Lino Cuaycong; the surviving children of Anastacio; as
well as children of deceased Praxedes Cuaycong Betia,
filed as pauper litigants, a suit against Justo, Luis and
Benjamin Cuaycong for conveyance of inheritance and
accounting, before the Court of First Instance of Negros
Occidental alleging among others that Luis, thru clever
strategy, fraud, misrepresentation and in disregard of
Eduardo’s wishes by causing the issuance in his name of
certificates of title covering Hacienda Bacayan’s
properties. They also claimed that Eduardo had an
arrangement with Justo and Luis that the latter will hold
in trust what might belong to his brothers and sister as a
result of the arrangements and deliver them their share
when time comes. The plaintiff repeatedly demanded for
their share in the property after Eduardo and Clotilde’s
death. Luis D. Cuaycong moved to dismiss the complaint.
On December 16, 1961, the Court of First Instance ruled
that the trust alleged, particularly in paragraph 8 of the
complaint, refers to an immovable which under Article
1443 of the Civil Code may not be proved by parole
evidence. Later, the court decreed that since there was
no amended complaint filed, it was useless to declare
Benjamin Cuaycong in default. Plaintiff thereafter
manifested that the claim is based on an implied trust as
shown by paragraph 8 of the complaint. They added that
there being no written instrument of trust, they could
not amend the complaint to include such instrument.
Paragraph 8 of the complaint state: That as the said two
haciendas were then the subject of certain transactions
between the spouses Eduardo Cuaycong and Clotilde de
Leon on one hand, and Justo and Luis D. Cuaycong on the
other, Eduardo Cuaycong told his brother Justo and his
nephew, defendant Luis D. Cuaycong, to hold in trust
what might belong to his brothers and sister as a result
of the arrangements and to deliver to them their shares
when the proper time comes, to which Justo and Luis D.
Cuaycong agreed.
ISSUE: Whether the trust is express or implied.
RULING: It is an express trust. Our Civil Code defines an
express trust as one created by the intention of the
trustor or of the parties, and an implied trust as one that
comes into being by operation of law. Express trusts are
those created by the direct and positive acts of the
parties, by some writing or deed or will or by words
evidencing an intention to create a trust. On the other
hand, implied trusts are those which, without being
expressed, are deducible from the nature of the
transaction by operation of law as matters of equity, in
dependently of the particular intention of the parties.
Thus, if the intention to establish a trust is clear, the trust
is express; if the intent to establish a trust is to be taken
from circumstances or other matters indicative of such
intent, then the trust is implied. From these and from the
provisions of paragraph 8 of the complaint itself, we find
it clear that the plaintiffs alleged an express trust over an
immovable, especially since it is alleged that the trustor
expressly told the defendants of his intention to establish
the trust. Such a situation definitely falls under Article
1443 of the Civil Code. Article 1453, one of the cases of
an implied trust would apply if the person conveying the
property did not expressly state that he was establishing
the trust, unlike the case at bar where he was alleged to
have expressed such intent.
Julio v. Dalandan, 21 SCRA 543
Facts:
Clemente Dalandan, deceased father of defendants
Emiliano and Maria Dalandan, acknowledged that a four-
hectare piece of riceland in Las Piñas belonging to
Victoriana Dalandan, whose only child and heir is plaintiff
Victoria Julio, was posted as security for an obligation
which he, Clemente Dalandan assumed but, however,
failed to fulfill. (he result was that Victoriana)s said land
was foreclosed. Clemente Dalandan promised to Victoria
Julio a farm of about four hectares to replace the
aforesaid foreclosed property. An affidavit was executed
by Clemente which herein petitioner accepted. One of
the condition laid were neither delivery of the land nor
the fruits thereof could immediately be demanded from
his children. After the death of Clemente Dalandan,
Victoria Julio requested from defendants, Clemente)s
legitimate and surviving heirs who succeeded in the
possession of the land thus conveyed, to deliver the
same to her; that defendants insisted that according to
the agreement, neither delivery of the land nor the fruits
thereof could immediately be demanded, and; that
plaintiff acceded to this contention of defendants and
allowed them to continue to remain in possession
thereof; that demands have been made upon defendants
to fix the period within which they would deliver to the
herein plaintiff the above-described parcels of land but
defendants have refused and until now still refuse to fix
a specific time within which they would deliver to
plaintiff the aforementioned parcels of land.
ISSUE: WON there is a trust instituted
RULING:
YES. There is trust instituted
- Article 1444 of the Civil Code states that: "No particular
words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended." In reality,
the development of the trust as a method of disposition
of property, so jurisprudence teaches, "seems in large
part due to its freedom from formal requirements." This
principle perhaps accounts for the provisions in Article
1444 just quoted. For, "technical or particular forms of
words or phrases are not essential to the manifestation
of intention to create a trust or to the establishment
thereof." Nor would the use of some such words as
"trust" or "trustee" be essential to the constitution of a
trust, as we have held in Lorenzo vs. Posadas, 64 Phil.
353, 368. Conversely, the mere fact that the word "trust"
or "trustee" was employed would not necessarily prove
an intention to create a trust. What is important is
whether the trustor manifested an intention to create
the kind of relationship which in law is known as a trust.
It is unimportant that the trustor should know that the
relationship "which he intends to create is called a trust,
and whether or not he knows the precise characteristics
of the relationship which is called a trust." Here, that
trust is effective as against defendants and in favor of the
beneficiary thereof, plaintiff Victoria Julio, who accepted
it in the document itself.
For, while it is true that said deed did not in definitive
words institute defendants as trustees, a duty is therein
imposed upon them - when the proper time comes - to
turn over both the fruits and the possession of the
property to Victoria Julio.
Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, 587
SCRA 417
FACTS
 Petition for review under Rule 45.
 29 September 1919, the late Epifanio Labiste
(Epifanio), on his own and on behalf of his brothers
and sisters who were the heirs of Jose Labiste (Jose),
purchased from the Bureau of Lands Lot No. 1054 of
the Banilad Friar Lands Estate, with an area of 13,308
square meters, located at Guadalupe, Cebu City for
P36.00.
 Subsequently, on 9 June 1924, then Bureau of Lands
Director Jorge B. Vargas executed Deed of
Conveyance No. 12536 selling and ceding Lot No.
1054 to Epifanio and his brothers and sisters who
were the heirs of Jose.
 Epifanio executed an Affidavit(Affidavit of Epifanio) in
Spanish on 10 July 1923, after full payment of the
purchase price but prior to the issuance of the deed
of conveyance, affirming that he, as one of the heirs
of Jose, and his uncle and petitioners predecessor-in-
interest, Tranquilino Labiste (Tranquilino), then co-
owned Lot No. 1054 because the money that was paid
to the government came from the two of them.
Tranquilino and the heirs of Jose continued to hold
the property jointly.
 On 2 May 1928, Engineer Espiritu Bunagan (Engr.
Bunagan), Deputy Public Land Surveyor, subdivided
Lot No. 1054 into two lots: Lot No. 1054-A with an
area of 6,664 square meters for Tranquilino and Lot
No. 1054-B with an area of 6,664 square meters for
Epifanio.
 Subsequently, on 18 October 1939, the heirs of
Tranquilino purchased the one-half (1/2) interest of
the heirs of Jose[9] over Lot No. 1054 for P300.00, as
evidenced by the Calig-onan sa Panagpalit[10]
executed by the parties in the Visayan dialect. The
heirs of Tranquilino immediately took possession of
the entire lot.
 When World War II broke out, the heirs of Tranquilino
fled Cebu City and when they came back they found
their homes and possessions destroyed. The records
in the Office of the Register of Deeds, Office of the
City Assessor and other government offices were also
destroyed during the war. Squatters have practically
overrun the entire property, such that neither
petitioners nor respondents possess it.
 In October 1993, petitioners learned that one of the
respondents, Asuncion Labiste, had filed on 17
September 1993 a petition for reconstitution of title
over Lot No. 1054.
 Petitioners opposed the petition at first but by a
compromise agreement between the parties dated
25 March 1994, petitioners withdrew their opposition
to expedite the reconstitution process.
 Under the compromise agreement, petitioners were
to be given time to file a complaint so that the issues
could be litigated in an ordinary action and the
reconstituted title was to be deposited with the Clerk
of Court for a period of sixty (60) days to allow
petitioners to file an action for reconveyance and to
annotate a notice of lis pendens.
 The Register of Deeds of Cebu City issued the
reconstituted title, TCT No. RT-7853, in the name of
Epifanio Labiste, married to Tomasa Mabitad, his
brothers and sisters, heirs of Jose Labiste on 14
December 1994.
 However, respondents did not honor the compromise
agreement.
 Petitioners filed a complaint for annulment of title
seeking the reconveyance of property and damages
on 13 January 1995, docketed as Civil Case No. CEB-
16943, with the RTC of Cebu City.
 Respondents claimed that the Affidavit of Epifanio
and the Calig-onan sa Panagpalit were forgeries and
that petitioners action had long prescribed or barred
by laches.
 RTC ruled in favor of petitioners, found that the
documents are genuine and authentic as ancient
documents and that they are valid and enforceable,
held that the action had not prescribed as the
complaint was filed about a year after the
reconstitution of the title by respondents.
 The judicial reconstitution was even opposed by
petitioners until a compromise agreement was
reached by the parties and approved by the RTC
which ordered the reconstitution.
 RTC further held that the reconstituted title did not
give any more right to respondents than what their
predecessors-in-interest actually had as it is limited to
the reconstitution of the certificate as it stood at the
time of its loss or destruction.
 CA, while affirming petitioners right to the property,
as the Affidavit and the Calig-onan sa Panagpalit are
genuine and authentic, and that the same are valid
and enforceable documents. Nevertheless, it
reversed the RTCs decision on the ground of
prescription and laches, citing Article 1144 of the Civil
Code, held that petitioners cause of action had
prescribed for the action must be brought within ten
(10) years from the time the right of action accrues
upon the written contract which in this case was
when petitioners predecessors-in-interest lost
possession over the property after World War II.
Also, the lapse of time to file the action constitutes
neglect on petitioners’ part so the principle of laches
is applicable.
ISSUE
WON the Affidavit executed by Epifanio was proof of
express trust, and if such, won an unrepudiated written
express trust is imprescriptible.
HELD
YES.
Trust is the right to the beneficial enjoyment of property,
the legal title to which is vested in another. It is a
fiduciary relationship that obliges the trustee to deal
with the property for the benefit of the beneficiary. Trust
relations between parties may either be express or
implied. An express trust is created by the intention of
the trustor or of the parties. An implied trust comes into
being by operation of law.
Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to
create a trust. Under Article 1444 of the Civil Code, "[n]o
particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly
intended."
The Affidavit of Epifanio is in the nature of a trust
agreement. Epifanio affirmed that the lot brought in his
name was co-owned by him, as one of the heirs of Jose,
and his uncle Tranquilino. And by agreement, each of
them has been in possession of half of the property. Their
arrangement was corroborated by the subdivision plan
prepared by Engr. Bunagan and approved by Jose P.
Dans, Acting Director of Lands.
As such, prescription and laches will run only from the
time the express trust is repudiated. The Court has held
that for acquisitive prescription to bar the action of the
beneficiary against the trustee in an express trust for
the recovery of the property held in trust it must be
shown that: (a) the trustee has performed unequivocal
acts of repudiation amounting to an ouster of the cestui
que trust; (b) such positive acts of repudiation have been
made known to the cestui que trust, and (c) the evidence
thereon is clear and conclusive. Respondents cannot rely
on the fact that the Torrens title was issued in the name
of Epifanio and the other heirs of Jose. It has been held
that a trustee who obtains a Torrens title over property
held in trust by him for another cannot repudiate the
trust by relying on the registration. The rule requires a
clear repudiation of the trust duly communicated to the
beneficiary. The only act that can be construed as
repudiation was when respondents filed the petition for
reconstitution in October 1993. And since petitioners
filed their complaint in January 1995, their cause of
action has not yet prescribed, laches cannot be
attributed to them.
Gamboa v. Gamboa, 52 Phil. 503
Cañezo v. Rojas, 538 SCRA 242
Go v. Estate of Felisa Tamio de Buenaventura, 763 SCRA
632
Facts:
Felisa Buenaventura, the mother of the Petitioner Bella
and respondents Resurreccion, Rhea and Regina, owned
a parcel of land with a three-storey building. In 1960,
Felisa transferred the same to her daughter Bella,
married to Delfin, Sr., and Felimon, Sr., the common-law
husband of Felisa, to assist them in procuring a loan from
the GSIS. In view thereof, her title over the property, TCT
No. 45951/T-233, was cancelled and a new one, TCT No.
49869, was issued in the names of Bella, married to
Delfin, Sr., and Felimon, Sr.
Upon Felisa's death in 1994, the Bihis Family, Felisa's
other heirs who have long been occupying the subject
property, caused the annotation of their adverse claim
over the property. However, the annotation was
cancelled, and thereafter a new TCT over the property
was issued in the names of Bella, et al. Finally, by virtue
of a Deed of Sale dated January 23, 1997, the subject
property was sold to Wilson and Peter, in whose names
TCT No. 170475 currently exists. A complaint for
reconveyance was then filed.
RTC: there was an implied trust between Felisa, on the
one hand, and Bella and Felimon, Sr., on the other,
created by operation of law. However, the RTC held that
reconveyance can no longer be effected since the subject
property had already been transferred to Wilson and
Peter, whom it found to be purchasers in good. Also,
Bella, Delfin, Sr., and Felimon, Sr. were unjustly enriched
at the expense of the respondents who, as compulsory
heirs, were also entitled to their share in the subject
property, the RTC directed Bella, et al. to pay plaintiffs,
jointly and severally.
CA: upheld the RTC's finding that an implied trust was
constituted between Felisa, during her lifetime, and
Bella, Delfin, Sr., and Felimon, Sr. when the former sold
the subject property to the latter, and that the present
action for reconveyance has not prescribe. However,
Wilson and Peter were found to not be purchasers im
good faith due to their knowledge of the adverse claim.
Issues:
1. Whether or not a trust was established
between Felisa and Bella, Delfin,Sr., and Felimon, Sr.
2. Whether or not the action for reconveyance
has prescribed.
3. Whether or not Wilson and Peter are
purchasers in good faith.
HELD:
1. An express trust was created. Trust is the right to the
beneficial enjoyment of property, the legal title to which
is vested in another. It is a fiduciary relationship that
obliges the trustee to deal with the property for the
benefit of the beneficiary. Trust relations between
parties may either be express or implied. An express trust
is created by the intention of the trustor or of the parties,
while an implied trust comes into being by operation of
law.
Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to
create a trust From the letter executed by Felisa, it
unequivocally and absolutely declared her intention of
transferring the title over the subject property to Bella,
Delfin, Sr., and Felimon, Sr. in order to merely
accommodate them in securing a loan from the GSIS. She
likewise stated clearly that she was retaining her
ownership over the subject property and articulated her
wish to have her heirs share equally therein. Hence,
while in the beginning, an implied trust was merely
created between Felisa, as trustor, and Bella, Delfin, Sr.,
and Felimon, Sr., as both trustees and beneficiaries, the
execution of the September 21, 1970 letter settled, once
and for all, the nature of the trust established between
them as an express one, their true intention irrefutably
extant thereon.
2. Anent the issue of prescription, the Court finds that the
action for reconveyance instituted by respondents has
not yet prescribed, following the jurisprudential rule that
express trusts prescribe in ten (10) years from the time
the trust is repudiated.
In this case, there was a repudiation of the express trust
when Bella, as the remaining trustee, sold the subject
property to Wilson and Peter on January 23, 1997. As the
complaint for reconveyance and damages was filed by
respondents on October 17, 1997, or only a few months
after the sale of the subject property to Wilson and Peter,
it cannot be said that the same has prescribed.
3. Wilson and Peter are not purchasers in good faith. A
purchaser in good faith is one who buys the property of
another without notice that some other person has a
right to, or an interest in, such property and pays a full
and fair price for the same at the time of such purchase,
or before he has notice of some other person 's claim or
interest i n the property. The
existence of an annotation on the title covering the
subject property and of the occupation thereof by
individuals other than the sellers negate any
presumption of good faith on the part of Wilson and
Peter when they purchased the subject property.
Juan v. Yap, Sr., 646 SCRA 753
FACTS:
The spouses Maximo and Dulcisima Cañeda mortgaged
to petitioner Richard Juan (petitioner), employee and
nephew of respondent Gabriel Yap, Sr. (respondent), two
parcels of land in Talisay, Cebu to secure a loan of P1.68
million, payable within one year.
Petitioner, represented by Atty. Solon, sought the
extrajudicial foreclosure of the mortgage. Although
petitioner and respondent participated in the auction
sale, the properties were sold to petitioner for tendering
the highest bid of P2.2 million. No certificate of sale was
issued to petitioner, however, for his failure to pay the
sale’s commission.
Respondent and the Cañeda spouses executed a
memorandum of agreement (MOA) where (1) the
Cañeda spouses acknowledged respondent as their "real
mortgagee-creditor x x x while Richard Juan [petitioner]
is merely a trustee" of respondent; (2) respondent
agreed to allow the Cañeda spouses to redeem the
foreclosed properties for P1.2 million; and (3) the Cañeda
spouses and respondent agreed to initiate judicial action
"either to annul or reform the [Contract] or to compel
Richard Juan to reconvey the mortgagee’s rights" to
respondent as trustor.
Three days later, the Cañeda spouses and respondent
sued petitioner in the Regional Trial Court of Cebu City
(trial court) to declare respondent as trustee of
petitioner vis a vis the Contract, annul petitioner’s bid for
the foreclosed properties, declare the Contract
"superseded or novated" by the MOA, and require
petitioner to pay damages, attorney’s fees and the costs.
The Cañeda spouses consigned with the trial court the
amount of P1.68 million as redemption payment.
Petitioner insisted on his rights over the mortgaged
properties. Petitioner also counterclaimed for damages
and attorney’s fees and the turn-over of the owner’s
copy of the titles for the mortgaged properties.
RTC: ruled against respondent and his co-plaintiffs and
granted reliefs to petitioner by declaring petitioner the
"true and real" mortgagee, ordering respondent to pay
moral damages and attorney’s fees, and requiring
respondent to deliver the titles in question to petitioner.
The trial court, however, granted the Cañeda spouses’
prayer to redeem the property and accordingly ordered
the release of the redemption payment to petitioner. In
arriving at its ruling, the trial court gave primacy to the
terms of the Contract, rejecting respondent’s theory in
light of his failure to assert beneficial interest over the
mortgaged properties for nearly four years.
Respondent appealed to CA
CA: granted the petition, set aside the trial court’s ruling,
declared respondent the Contract’s mortgagee, directed
the trial court to release the redemption payment to
respondent, and ordered petitioner to pay damages and
attorney’s fees. The CA found the following
circumstances crucial in its concurrence with
respondent’s theory, notwithstanding the terms of the
Contract: (1) Solon testified that he drew up the Contract
naming petitioner as mortgagee upon instructions of
respondent; (2) Dulcisima Cañeda acknowledged
respondent as the creditor from whom she and her
husband obtained the loan the Contract secured; and (3)
respondent shouldered the payment of the foreclosure
expenses. Instead, however, of annulling the Contract,
the CA held that reformation was the proper remedy,
with the MOA "serv[ing] as the correction done by the
parties to reveal their true intent."
ISSUE: Whether an implied trust arose between
petitioner and respondent, binding petitioner to hold the
beneficial title over the mortgaged properties in trust for
respondent
RULING:
Yes, there is an implied trust between the petitioner and
the respondent.
An implied trust arising from mortgage contracts is not
among the trust relationships the Civil Code enumerates.
The Code itself provides, however, that such listing "does
not exclude others established by the general law on
trust x x x." Under the general principles on trust, equity
converts the holder of property right as trustee for the
benefit of another if the circumstances of its acquisition
makes the holder ineligible "in x x x good conscience [to]
hold and enjoy [it]." As implied trusts are remedies
against unjust enrichment, the "only problem of great
importance in the field of constructive trusts is whether
in the numerous and varying factual situations presented
x x x there is a wrongful holding of property and hence, a
threatened unjust enrichment of the defendant."
Applying these principles, this Court recognized
unconventional implied trusts in contracts involving the
purchase of housing units by officers of tenants’
associations in breach of their obligations, the
partitioning of realty contrary to the terms of a
compromise agreement, and the execution of a sales
contract indicating a buyer distinct from the provider of
the purchase money. In all these cases, the formal
holders of title were deemed trustees obliged to transfer
title to the beneficiaries in whose favor the trusts were
deemed created. We see no reason to bar the
recognition of the same obligation in a mortgage
contract meeting the standards for the creation of an
implied trust.
Heirs of Narvasa, Sr. v. Imbornal, 732 SCRA 171
FACTS
 Petition for review on certiorari.
 Basilia Imbornal+ (Basilia) had four (4) children,
namely, Alejandra, Balbina, Catalina, and Pablo.
 Petitioners are the heirs and successors-in-interest of
Alejandra and Balbina.
 Respondents are heirs and successors-in-interest of
Pablo.
 Basilia owned a parcel of land situated at Sabangan,
Barangay Nibaliw West, San Fabian, Pangasinan
which she conveyed to her three (3) daughters
Balbina, Alejandra, and Catalina (Imbornal sisters)
sometime in 1920.
 Meanwhile, Catalina’s husband, Ciriaco Abrio
(Ciriaco), applied for and was granted a homestead
patent over a 31,367-sq. m. riparian land
(Motherland) adjacent to the Cayanga River in San
Fabian, Pangasinan on December 5, 1933.
 The certificate of title to such patent was eventually
issued to his heirs in 1973.
 Ciriaco and his heirs had since occupied the northern
portion of the Motherland, while respondents
occupied the southern portion.
 In 1949 and 1971, First and Second Accretion
adjoined the southern portion of the Motherland.
 OCT to the First Accretion was issued to Victoriano,
one of the respondents, and OCT for the Second
Accretion was issued to all respondents.
 Petitioners Francisco, et al., as the children of
Alejandra and Balbina, filed on February 27,1984 an
Amended Complaint for reconveyance, partition,
and/or damages against respondents, claiming rights
over the entire Motherland.
 They anchored their claim on the allegation that
Ciriaco, with the help of his wife Catalina, urged
Balbina and Alejandra to sell the Sabangan property,
and that Ciriaco used the proceeds therefrom to fund
his then-pending homestead patent application over
the Motherland. As such, Francisco, et al. claim that
they are, effectively, co-owners of the Motherland
together with Ciriaco’s heirs.
 In return, Ciriaco agreed that once his homestead
patent is approved, he will be deemed to be holding
the Motherland – which now included both
accretions – in trust for the Imbornal sisters.
 RTC found that the factual circumstances surrounding
the present case showed that an implied trust existed
between Ciriaco and the Imbornal sisters with respect
to the Motherland, giving probative weight to
Francisco, et al.’s allegation that the Sabangan
property, inherited by the Imbornal sisters from their
mother, Basilia, was sold in order to help Ciriaco raise
funds for his then-pending homestead patent
application. In exchange therefor, Ciriaco agreed that
he shall hold the Motherland in trust for them once
his homestead patent application had been
approved. As Ciriaco was only able to acquire the
Motherland subject of the homestead patent through
the proceeds realized from the sale of the Sabangan
property, the Imbornal sisters and, consequently,
Francisco, et al. (as the children of Alejandra and
Balbina) are entitled to their proportionate shares
over the Motherland, notwithstanding the
undisputed possession of respondents over its
southern portion since 1926.
 With respect to the accretions that formed adjacent
to the Motherland, the RTC ruled that the owner of
the Motherland is likewise the owner of the said
accretions. Considering that the Imbornal sisters
have become proportionate owners of the
Motherland by virtue of the implied trust created
between them and Ciriaco, they (Imbornal sisters)
and their heirs are also entitled to the ownership of
said accretions despite the fact that respondents
were able to register them in their names.
 CA rendered a Decision reversing and setting aside
the RTC Decision, declaring: (a) the descendants of
Ciriaco as the exclusive owners of the Motherland; (b)
the descendants of respondent Victoriano as the
exclusive owners of the First Accretion; and (c) the
descendants of Pablo (i.e., respondents collectively)
as the exclusive owners of the Second Accretion. As
to Motherland, CA found that Ciriaco alone was
awarded a homestead patent, which later became
the basis for the issuance of a Torrens certificate of
title in his name, consequently, since the entire
Motherland was titled in Ciriaco’s name, his
descendants should be regarded as the absolute
owners thereof.
ISSUE
WON an implied trust existed between Ciriaco and
Imbornal sisters.
HELD
No.
An implied trust arises, not from any presumed intention
of the parties, but by operation of law in order to satisfy
the demands of justice and equity and to protect against
unfair dealing or downright fraud.44 To reiterate, Article
1456 of the Civil Code states that "[i]f property is
acquired through mistake or fraud, the person obtaining
it is, by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the
property comes.
The burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be
clear and satisfactorily show the existence of the trust
and its elements.45 While implied trusts may be proven
by oral evidence, the evidence must be trustworthy and
received by the courts with extreme caution, and should
not be made to rest on loose, equivocal or indefinite
declarations. Trustworthy evidence is required because
oral evidence can easily be fabricated.46
In this case, it cannot be said, merely on the basis of the
oral evidence offered by Francisco, et al., that the
Motherland had been either mistakenly or fraudulently
registered in favor of Ciriaco. Accordingly, it cannot be
said either that he was merely a trustee of an implied
trust holding the Motherland for the benefit of the
Imbornal sisters or their heirs.
As the CA had aptly pointed out,47 a homestead patent
award requires proof that the applicant meets the
stringent conditions48 set forth under Commonwealth
Act No. 141, as amended, which includes actual
possession, cultivation, and improvement of the
homestead. It must be presumed, therefore, that Ciriaco
underwent the rigid process and duly satisfied the strict
conditions necessary for the grant of his homestead
patent application. As such, it is highly implausible that
the Motherland had been acquired and registered by
mistake or through fraud as would create an implied
trust between the Imbornal sisters and Ciriaco, especially
considering the dearth of evidence showing that the
Imbornal sisters entered into the possession of the
Motherland, or a portion thereof, or asserted any right
over the same at any point during their lifetime. Hence,
when OCT No. 1462 covering the Motherland was issued
in his name pursuant to Homestead Patent No. 24991 on
December 15, 1933, Ciriaco’s title to the Motherland had
become indefeasible. It bears to stress that the
proceedings for land registration that led to the issuance
of Homestead Patent No. 24991 and eventually, OCT No.
1462 in Ciriaco’s name are presumptively regular and
proper,49 which presumption has not been overcome by
the evidence presented by Francisco, et al.
In this light, the Court cannot fully accept and accord
evidentiary value to the oral testimony offered by
Francisco, et al. on the alleged verbal agreement
between their predecessors, the Imbornal sisters, and
Ciriaco with respect to the Motherland. Weighed against
the presumed regularity of the award of the homestead
patent to Ciriaco and the lack of evidence showing that
the same was acquired and registered by mistake or
through fraud, the oral evidence of Francisco, et al.
would not effectively establish their claims of ownership.
It has been held that oral testimony as to a certain fact,
depending as it does exclusively on human memory, is
not as reliable as written or documentary evidence,50
especially since the purported agreement transpired
decades ago, or in the 1920s. Hence, with respect to the
Motherland, the CA did not err in holding that Ciriaco and
his heirs are the owners thereof, without prejudice to the
rights of any subsequent purchasers for value of the said
property.
Salao v. Salao, 70 SCRA 65
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.
-Juan S. Salao, Jr. pleaded the indefeasibility of the
Torrens title secured by his father and aunt. As counter-
claims, he asked for moral damages attorney's fees and
litigation expenses reimbursement of the premiums.
Juan S. Salao, Jr. died in 1958 and was substituted by his
widow, Mercedes Pascual and his six children and by the
administrator of his estate.
-trial court dismissed the amended complaint and the
counter-claim. Both parties appealed. The plaintiffs
appealed because their action for reconveyance was
dismissed. The defendants appealed because their
counterclaim for damages was dismissed. The appeals
were made to the Court of Appeals. However, as the
amounts involved exceed two hundred thousand pesos,
the Court of Appeals elevated the case to this Court in its
resolution of October 3, 1966 (CA-G.R. No. 30014-R).
Issue: Whether or not the Calunuran fishpond was held
in trust for Valentin Salao by Juan Y. Salao, Sr. and
Ambrosia Salao.
Held:
- No, 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.
- "Implied trusts are those which, without being
expressed, are deducible from the nature of the
transaction as matters of intent, or which are
superinduced on the transaction by operation of
law as matter of equity, independently of the
particular intention of the parties" (89 C.J.S.
724). They are ordinarily subdivided into
resulting and constructive trusts.
- Resulting trust. is broadly defined as a trust
which is raised or created by the act or
construction of law, but in its more restricted
sense it is a trust raised by implication of law and
presumed to have been contemplated by the
parties, the intention as to which is to be found
in the nature of their transaction, but not
expressed in the deed or instrument of
conveyance
- Constructive trust is -a trust "raised by
construction of law, or arising by operation of
law". In a more restricted sense and as contra-
distinguished from a resulting trust, a
constructive trust is "a trust not created by any
words, either expressly or impliedly evincing a
direct intension to create a trust, but by the
construction of equity in order to satisfy the
demands of justice." It does not arise "by
agreement or intention, but by operation of
law."
- Not a scintilla of documentary evidence was
presented by the plaintiffs to prove that there
was an express trust over the Calunuran
fishpond in favor of Valentin Salao. Purely parol
evidence was offered by them to prove the
alleged trust. Their claim that in the oral partition
in 1919 of the two fishponds the Calunuran
fishpond was assigned to Valentin Salao is legally
untenable.
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
 re-conveyance, 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”.
Municipality of Victorias v. CA, 149 SCRA 32
Booc V. Five Start Marketing Co., Inc., 538 SCRA 42
Cañezo v. Rojas, 538 SCRA 242
Facts:
Petitioner (Canezo) filed complaint for recovery of real
property against respondent Rojas
Petitioner filed complaint for recovery of real property
against Rojas(2nd wife of her dad) plus damages- subject
property is a 4k sqm unregistered land in Biliran
Petitioner alleges she bought the land from Limpiado and
the transaction was not reduced in writing. She
immediately took possession of said property
She allegedly ENTRUSTED the property to his father
when she and hubby left for Mindanao in 1984 and said
father took possession of land and cultivated it.
1980 she found out that RESPONDENT(2nd wife) was in
possession/cultivating the same as well as tax
declarationsin Crispulo Rojas’ name (father)
Respondent claims that it was the father who bought the
property the reason why tax declaration was in his name
and was in possession until death and property was
included in ESTATE which petitioner RECEIVED her share
in the estate.
Respondent claims that father bought the property in
1948 and that is why the tax declarations was in father’s
name.
Father possessed and cultivated the land until his death.
Upon death in 1978, property was part of ESTATE.
Respondent claims that petitioner ought to have
impleaded all of the heirs as defendants.
Further claims that petitioner has abandoned her right
over the property since she just filed her complaint in
1997
MTC ruled in favor of petitioner saying that there was no
proof that father bought the property
RTC reversed and ruled in favor of Petitioner. RTC 1st
reversed MTC stating that prescription took place and
acquisitive prescription has already set. RTC reveres its
original decision stating that no prescription took place
since petitioner ENTRUSTED the property to her father,
and that 10-year prescription starts from the day the
trustee REPUDIATES the trust. RTC found no evidence
showing such.
CA ruled in favor of the respondents. Father is owner,
petitioner’s inaction for 17 years since discovery of
possession of 2nd wife tax declaration was in father’s
name, father was in adverse possession, and property
was included in estate. Even assuming implied trust,
petitioners right of action to recover is barred by
prescription - 49 YEARS lapsed.
Petitioner contends that there was EXPRESS TRUST
hence prescription will not set in.
ISSUE: WON trust existed.
HELD: NO, neither express nor implied resulting TRUST
existed in this case
Intention to create trust CANNOT be inferred from
petitioner’s testimony and on the facts and circumstance
Petitioner only TESTIFIED that father agreed to give her
proceeds of the production of the land
SC states that had it been had it been her intention to
create trust, she should not have made an issue of the
tax declarations. Trustee would necessarily have legal
title hence right to transfer the tax declarations in his
name as this was more beneficial to the beneficiary.
In light of the disquisitions, we hold that there was no
express trust or resulting trust established between the
petitioner and her father. Thus, in the absence of a trust
relation, we can only conclude that Crispulos
uninterrupted possession of the subject property for 49
years, coupled with the performance of acts of
ownership, such as payment of real estate taxes, ripened
into ownership.
Assuming trust existed it was terminated upon DEATH of
father
PNB v. CA, 217 SCRA 347
 Private Respondent B. P. Mata & Co. Inc. (Mata), is a
private corporation engaged in providing goods and
services to shipping companies and since 1966, 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, sending
monthly billings to its foreign principal Star Kist, which
in turn reimburses Mata by sending a telegraphic
transfer through banks for credit to the latter’s
account.
 Against this background 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 forUS$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 (P9,772.96) 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).
 libHowever, 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.
 RTC 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, applying strictly
the technical definition of a trust as "a right of
property, real or personal, held by one party for the
benefit of another; that there is a fiduciary relation
between a trustee and a cestui que trust as regards
certain property, real, personal, money or choses in
action."
 CA affirmed, added in its opinion that under Article
2154 on solutio indebiti, the person who makes the
payment is the one who commits the mistake vis-a-vis
the recipient who is unaware of such a mistake and
consequently, recipient is duty bound to return the
amount paid by mistake. But the appellate court
concluded that petitioner’s demand for the return of
US$14,000 cannot prosper because its cause of
action had already prescribed under Article 1145,
paragraph 2 of the Civil Code.
 Hence, the instant petition for certiorari proceeding
seeking to annul the decision of the appellate court
on the basis that Mata’s obligation to return
US$14,000 is governed, in the alternative, by either
Article 1456 on constructive trust or Article 2154 of
the Civil Code on quasi-contract.
ISSUE
1. WON Mata’s obligation to return US$14,000 is
governed, in the alternative, by either Article 1456 on
constructive trust or Article 2154 of the Civil Code on
quasi-contract.
2. WON petitioner may still claim the US$14,000 it
erroneously paid private respondent under a
constructive trust.
HELD
1. Constructive trust. The Civil Code does not confine
itself exclusively to the quasi-contracts enumerated
from Articles 2144 to 2175 but is open to the
possibility that, absent a pre-existing relationship,
there being neither crime nor quasi-delict, a quasi-
contractual relation may be forced upon the parties
to avoid a case of unjust enrichment. 17 There being
no express consent, in the sense of a meeting of
minds between the parties, there is no contract to
speak of. However, in view of the peculiar
circumstances or factual environment, consent is
presume to the end that a recipient of benefits or
favors resulting from lawful, voluntary and unilateral
acts of another may not be unjustly enriched at the
expense of another.cralawnad
Undoubtedly, the instant case fulfills the
indispensable requisites of solutio indebiti as defined
in Article 2154: that something (in this case money)
has been received when there was no right to
demand it and (2) the same was unduly delivered
through mistake. There is a presumption that there
was a mistake in the payment "if something which
had never been due or had already been paid was
delivered; but he from whom the return is claimed
may prove that the delivery was made out of liberality
or for any other just cause." 18
In the case at bar, a payment in the corrected amount
of US$1,400 through Cashier’s Check No. 269522 had
already been made by PNB for the account of Mata
on February 25, 1975. Strangely, however, fourteen
days later, PNB effected another payment through
Cashier’s Check No. 270271 in the amount of
US$14,000, this time purporting to be another
transmittal of reimbursement from Star Kist, private
respondent’s foreign principal.
While the principle of undue enrichment or solutio
indebiti, is not new, having been incorporated in the
subject on quasi-contracts in Title XVI of Book IV of
the Spanish Civil Code entitled "Obligations incurred
without contract," 19 the chapter on Trusts is fairly
recent, having been introduced by the Code
Commission in 1949. Although the concept of trusts is
nowhere to be found in the Spanish Civil Code, the
framers of our present Civil Code incorporated
implied trusts, which includes constructive trusts, on
top of quasi-contracts, both of which embody the
principle of equity above strict legalism. 20
In analyzing the law on trusts, it would be instructive
to refer to Anglo-American jurisprudence on the
subject. Under American Law, a court of equity does
not consider a constructive trustee for all purposes as
though he were in reality a trustee; although it will
 force him to return the property, it will not impose
upon him the numerous fiduciary obligations
ordinarily demanded from a trustee of an express
trust. 21 It must be borne in mind that in an express
trust, the trustee has active duties of management
while in a constructive trust, the duty is merely to
surrender the property.
Still applying American case law, quasi-contractual
obligations give rise to a personal liability ordinarily
enforceable by an action at law, while constructive
trusts are enforceable by a proceeding in equity to
compel the defendant to surrender specific property.
To be sure, the distinction is more procedural than
substantive. 22
Further reflection on these concepts reveals that a
constructive "trust" is as much a misnomer as a
"quasi-contract," so far removed are they from trusts
and contracts proper, respectively. In the case of a
constructive trust, as in the case of quasi-contract, a
relationship is "forced" by operation of law upon the
parties, not because of any intention on their part but
in order to prevent unjust enrichment, thus giving rise
to certain obligations not within the contemplation of
the parties. 23
Although we are not quite in accord with the opinion
that "the trusts known to American and English equity
jurisprudence are derived from the fidei commissa of
the Roman Law," 24 it is safe to state that their roots
are firmly grounded on such Civil Law principles as
expressed in the Latin maxim, "Nemo cum alterius
detrimento locupletari potest," 25 particularly the
concept of constructive trust.
Returning to the instant case, while petitioner may
indeed opt to avail of an action to enforce a
constructive trust or the quasi-contract of solutio
indebiti, it has been deprived of a choice, for
prescription has effectively blocked quasi-contract as
an alternative, leaving only constructive trust as the
feasible option
2. No.
Although we are aware that only seven (7) years lapsed
after petitioner erroneously credited private respondent
with the said amount and that under Article 1144,
petitioner is well within the prescriptive period for the
enforcement of a constructive or implied trust, we rule
that petitioner’s claim cannot prosper since it is already
barred by laches. It is a well-settled rule now that an
action to enforce an implied trust, whether resulting or
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 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.
Aznar Brothers Realty Co. v. Aying, 458 SCRA 496
Facts:
- Crisanta Maloloy-on petitioned for the issuance of a
cadastral decree in her favor over said parcel of land.
after she died, Cadastral Court issued a Decision, a
decree in the name of Crisanta Maloloy-ons eight
children. but certificate of title was, however, lost during
the war.
- ll the heirs of the Aying siblings executed an Extra-
Judicial Partition of Real Estate with Deed of Absolute
Sale dated March 3, 1964, conveying subject parcel of
land to herein petitioner Aznar Brothers Realty
Company. since then, petitioner had been religiously
paying real property taxes on said property.
- 1991, petitioner sent out notices to vacate, addressed
to persons occupying the property. Unheeded, petitioner
then filed a complaint for ejectment against the
occupants before the Metropolitan Trial Court (MTC),
Lapu-Lapu City.
- February 1, 1994, the MTC ordered the occupants to
vacate the property. The case eventually reached this
Court. March 7, 2000, a Decision was promulgated in
favor of herein petitioner.
- respondents the aforementioned extra-judicial
partition of real estate with deed of absolute sale is a
fraud and is null and void ab initio because not all the co-
owners of subject property affixed their signature on said
document and some of the co-owners who supposedly
signed said document had been dead at the time of the
execution thereof; petitioner entered subject land in bad
faith, knowing fully well that it did not have any right to
the land and used force, threat and intimidation against
respondents; and they suffered moral damages
- Petitioner argues that when an action to recover
property based on an implied trust should be instituted
within 4 years from discovery of the fraud.
- After trial, the RTC rendered a Decision, respondents
evidence failed to prove that the extra-judicial partition
with deed of absolute sale was a totally simulated or
fictitious contract and concluded that said document is
valid, thus, effectively conveying to petitioner the
property in question. espondents action had prescribed,
action is considered as one for reconveyance based on
implied or constructive trust, it prescribed in 10 years
from the registration of the deed on March 6, 1964; and
if the action is considered as one for annulment of
contract on the ground of fraud, it should have been filed
within 4 years from discovery of the fraud.
- respondents appealed the foregoing decision to the CA.
CA affirmed the decision with modification, heirs of
Emiliano Aying, Simeon Aying and Roberta Aying are
hereby declared as the lawful owners of the contested
property but equivalent only to 3/8. Hence, the present
petition for review on certiorari assailing the CA decision
Issue: WON COURT OF APPEALS ERRED IN FAILING TO
APPLY THE RULE THAT THE ACT OF REGISTRATION OF
THE DEED OF PARTITION WITH SALE MAY BE
CONSIDERED AN UNEQUIVOCAL REPUDIATION OF THE
TRUST GIVING RISE TO PRESCRIPTION.

Ruling:
- (.....) facts on record show that petitioner acquired the
entire parcel of land with the mistaken belief that all the
heirs have executed the subject document. Thus, the trial
court is correct that the provision of law applicable to this
case is Article 1456 of the Civil Code which states: ART.
1456. If property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person
from whom the property comes.
- A constructive trust, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in
an express trust, a beneficiary and a trustee are linked by
confidential or fiduciary relations, in a constructive trust,
there is neither a promise nor any fiduciary relation to
speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the
beneficiary.[9] The concept of constructive trusts was
further elucidated in the same case, as follows: . . .
implied trusts are those which, without being expressed,
are deducible from the nature of the transaction as
matters of intent or which are superinduced on the
transaction by operation of law as matters of equity,
independently of the particular intention of the parties.
In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as
follows: Resulting trusts are based on the equitable
doctrine that valuable consideration and not legal title
determines the equitable title or interest and are
presumed always to have been contemplated by the
parties. They arise from the nature of circumstances of
the consideration involved in a transaction whereby one
person thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the benefit of
another. On the other hand, constructive trusts are
created by the construction of equity in order to satisfy
the demands of justice and prevent unjust enrichment.
They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds
the legal right to property which he ought not, in equity
and good conscience, to hold.
- Based on such concept of constructive trusts, the Court
ruled in said case that: The rule that a trustee cannot
acquire by prescription ownership over property
entrusted to him until and unless he repudiates the trust,
applies to express trusts and resulting implied trusts.
However, in constructive implied trusts, prescription
may supervene even if the trustee does not repudiate
the relationship. Necessarily, repudiation of said trust is
not a condition precedent to the running of the
prescriptive period
- The next question is, what is the applicable prescriptive
period? Court expounded on the prescriptive period
within which to bring an action for reconveyance of
property based on implied or constructive trust, to wit: .
. . under the present Civil Code, we find that just as an
implied or constructive trust is an offspring of the law
(Art. 1456, Civil Code), so is the corresponding obligation
to reconvey the property and the title thereto in favor of
the true owner. In this context, and vis--vis prescription,
Article 1144 of the Civil Code is applicable. Article 1144.
The following actions must be brought within ten years
from the time the right of action accrues: (1) Upon a
written contract; (2) Upon an obligation created by law;
(3) Upon a judgment. An action for reconveyance based
on an implied or constructive trust must perforce
prescribe in ten years and not otherwise. A long line of
decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled
that an action for reconveyance based on an implied or
constructive trust prescribes in ten years from the
issuance of the Torrens title over the property.[13] It has
also been ruled that the ten-year prescriptive period
begins to run from the date of registration of the deed or
the date of the issuance of the certificate of title over the
property, but if the person claiming to be the owner
thereof is in actual possession of the property, the right
to seek reconveyance, which in effect seeks to quiet title
to the property, does not prescribe.[14] In the present
case, respondents Wenceslao Sumalinog, an heir of
Roberta Aying; Laurencio Aying, an heir of Emiliano
Aying; and Paulino Aying, an heir of Simeon Aying, all
testified that they had never occupied or been in
possession of the land in dispute.[15] Hence, the
prescriptive period of ten years would apply to herein
respondents. The question then arises as to the date
from which the ten-year period should be reckoned,
considering that the Extra-Judicial Partition of Real Estate
with Deed of Absolute Sale was registered under Act No.
3344 and not under Act No. 496 (Land Registration Act),
despite the fact the land in dispute was already titled
under Act No. 496 in the names of the Aying siblings at
the time the subject document was executed.
Ossorio Pension Foundation v. CA, 621 SCRA 606
Rosario v. CA, 310 SCRA 464
Paringit v. Bajit, 631 SCRA 584
Uy Aloc v. Cho Jan Jing, 19 Phil. 202
Facts:
 A number of Chinese merchants raised a fund by
voluntary subscription with which they purchased a
valuable tract of land and erected a large building to
be used as a sort of club house for the mutual benefit
of the subscribers to the fund.
 The subscriber organized themselves into an irregular
association, which had no regular articles in the
commercial registry or elsewhere.
 The association not having any existence as a legal
entity, it was agreed to have the title to the property
placed in the name of one of the members, the
defendant, Cho Jan Ling, who on his part accepted the
trust, and agreed to hold the property as the agent of
the members of the association.
 After the club building was completed with the funds
of the members of the association, Cho Jan Ling
collected some P25,000 in rents for which he failed
and refused to account, and upon proceedings being
instituted to compel him to do so, he set up title in
himself to the club property as well as to the rents
accruing therefrom, falsely alleging that he had
bought the real estate and constructed the building
with his own funds, and denying the claims of the
members of the association that it was their funds
which had been used for that purpose.
 Decree of the trial court provides for the conveyance
of the club house and the land on which it stands from
the defendant, Cho Jan Ling, in whose name it is
registered, to the members of the association, and
further makes provision for an accounting by him for
rents had and received.
ISSUE
WON implied trust existed between the association and
Cho Jan Ling.
HELD
Yes.
In that case at bar we think that the evidence clearly
discloses not only that the funds with which the property
in question was purchased were furnished by the
members of the association, but that Cho Jan Ling, in
whose name it was registered, received and holds the
property as the agent and trustee of the association; that
on at least one occasion he admitted the beneficial
ownership to be in the association; and that while the
legal registered title is in his name the beneficial
ownership is in the association. Nor has the doctrine laid
down in the Topiño case any direct bearing upon the
facts proven and the relief sought and granted in this
case. The Topiño case turned on the determination of the
question of the legal title of the grantor of the
conveyance inscribed in the land registry, and the further
question of the right of the holder of a duly registered
title to be secured in his right of possession as against
third persons who do not claim through him, until and
unless the inscription of his title has been judicially
cancelled. In the case at bar the legal title of the holder
of the registered title is not questioned; it is admitted
that the members of the association voluntarily obtained
the inscription in the name of Cho Jan Ling and that they
have no right to have that inscription cancelled; they do
not seek such cancellation, and on the contrary they
allege and prove that the duly registered legal title to the
property is in Cho Jan Ling, but they maintain, and we
think that they rightly maintain, that he holds it under an
obligation, both express and implied, to deal with it
exclusively for the benefit of the members of the
association and subject to their will.
Ty v. Ty, 553 SCRA 306
Facts:
Alexander Ty, son of Alejandro Ty and husband of Sylvia
Ty, dies of cancer at the age of 34. Sylvia files petition for
the settlement of Alexander’s intestate estate. She also
asks court to sell or mortgage properties in order to pay
the estate tax amounting to P4,714,560.02 assessed by
the BIR. The properties include a parcel of land in EDSA
Greenhills, a residential land in Wack Wack, and the
Meridien condo unit in Annapolis, Greenhills.
Alejandro Ty opposed the move and filed for recovery of
the property with prayer for preliminary injunction
and/or temporary restraining order. Plaintiff Alejandro
claims that he owns the EDSA, Wack Wack and Meridien
condo unit because he paid for them. The property was
supposedly registered in trust for Alexander’s brothers
and sisters in case plaintiff dies. Plaintiff also claimed that
Alex had no financial capacity to purchase the disputed
property, as the latter was only dependent on the
former.
Sylvia countered that Alexander had purchased the
property with his money. Alexander was financially
capable of purchasing it because he had been managing
the family corporations since he was 18 years old and
was also engage in other profitable businesses.
The RTC granted the application for preliminary
injunction and decides in favor of plaintiff regarding the
recovery of the property. CA reversed the RTC stating
that the implication created by law under Art. 1448 does
not apply if the property was in the name of the
purchaser’s child. They agreed that plaintiff partly paid
for the EDSA property. Plaintiff appealed.
Issue: whether there was an implied trust under Art.
1448 of the Civil Code?
Held:
No, there was no implied trust created in relation to the
EDSA property. If the person to whom the title is
conveyed is the child of the one paying the price of the
sale, no trust is implied by law under Art. 1448, the so-
called purchase money resulting trust. The said article
provides an exception: “if the person to whom the title is
conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale, NO TRUST is IMPLIED by
LAW, it being disputable presumed that there is a gift in
favor of the child.” The Court also noted that plaintiff
failed to prove that he did not intend a donation.
Regarding the Meridien Condo and Wack Wack property,
the court said that plaintiff failed to prove that purchase
money came from him. They also said that Alexander was
capable of purchasing the property as he had been
working for nine years, had a car care business, and was
actively engaged in the business dealings of several
family corporations from which he received emoluments
and other benefits. Hence, no implied trust created
because there was no proof that plaintiff had paid for
said properties.
Padilla v. CA, 53 SCRA 168
Gabutan v. Nacalaban, 795 SCRA 115
PNB v. Aznar, 649 SCRA 214
Sime Darby Pilipinas v. Mendoza, 699 SCRA 290
FACTS
 Petition for review on certiorari.
 Petitioner Sime Darby Pilipinas, Inc. (Sime Darby)
employed Jesus B. Mendoza (Mendoza) as sales
manager to handle sales, marketing, and distribution
of the company's tires and rubber products.
 Sime Darby bought a Class "A" club share4 in Alabang
Country Club (ACC) from Margarita de Araneta as
evidenced by a Deed of Absolute Sale.
 The share, however, was placed under the name of
Mendoza in trust for Sime Darby since the By-Laws6
of ACC state that only natural persons may own a club
share.
 As part of the arrangement, Mendoza endorsed the
Club Share Certificate in blank and executed a Deed
of Assignment, also in blank, and handed over the
documents to Sime Darby.
 From the time of purchase in 1987, Sime Darby paid
for the monthly dues and other assessments on the
club share.
 When Mendoza retired in April 1995, Sime Darby fully
paid Mendoza his separation pay amounting to more
than ₱3,000,000.
 Nine years later, or sometime in July 2004, Sime
Darby found an interested buyer of the club share for
₱1,101,363.64. Before the sale could push through,
the broker required Sime Darby to secure an
authorization to sell from Mendoza since the club
share was still registered in Mendoza’s name.
 However, Mendoza refused to sign the required
authority to sell or special power of attorney unless
Sime Darby paid him the amount of ₱300,000,
claiming that this represented his unpaid separation
benefits.
 As a result, the sale did not push through and Sime
Darby was compelled to return the payment to the
prospective buyer.
 Sime Darby filed a complaint for damages with writ of
preliminary injunction against Mendoza with the
Regional Trial Court (RTC) of Makati City, Branch 132.
 Sime Darby claimed that it was the practice of the
company to extend to its senior managers and
executives the privilege of using and enjoying the
facilities of various club memberships.
 Sime Darby added that during Mendoza’s
employment with the company until his retirement in
April 1995, Sime Darby regularly paid for the monthly
dues and other assessments on the ACC Class "A" club
share.
 Further, Sime Darby alleged that Mendoza sent a
letter11dated 9 August 2004 to ACC and requested all
billings effective September 2004 be sent to his
personal address.
 Despite having retired from Sime Darby for less than
10 years and long after the employment contract of
Mendoza with the company has been severed,
Mendoza resumed using the facilities and privileges
of ACC, to the damage and prejudice of Sime Darby.
Thus, Sime Darby prayed that a restraining order be
issued, pending the hearing on the issuance of a writ
of preliminary injunction, enjoining Mendoza from
availing of the club’s facilities and privileges as if he is
the owner of the club share.
 Mendoza filed an Answer alleging ownership of the
club share, stated that Sime Darby purchased the
Class "A" club share and placed it under his name as
part of his employee benefits and bonus for past
exemplary service.
 Mendoza admitted endorsing in blank the stock
certificate covering the club share and signing a blank
assignment of rights only for the purpose of securing
Sime Darby’s right of first refusal in case he decides to
sell the club share.
 Mendoza also alleged that when he retired in 1995,
Sime Darby failed to give some of his retirement
benefits amounting to ₱300,000.
 RTC denied Sime Darby’s prayer for restraining order
and preliminary injunction and denied Sime Darby’s
Motion for Summary Judgment explaining that a trial
was no longer necessary since there was no issue as
to any material fact.
 Sime Darby presented witnesses who:
o testified that Mendoza refused to give
Sime Darby his authorization to sell the
club share unless he was paid ₱300,000
as additional retirement benefit;
o testified that the club share was
registered under the name of Mendoza
since ACC’s By-Laws prohibits juridical
persons from acquiring a club share and
attested that Sime Darby paid for the
monthly dues of the share since it was
purchased in 1987; and
o testified that Mendoza was asked to
endorse ACC Stock Certificate No. A-
1880 at the back and to sign the
assignment of rights, as required by Sime
Darby.
 Mendoza presented two witnesses: (1) himself; and
(2) Ranel Villar, the same employee of ACC who also
testified for Sime Darby, who confirmed that the club
share could not be sold to a corporation like Sime
Darby.
 Mendoza testified that (1) he owns the disputed club
share; (2) Sime Darby allowed him to personally
choose the share that he liked as part of his benefits;
(3) as a condition for membership in ACC, he had to
personally undergo an interview with regard to his
background and not the company’s; (4) though he
retired in 1995, he only started paying the club share
dues in 2004 because after his retirement, he
migrated to the United States until he came back in
1999 and since then he had been going back and forth
to the United States; (5) in May 2004, he met with
Atty. Ronald E. Javier, Sime Darby’s representative, to
discuss the supposed selling of the club share which
he refused since there were still unpaid retirement
benefits due him; and (6) ACC recognizes him as the
owner of the club share.
 RTC rendered a Decision in favor of Sime Darby.
 CA reversed the ruling of RTC, held ruled that Sime
Darby failed to prove that it has a clear and
unmistakable right over the club share of ACC. MR
was denied.
ISSUE
WON implied trust existed.
HELD
Yes.
In Thomson v. Court of Appeals,20 we held that a trust
arises in favor of one who pays the purchase price of a
property in the name of another, because of the
presumption that he who pays for a thing intends a
beneficial interest for himself. While Sime Darby paid for
the purchase price of the club share, Mendoza was given
the legal title. Thus, a resulting trust is presumed as a
matter of law. The burden then shifts to the transferee
to show otherwise of the Company."
Being a corporation which is expressly disallowed by
ACC’s By-Laws to acquire and register the club share
under its name, Sime Darby had the share registered
under the name of respondent Mendoza, Sime Darby’s
former sales manager, under a trust arrangement. Such
fact was clearly proved when in the application form17
dated 17 July 1987 of the ACC for the purchase of the
club share, Sime Darby placed its name in full as the
owner of the share and Mendoza as the assignee of the
club share. Also, in connection with the application for
membership, Sime Darby sent a letter18 dated 17
September 1987 addressed to ACC confirming that
"Mendoza, as Sime Darby’s Sales Manager, is entitled to
club membership benefit. While the share was bought by
Sime Darby and placed under the name of Mendoza, his
title is only limited to the usufruct, or the use and
enjoyment of the club’s facilities and privileges while
employed with the company
Paringit v. Bajit, 631 SCRA 584
Facts:
- spouses Julian and Aurelia Paringit leased a lot, built
their home there and raised five children.
- having occupied the lot for years, Terocel Realty offered
to sell it to Julian but he did not have enough money.
Julian sought help from his children to buy the property
but only his son Felipe and wife Josefa had the financial
resources he needed at that time. on January 16, 1984
Julian executed a deed of assignment of leasehold right
in favor of Felipe and his wife that would enable them to
acquire the lot. On April 12, 1984 Felipe and his wife paid
the last installment and the realty company executed a
Deed of Absolute Sale in their favor
- February 25, 1985, due to issues among Julians children
regarding the ownership of the lot, Julian executed an
affidavit clarifying the nature of Felipe and his wifes
purchase of the lot, He claimed that it was bought for the
benefit of all his children.
- Expressing their concurrence with what their father said
in his affidavit, Felipes siblings signed the same. Josefa,
signed the affidavit for Felipe who was in Saudi Arabia.
Only Florencio, did not sign.
- Despite the title, felipe and wife moved to another
house on the same street in 1988. Marciana, et al
continued to occupy the lot with their families without
paying rent.
- On December 18, 1995 Felipe and his wife sent a
demand letter to Marciana, et al asking them to pay
rental arrearages for occupying the property from March
1990 to December 1995. Marciana, et al refused to pay
or reply to the letter. Hence, On March 11, 1996 Felipe
and his wife filed an ejectment suit against them in which
the suit prospered.
- on July 24, 1996 Marciana, et al filed the present action
against Felipe and his wife for annulment of title and
reconveyance of property before the Regional Trial Court
(RTC) of Manila. RTC rendered a decision, finding the
evidence of Marciana, et al insufficient to prove by
preponderance of evidence that Felipe and his wife
bought the subject lot for all of the siblings. Not satisfied
with that decision, Marciana, et al appealed to the Court
of Appeals, where CA reversed the decision of the RTC
and ordered Felipe and his wife to reconvey to Marciana,
et al their proportionate share in the lot.
Issues: Whether or not the CA erred in finding that Felipe
and his wife purchased the subject lot under an implied
trust for the benefit of all the children of Julian
Ruling:
- Yes
- this case are actually what implied trust is about.
Although no express agreement covered Felipe and his
wifes purchase of the lot for the siblings and their father,
it came about by operation of law and is protected by it.
The nature of the transaction established the implied
trust and this in turn gave rise to the rights and
obligations provided by law. Implied trust is a rule of
equity, independent of the particular intention of the
parties
- evidence shows that Felipe and his wife bought the lot
for the benefit of Julian and his children, rather than for
themselves:
- First. There is no question that the house originally
belonged to Julian and Aurelia who built it. When Aurelia
died, Julian and his children inherited her conjugal share
of the house. When Terocel Realty, therefore, granted its
long time tenants on Norma Street the right to acquire
the lots on which their house stood, that right technically
belonged to Julian and all his children. If Julian really
intended to sell the entire house and assign the right to
acquire the lot to Felipe and his wife, he would have
arranged for Felipes other siblings to give their
conformity as co-owners to such sale. And if Felipe and
his wife intended to buy the lot for themselves, they
would have, knowing that Felipes siblings co-owned the
same, taken steps to secure their conformity to the
purchase. These did not happen.
- Second. Julian said in his affidavit that Felipe and his
wife bought the lot from Terocel Realty on his behalf and
on behalf of his other children. Felipe and his wife
advanced the payment because Julian and his other
children did not then have the money needed to meet
the realty companys deadline for the purchase. Julian
added that his other children were to reimburse Felipe
for the money he advanced for them.
Notably, Felipe, acting through his wife, countersigned
Julians affidavit the way his siblings did. The document
expressly acknowledged the parties intention to
establish an implied trust between Felipe and his wife, as
trustees, and Julian and the other children as trustors.
Josefa, Felipes wife, of course claims that she signed the
document only to show that she received a copy of it. But
her signature did not indicate that fact. She signed the
document in the manner of the others.
- If Felipe and his wife really believed that the
assignment of the house and the right to buy the lot were
what their transactions with Julian were and if the
spouses also believed that they became absolute owners
of the same when they paid for the lot and had the title
to it transferred in their name in 1987, then their moving
out of the house in 1988 and letting Marciana, et al
continue to occupy the house did not make sense. They
would make sense only if, as Marciana, et al and their
deceased father claimed, Felipe and his wife actually
acquired the lot only in trust for Julian and all the
children.
- In an implied trust, the beneficiarys cause of action
arises when the trustee repudiates the trust, not when
the trust was created as Felipe and his wife would have
it. The spouses of course registered the lot in their names
in January 1987 but they could not be said to have
repudiated the implied trust by that registration. Their
purchase of the land and registration of its title in their
names are not incompatible with implied trust. It was
understood that they did this for the benefit of Julian and
all the children
De Ocampo v. Zaporteza, 53 Phil. 442
Miguel J. Ossorio Pension Foundation, v. CA, 621 SCRA
606
Heirs of Tanak Pangaaran Patiwayon v. Martinez, 142
SCRA 252
Martinez v. Graño, 42 Phil. 35
FACTS
 Juan Martinez and his wife, Macaria Ticson, were
owners in their lifetime of seven parcels of land of
considerable value, located in the municipality of San
Pablo, in the Province of Laguna, which property,
upon the death in 1910 of the last of the two spouses
abovementioned, devolved by inheritance upon their
numerous living children and the descendants of such
as were dead.
 In due time partition was effected, with the approval
of the Court of First Instance of Laguna, and
appropriate portions were assigned to the several
heirs.
 The persons participating in this division, according to
the project of partition approved by the court on July
7, 1915, were, first, the four children, Sebastiana
 Martinez, Julio Martinez, Isidro Martinez, and
Benedicto Martinez, to each of whom was assigned a
child's part. Three other brothers, Inocente,
Eleuterio, and Apolonio had meantime died.
Inocente Martinez left a widow, named Rosario
Ebron, and four children named respectively Alfredo,
Florinio, Maria-Salome, and Maria-Jacobe. To these
accordingly was assigned in common the portion
which would have pertained to their father, Inocente.
The second deceased brother, Eleuterio Martinez,
also left four orphan children, named respectively
Leoncio, Ulpiano, Zosima, and Maximo, his wife
having died about the same time as himself or soon
thereafter. To these four children, therefore, was
assigned in common the portion that would have
pertained to their father, Eleuterio. The third
deceased brother, Apolonio Martinez, was survived
by his widow, Clemencia Grano, and by their only
child, a boy named Jose, to whom was assigned the
portion that would have pertained to Apolonio. There
was still another brother of the Martinez family,
named Ciriaco, but as he died without issue no
account need be taken of him.
 The property comprising the estate of the deceased
spouses was encumbered with indebtedness, and the
parties in interest had long since been compelled to
resort to the dangerous expedient of selling their
inheritance under a contract of sale with pacto de
retro.
 Prior to the year 1911, one W. W. Robinson had
acquired title to the property under such a contract;
and on October 11 of that year the property was
again sold under pacto de retro to Alfonso Tiaoqui,
of Manila, for the sum of P12,000, apparently in order
to get the means to redeem the property from
Robinson.
 The parties-in-interest secured a loan from "El Hogar
Filipino," a mutual building and loan association of
Manila to be used to redeem said property.
 As the parties in interest were numerous and many
were minors, the adult parties in interest appointed
Clemencia Grano to effect the redemption from
Alfonso Tiaoqui, as the repository of this trust, the
widow of Apolonio Martinez and mother and
guardian of Jose.
 Upon delivery of a check by proper representative of
"El Hogar Filipino" to Clemencia Grano, she
immediately indorsed and delivered it to Alfonso
Tiaoqui, in satisfaction of the stipulated price of
repurchase (P20,000), together with rents in arrears,
due from the Martinez heirs, and the amount of
P4,759.61, including interest. Upon this occasion the
following documents were executed and duly
acknowledged by the parties respectively concerned
therein:
o (1) A deed of sale from Alfonso Tiaoqui,
conveying to Clemencia Grano all the
property which had been sold to him by the
Martinez heirs under contract of sale with
pacto de retro, dated September 28, 1916;
o (2) A mortgage of real estate from
Clemencia Grano, conveying to "El Hogar
Filipino," in consideration of a loan of
P30,000, all of the seven parcels pertaining
to the Martinez estate which had been
obtained by her under the deed of purchase
from Alfonso Tiaoqui, together with four
additional parcels, to one of which, the
parcel (k), more particular reference will be
made in the next succeeding paragraph
hereof.
o (3) A notarial declaration, signed and
acknowledged by Clemencia Grano, in
which she states, among other things, that
she had intervened in the aforementioned
transactions in behalf of all the Martinez
heirs and that the seven parcels of property
proceeding from the Martinez estate which
had been mortgaged by her to "El Hogar
Filipino" belonged to said heirs. She also
states in the same declaration that the
parcel (k), included in the mortgage to "El
Hogar Filipino," is the property of Julio
Martinez, which had been conveyed to her
in order that it might be included in the
mortgage as additional security.
 As "El Hogar Filipino," upon making a loan, required
the borrower to become subscriber to a sufficient
number of shares of the stock of the association to
amortize the loan upon maturity of the shares, all of
the adult Martinez heirs personally and the
guardians of the minor heirs executed a document
jointly with Clemencia Grano, personally and as
guardian of her own minor son Jose, in consideration
of the responsibility thus to be assumed by Clemencia
Grano, as borrower, in which it was agreed that
Clemencia Grano should have exclusive possession
of all the land pertaining to the Martinez estate and
administer the same for the purpose of raising the
necessary revenue to meet her obligations to "El
Hogar Filipino."
 Another document, bearing the signatures of Isidro
Martinez, Julia Martinez, Sebastiana Martinez,
Rosario Ebron, and Clemencia Grano, and
acknowledged before a notary public on December
17, 1917, defined in the fullest and most satisfactory
way the interests of all the parties in the property
derived from the Martinez estate, explained clearly
the function to be undertaken by Clemencia Grano
in respect thereto, which stated, among other things:
o (1) that, although the period for
repurchase under the contract of sale to
Alfonso Tiaoqui had expired on
September 28, 1917, he had
nevertheless been extending the time
until then;
o (2) that a mortgage of the property
which had been sold to Tiaoqui was
under contemplation to "El Hogar
Filipino," as a means of raising the
money to pay off Tiaoqui; but that
o (3) it had been found impossible, owing
to the continued absence of a judge of
First Instance from the Province of
Laguna, to obtain judicial approval of the
mortgaging of the minors' interest;
wherefore the parties in interest had
decided to permit the property to be
consolidated in Tiaoqui, to the end that
he might convey the same absolutely to
Clemencia Grano.
 In the same document, Clemencia Grano,
solemnly and under oath, stated that after the
expiration of the period of the mortgage to the
'Hogar Filipino' and the payment of all sums
owing to it, with bind herself to deliver said
lands to the heirs, according to their respective
shares, in accordance with the partition made by
 us on April 9, 1915, duly approved by the Court
of First Instance of Laguna and shall render an
account of all the income and expenses
occasioned during the five years that the
properties were mortgaged to the 'Hogar
Filipino' in order that each heir may know the
amount of the income and expenses and the
portion thereof corresponding to each of them
after the termination of the five-year period of
the mortgage in favor of the 'Hogar Filipino.
 Notwithstanding the very clear statements
contained in the documents, she nevertheless
asserted that she is the sole and absolute owner
of all the property obtained by her from Tiaoqui
and denies that the Martinez heirs have any
interest whatever therein.
 The Martinez heirs, who are named as plaintiffs
herein, instituted the present action in the
Court of First Instance of Laguna against
Clemencia Grano, both in her own right and as
guardian of Jose Martinez, and against "El Hogar
Filipino", in view of the hostile attitude thus
assumed by Clemencia Grano, as well as in view
of certain acts of maladministration attributed
to her in respect to the application of the
income derived from the property in question.
 Plaintiffs prayed that the agreement under
which Clemencia Grano had been made
administrator of the property and had been
allowed to acquire the legal title in her own
name should be rescinded for her manifest
failure to comply with the trust reposed in her.
 The trial court rendered judgment declaring
Clemencia Grano to be the sole and exclusive
owner of all the property in question, subject to
the mortgage to "El Hogar Filipino", based on the
fact that defendant, Clemencia Grano, was the
holder of the legal title to the questioned
property by the deed of conveyance directly
from Alfonso Tiaoqui, dated December 19, 1917
and rejected the three several documents
wherein Clemencia Grano had recognized that
she was to acquire, or had acquired, said
property in behalf of all the Martinez heirs.
ISSUE: WON defendant was the trustee of the Martinez
heirs.
HELD
Yes.
All three of the notarial documents mentioned tell the
same story and conclusively showed that Clemencia
Grano intended to act for all the Martinez heirs in
repurchasing the questioned property from Alfonso
Tiaoqui.
In addition to the conclusive proof supplied by the three
notarial documents to which reference has been made,
we may add that an examination of the entire history of
the efforts of the parties in interest to recover the
property from Alfonso Tiaoqui, as revealed in other
evidence, both oral and documentary, is convincing that
the intention of everybody concerned was that when
the property was finally recovered and disencumbered
if fortunately this could be accomplished it should
belong to all the Martinez heirs in the respective
proportions indicated in the judicial partition.
It should not pass unnoticed that a strong motive on the
part of Clemencia Grano to act for the Martinez heirs in
the matter of taking over the property from Alfonso
Tiaoqui is to be found in the fact that her own minor son,
Jose Martinez, was himself one of those heirs; and there
can be no doubt that at the time the agreement was
made she had a natural desire to assist all her relatives,
as well as her own son, in recovering the property. This
circumstance adds weight to the antecedent probability
that she would have entered into the exact agreement
which she now seeks to evade.
Moreover, upon examining the proof relative to the
efforts of the Martinez heirs to redeem the property, and
considering the just attitude of continuous indulgence
exhibited by Tiaoqui, it is entirely clear that all he wanted
was to get back the money which had been advanced by
him, together with the stipulated rent. He at no time
showed any desire to keep the property or assert title as
owner by purchase otherwise than as was necessary to
secure the money which he had advanced upon the
property. In other words, the sale with pacto de retro to
him involved a mere loan to the Martinez heirs, secured
by that form of conveyance. This being true, the property
had not consolidated in him; and the heirs could still have
enforced the right of redemption.
As the Martinez heirs thus demonstrably retained their
redemptionary interest in the property in question at the
time it was acquired by Clemencia Grano, the latter was
unquestionably bound by the stipulations contained in
the documents in which she had recognized their rights
and had agreed to hold and administer the property for
the common benefit of all. Those stipulations are not
mere nuda pacta, but are supported by a sufficient
consideration in law, which is found in the circumstance
that by virtue of those agreements Clemencia Grano was
able to acquire, and did acquire, the legal title to
property in which others had a subsisting interest,
whereby she became entitled to use and administer the
same for the purpose and to the end contemplated. Nor
is the situation in anywise changed by the circumstance
that when the property in question was hypothecated to
"El Hogar Filipino," a few other parcels, some of which
belonged exclusively to Clemencia Grano, were included
in the mortgage.
Heirs of Emilio Candelaria v. Romero, 109 Phil. 500
FACTS:
- complaint was filed on December 20, 1956 by Ester
Candelaria and in representation of the other alleged
heirs of Emilio Candelaria, alleges sometime prior to
1917 the latter and his brother Lucas Candelaria bought
each a lot on the installment basis; Lucas paid first two
installments to his lot, but was unable to continue
because he was sick. Latter hold his insterest to his
brother
- subsequent payments made by Emilio Candelaria in the
name of Lucas Candelaria with the understanding that
the necessary documents of transfer will be made later.
- in 1918 a transfer certificate of title was issued n the
name of "Lucas Candelaria married to Luisa Romero.
Lucas held the title to said lot merely in trust for Emilio
- Lucas' possession of the lot was merely tolerated by
Emilio. Lucas had been collecting all its rents for his own
use as financial aid. although from 1926 when Emilio was
confined up to his death, Lucas had been giving part of
the rents to Fortunata Bautista, the second wife of
Emilio, in accordance with the latter's wishes
- Lucas died in August, 1942, survived by the present
defendants and that said defendants are still in
possession of the lot, having refused to reconvey it to
plaintiff despite repeated demands.
- Heirs filed a complaint. However, Instead of answering
the complaint, the defendants filed a motion to dismiss,
alleging plaintiff's cause of action is unenforceable and
that the action has already prescribed. The court upheld
the motion of defendants, hence this appeal.
ISSUE: WON plaintiff's cause of action prescribed
because the the trust created was an express trust.
RULING:
- No, The trust alleged to have been created s an implied
trust. where property is taken by a person under an
agreement to hold it for, or convey it to another or the
grantor, a resulting or implied trust arises in favor of the
person for whose benefit the property was intended.
- It is also the rule there that an implied trust arises where
a person purchases land with his own money and takes a
conveyance thereof in the name of another. In such a
case, the property is held on a resulting trust in favor of
the one furnishing the consideration for the transfer,
unless a different intention or understanding appears.
The trust which results under such circumstances does
not arise from contract or agreement of the parties, but
from the facts and circumstances, that is to say, it results
because of equity and arises by implication or operation
of law.
- In the present case it is apparent that Emilio Candelaria
who furnished the consideration intended to obtain a
beneficial interest in the property in question. it may
naturally be presumed that he intended the purchase for
his own benefit. evident from the above-quoted
allegation in the complaint that the property in question
was acquired by Lucas Candelaria under circumstances
which show it was conveyed to him on the faith of his
intention to hold it for, or convey it to the grantor, the
plaintiff's predecessor in interest.
- Constructive or implied trusts may, of course, be barred
by lapse of time. The rule in such trusts 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.
Continuous recognition of a resulting trust, however,
precludes any defense of laches in a suit to declare and
enforce the trust. The beneficiary of a resulting trust
may, therefore, without prejudice to his right to enforce
the trust, prefer the trust to persist and demand no
conveyance from the trustee.
- It being alleged in the complaint that Lucas held the title
to the lot in question merely in trust for Emilio and that
this fact was acknowledged not only by him but also by
his heirs, herein defendants — which allegation is
hypothetically admitted — we are not prepared to rule
that plaintiff's action is already barred by lapse of time
Cuaycong v. Cuaycong, 21 SCRA 1192
Rosario v. CA, 310 SCRA 464
Adaza v. CA, 171 SCRA 369
Severino v. Severino, 44 Phil. 343
FACTS
 This is an action brought by the plaintiff as the
alleged natural daughter and sole heir of one
Melecio Severino, deceased, to compel the
defendant Guillermo Severino to convey to her four
parcels of land described in the complaint, or in
default thereof to pay her the sum of P800,000 in
damages for wrongfully causing said land to be
registered in his own name.
 Felicitas Villanueva, in her capacity as administratrix
of the estate of Melecio Severino, has filed a
complaint in intervention claiming the same relief as
the original plaintiff, except in so far as she prays that
the conveyance be made, or damages paid, to the
estate instead of to the plaintiff Fabiola Severino.
 Melecio Severino died on the 25th day of May, 1915;
that some 428 hectares of the land were recorded in
the Mortgage Law Register in his name in the year
1901 by virtue of possessory information proceedings
instituted on the 9th day of May of that year by his
brother Agapito Severino in his behalf.
 During the lifetime of Melecio Severino the land was
worked by the defendant, Guillermo Severino, his
brother, as administrator for and on behalf of the said
Melecio Severino; that after Melencio’s death, the
defendant Guillermo Severino continued to occupy
the land.
 In 1916 a parcel survey was made of the lands in the
municipality of Silay, including the land here in
question, and cadastral proceedings were instituted
for the registration of the land titles within the
surveyed area.
 Roque Hofileña, as lawyer for Guillermo Severino,
filed answers in behalf of the latter in said
proceedings claiming the lots as the property of his
client and since no opposition was presented in the
proceedings to the claims of Guillermo Severino, the
court therefore decreed the title in his favor, in
pursuance of which decree certificates of title were
issued to him in the month of March, 1917.
 It was alleged that Guillermo Severino did not appear
personally in proceedings and did not there testify
and the only testimony in support of his claim was
that of his attorney Hofileña, who swore that he knew
the land and that he also knew that Guillermo
Severino inherited the land from his father and that
he, by himself, and through his predecessors in
interest, had possessed the land for thirty years.
 At the time of the cadastral proceedings the plaintiff
Fabiola Severino was a minor.
 The lower court rendered a judgment recognizing the
plaintiff Fabiola Severino as the acknowledged
natural child of the said Melecio Severino and
ordering the defendant to convey 428 hectares of
the land in question to the intervenor as
administratrix of the estate of the said Melecio
Severino, to deliver to her the proceeds in his
possession of a certain mortgage placed thereon by
him and to pay the costs.
 On appeal, defendant argued the trial court erred in
rejecting his offer of evidence to the effect that the
land was owned in common by all the heirs of Ramon
Severino and did not belong to Melecio Severino
exclusively and that such evidence, if admitted, would
have shown that he did not act with fraudulent intent
in taking title to the land; that the trial court erred in
holding him estopped from denying Melecio’s title.
ISSUE
WON defendant was a trustee, therefore obliged to
return, or retransfer, to the heirs or the estate of its
principal, the property committed to his custody.
HELD
Yes.
The relations of an agent to his principal are fiduciary and
it is an elementary and very old rule that in regard to
property forming the subject-matter of the agency, he is
estopped from acquiring or asserting a title adverse to
that of the principal. His position is analogous to that of
a trustee and he cannot consistently, with the principles
of good faith, be allowed to create in himself an interest
in opposition to that of his principal or cestui que trust.
Upon this ground, and substantially in harmony with the
principles of the Civil Law (see sentence of the supreme
court of Spain of May 1, 1900), the English Chancellors
held that in general whatever a trustee does for the
advantage of the trust estate inures to the benefit of the
cestui que trust. (Greenlaw v. King, 5 Jur., 18; Ex parte
Burnell, 7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex parte
James, 8 Ves., 337; Oliver v. Court, 8 price, 127.) The
same principle has been consistently adhered to in so
many American cases and is so well established that
exhaustive citations of authorities are superfluous and
we shall therefore limit ourselves to quoting a few of the
numerous judicial expressions upon the subject.
That the defendant came into the possession of the
property here in question as the agent of the deceased
Melecio Severino in the administration of the property,
cannot be successfully disputed. His testimony in the
case of Montelibano v. Severino (civil case No. 902 of the
Court of First Instance of Occidental Negros and which
forms a part of the evidence in the present case) is, in
fact, conclusive in this respect. He there stated under
oath that from the year 1902 up to the time the
testimony was given, in the year 1913, he had been
continuously in charge and occupation of the land as the
encargado or administrator of Melecio Severino; that he
had always known the land as the property of Melecio
Severino; and that the possession of the latter had been
peaceful, continuous, and exclusive. In his answer filed in
the same case, the same defendant, through his
attorney, disclaimed all personal interest in the land and
averred that it was wholly the property of this brother
Melecio.
Neither is it disputed that the possession enjoyed by the
defendant at the time of obtaining his decree was of the
same character as that held during the lifetime of his
brother, except in so far as shortly before the trial of the
cadastral case the defendant had secured from his
brothers and sisters a relinquishment in his favor of such
rights as they might have in the land.
Castro v. Castro, 57 Phil. 675
Ting Ho, Jr. v. Teng Gui, 558 SCRA 421
Diaz v. Gorricho and Aguado, 103 Phil. 261
Sumaoang v. Judge, RTC Br. XXXI, Buimba, Nueva Ecija,
215 SCRA 136
Vda. de Ouano v. Republic, 642 SCRA 384
FACTS
 Consolidated case. Petitions for Review on Certiorari.
 In 1949, the National Airport Corporation (NAC),
MCIAAs predecessor agency, pursued a program to
expand the Lahug Airport in Cebu City. Through its
team of negotiators, NAC met and negotiated with
the owners of the properties situated around the
airport, which included Lot Nos. 744-A, 745-A, 746,
747, 761-A, 762-A, 763-A, 942, and 947 of the Banilad
Estate.
 As the landowners would later claim, the government
negotiating team, as a sweetener, assured them that
they could repurchase their respective lands should
the Lahug Airport expansion project do not push
through or once the Lahug Airport closes or its
operations transferred to Mactan-Cebu Airport.
 Some of the landowners accepted the assurance and
executed deeds of sale with a right of repurchase.
 Others, however, including the owners of the
aforementioned lots, refused to sell because the
purchase price offered was viewed as way below
market, forcing the hand of the Republic, represented
by the then Civil Aeronautics Administration (CAA), as
successor agency of the NAC, to file a complaint for
the expropriation of Lot Nos. 744-A, 745-A, 746, 747,
761-A, 762-A, 763-A, 942, and 947, among others,
docketed as Civil Case No. R-1881 entitled Republic v.
Damian Ouano, et al, which Court of First Instance
(CFI) of Cebu rendered judgment for the Republic
declaring expropriation.
 In view of the adverted buy-back assurance made by
the government, the owners of the lots no longer
appealed the decision of the trial court.
 Following the finality of the judgment of
condemnation, certificates of title for the covered
parcels of land were issued in the name of the
Republic which, pursuant to Republic Act No. 6958,
were subsequently transferred to MCIAA.
 At the end of 1991, or soon after the transfer of the
aforesaid lots to MCIAA, Lahug Airport completely
ceased operations, Mactan Airport having opened to
accommodate incoming and outgoing commercial
flights. On the ground, the expropriated lots were
never utilized for the purpose they were taken as no
expansion of Lahug Airport was undertaken. This
development prompted the former lot owners to
formally demand from the government that they be
allowed to exercise their promised right to
repurchase. The demands went unheeded. Civil suits
followed.
 On G.R. No. 168770: On August 18, 1997, the Ouanos
instituted a complaint before the Cebu City RTC
against the Republic and the MCIAA for
reconveyance, docketed as Civil Case No. CEB-20743.
RTC, Branch 57 in Cebu City ruled in favor of the
Ouanos and against the Republic of the Philippines
and Mactan Cebu International Airport Authority
(MCIAA) to restore to plaintiffs, the possession and
ownership of their land, Lot No. 763-A upon payment
of the expropriation price to defendants. Acting on
the motion of the Republic and MCIAA for
reconsideration, however, the RTC, Branch 57 in
Cebu City, presided this time by Judge Enriqueta L.
Belarmino, issued, on December 9, 2002, an Order
that reversed its earlier decision of November 28,
2000 and dismissed the Ouanos complaint. CA
affirmed the RTC decision, invoking Civil Case No. R-
1881 entitled Republic v. Damian Ouano, et al., that
the decision did not state any condition that Lot No.
763-A of the Ouanos and all covered lots for that
matter would be returned to them or that they could
repurchase the same property if it were to be used
for purposes other than for the Lahug Airport.
 On G.R. No. 168812: On February 8, 1996, Ricardo L.
Inocian and four others (all children of Isabel Limbaga
who originally owned six [6] of the lots expropriated);
and Aletha Suico Magat and seven others, successors-
 in-interest of Santiago Suico, the original owner of
two (2) of the condemned lots (collectively, the
Inocians), filed before the RTC in Cebu City a
complaint for reconveyance of real properties and
damages against MCIAA. The complaint, docketed as
Civil Case No. CEB-18370, was eventually raffled to
Branch 13 of the court. On September 29, 1997, one
Albert Chiongbian (Chiongbian), alleging to be the
owner of Lot Nos. 761-A and 762-A but which the
Inocians were now claiming, moved and was later
allowed to intervene. RTC directed defendant Mactan
Cebu International Airport Authority (MCIAA) to
reconvey (free from liens and encumbrances) to
plaintiffs the disputed lots, after plaintiffs shall have
paid MCIAA the sums indicated in the decision in Civil
Case No. R-1881 and to pay the aforementioned
plaintiffs the sum or P50,000.00 as and for attorney’s
fees and P10,000.00 for litigation expenses. CA
affirmed the judgment of the RTC, citing and
reproducing excerpts from Heirs of Moreno, virtually
held that the decision in Civil Case No. R-1881 was
conditional, that should MCIAA, or its precursor
agency, discontinue altogether with the operation of
Lahug Airport, then the owners of the lots
expropriated may, if so minded, demand of MCIAA
to make good its verbal assurance to allow the
repurchase of the properties.
 In this petition for review, the Ouanos asserted their
entitlement to recover the litigated property, while
MCIAA asserted their absolute and unconditional title
to the subject expropriated properties.
ISSUE
WON MCIAA can be compelled by the former
landowners to reconvey the parcels of land to them after
the payment of the condemnation price, as the
government merely held the properties condemned in
trust subject to condition, failed to perform the
obligation that is the basis of the transfer of the property.
HELD
Yes.
Constructive trusts are fictions of equity that courts use
as devices to remedy any situation in which the holder of
the legal title, MCIAA in this case, may not, in good
conscience, retain the beneficial interest. We add,
however, as in Heirs of Moreno, that the party seeking
the aid of equity the landowners in this instance, in
establishing the trust must himself do equity in a manner
as the court may deem just and reasonable.
In esse, expropriation is forced private property taking,
the landowner being really without a ghost of a chance
to defeat the case of the expropriating agency. In other
words, in expropriation, the private owner is deprived of
property against his will. Withal, the mandatory
requirement of due process ought to be strictly followed,
such that the state must show, at the minimum, a
genuine need, an exacting public purpose to take private
property, the purpose to be specifically alleged or least
reasonably deducible from the complaint.
Public use, as an eminent domain concept, has now
acquired an expansive meaning to include any use that is
of usefulness, utility, or advantage, or what is productive
of general benefit [of the public].[41] If the genuine
public necessitythe very reason or condition as it were
allowing, at the first instance, the expropriation of a
private land ceases or disappears, then there is no more
cogent point for the governments retention of the
expropriated land. The same legal situation should hold
if the government devotes the property to another public
use very much different from the original or deviates
from the declared purpose to benefit another private
person. It has been said that the direct use by the state
of its power to oblige landowners to renounce their
productive possession to another citizen, who will use it
predominantly for that citizens own private gain, is
offensive to our laws.[42]
A condemnor should commit to use the property
pursuant to the purpose stated in the petition for
expropriation, failing which it should file another petition
for the new purpose. If not, then it behooves the
condemnor to return the said property to its private
owner, if the latter so desires. The government cannot
plausibly keep the property it expropriated in any
manner it pleases and, in the process, dishonor the
judgment of expropriation. This is not in keeping with the
idea of fair play,
The notion, therefore, that the government, via
expropriation proceedings, acquires unrestricted
ownership over or a fee simple title to the covered land,
is no longer tenable. We suggested as much in Heirs of
Moreno and in Tudtud and more recently in Lozada, Sr.
Expropriated lands should be differentiated from a piece
of land, ownership of which was absolutely transferred
by way of an unconditional purchase and sale contract
freely entered by two parties, one without obligation to
buy and the other without the duty to sell. In that case,
the fee simple concept really comes into play. There is
really no occasion to apply the fee simple concept if the
transfer is conditional. The taking of a private land in
expropriation proceedings is always conditioned on its
continued devotion to its public purpose. As a necessary
corollary, once the purpose is terminated or
peremptorily abandoned, then the former owner, if he
so desires, may seek its reversion, subject of course to
the return, at the very least, of the just compensation
received.
To be compelled to renounce dominion over a piece of
land is, in itself, an already bitter pill to swallow for the
owner. But to be asked to sacrifice for the common good
and yield ownership to the government which reneges
on its assurance that the private property shall be for a
public purpose may be too much. But it would be worse
if the power of eminent domain were deliberately used
as a subterfuge to benefit another with influence and
power in the political process, including development
firms. The mischief thus depicted is not at all far-fetched
with the continued application of Fery. Even as the Court
deliberates on these consolidated cases, there is an
uncontroverted allegation that the MCIAA is poised to
sell, if it has not yet sold, the areas in question to Cebu
Property Ventures, Inc. This provides an added
dimension to abandon Fery.
Given the foregoing disquisitions, equity and justice
demand the reconveyance by MCIAA of the litigated
lands in question to the Ouanos and Inocians. In the same
token, justice and fair play also dictate that the Ouanos
and Inocian return to MCIAA what they received as just
compensation for the expropriation of their respective
properties plus legal interest to be computed from
default, which in this case should run from the time
MCIAA complies with the reconveyance obligation.[43]
They must likewise pay MCIAA the necessary expenses it
might have incurred in sustaining their respective lots
and the monetary value of its services in managing the
lots in question to the extent that they, as private
owners, were benefited thereby.
In accordance with Art. 1187 of the Civil Code on mutual
compensation, MCIAA may keep whatever income or
fruits it may have obtained from the parcels of land
expropriated. In turn, the Ouanos and Inocians need not
require the accounting of interests earned by the
amounts they received as just compensation.[44]
Juan v. Yap, Sr., 646 SCRA 753
Facts:
- On 31 July 1995, (Cañeda spouses) mortgaged to
petitioner Richard Juan (petitioner), nephew of
respondent Gabriel Yap, Sr. (respondent), two parcels of
land in Talisay, Cebu to secure a loan of ?1.68 million,
payable within one year.
- 30 June 1998, petitioner sought the extrajudicial
foreclosure of the mortgage
- 5 February 1999, respondent and the Cañeda spouses
executed a memorandum of agreement Cañeda spouses
acknowledged respondent as their "real mortgagee-
creditor Richard Juan [petitioner] is merely a trustee.
- Three days later, the Cañeda spouses and respondent
sued petitioner in the Regional Trial Court of Cebu City
(trial court) to declare respondent as trustee of
petitioner annul petitioner’s bid for the foreclosed
properties, declare the Contract "superseded or
novated" by the MOA, and require petitioner to pay
damages, attorney’s fees and the costs. petitioner
insisted on his rights over the mortgaged properties
- trial court ruled against respondent and his co-plaintiffs
and granted reliefs to petitioner by declaring petitioner
the "true and real" mortgagee, ordering respondent to
pay moral damages and attorney’s fees, and requiring
respondent to deliver the titles in question to petitioner
however, granted the Cañeda spouses’ prayer to redeem
the property and accordingly ordered the release of the
redemption payment to petitioner.
- CA granted the petition, set aside the trial court’s ruling,
declared respondent the Contract’s mortgagee, directed
the trial court to release the redemption payment to
respondent, and ordered petitioner to pay damages and
attorney’s fees. Hence, petitioner prays for the reversal
of the CA’s ruling.
Issue: Whether an implied trust arose between
petitioner and respondent, binding petitioner to hold the
beneficial title over the mortgaged properties in trust for
respondent
Ruling:
- Yes, Court hold affirmative on the issue.
- An implied trust arising from mortgage contracts is not
among the trust relationships the Civil Code
enumerates.14 The Code itself provides, however, that
such listing "does not exclude others established by the
general law on trust x x x."15 Under the general
principles on trust, equity converts the holder of
property right as trustee for the benefit of another if the
circumstances of its acquisition makes the holder
ineligible "in x x x good conscience [to] hold and enjoy
[it]."16 As implied trusts are remedies against unjust
enrichment, the "only problem of great importance in
the field of constructive trusts is whether in the
numerous and varying factual situations presented x x x
there is a wrongful holding of property and hence, a
threatened unjust enrichment of the defendant."17
Applying these principles, this Court recognized
unconventional implied trusts in contracts involving the
purchase of housing units by officers of tenants’
associations in breach of their obligations,18 the
partitioning of realty contrary to the terms of a
compromise agreement,19 and the execution of a sales
contract indicating a buyer distinct from the provider of
the purchase money.20 In all these cases, the formal
holders of title were deemed trustees obliged to transfer
title to the beneficiaries in whose favor the trusts were
deemed created. We see no reason to bar the
recognition of the same obligation in a mortgage
contract meeting the standards for the creation of an
implied trust. An implied trust arising from mortgage
contracts is not among the trust relationships the Civil
Code enumerates.14 The Code itself provides, however,
that such listing "does not exclude others established by
the general law on trust x x x."15 Under the general
principles on trust, equity converts the holder of
property right as trustee for the benefit of another if the
circumstances of its acquisition makes the holder
ineligible "in x x x good conscience [to] hold and enjoy
[it]."16 As implied trusts are remedies against unjust
enrichment, the "only problem of great importance in
the field of constructive trusts is whether in the
numerous and varying factual situations presented x x x
there is a wrongful holding of property and hence, a
threatened unjust enrichment of the defendant."17
Applying these principles, this Court recognized
unconventional implied trusts in contracts involving the
purchase of housing units by officers of tenants’
associations in breach of their obligations,18 the
partitioning of realty contrary to the terms of a
compromise agreement,19 and the execution of a sales
contract indicating a buyer distinct from the provider of
the purchase money.20 In all these cases, the formal
holders of title were deemed trustees obliged to transfer
title to the beneficiaries in whose favor the trusts were
deemed created. We see no reason to bar the
recognition of the same obligation in a mortgage
contract meeting the standards for the creation of an
implied trust.
Sing Juco and Sing Bengco v. Sunyantong and Llorente,
43 Phil. 589
Hernandez v. Hernandez, 645 SCRA 24
Gonzales v. Jimenez, Sr., 13 SCRA 80
Lopez v. CA, 574 SCRA 26
FACTS
 An action for reconveyance instituted by petitioner
Richard B. Lopez in his capacity as trustee of the
estate of the late Juliana Lopez Manzano (Juliana) to
recover from respondents several large tracts of lands
allegedly belonging to the trust estate of Juliana.
 The decedent, Juliana, was married to Jose Lopez
Manzano (Jose) and their union did not bear any
children.
 Juliana was the owner of several properties, among
them, the properties subject of this dispute and the
same were the exclusive paraphernal properties of
Juliana together with a parcel of land situated in
Mindoro known as Abra de Ilog and a fractional
interest in a residential land on Antorcha St., Balayan,
Batangas.
 Juliana executed a notarial will, whereby she
expressed that she wished to constitute a trust fund
for her paraphernal properties, denominated as
Fideicomiso de Juliana Lopez Manzano (Fideicomiso),
to be administered by her husband and if her husband
were to die or renounce the obligation, her nephew,
Enrique Lopez, was to become administrator and
 executor of the Fideicomiso. Two-thirds (2/3) of the
income from rentals over these properties were to
answer for the education of deserving but needy
honor students, while one-third 1/3 was to shoulder
the expenses and fees of the administrator. As to her
conjugal properties, Juliana bequeathed the portion
that she could legally dispose to her husband, and
after his death, said properties were to pass to her
biznietos or great grandchildren.
 Juliana initiated the probate of her will five (5) days
after its execution, but she died on 12 August 1968,
before the petition for probate could be heard.
 The petition was pursued instead in Special
Proceedings (S.P.) No. 706 by her husband, Jose, who
was the designated executor in the will and the Court
of First Instance, Branch 3, Balayan, Batangas, acting
as probate court, admitted the will to probate and
issued the letters testamentary to Jose who then
submitted an inventory of Juliana’s real and personal
properties with their appraised values, which was
approved by the probate court.
 Thereafter, Jose filed a report, which included a
proposed project of partition and explained that as
the only compulsory heir of Juliana, he was entitled
by operation of law to one-half (1/2) of Julianas
paraphernal properties as his legitime, while the
other one-half (1/2) was to be constituted into the
Fideicomiso and at the same time alleged that he and
Juliana had outstanding debts totaling P816,000.00
excluding interests, and that these debts were
secured by real estate mortgages and that if these
debts were liquidated, the residuary estate available
for distribution would, value-wise, be very small.
 Jose proceeded to offer a project of partition listing
relevant properties belonging to Fideicomiso and
those properties which he alleged were registered in
both his and Julianas names, totaling 13 parcels in all
including the disputed properties consisting of six (6)
parcels, all located in Balayan, Batangas.
 The probate court issued an order approving the
project of partition ordered that new certificates be
issued in favor of Jose as trustee of the Fideicomiso
covering one-half (1/2) of the properties listed under
paragraph 14 of the project of partition; and
regarding the other half, to be registered in the name
of Jose as heir of Juliana.
 The properties which Jose had alleged as registered in
his and Julianas names, including the disputed lots,
were adjudicated to Jose as heir, subject to the
condition that Jose would settle the obligations
charged on these properties. The probate court, thus,
directed that new certificates of title be issued in
favor of Jose as the registered owner thereof and on
even date, the certificates of title of the disputed
properties were issued in the name of Jose.
 The Fideicomiso was constituted in S.P No. 706
encompassing one-half (1/2) of the Abra de Ilog lot on
Mindoro, the 1/6 portion of the lot in Antorcha St. in
Balayan, Batangasand all other properties inherited
ab intestato by Juliana from her sister, Clemencia, in
accordance with the order of the probate court in S.P.
No. 706. The disputed lands were excluded from the
trust.
 Jose died on 22 July 1980, leaving a holographic will
disposing of the disputed properties to respondents.
Pursuant to Jose’s will, the RTC ordered on 20
December 1983 the transfer of the disputed
properties to the respondents as the heirs of Jose.
Consequently, the certificates of title of the disputed
properties were cancelled and new ones issued in the
names of respondents.
 RTC of Batangas, Branch 9 appointed petitioner as
trustee of Juliana’s estate in S.P. No. 706.
 On 11 December 1984, petitioner instituted an action
for reconveyance of parcels of land with sum of
money before the RTC of Balayan, Batangas against
respondents alleging that Jose was able to register in
his name the disputed properties, which were the
paraphernal properties of Juliana, either during their
conjugal union or in the course of the performance of
his duties as executor of the testate estate of Juliana
and that upon the death of Jose, the disputed
properties were included in the inventory as if they
formed part of Jose’s estate when in fact Jose was
holding them only in trust for the trust estate of
Juliana.
 RTC rendered a summary judgment dismissing the
action on the ground of prescription of action. The
RTC also denied respondents motion to set date of
hearing on the counterclaim.
 CA denied the appeals filed by both petitioner and
respondents and also denied petitioners motion for
reconsideration for lack of merit.
 Petitioner insists that an express trust was
constituted over the disputed properties; thus the
registration of the disputed properties in the name of
Jose as trustee cannot give rise to prescription of
action to prevent the recovery of the disputed
properties by the beneficiary against the trustee.
ISSUE
WON the fiduciary relation assumed by the late Jose
Lopez Manzano, as trustee, pursuant to the last will and
testament of Juliana Lopez Manzano was implied trust,
instead of express trust.
HELD
Yes.
On the premise that the disputed properties were the
paraphernal properties of Juliana which should have
been included in the Fideicomiso, their registration in the
name of Jose would be erroneous and Joses possession
would be that of a trustee in an implied trust. Implied
trusts are those which, without being expressed, are
deducible from the nature of the transaction as matters
of intent or which are superinduced on the transaction
by operation of law as matters of equity, independently
of the particular intention of the parties.[14]
The provision on implied trust governing the factual
milieu of this case is provided in Article 1456 of the Civil
Code, which states:
ART. 1456. If property is acquired through mistake or
fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of
the person from whom the property comes.
In Aznar Brothers Realty Company v. Aying,[15] the Court
differentiated two kinds of implied trusts, to wit:
x x x In turn, implied trusts are either resulting or
constructive trusts. These two are differentiated from
each other as follows:
Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable title or interest and are presumed always to
have been contemplated by the parties. They arise from
the nature of circumstances of the consideration
involved in a transaction whereby one person thereby
becomes invested with legal title but is obligated in
equity to hold his legal title for the benefit of another. On
the other hand, constructive trusts are created by the
construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise
contrary to intention against one who, by fraud, duress
or abuse of confidence, obtains or holds the legal right to
property which he ought not, in equity and good
conscience, to hold.[16]
A resulting trust is presumed to have been contemplated
by the parties, the intention as to which is to be found in
the nature of their transaction but not expressed in the
deed itself.[17] Specific examples of resulting trusts may
be found in the Civil Code, particularly Arts. 1448,[18]
1449,[19] 1451,[20] 1452[21] and 1453.[22]
A constructive trust is created, not by any word evincing
a direct intention to create a trust, but by operation of
law in order to satisfy the demands of justice and to
prevent unjust enrichment.[23] It is raised by equity in
respect of property, which has been acquired by fraud,
or where although acquired originally without fraud, it is
against equity that it should be retained by the person
holding it.[24] Constructive trusts are illustrated in Arts.
1450,[25] 1454,[26] 1455[27] and 1456.[28]
The disputed properties were excluded from the
Fideicomiso at the outset. Jose registered the disputed
properties in his name partly as his conjugal share and
partly as his inheritance from his wife Juliana, which is
the complete reverse of the claim of the petitioner, as
the new trustee, that the properties are intended for the
beneficiaries of the Fideicomiso. Furthermore, the
exclusion of the disputed properties from the
Fideicomiso was approved by the probate court and,
subsequently, by the trial court having jurisdiction over
the Fideicomiso. The registration of the disputed
properties in the name of Jose was actually pursuant to
a court order. The apparent mistake in the adjudication
of the disputed properties to Jose created a mere implied
trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso.
Now that it is established that only a constructive trust
was constituted over the disputed properties, may
prescription for the recovery of the properties
supervene?
Pasiño v. Monterroyo, 560 SCRA 739
FACTS:
- Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No.
2139) was part of a 24-hectare land occupied, cultivated
and cleared by Laureano Pasio (Laureano) in 1933. 18
February 1935, Laureano filed a homestead application
over the entire 24-hectare land. On 11 September 1941,
the Director of Lands issued an Order [7] approving
Laureanos homestead application and was recorded in
his name.
- Laureano died on 24 March 1950 15 April 1952, the
Director of Lands issued an Order issuance of a
homestead patent in favor of Laureano, Laureanos heirs
did not receive the order and consequently, the land was
not registered under Laureanos name or under that of
his heirs.
- Petitioners claimed that Laureanos heirs continuously
possessed and cultivated both lots. Petitioners alleged
that their possession of Lot No. 2139 was interrupted on
3 January 1993 when respondents forcibly took
possession of the property.
- Respondents alleged that they had been in open,
continuous, exclusive and notorious possession of Lot
No. 2139, by themselves and through their predecessors-
in-interest, since 10 July 1949. In 1992, Arturo sold Lot
No. 2139 in favor of respondents father, Dr. Monterroyo,
by virtue of an oral contract. On 5 January 1995, Arturo
executed a Deed of Confirmation of Absolute Sale of
Unregistered Land in favor of Dr. Monterroyos heirs.
- Hence petitioner filed the case against respondents.
- RTC ruled in favor of defendants. Petitioners appeled to
the CA but CA affirmed the decision of the RTC. Thus this
present case
ISSUE: WON the property in question belonged to the
defendants by virtue of constructive trust.
Ruling:
- Yes, Under the principle of constructive trust,
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.
- In the action for reconveyance, the decree of
registration is respected as incontrovertible but what is
sought instead is the transfer of the property wrongfully
or erroneously registered in anothers name to its rightful
owner or to one with a better right. [30] If the
registration of the land is fraudulent, the person in
whose name the land is registered holds it as a mere
trustee, and the real owner is entitled to file an action for
reconveyance of the property
- In the case before us, respondents were able to
establish that they have a better right to Lot No. 2139
since they had long been in possession of the property in
the concept of owners, by themselves and through their
predecessors-in-interest. Hence, despite the
irrevocability of the Torrens titles issued in their names
and even if they are already the registered owners under
the Torrens system, petitioners may still be compelled
under the law to reconvey the property to respondents.
Hortizuela v. Tagufa, 751 SCRA 371
Home Guaranty Corp. v. La Savoje Dev. Corp., 748 SCRA
312
Ramos v. Ramos, 61 SCRA 284, 299
Diaz v. Gorricho and Aguado, 103 Phil. 261
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.
 Appellee Carmen J. Gorricho filed an action against
Maria Sevilla in the Court of First Instance of Manila
(C. C. No. 43474) 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
Gorricho 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
lands as owner ever since.
 In November, 1951, Maria Sevilla died and her
children Manuel Diaz, Constancia Diaz, and Sor Petra
Diaz (Lolita Diaz) filed the present action (C. C. No. 926
of the Court of First Instance of Nueva Ecija) 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.
 The court held 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.
 On appeal, appellants contended that:
o their father’s half of the disputed
property was acquired by Carmen J.
Gorricho through an error of the
provincial sheriff;
o that having been acquired through error,
it was subject to an implied trust, as
provided by Article 1456 of the new Civil
Code; and
o since the trust is continuing and
subsisting, the appellants may compel
reconveyance of the property despite
the lapse of time, specially because
prescription does not run against titles
registered under Act 496.
ISSUE
WON implied trust may not be barred by laches and
prescription.
HELD
Yes, implied trust may be barred by laches and
prescription.
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 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, and until the alleged
trustee has died, will not be aided by a court of equity
to establish his trust." (54 Am. Jur., pp. 448-450.)
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 is linked to the
beneficiary by confidential or fiduciary relations. The
trustee’s possession is, therefore, not adverse to the
beneficiary, until and unless the latter is made aware that
the trust has been repudiated. 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.
Of course, the equitable doctrine of estoppel by laches
requires that the one invoking it must show, not only
the unjustified inaction, but that some unfair injury
would result to him unless the action is held barred (Go
Chi Gun v. Co Cho, 96 Phil., 622; Mejia v. Gamponia, * 53
Off. Gaz., 677). This requirement the appellees have not
met, and they are thereby bereft of the protection of
this rule.
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 v. Insular Treasurer, 49 Phil., 244). Appellants
are, however, in error in believing that like express trusts,
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 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 (Gayondato v. Insular Treasurer,
supra). 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, as pointed out by the court
below, 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 (54 Am. Jur., secs. 580, 581; 65 C. J., secs. 956,
957, 958; Amer. Law Institute, Restatement on Trusts,
section 219; on Restitution, section 179; Stianson v.
Stianson, 6 ALR 287; Claridad v. Benares, 97 Phil., 973).
Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, 587
SCRA 417
Escay v. CA, 61 SCRA 369
Government v. Abadilla, 46 Phil. 642
Tong v. Go Tiat Kun, 722 SCRA 623
Heirs of Candelaria v. Romero, 109 Phil. 500
FACTS
 Ester Candelaria, filed a complaint on December 20,
1956 , in her own behalf and in representation of the
other alleged heirs of Emilio Candelaria.
 Petitioners alleged that sometime prior to 1917
Emiliano Candelaria and his brother Lucas Candelaria
bought each a lot in the Solokan Subdivision on the
installment basis; that Lucas paid the first two
installments corresponding to his lot, then unable to
meet the subsequent installments because of
sickness which caused him to be bedridden, sold his
interest therein to his brother Emilio, who then
reimbursed him the amount he had already paid, and
thereafter continued payment of the remaining
installments until the whole purchase price had been
fully satisfied,
 It was further alleged that the subsequent payments
made by Emilio Candelaria until fully paid were made
in the name of Lucas Candelaria, with the
understanding that the necessary documents of
transfer will be made later, the reason that the
transaction being from brother to brother.
 Moreover, it was alleged that a transfer certificate of
title for said lot was issued by the register of deeds of
Manila in the name of "Lucas Candelaria married to
Luisa Romero" and Lucas held the title to said lot
merely in trust for Emilio and that this fact was
acknowledged not only by him but also by the
defendants (his heirs) on several occasions.
 Lucas' possession of the lot was merely tolerated by
Emilio and his heirs and from the time Emilio bought
the lot from his brother, Lucas had been collecting all
its rents for his own use as financial aid to him as a
brother in view of the fact that he was bedridden
without any means of livelihood and with several
children to support, although from 1926, when Emilio
was confined at the Culion Leper Colony up to his
death on February 5, 1936, Lucas had been giving part
of the rents to Fortunata Bautista, the second wife of
Emilio, in accordance with the latter's wishes.
 Lucas died in August, 1942, survived by the present
defendants, who are his spouse Luisa Romero and
several children; and that said defendants are still in
possession of the lot, having refused to reconvey it to
plaintiff despite repeated demands.
 Defendants filed a motion to dismiss, alleging, among
other things, that plaintiff's cause of action is
unenforceable under the new Civil Code and that the
action has already prescribed.
 The lower grant granted the motion to dismiss,
held that an express and not an implied trust was
created as may be gleaned from the facts alleged
in the complaint, which is unenforceable without
any writing, and that since Transfer Certificate of
Title No. 9584 covering the land in question had
been issued to Lucas Candelaria way-back in
1918 or 38 years before the filing of the
complaint, the action has already prescribed.
ISSUE
WON the implied trust, in the case at bar, prescribed by
laches.
HELD
No.
The trust alleged to have been created, in our opinion, is
an implied trust. As held, in effect, by this Court in the
case of Martinez vs. Graño (42 Phil., 35), where property
is taken by a person under an agreement to hold it for, or
convey it to another or the grantor, a resulting or implied
trust arises in favor of the person for whose benefit the
property was intended. This rule, which has been
incorporated in the new Civil Code in Art. 1453 thereof,
is founded upon equity. The rule is the same in the
United States, particularly where, on the faith of the
agreement or the understanding, the grantee is enabled
to gain an advantage in the purchase of the property or
where the consideration or part thereof has been
furnished by or for such other. Thus, it has been held that
where the grantee takes the property under an
agreement to convey another on certain conditions, a
trust results for the benefit of such other or his heirs,
which equity will enforce according to the agreement.
(89 C.J.S. 960.) It is also the rule there that an implied
trust arises where a person purchases land with his own
money and takes a conveyance thereof in the name of
another. In such a case, the property is held on a
resulting trust in favor of the one furnishing the
consideration for the transfer, unless a different
intention or understanding appears. The trust which
results under such circumstances does not arise from
contract or agreement of the parties, but from the facts
and circumstances, that is to say, it results because of
equity and arises by implication or operation of law. (See
89 C.J.S. 964-968.)
Constructive or implied trusts may, of course, be barred
by lapse of time. The rule in such trusts 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. (Diaz,
et al. vs. Gorricho, et al., 103 Phil., 261; 54 Off. Gaz. [37]
8429.) Continuous recognition of a resulting trust,
however, precludes any defense of laches in a suit to
declare and enforce the trust. (See 581, 54 Am Jur. pp.
448-450.) The beneficiary of a resulting trust may,
therefore, without prejudice to his right to enforce the
trust, prefer the trust to persist and demand no
conveyance from the trustee. It being alleged in the
complaint that Lucas held the title to the lot in question
merely in trust for Emilio and that this fact was
acknowledged not only by him but also by his heirs,
herein defendants — which allegation is hypothetically
admitted — we are not prepared to rule that plaintiff's
action is already barred by lapse of time. On the contrary,
we think the interest of justice would be better served if
she and her alleged co-heirs were to be given an
opportunity to be heard and allowed to present proof in
support of their claim.
Heirs of Yambao v. Heirs of Yambao, 789 SCRA 361
Varsity Hills v. Navarro, 43 SCRA 503
Cañezo v. Rojas, 538 SCRA 242
Figuracion v. Figuracion-Gerilla, 690 SCRA 495
Cavile v. Litania-Hong, 581 SCRA 408
FACTS
 On 5 April 1937, a Deed of Partition was entered into
by the heirs of the spouses Bernardo Cavile and
Tranquilina Galon.
 Said heirs included the legitimate children of
Bernardo and Tranquilina, namely, (1) Susana Cavile,
(2) Castor Cavile, and (3) Benedicta Cavile; as well as
the children of Bernardo by his previous marriages,
specifically: (4) Simplicia Cavile, (5) Fortunato Cavile,
and (6) Vevencia Cavile.
 Subject of the Deed of Partition were several parcels
of land situated in the Municipality of Tolong, Negros
Oriental, which were then covered by Tax
 Declarations No. 5615, No. 5729, No. 7143, No. 7421
and No. 7956, all under the name of Bernardo.
 In accordance with the Deed of Partition, the conjugal
properties of Bernardo and Tranquilina were divided
into two parts. The first part, corresponding to
Bernardos share, was further divided into six equal
shares and distributed among his six heirs. The
second part, corresponding to Tranquilinas share,
was subdivided only into three shares and distributed
among her children with Bernardo, i.e., Susana,
Castor, and Benedicta.
 Also stated in the Deed of Partition was the sale by
the other aforementioned legal heirs to their co-heir
Castor of their aliquot shares in the lots covered by
Tax Declarations No. 7143, No. 7421, and No. 7956;
thus, making Castor the sole owner of the said
properties. Similarly, the Deed of Partition
acknowledged the sale by all the legal heirs to
Ulpiano Cavile of their respective shares in the lot
covered by Tax Declaration No. 5729, thus,
transferring to the latter absolute ownership of said
parcel of land.
 On 5 August 1960, Castor and Susana executed a
Confirmation of Extrajudicial Partition, whereby
Castor recognized and confirmed that the lots
covered by Tax Declarations No. 2039 and No. 2040
were the just and lawful shares of Susana in the
properties left by their deceased parents Bernardo
and Tranquilina, and that Susana was in actual
possession of the said properties.
 According to the Confirmation of Extrajudicial
Partition, the lot covered by Tax Declaration No. 2039
was bounded on the North by Simplicio Cavile, on the
East by Rio Bayawan, on the South by Napasu-an, and
on the West by Napasu-an Creek and Julian Calibog;
while the one covered by Tax Declaration No. 2040
was bounded on the North by Hilario Navvaro (sic), on
the South by Fortunato Cavile, on the East by Silverio
Yunting, and on the West by Maximino (sic)
Balasabas.
 The descriptions of the lots covered by Tax
Declarations No. 2039 and No. 2040 in the
Confirmation of Extrajudicial Partition were
strikingly close to those of the lots covered by Tax
Declarations No. 7421 and No. 7956, respectively, in
the Deed of Partition. The lot covered by Tax
Declaration No. 7421 was described in the Deed of
Partition as bounded on the North by Simplicio Cavile
antes Roman Echaves, on the East by Rio Bayawan, on
the South by Riachuelo Napasu-an, and on the West
by Riachuelo Napasu-an y Julian Calibug antes
Francisco Tacang. The lot covered by Tax Declaration
No. 7956 was identified to be the one bounded on the
North by Hilario Navaro, on the East by Silverio
Yunting, on the South by Fortunato Cavile, and on the
West by Maximiano Balasabas.
 Fourteen years after the execution of the
Confirmation of Extrajudicial Partition in 1960,
respondents filed on 23 December 1974 a Complaint
for Reconveyance and Recovery of Property with
Damages before the RTC against Perfecta Cavile, the
daughter of Castor, Jose de la Cruz, the husband of
Perfecta (hereinafter petitioner spouses), and the
Rural Bank of Bayawan, Inc.
 Respondents invoked the Confirmation of
Extrajudicial Partition dated 5 August 1960 wherein
Castor purportedly recognized Susanas ownership of
the subject lots alleged that Castor and petitioner
spouses eventually intruded upon and excluded
respondents from the subject lots and when Castor
died in 1968, petitioner spouses continued their
unlawful occupancy of the subject lots, planting on
the same and harvesting the products.
 Petitioner spouses asserted that the Confirmation of
Extrajudicial Partition dated 5 August 1960 involving
the subject lots was a nullity since said properties
were never owned nor adjudicated in favor of
Susana, respondents predecessor-in-interest; that
Castor and Susana executed the Confirmation of
Extrajudicial Partition merely to accommodate the
latter who then needed security for the loan she was
trying to obtain from the Rural Bank of Dumaguete
City.
 RTC declared herein petitioner spouses as the
absolute owners over the parcels of land in
litigation, dismissed the complaint and counterclaim
was likewise dismissed for lack of merit held that the
petitioner spouses evidence was more worthy of
credence in establishing their ownership of the
subject lots based on Perfecta’s testimonies that (1)
Castor immediately took possession of the subject
lots after the Deed of Partition was executed in 1937
and such fact was supported by the unrebutted
testimony of Luciana Navarra, petitioner Perfectas
cousin, who declared that her husband was petitioner
Perfectas tenant on the subject lots since 1947 and
that respondents never actually occupied the said
properties and that (2) the Confirmation of
Extrajudicial Partition was executed by Castor solely
to accommodate Susana, enabling her to obtain a
bank loan using the subject lots as collateral; that it
was highly questionable and contrary to human
experience that respondents waited nine long years
after their ejection from the subject lots in 1965
before taking any legal step to assert their rights over
the same and RTC concluded that the Confirmation of
Extrajudicial Partition was a simulated contract which
was void and without any legal effect.
 CA rendered the assailed Decision in favor of
respondents, held that:
o respondents’ contention that the Confirmation
of Extrajudicial Partition was not a simulated
document as it was executed by and between
parties who had firsthand knowledge of the
Deed of Partition of 1937, that the
Confirmation of Extrajudicial Partition
constituted evidence that was of the highest
probative value against the declarant, Castor,
because it was a declaration against his
proprietary interest;
o that other than petitioner Perfectas testimony,
the appellate court found no other proof extant
in the records to establish that the
Confirmation of Extrajudicial Partition was a
simulated document or that it did not express
the true intent of the parties.
o The Court of Appeals likewise highlighted the
fact that Castor did not attempt to have the
subject lots declared in his name during his
lifetime and that petitioner Perfecta herself
admitted that she only started paying real
estate taxes for the subject lots in 1993. It was
Susana and, later, her children, respondents
Justina and Genoveva, who had been paying for
the realty taxes on the subject lots since 1937.
ISSUE
WON the action for reconveyance based on implied or
constructive trust which prescribes in 10 years from the
date of the issuance of the Certificate of Title over the
property may still be filed, in the case at bar.
HELD
No.
Verily, an aggrieved party may still file an action for
reconveyance based on implied or constructive trust,
which prescribes in 10 years from the date of the issuance
of the Certificate of Title over the property, provided that
the property has not been acquired by an innocent
purchaser for value. An action for reconveyance is one
that seeks to transfer property, wrongfully or
fraudulently registered by another, to its rightful and
legal owner. If the registered owner, be he the patentee
or his successor-in-interest to whom the free patent was
transferred, knew that the parcel of land described in the
patent and in the Torrens title belonged to another, who
together with his predecessors-in-interest had been in
possession thereof, and if the patentee and his
successor-in-interest were never in possession thereof,
the true owner may bring an action to have the
ownership of or title to the land judicially settled. The
court in the exercise of its equity jurisdiction, without
ordering the cancellation of the Torrens titled issued
upon the patent, may direct the defendant, the
registered owner, to reconvey the parcel of land to the
plaintiff who has been found to be the true owner
thereof.
In the instant case, respondents brought the action for
reconveyance of the subject lots before the RTC only on
23 December 2004, or more than 12 years after the
Torrens titles were issued in favor of petitioner Perfecta
on 9 October 1962. The remedy is, therefore, already
time-barred.
Heirs of Domingo Valientes v. Ramas, 638 SCRA 444
Geronimo and Isidro v. Nava and Aquino, 105 Phil. 145
Adaza v. CA, 171 SCRA 369
Castro v. Castro, 57 Phil. 675
Gabutan v. Nacalaban, 795 SCRA 115
FACTS
 On January 25, 1957, Godofredo Nacalaban
(Godofredo) purchased an 800-square meter parcel
of prime land (property) in Poblacion, Cagayan de Oro
City from Petra, Fortunata, Francisco and Dolores, all
surnamed Daamo.
 Pursuant to the sale, Transfer Certificate of Title (TCT)
No. T-22597 covering the property was issued in the
name of Godofredo. He thereafter built a house on it.
 Godofredo died on January 7, 1974 and was survived
by his wife, Baldomera, and their children, Dante,
Helen, and Susan.
 On March 19, 1979, Baldomera issued a Certification
in favor of her mother, Melecia which provided, in
effect, that Baldomera was allowing her mother to
build and occupy a house on the portion of the
property.
 Accordingly, the house was declared for taxation
purposes. The tax declaration presented in evidence
showed that Melecia owned the building on the land
owned by Godofredo.
 Baldomera died on September 11, 1994.
 On July 3, 1996, her children executed an Extrajudicial
Settlement of Estate of Deceased Person with Sale
(Extrajudicial Settlement with Sale) where they
adjudicated unto themselves the property and sold it
to the Cagayan Capital College. On August 22, 1996,
TCT No. T-2259 was cancelled and TCT No. T-
11184616 covering the property was issued in the
name of the College.
 In a letter dated May 5, 1997, the College demanded
Trifonia D. Gabutan, Mary Jane Gilig, Allan Ubaub,
and Evelyn Dailo, the heirs of Melecia, who were
occupying the house on the property, to vacate the
premises.
 On July 7, 1997, Gabutan, et al. filed a Complaint for
Reconveyance of Real Property, Declaration of
Nullity of Contracts, Partition and Damages with
Writ of Preliminary Attachment and Injunction
against Nacalaban, et al. and the College alleging
that:
o (1) Melecia bought the property using her own
money but Godofredo had the Deed of
Absolute Sale executed in his name instead of
his mother-in-law;
o (2) Godofredo and Baldomera were only
trustees of the property in favor of the real
owner and beneficiary, Melecia;
o (3) they only knew about the Extrajudicial
Settlement with Sale upon verification with the
Registry of Deeds; and
o (4) the College was a buyer in bad faith, being
aware they were co-owners of the property.
 College claimed that it is a buyer in good faith and for
value, having "made exhaustive investigations and
verifications from all reliable sources" that Melecia
and her heirs were staying in the property by mere
tolerance alleging that:
o (1) in the tax declaration of the residential
house, Melecia admitted that the lot owner is
Godofredo;
o (2) the occupancy permit of Melecia was issued
only after Godofredo issued a certification to
the effect that Melecia was allowed to occupy
a portion of the property; and
o (3) the Extrajudicial Settlement with Sale was
published in three consecutive issues of
Mindanao Post, a newspaper of general
circulation.
 Nacalaban, et al. denied the allegations of Gabutan,
et al. and claimed to have acquired the property by
intestate succession from their parents, who in their
lifetime, exercised unequivocal and absolute
ownership over the property and also set up the
defenses of laches and prescription, and asserted
that the action for reconveyance was improper
because the property had already been sold to an
innocent purchaser for value.
 College filed a separate Complaint for Unlawful
Detainer and Damages with the Municipal Trial Court
in Cities (MTCC) against Trifonia, Mary Jane, Allan,
Evelyn and Nicolas Dailo (Heirs of Melecia).
 In their Answer with Affirmative and/or Negative
Defenses with Compulsory Counterclaim,37 the Heirs
of Melecia claimed that they own and possess the
property in co-ownership with Nacalaban, et al. and
Gabutan, et al. because it was purchased by Melecia,
their common predecessor.38 They also claimed that
 the house in which they reside was constructed at her
expense and that College had prior knowledge of this
co-ownership, and hence, was a purchaser in bad
faith; also raised the defense of forum-shopping in
view of the pendency of the action for reconveyance
and concluded that in view of the issues and the value
of the property, as well, the MTCC had no jurisdiction
over the case.
 MTCC found it had jurisdiction to hear the case and
ruled in favor of the College ordering each of the
defendants immediately vacate the property of the
plaintiff.
 RTC affirmed the MTCC's Decision in all respects,
except that the Heirs of Melecia were given 30 days
from notice to vacate the property.
 In the reconveyance case, the RTC rendered a
Decision in favor of Gabutan, et al. found the
testimonies of their witnesses credible, in that the
money of Melecia was used in buying the property
but the name of Godofredo was used when the title
was obtained because Godofredo lived in Cagayan de
Oro City while Melecia lived in Bornay, Gitagum,
Misamis Oriental and held that a trust was
established by operation of law pursuant to Article
1448 of the Civil Code.
 CA dismissed the consolidated appeals and affirmed
in toto the RTC Decisions in the unlawful detainer case
and the action for reconveyance, CA held that the
action for reconveyance has not yet prescribed
because Gabutan, et al. are in possession of the
property.
ISSUE: WON an action for reconveyance based on
implied or constructive trust is imprescriptible if the
plaintiff or the person enforcing the trust is in possession
of the property.
HELD
Yes.
An action for reconveyance based on an implied or a
constructive trust prescribes 10 years from the alleged
fraudulent registration or date of issuance of the
certificate of title over the property. However, an action
for reconveyance based on implied or constructive trust
is imprescriptible if the plaintiff or the person enforcing
the trust is in possession of the property. In effect, the
action for reconveyance is an action to quiet the property
title, which does not prescribe.111 The reason is that the
one who is in actual possession of the land claiming to be
its owner may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right.
His undisturbed possession gives him a continuing right
to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third
party and its effect on his own title, which right can be
claimed only by one who is in possession.
The fact of actual possession of Gabutan, et al. of the
property, during the lifetime of Melecia and even after
her death, is an undisputed and established fact. The
College has even filed an ejectment case against the
Heirs of Melecia for this reason.113 Thus, their complaint
for reconveyance is imprescriptible. It follows, with more
reason, that Gabutan, et al. cannot be held guilty of
laches as the said doctrine, which is one in equity, cannot
be set up to resist the enforcement of an imprescriptible
legal right.
Note:
Article 1448 of the Civil Code provides in part that there
is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest
of the property. The former is the trustee, while the
latter is the beneficiary. The trust created here, which is
also referred to as a purchase money resulting trust,89
occurs when there is (1) an actual payment of money,
property or services, or an equivalent, constituting
valuable consideration; (2) and such consideration must
be furnished by the alleged beneficiary of a resulting
trust.90 These two elements are present here.
Gabutan, et al., through the testimonies of Felisia,
Crisanta, and Trifonia, established that Melecia's money
was used in buying the property, but its title was placed
in Godofredo's name. She purchased the property
because Felisia wanted to build a pharmacy on it.91 On
one occasion in Melecia's house, and when the entire
family was present, Melecia gave Godofredo the money
to purchase the property.92Melecia entrusted the
money to Godofredo because he was in Cagayan de Oro,
and per Melecia's instruction, the deed of sale covering
the property was placed in his name.93 It was allegedly
her practice to buy properties and place them in her
children's name, but it was understood that she and her
children co-own the properties.94chanrobleslaw
Melecia built a residential building on the property,
where her daughter Crisanta and some of her
grandchildren resided.95 Godofredo also thereafter built
a house on the property. Twice, he also mortgaged the
property to secure loans. Melecia allowed him to do so
because she trusted him.96 After Godofredo's death,
and when Baldomera fell ill, there were family
discussions to transfer the title in Melecia's name so
Melecia's children can divide it together with the rest of
Melecia's properties. The plans, however, always fell
through.97chanrobleslaw
Both the RTC and CA found credence on these pieces of
testimonial evidence that an implied resulting trust
exists. Reliance on these testimonies will not violate the
parol evidence rule, as Nacalaban, et al. once raised. In
Tong v. Go Tiat Kun,98 we ruled that since an implied
trust is neither dependent upon an express agreement
nor required to be evidenced by writing, Article 1457 of
our Civil Code authorizes the admission of parol evidence
to prove their existence. What is crucial is the intention
to create a trust.99We cautioned, however, that the
parol evidence that is required to establish the existence
of an implied trust necessarily has to be trustworthy and
it cannot rest on loose, equivocal or indefinite
declarations.100 The testimonies of Felisia, Crisanta, and
Trifonia satisfy these requirements. They are consistent
and agree in all material points in reference to the
circumstances behind the arrangement between Melecia
and Godofredo. We agree with the RTC when it said that
this arrangement among family members is not unusual,
especially in the 1950s.101chanrobleslaw
Nacalaban, et al., on the other hand, denied the
arrangement between Melecia and Godofredo, and
maintained that it was really the latter who purchased
the property from its original owners, as evidenced by
their possession of the Deed of Conditional Sale and the
title being in Godofredo's name.102It is telling, however,
that Nacalaban, et al. failed to provide the details of the
sale, specifically with regard to how Godofredo could
have been able to afford the purchase price himself,
which would have directly refuted the allegation that
Melecia's money was used in the purchase. As the RTC
aptly observed, if Godofredo really bought the property
with his own money, it was surprising that Baldomera did
not transfer the title of the property to her name when
Godofredo died in 1974. Baldomera did not do so until
her death in 1994 despite being pressed by her siblings
to partition the property. The RTC correctly deduced that
this only meant that Baldomera acknowledged that the
property belongs to Melecia.103chanrobleslaw

Macababbad v. Masirag, 576 SCRA 70

Khoemani v. Heirs of Anastacio Trinidad, 540 SCRA 83