1. Mercado v Espinocilla| G.R. No. 184109| February 1, 2012| VILLARAMA, JR.

, J

Petitioner: CELERINO E. MERCADO

Respondents: BELEN ESPINOCILLA AND FERDINAND ESPINOCILLA, 

FACTS:

 Doroteo Espinocilla owned a parcel of land,

 After he died, his five children, Salvacion, Aspren, Isabel, Macario, and Dionisia divided the lot equally
among themselves.

 Dionisia died without issue ahead of her four siblings, and Macario took possession of Dionisia’s share.

 In an affidavit of transfer of real property in the year 1947 Macario claimed that Dionisia had donated
her share to him in May 1945.

 Macario and his daughters Betty Gullaba and Saida Gabelo sold 225 sq. m. to his son Roger Espinocilla,
husband of respondent Belen Espinocilla and father of respondent Ferdinand Espinocilla.

 Roger sold 114 sq. m. to Caridad Atienza.

 Petitioner sued the Espinocillas to recover two portions allegedly belonging to him by virtue of his
inheritance from his mother and the lots he bought from other co-owners

 he claims that respondents encroach on his share by 39 sq. m.

 Respondents alleged that Macario’s share increased when he received Dionisia’s share. Macario’s
increased share was then sold to his son Roger.

 Respondents claim that they rightfully possess the land they occupy by virtue of acquisitive
prescription and that there is no basis for petitioner’s claim of encroachment.

 RTC ruled in favor of Mercado and held that he is entitled to 171 sq. m. (inherited 142.5 sq. m. from
his mother Salvacion and bought 28.5 sq. m. from his aunt Aspren)

o Macario was not entitled to 228 sq. m. Thus, respondents must return 39 sq. m. to petitioner
who occupies only 132 sq. m.

o There being no public document to prove Dionisia’s donation, Macario’s 1948 affidavit is void
and is an invalid repudiation of the shares of his sisters Salvacion, Aspren, and Isabel in
Dionisia’s share.

o Macario cannot acquire said shares by prescription.

o the oral partition of Lot No. 552 by Doroteo’s heirs did not include Dionisia’s share and
partition should have been the main action.
  CA reversed the RTC decision and dismissed petitioner’s complaint on the ground that extraordinary
acquisitive prescription has already set in in favor of respondents.

o Oral partition of Doroteo’s four remaining children after Dionisia’s death terminated the co-
ownership of the Lot. The partition included Dionisia’s share because the lot was divided into
four parts only.

o SSince petitioner’s complaint was filed only on July 13, 2000 prescription has set in.

ISSUE + RULING

1. Whether or not petitioner’s action to recover the subject portion is barred by prescription. Yes the
action is already barred by prescription

 Mercado alleges alleges that Macario committed fraud in acquiring his share; hence, any evidence
adduced by him to justify such acquisition is inadmissible. If a person obtains legal title to property by
fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor
of the defrauded party.

 In a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-
called trustee (Macario) neither accepts any trust nor intends holding the property for the beneficiary
(Salvacion, Aspren, Isabel)

 The relation of trustee and cestui que trust does not in fact exist, and the holding of a constructive trust
is for the trustee himself, and therefore, at all times adverse

 Prescription may supervene even if the trustee does not repudiate the relationship

 Prescription, as a mode of acquiring ownership and other real rights over immovable property, is
concerned with lapse of time in the manner and under conditions laid down by law, namely, that the
possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.

o Acquisitive prescription of real rights may be ordinary or extraordinary.

 Ordinary acquisitive prescription requires possession in good faith and with just title for
10 years.

 In extraordinary prescription, ownership and other real rights over immovable property
are acquired through uninterrupted adverse possession for 30 years without need of
title or of good faith.

 In this case the respondents’ uninterrupted adverse possession for 55 years of 109 sq. m. of Lot No.
552 was established.

o Macario occupied Dionisia’s share in 1945 although his claim that Dionisia donated it to him in
1945 was only made in a 1948 affidavit.

o Macario’s possession of Dionisia’s share was public and adverse since his other co-owners, his
three other sisters, also occupied portions of the Lot. The sale made by Macario and his two
 daughters in favor of his son Roger confirms the adverse nature of Macario’s possession
because said sale was an act of ownership

o Roger also exercised an act of ownership when he sold to Caridad Atienza.

o It was only in the year 2000, upon receipt of the summons to answer petitioner’s complaint,
that respondents’ peaceful possession of the remaining portion was interrupted.

o extraordinary acquisitive prescription has already set in in favor of respondents.

 petitioner’s action for reconveyance based on an implied or constructive trust prescribes in 10 years
from the time the right of action accrues

o Petitioner’s action for recovery of possession having been filed 55 years after Macario occupied
Dionisia’s share, it is also barred by extinctive prescription.

Disposition: CA affirmed

2. Estate of Margarita Cabucangan v Laigo |G.R. No. 175073 | August 15, 2011| Peralta, J.:

Petitioner: ESTATE OF MARGARITA D. CABACUNGAN, REPRESENTED BY LUZ LAIGO-ALI

Respondents: MARILOU LAIGO, PEDRO ROY LAIGO, STELLA BALAGOT AND SPOUSES MARIO B. CAMPOS AND
JULIA S. CAMPOS

Facts:
 Margarita Cabacungan owned three parcels of unregistered land individually covered by tax
declaration all in her name
 Margarita’s son, Roberto Laigo, Jr. (Roberto), applied for a non-immigrant visa to the United States,
and to support his application, he allegedly asked Margarita to transfer the tax declarations of the
properties in his name
 Margarita, unknown to her other children, executed an Affidavit of Transfer of Real Property whereby
the subject properties were transferred by donation to Roberto
 Roberto’s visa was issued and he was able to travel to the U.S. as a tourist and returned in due time
o he adopted respondents Pedro Laigo (Pedro) and Marilou Laigo (Marilou), and then he married
respondent Estella Balagot.
 Roberto sold properties unknown to Margarita and her other children.
 Margarita came to know of the sales as told by Pedro himself in Roberto’s waker
 Margarita, instituted the instant complaint for the annulment of said sales and for the recovery of
ownership and possession of the subject properties as well as for the cancellation of Ricardo’s tax
declarations. 
o Margarita accommodated Roberto’s request but she never intended to divest herself of
ownership over the subject lands and, hence, Roberto had no right to sell them to respondents
and the Spouses Campos. 
o The saleswere fictitious and simulated considering the gross inadequacy of the stipulated price,
were fraudulently entered into by Roberto. 
 Spouses Campos alleged that they were innocent purchasers for value and in good faith, and had
merely relied on Roberto’s representation that he had the right to sell the property; and that, hence,
they were not bound by whatever agreement entered by Margarita with her son. Margarita’s claim
was already barred by prescription and laches. Inasmuch as Roberto had already passed away,
Margarita must have, instead, directed her claim against his estate.
 Marilou and Pedro states that they were buyers in good faith and the cause of action was barred by
prescription as the same had accrued wayback in 1968 upon the execution of the affidavit of transfer
by virtue of which an implied trust had been created. 
 Margarita died two days later and was forthwith substituted by her estate
 the trial court rendered a Partial Decisionapproving the compromise agreement and dismissing the
complaint against the Spouses Campos but ruled in favor Marilou and Pedro stating that the affidavit of
transfer is a simple transfer and no express trust was created between Margarita and Roberto
o There was no evidence of another document showing Roberto’s undertaking to return the
subject properties
o instead, an “implied or constructive trust” was created between the parties, as if affirming that
there was indeed an agreement – albeit unwritten – to have the properties returned to
Margarita in due time. 
 CA dismissed petitioner’s claim that Roberto was merely a trustee of the subject properties as there
was no evidence on record supportive of the allegation that Roberto merely borrowed the properties
from Margarita upon his promise to return the same on his arrival from the United States. Granting the
existence of an implied trust, still Margarita’s action thereunder had already been circumscribed by
laches.

ISSUE + RULING

1. Whether or not there is a trust relationship between Margarita and Roberto concerning the properties
used to support the visa application of the latter Yes

 A trust is the legal relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of the former entitling
him to the performance of certain duties and the exercise of certain powers by the latter. Trusts are
either express or implied.
 Express or direct trusts are created by the direct and positive acts of the parties, by some writing or
deed, or will, or by oral declaration in words evincing an intention to create a trust
 Implied trusts – also called “trusts by operation of law,” “indirect trusts” and “involuntary trusts” –
arise by legal implication based on the presumed intention of the parties or on equitable principles
independent of the particular intention of the parties
 o They are those which, without being expressed, are deducible from the nature of the
transaction as matters of intent or, independently of the particular intention of the parties, as
being inferred from the transaction by operation of law basically by reason of equity.
o Implied trusts are further classified into constructive trusts and resulting trusts. 
o Constructive trusts, on the one hand, come about in the main by operation of law and not by
agreement or intention.  They arise not by any word or phrase, either expressly or impliedly,
evincing a direct intention to create a trust, but one which arises in order to satisfy the
demands of justice
o Resulting trusts arise from the nature or circumstances of the consideration involved in a
transaction whereby one person becomes invested with legal title but is obligated in equity to
hold his title for the benefit of another. This is based on the equitable doctrine that valuable
consideration and not legal title is determinative of equitable title or interest and is always
presumed to have been contemplated by the parties. Such intent is presumed as it is not
expressed in the instrument or deed of conveyance and is to be found in the nature of their
o While resulting trusts generally arise on failure of an express trust or of the purpose thereof, or
on a conveyance to one person upon a consideration from another (“purchase-money resulting
trust”), they may also be imposed in other circumstances such that the court, shaping judgment
in its most efficient form and preventing a failure of justice, must decree the existence of such a
trust
o A resulting trust, for instance, arises where, there being no fraud or violation of the trust, the
circumstances indicate intent of the parties that legal title in one be held for the benefit of
another
o It also arises in some instances where the underlying transaction is without consideration, such
as that contemplated in Article 1449 of the Civil Code. 
o Where property, for example, is gratuitously conveyed for a particular purpose and that
purpose is either fulfilled or frustrated, the court may affirm the resulting trust in favor of the
grantor or transferor where the beneficial interest in property was not intended to vest in the
grantee.

o Intention – although only presumed, implied or supposed by law from the nature of the
transaction or from the facts and circumstances accompanying the transaction, particularly the
source of the consideration – is always an element of a resulting trust and may be inferred from
the acts or conduct of the parties rather than from direct expression of conduct.
o Because an implied trust is neither dependent upon an express agreement nor required to be
evidenced by writing Article 1457of our Civil Code authorizes the admission of parole evidence
to prove their existence.
 In this case, petitioner before the trial court, had actually adduced evidence to prove the intention of
Margarita to transfer to Roberto only the legal title to the properties in question, with attendant
expectation that Roberto would return the same to her on accomplishment of that specific purpose for
which the transaction was entered into.  The evidence of course is not documentary, but rather
testimonial.
o the complaint before the trial court alleged that the 1968 Affidavit of Transfer was executed
merely to accommodate Roberto’s request to have the properties in his name and thereby
produce proof of ownership of certain real properties in the Philippines to support his U.S. visa
application.  The agreement was for Margarita to transfer the tax declarations of the subject
properties to Roberto for the said purpose and without the intention to divest her of the rights
of ownership and dominion
 o While Margarita, however, died before trial on the merits ensued; yet the allegation was
substantiated by the open-court statements of her daughter, Luz, and of her niece, Hilaria
Costales, a disinterested witness which was offered to prove the circumstances surrounding its
execution – the circumstances from which could be derived the unwritten understanding
between Roberto and Margarita that by their act, no absolute transfer of ownership would be
effected. 
o Besides, it would be highly unlikely for Margarita to institute the instant complaint if it were
indeed her intention to vest in Roberto, by virtue of the Affidavit of Transfer, absolute
ownership over the covered properties.
o from the foregoing that the inscription of Roberto’s name in the Affidavit of Transfer as
Margarita’s transferee is not for the purpose of transferring ownership to him but only to
enable him to hold the property in trust for Margarita
o As a trustee of a resulting trust, therefore, Roberto, like the trustee of an express passive
trust, is merely a depositary of legal title having no duties as to the management, control or
disposition of the property except to make a conveyance when called upon by the cestui que
trust.
o   Hence, the sales he entered into with respondents are a wrongful conversion of the trust
property and a breach of the trust

2. Whether or not respondents should reconvey the property Yes

 The purchasers in good faith rule does not apply to respondents’ case. Under Land registration law
that the issue of whether the buyer of realty is in good or bad faith is relevant only where the subject
of the sale is registered land and the purchase was made from the registered owner whose title to the
land is clean, in which case the purchaser who relies on the clean title of the registered owner is
protected if he is a purchaser in good faith and for value
o However the properties were unregistered lands so their claim of having bought the properties
in good faith, i.e., without notice that there is some other person with a right to or interest
therein, would not protect them should it turn out, as it in fact did in this case, that their seller,
Roberto, had no right to sell them.
 The cause of action has not prescribed. The invocation of the rules on limitation of actions relative to a
resulting trust is not on point because the resulting trust relation between Margarita and Roberto had
been extinguished by the latter’s death. 
o A trust, it is said, terminates upon the death of the trustee, particularly where the trust is
personal to him 
o in accordance with Article 1144 of the Civil Code, an action for reconveyance to enforce an
implied trust in one’s favor prescribes in ten (10) years from the time the right of action
accrues, as it is based upon an obligation created by law. It sets in from the time the trustee
performs unequivocal acts of repudiation amounting to an ouster of the cestui que trust which
are made known to the latter
o In this case, it was the 1992 sale of the properties to respondents that comprised the act of
repudiation which, however, was made known to Margarita only in 1995 but nevertheless
impelled her to institute the action in 1996 – still well within the prescriptive period. 
 Trust Pursuit Rule: where certain property entrusted to an agent and impressed y law with a trust in
favor of the principal is wrongfully diverted, such trust follows the property in the hands of a third
person and the principal is ordinarily entitled to pursue and recover it so long as the property can be
traced and identified, and no superior equities have intervened. 
o a trust will follow the property – through all changes in its state and form as long as such
property, its products or its proceeds, are capable of identification, even into the hands of a
 transferee other than a bona fide purchaser for value, or restitution will be enforced at the
election of the beneficiary through recourse against the trustee or the transferee personally. 
o Accordingly, the person to whom is made a transfer of trust property constituting a wrongful
conversion of the trust property and a breach of the trust, when not protected as a bona
fide purchaser for value, is himself liable and accountable as a constructive trustee.  The liability
attaches at the moment of the transfer of trust property and continues until there is full
restoration to the beneficiary. Thus, the transferee is charged with, and can be held to the
performance of the trust, equally with the original trustee, and he can be compelled to execute
a reconveyance.
 This scenario is characteristic of a constructive trust imposed by Article 1456 of the Civil Code, which
impresses upon a person obtaining property through mistake or fraud the status of an implied trustee
for the benefit of the person from whom the property comes. Petitioner, in laying claim against
respondents who are concededly transferees who professed having validly derived their ownership
from Roberto, is in effect enforcing against respondents a constructive trust relation that arose by
virtue of the wrongful and fraudulent transfer to them of the subject properties by Roberto.
 an action for reconveyance based on a constructive implied trust prescribes in 10 years likewise in
accordance with Article 1144 of the Civil Code.  Yet not like in the case of a resulting implied trust and
an express trust, prescription supervenes in a constructive implied trust even if the trustee does not
repudiate the relationship.  In other words, repudiation of said trust is not a condition precedent to the
running of the prescriptive period
 An action for reconveyance under a constructive implied trust in accordance with Article 1456 does
not prescribe unless and until the land is registered or the instrument affecting the same is inscribed in
accordance with law, inasmuch as it is what binds the land and operates constructive notice to the
world
 In the present case, however, the lands involved are concededly unregistered lands; hence, there is no
way by which Margarita, during her lifetime, could be notified of the furtive and fraudulent sales made
in 1992 by Roberto in favor of respondents, except by actual notice from Pedro himself in August 1995.
 The filing of the complaint in February 1996 is well within the prescriptive period. Finally, such delay of
only six (6) months in instituting the present action hardly suffices to justify a finding of inexcusable
delay or to create an inference that Margarita has allowed her claim to stale by laches.

Disposition: the Petition is GRANTED. 

3. Araneta v Perez(1962)| G.R. Nos. L-16185-86| May 31, 1962| CONCEPCION, J

Petitioners: TRUSTEESHIP OF THE MINORS BENIGNO, ANGELO and ANTONIO, all surnamed PEREZ Y TUAZON,
PHILIPPINE NATIONAL BANK, Judicial Guardian, J. ANTONIO ARANETA, trustee-appellee
Respondents: ANTONIO M. PEREZ, judicial guardian-appellant

Facts:
 The will of Angela Tuazon creating the trusteeship of the minors Benigno, Angelo and Antonio Perez
designated the Antonio Araneta as trustee
 Antonio Perez is the judicial guardian of the minors
G. R. No. L-16185
  the law firm Araneta & Araneta, through its assistant, Atty. Francisco T. Papa, had rendered services, as
counsel for the trustee J. Antonio Araneta in connection with cases for the approval of his accounts
and cases in the CA involving the trusteeship
 The lower court authorized the payment of P5,500.00 for the services rendered by Araneta & Araneta
 Perez assails the payment upon the ground that, pursuant to Section 7 of Rule 86 of the Rules of Court:
o "When the executor or administrator is an attorney he shall not charge against the estate any
professional fees for legal services rendered by him."
o that the services above referred to inured to the benefit, not of the trust estate, but of the
trustee; that the amount of the award is excessive: and that the lower court should have
required the introduction of evidence on the extent of the services rendered by the law firm

G. R. No. L-16186
 from July to September, 1958, the appellee had bought for the trust estate, through a broker (Pedro
Nolasco da Silva & Co.) , a total of 118 common shares of stock of the Philippine-American Drug Co. at
P100 each
 upon submission of appellee’s accounts for said period, Perez objected to the items of expenses
relative to the acquisition of said common shares, upon the ground that the investment therein is
unwise, the operation of said company has not proved profitable and unlawful in that it is actually an
act of self- dealing between the trustee and the beneficiaries of the trust, because Araneta is, also, a
stockholder of said company.
 the lower court overruled the objection and approved said accounts.

ISSUE + RULING:
1. Whether or not the trustee, J. Antonio Araneta may be allowed to pay a sum of money to the law firm,
Araneta & Araneta, of which he is a member, for services rendered to him, in his capacity as such trustee, in
several judicial proceedings YES
 Section 7 of Rule 86 refers only to "executors or administrators" of the estate of deceased persons, and
does not necessarily apply to trustees
 some functions of the former bear a close analogy with those of the latter. A trustee, like, an executor
or administrator, holds an office of trust, particularly when, as in the case of appellee herein, the
trustee acts as such under judicial authority.
 Generally, the policy set forth in said Section 7 of Rule 86should be applicable to trustees.
 The duties of executors or administrators are, however, fixed and/or limited by law, whereas those
of trustee of an express trust, like in this case, are, usually, governed by the intention of the trustor
or of the parties, if established by contract (Art. 1441, Civil Code of the Philippines).
 The duties of trustees may cover a much wider range than those of executors or administrators of the
estate of deceased persons.
 the application of Section 7 of Rule 86 to all trusteeships without distinction may dissuade deserving
persons from accepting the position of trustee and consequently have a deterrent effect upon the
establishment of trusts, at a time when a sizeable part of the burden to undertake important and even
essential activities in advanced and/or developing communities or states, particularly in the field of
education, science and social welfare, is borne by foundations or other similar organizations based
upon the principles of trust.
 It is the better policy to acknowledge the authority of courts of justice to exercise a sound judgment in
determining, in the light of the peculiar circumstances obtaining in each case, whether or not a trustee
shall be allowed to pay attorney’s fees and charge the same against the trust estate, independently of
his compensation as a trustee.
  In the case at bar, the appellee was merely defending himself in the proceedings that required the
services of counsel and in each case the stand taken by the appellee was upheld by the court. The will
creating the trust and designating the Araneta as trustee explicitly grants him the right to collect for
his services as such reasonable fees. In view of the nature of the relations between the trustor and the
trustee, on the one hand, and the trustor and Perez on the other, the trustor would have sanctioned
the payment of the attorney’s fees involved in this incident; and that it may have been more costly for
the trust estate to engage the services of a law firm other than that of Araneta & Araneta
 a trustee may be indemnified out of the trust estate for his expenses in rendering and proving his
accounts and for costs and counsel fees"

2. Whether or not the purchase of certain shares of stock made by the appellee for the benefit of the
trusteeship merits judicial approval YES
 Araneta holds, in his individual capacity, 199 out of 30,000 common shares of stock of the Philippine
American Drug Co., whereas his children own 270 out of 5,000 preferred shares of stock of the same
enterprise.
 As a consequence, the interest of Araneta and his children in said company is not such as to warrant
the charge that the purchase of 118 common stocks for the trust estate amounts to self-dealing by the
appellee with himself.
 The purchase by the trustee may be considered as an indication that he had displayed in the
management of the trust estate the same interest he had in the protection of his own property.
 Under the circumstances below, court cannot say that the investment in question is unwise:
o the book value of each of said 118 common shares of stock, purchased by the trustee at P100
each, is P202.80
o in 1954 the Philippine-American Drug Co. had paid a cash dividend of 6%, aside from declaring a
33- 1/3% stock dividend for its common shares;
o 6-1/2 % and 4% cash dividends were paid in 1955 and 1957, respectively.
o the statement of accounts of the company for the years 1954, 1955, 1956 and 1957, satisfied
the lower court that the enterprise "is financially stable and sound."
 Perez’s allegation that shares of stock of the San Miguel Brewery pay higher returns, even if true, does
not establish his pretense.
 Whether an investment is good or not does not depend upon the general, abstract possibility of better
investments.
o one factor that should be taken into account is the degree of influence that the investor may
have upon the management of the enterprise concerned, which Araneta amittedly has in the
Philippine- American Drug Co., but which it is not claimed he wields in the San Miguel Brewery
Co.
Disposition: ORDERS AFFIRMED
4. Araneta v Perez (1965) |G.R. Nos. L-20787-8 | June 29, 1965| BAUTISTA ANGELO, J

Petitioner: J. ANTONIO ARANETA

Respondent: ANTONIO PEREZ,

Facts:

 On June 16, 1961, Antonio M. Perez executed a promissory note wherein he agreed to pay J. Antonio
Araneta, or order, the sum of P3,700.00 119 days from said date, or on October 13, 1961, and if it is
not paid on the date of maturity, to pay interest at 9% per annum on the amount of the loan, and
P370.00 as attorney's fees in addition to costs and other disbursements taxable under the Rules of
Court.

 The note became due and Perez failed to pay despite demand

 Araneta filed on October 31, 1961 a complaint in the Municipal Court of Manila for collection

 In his answer Perez admitted the execution of the promissory note as well as his failure to pay it
despite its maturity and demand

o Perez alleged that the proceeds of the note were applied by him to the payment of the medical
treatment of his minor daughter Angela Perez y Tuason, who is the beneficiary of the trust then
administered by Araneta as trustee in a Special Proceeding, and that the trust estate is bound
to pay the expenses of said treatment because they were for the benefit of said minor and so
the personal fund he borrowed from Araneta and for which he executed the aforesaid
promissory note should be paid by Araneta

 The lower court rendered a decision ordering Perez to pay the amounts prayed

 Perez appealed. In the meantime, , Perez filed a complaint in the Municipal Court against Araneta in his
capacity as trustee of the minor child Angela Perez y Tuason in a Special Proceeding wherein he
repeated the same allegations contained in the answer he interposed to the complaint of Araneta and
prayed that Araneta as trustee be required to pay Perez the amount of P3,700.00 advanced by the
latter in order to meet the obligation of the trust estate. The case was dismissed. Perez appealed .

ISSUE + RULING

1. Whether or not Perez is liable to pay the 3700 YES

 Under the terms of the promissory note, appellant bound himself to pay personally said promissory
note which he cannot shift to another without the consent of the payee. Such is the undertaking of the
maker.

 Section 60 of the Negotiable Instrument, Law provides that "the maker of a negotiable instrument by
making it engages that he will pay it according to its tenor and admits the existence of the payee and
his then capacity to indorse so that appellant cannot now escape liability as maker by alleging that he
spent the money for the medical treatment of his daughter since it is not the payee's concern to know
how said proceeds should be spent.
  the affirmative defenses of Perez are not relevant to the finding of his liability on the promissory note

o Perez, after admitting the execution of the promissory note and his failure to pay it despite
demand thereof, made averments which in substance had the effect of a recoupment of what
he had spent against any share in the trust fund that may come to the minor for whose benefit
he claims to have spent the money.

o Perez made the following affirmative defenses:

 Dña. Angela Tuason died in 1948 leaving estate worth five million pesos 2/9 of which
she left in trust for the benefit of the children of said Angela Tuason under the
administration of appellee Araneta; that the will was prepared by Araneta

 the estate is worth 1 million pesos and despite thereof Araneta professed inability to
pay the allowance of P18,000.00 a year due the beneficiaries

 Araneta sold some income — producing properties of the trust and speculated with
trust funds in the stock market;

 Perez had to advance certain expenses for the minors and secure for them properties
worth at least a quarter of a million pesos

 the two beneficiaries are for unknown reasons short of funds so, that the Perez had to
borrow the sum of P3,700.00 for the medical treatment of minor Angela Perez y Tuason

 Perez asked the trustee to advance said amount with the concurrence of the
beneficiaries but the trustee refused though he offered to lend the money out of his
own pocket, and so appellant executed the promissory note in question.

o insofar as the personal liability of appellant Perez on the promissory note is concerned all the
above allegations are irrelevant and immaterial and cannot tender any issue that will affect his
personal liability under the note.

o the allegation regarding the existence of the trust and its mismanagement on the part of
appellee Araneta as trustee, certainly, has nothing to do with the money lent by him to
appellant.

o Neither has the allegation that the proceeds of the note were spent by appellant for the
medical treatment of minor Angela anything to do with his personal obligation because the
destination of the proceeds of said note is certainly not the concern of Araneta.

2. Whether or not there was mismanagement of Araneta of the trust giving Perez some basis to claim for
recoupment against the share of the trust fund belonging to the benefited minor if it is properly shown that
there is fund coming to said minor NO

 no such showing was made

  the trust herein created merely provides for delivery to the beneficiaries of the share that may
correspond to them in the net income of the trust fund, but does not impose upon the trustee the
duty to pay any obligation or expenses that may be needed by said beneficiaries.

 In order that the trust estate may be obliged to shoulder the medical expenses in question which were
made for the sake of the beneficiary, the beneficiary must be shown to be insolvent

o Here the beneficiary has properties that are worth at least a quarter of a million pesos which
are under the Guardianship Court of Manila.

Disposition: Lower Court Affirmed

5. Ringor v Ringor |G.R. No. 147863| August 13, 2004| QUISUMBING, J.

Petitioners: PROSPERO RINGOR, SATURNINO RINGOR, ANDRES RINGOR, SUBSTITUTED BY SHAKUNTALA

DEBIE, CLARO ALEJO, GERONIMA AND SANDIE LOUR, ALL SURNAMED RINGOR, RAYMUNDA RINGOR, LUISA R.
RIMANDO, EMILIANA R. TIU AND HEIRS OF JOSE M. RINGOR, INC

Respondents: CONCORDIA, FELIPA, EMETERIA, all surnamed RINGOR, MARCELINA RINGOR, in behalf of her
deceased father, AGAPITO RINGOR, AVELINA, CRESENCIA, and FELIMON, all surnamed ALMASEN, in behalf of
their deceased mother, ESPIRITA RINGOR, and TEOFILO M. ABALOS, in behalf of his deceased mother,
GENOVEVA RINGOR

Facts:

 The controversy involves lands owned by the late Jacobo Ringor.

 By his first wife, Gavina Laranang, he had two children, Juan and Catalina. He did not have offsprings by
his second and third wives.

 Catalina predeceased her father Jacobo who died sometime in 1935, leaving Juan his lone heir.

 Juan married Gavina Marcella and they had 7 children including: Jose (the father and predecessor-in-
interest of herein petitioners), Genoveva, etc.

 Resps: Genoveva and Agapito are represented in this case by Teofilo Abalos and Marcelina Ringor,
their respective children. Espirita is represented by her children, Avelina, Cresencia and Felimon
Almasen.

 Jacobo applied for the registration of his lands under the Torrens system. He filed three land
registration cases alone, with his son Juan, or his grandson Jose, applying jointly with him.

o First application: Parcel 1 and 2 was awarded to Jacobo and Juan in equal shares as pro-indiviso
co-owners and an OCT was issued

 The ½ pro-indiviso share of Jacobo in these parces were sold to Jose and a new TCT was
issued in his name

 Parcel 3 was also awarded to Jacobo and the same was sold and transferred to Jose

o 2nd application, Jose was named by Jacobo as applicant and the 5 parcels land was awarded to
Jose as a donation of his grandfather

o 3rd application: application for 3 parcels of land filed in the names of jacobo and Juan.

 Juan died before the adjudication therefore ½ of Parcel 1 was awarded to Jacobo and
the other half to Jose his son. 3/4th of parcel 2 and 3 were awarded to Jacobo and 1/4 th
to Jose
  The OCts were issued in their names

 Jacobo allegedly sold and transferred to Jose his one-half (½) undivided interest in
Parcel 1 covered. Jacobo's thumbmark appeared on the Compraventa.

 These lands are now covered by a TCT in the name of petitioner corporation, Heirs of
Jose M. Ringor, Inc.,

 In another compraventa, the three-fourths (¾) undivided interests of Jacobo in Parcels 2

and 3. The OCTs were cancelled and new TCTs were issued in the name of Jose. Jacobo
allegedly sold to Jose for P800 all the lands declared to

 Even after the decisions in the three land registration cases and the Compraventas, Jacobo remained in
possession of the lands and continued administering them as he did prior to their registration and gave
produce to all 7 children of Juan

 Jacobo did not partition the lands since he still needed them

 When Jacobo died the lands under the three land registration applications remained undivided.

 Jose, as the eldest grandchild, assumed and continued the administration of the lands and gave his 6
siblings which included Agapito, their share in the produce and income from the lands.

 When ths siblings asked for partition Jose always answered that it was not going to be easy because
there would be "big and small shares and Jose constantly assured them that he would never cheat
them and because they respected him highly

 Jose died and resps. demanded from Jose's children, pets., the partition and delivery of their share in
the estate left by Jacobo and under Jose's administration.

 The petitioners refused and attempts at amicable settlement failed. so respondents filed
a Complaint for partition and reconveyance with

o Resps alleged that they are all grandchildren and/or great grandchildren of Jacobo, who left
intestate the disputed lands which were in the name of Jose Ringor

o the late Jose Ringor had always been the administrator and trustee of Jacobo and after Jacobo's
death, they asked for their shares of the intestate properties but was refused

o Jose as trustee and overseer of all these properties was answerable to the respondents for their
just shares in the intestate properties of Jacobo.

 Petitioners allege that they rightfully own and possess the disputed lands.

o Their father acquired legitimate title to and remained in continuous, uninterrupted and
exclusive possession and enjoyment of the said parcels of land in the concept of an owner for
more than thirty (30) years ago up to more than 50 years before the suit

o Jacobo sold the parcels of land to Jose for valuable consideration

 o The other disputed lands sought to be divided, were held by Jose as exclusive owner acquired
by him either by inheritance, homestead patent, or purchase.

o Jose had long acquired indefeasible and incontrovertible title to the said properties in
accordance with the provisions of the Land Registration Act.

o respondents' claim of express trust concerning the properties in question could not be proved
by parol evidence.

 RTC:

o Jacobo created an express trust over his entire property in favor of his grandchildren.

o Jose held the subject lands as co-owner and trustee of the express trust.

o the notarial deeds of sale executed between Jacobo and Jose were false and simulated Jose
registered the deed of sale twelve years after their execution and five years after Jacobo's
death.

o Jacobo continued to occupy and exercise acts of ownership over the same parcels of land until
his death despite the supposed sale to Jose.

o Donation to Jose was invalid. The document evidencing that Jacobo donated the lands therein
to Jose was never presented to the registration court, nor was any explanation given for the
failure to register the alleged donation. Hence, the donation was declared invalid.

o On the lands covered by the 3rd application the land was erroneously adjudicated to Jacobo and
Jose because it was made to appear that Jose was the only child who succeeded Juan, who died
a year before the application was adjudicated, when in fact Juan had seven children

o All these incidents and circumstances served as indicia that Jacobo cared little if the lands were
in his name or someone else's. The compraventas were issued without consideration

o despite the absence of a document proving the express trust, the same was proven by parol
evidence. The prohibition in Article 1443of the New Civil Code – that no express trust
concerning an immovable or any interest therein may be proved by parol evidence – is a
prohibition for purposes of presenting proof on the matter, but it could be waived by a party.
Failure to object to parol evidence during trial and the cross-examination of the witnesses is a
waiver of the prohibition

o Jose, as trustee, did not repudiate the trust, such that the trust remained, and since the trust
continued to exist, an action to compel the trustee to convey the properties has not prescribed
nor is it barred by laches

 CA affirmed RTC

ISSUES + RULING

Whether or not there was a valid express trust established by Jacobo Ringor? YES
Petitioners: No basis that Jacobo constituted an express trust because respondents did not present any deed,
instrument or document expressly declaring that a trust was constituted based on Articles 1440- 1446, of the
Civil code because the elements of an express trust was not complied with, the resps did not present any
deed, instrument or document that Jacobo intended to create a trust and that the intent to create a trust
must be in writing; and they claimed that they objected, from the beginning, to the introduction of any oral
testimony to prove the establishment of an express trust.

Respondents: Jacobo created an express trust. the three applications for registration and the
three Compraventas are documentary proofs that an express trust was created by Jacobo. Jacobo exercised
acts of ownership over all the disputed lands even after the alleged donation and deeds of sale in favor of
Jose, and when Jacobo religiously gave shares of the income and produce of the disputed lands to the
respondents, a practice Jose continued until three years before his death.

 Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and
positive acts of the settlor or the trustor – by some writing, deed, or will, or oral declaration.

o It is created not necessarily by some written words, but by the direct and positive acts of the
parties.

o No particular words are required, it being sufficient that a trust was clearly intended.

 
o Unless required by a statutory provision, such as the Statute of Frauds, a writing is not a
requisite for the creation of a trustSuch a statute providing that no instruments concerning
lands shall be "created" or declared unless by written instruments signed by the party creating
the trust, or by his attorney, is not to be construed as precluding a creation of a trust by oral
agreement, but merely as rendering such a trust unenforceable

 In this case, Oral testimony is allowed to prove that a trust exists. The court can rely on parol evidence
to arrive at the conclusion that an express trust exists.

 What is crucial is the intention to create a trust.

o While oftentimes the intention is manifested by the trustor in express or explicit language, such
intention may be manifested by inference from what the trustor has said or done, from the
nature of the transaction, or from the circumstances surrounding the creation of the purported
trust.

o However, an inference of the intention to create a trust, made from language, conduct or
circumstances, must be made with reasonable certainty

o An inference of intention to create a trust, predicated only on circumstances, can be made only
where they admit of no other interpretation

 In this case credible witnesses testified that:

o the lands were made and transferred in the name of Jose merely for convenience since Juan
predeceased Jacobo;
 o despite the Compraventas, transferring all the lands in Jose's name, Jacobo continued to
perform all the acts of ownership including possession, use and administration of the lands

o Jacobo did not want to partition the lands because he was still using them; that when Jacobo
died, Jose took over the administration of the lands and conscientiously and unfailingly gave his
siblings their share in the produce of the lands, in recognition of their share as co-owners

o Jose did not repudiate the claim of his siblings and only explained upon their expression of the
desire for partitioning, that it was not going to be an easy task.

 when Jacobo transferred the lands to Jose, in what the lower court said were simulated or falsified
sales, Jacobo's intention impressed upon the titles of Jose a trust in favor of the true party-
beneficiaries, including respondents.

 Under the doctrine of partial performance recognized, the objection to the oral character of a trust
may be overcome or removed where there has been partial performance of the terms of the trust as to
raise an equity in the promise

o A trustee may perform the provisions of the trust, and if he does, the beneficiary is protected in
benefits that he has received from such performance.

o when a verbal contract has been completed, executed or partially consummated, its
enforceability will not be barred by the Statute of Frauds, which applies only to an executory
agreement

 Despite the compraventas transferring the lands in his name, Jose unfailingly gave his siblings their
share of the produce of the lands. Not only did he fail to repudiate the trust, he also assured his co-
heirs that it was the inconvenience of partitioning that kept him from transferring the shares of his
siblings to them.

 In this case, an express trust exists with Jose Ringor as trustee in favor of all the heirs of Jacobo
Ringor. As far as prescription or laches are concerned, they pose no hindrance or limitation to the
enforcement of an express trust.

 on the lands donated, the donation impaired the hereditary rights of succession of Jose's co-heirs.
Despite the registration in Jose's name, Jose did not take possession over them from the date of
registration to the time of Jacobo's death. Instead, while alive, Jacobo retained possession, and
continued the administration of the lands.

o Article 1449 of the New Civil Code on implied trusts provides that, "[t]here is also an implied
trust when a donation is made to a person but it appears that although the legal estate is
transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part
thereof."

o Article 1449 creates a resulting trust where the donee becomes the trustee of the real
beneficiary.

o resulting trusts do not prescribe except when the trustee repudiates the trust
 o the action to reconvey does not prescribe so long as the property stands in the name of the
trustee. To allow prescription would be tantamount to allowing a trustee to acquire title against
his principal and true owner

 Here, Jose did not repudiate the trust, and the titles of the disputed lands are still registered in Jose's
name or in the name of the Heirs of Jose M. Ringor, Inc.

 A trustee who obtains a Torrens title over a property held in trust for him by another cannot repudiate
the trust by relying on the registration

o A Torrens Certificate of Title in Jose's name did not vest ownership of the land upon him. The
Torrens system does not create or vest title. It only confirms and records title already existing
and vested. It does not protect a usurper from the true owner

 Petitioners cannot rely on the registration of the lands in Jose's name nor in the name of the Heirs of
Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate a trust by relying on a
Torrens title he held in trust for his co-heirsThe beneficiaries are entitled to enforce the trust,
notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained.

Disposition: Petition Denied

6. Heirs of Maria De La Cruz y Gutierrez v CA |G.R. No. 76590| February 26, 1990| PARAS, J.:

Petitioners: HEIRS OF MARIA DE LA CRUZ Y GUTIERREZ

Respondents: COURT OF APPEALS and HEIRS OF MARIA DE LA CRUZ Y GUEVARRA

Facts:

 Petitioners are the heirs (children) of the late Maria de la Cruz y Gutierrez, married to Mateo del
Rosario Lansang, while herein private respondents are the heirs of Maria de la Cruz y Guevarra,
married to Calixto Dimalanta, and Fermin de la Cruz.
 Maria de la Cruz y Gutierrez resided owned a parcel of land and resided there from 1921 to 1951 when
she died. She declared the lot for tax purposes in her name
 She entrusted the administration of the lot to her niece Maria de la Cruz y Guevarra.
 Guttierez filed an answer in the cadastral proceedings over the lot. In the said filed answer:
o over the handwritten name "Maria de la Cruz y Gutierrez" is a thumbmark presumably affixed
by her
o a person named therein as Fermin de la Cruz y Gutierrez is stated to have an interest or
participation on the said lot
o in the space provided to be filled up with the personal circumstances of claimant Maria de la
Cruz y Gutierrez, what appears therein is the name Maria de la Cruz, married to Calixto
Dimalanta, instead of Maria de la Cruz y Gutierrez,
o in the space provided intended for the personal circumstances of other person or persons who
may have an interest on the said lot, the name Fermin de la Cruz, single, appears,
 the trial court rendered a decision adjudicating the Lot in favor of Maria de la Cruz, 26 years old,
married to Calixto Dimalanta and Fermin de la Cruz, Single.
 An OCT was issued in their names.
 Petitioners, claiming to have learned of the same only on July 1, 1974, on October 1, 1974 (allegedly
barely three months after discovery of the registration, and two years after the death of Maria de la
Cruz y Guevarra who, before she died in 1974, revealed to petitioners Daniel Lansang and Isidro
Lansang that the lot of their mother Maria de la Cruz y Gutierrez had been included in her title), filed
with CFI, a complaint for reconveyance
 o They allege that the claimant of the questioned lot was Maria de la Cruz y Gutierrez and not
Maria de la Cruz y Guevarra who by not using her maternal surname "Guevarra" succeeded in
registering the lot in her name and that of her brother Fermin de la Cruz.
o Maria de la Cruz married to Calixto Dimalanta and Fermin de la Cruz hold the property in trust
for the petitioners.
 Resps. claimed that the land in question is their exclusive property, having inherited the same from
their parents and the OCT was issued in their names. Petitioners have lost their cause of action by
prescription.
 The Trial court ruled in favor of the petitioners
 IAC reversed the decision of the Trial court on the basis that the action was based on an implied trust.

ISSUE + RULING

Whether or not petitioners' action for reconveyance has already prescribed NO

Petitioners: their action is one based on express trust and not on implied or constructive trust. Petitioners'
predecessor-in-interest, Maria de la Cruz y Gutierrez, was an unlettered woman, a fact borne out by her
affixing her thumbmark in her answer in the Cadastral Case. Because of her mental weakness, in a prepared
document for her, she consented and authorized her niece Maria de la Cruz y Guevarra to administer the lot in
question

Resps: the said document is a portion of the tax declaration which was prepared by the Office of the Municipal
Assessor/Treasurer where the lot in question is located, and clearly not the written instrument constituting an
express trust required under Article 1443 of the Civil Code.

 Under the law on Trusts, it is not necessary that the document expressly state and provide for the
express trust, for it may even be created orally, no particular words are required for its creation (Article
1444, Civil Code).
 An express trust is 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. No particular words are required for the creation
of an express trust, it being sufficient that a trust is clearly intended
 In this case, the petitioner's action, being one based on express trust, has not yet prescribed.
 Article 1443 of the Civil Code which states "No express trusts concerning an immovable or any interest
therein may be proved by parol evidence," refers merely to enforceability, not validity of a contract
between the parties.
 For purposes of validity between the parties, an express trust concerning an immovable does not have
to be in writing. Thus, Article 1443 may be said to be an extension of the Statute of Frauds. The action
to compel the trustee to convey the property registered in his name for the benefit of the cestui for
trust does not prescribe. If at all, it is only when the trustee repudiates the trust that the period of
prescription may run

Disposition: IAC reversed