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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 brought and could no longer succeed and prosper.
guardian of the minors Concepcion, Alicia, and Herminia
RESPONDENTS: Santiago Arro et al. (CLAIMANTS) The petition composed five (5) consolidated cases which
***Jose Yulo y Regalado (PREDECESSOR IN INTEREST) stemmed from Civil Case No. 04-109444 filed with the
Regional Trial Court. But the focus of the case with
FACTS: respect to trust is GR 176650. The petition filed by Gilbert
● Arro et al filed answers in a cadastral case, claiming lots Guy (Gilbert) and Lincoln Continental Development
as their property and began to present evidence before Corporation, Inc. (Lincoln Continental) questioning the
a referee. Dr. Mariano Yulo, who represented the late decision of the Court of Appeals (CA) in affirming the
Jose Yulo y Regalado in the cadastral case, assured and Regional Trial Court (RTC) in dismissing their complaint
promised that after the change of the street names from against the respondents.
Zamora and Quennon streets to T.Yulo and G. Regalado
streets, Jose Yulo y Regalado would convey and assign FACTS:
the lots to the claimants (Arro et al). Gilbert, petitioner, is the son of Francisco and Simny Guy.
● Because of this, Arro et al withdrew their claims and Respondents, Geraldine,Gladys and Grace are his sisters.
the cadastral court confirmed the title to the lost and The family feud involves the ownership and control of
decreed their registration in the name of Jose Yulo y 20,160 shares of stock of Northern Islands Co., Inc.
Regalado. (Northern Islands).Northern Islands is a family-owned
● The representative of Jose Yulo complied with the corporation. In November 1986, they
promise by executing deeds of donation or assignment incorporatedLincoln Continental as a holding company of
to some of the claimants. ***2/3 of this case is in the 50% shares of stock of Northern Islands intrust for
Spanish; I’m guessing that the part where the their daughters, respondents. In December 1986, upon
CLAIMANTS filed a complaint was explained there. CFI instruction of spouses Guy,Atty. Andres Gatmaitan,
ordered the PREDECESSOR-IN-INTEREST to execute president of Lincoln Continental, indorsed in blank Stock
deeds of assigned in favour of the CLAIMANTS for each CertificateNo. 132 (covering 8,400 shares) and Stock
and every lot claimed by them. CA affirmed. Certificate No. 133 (covering 11,760 shares)
● Pacheco contend that since a trustee does not have anddelivered them to Simny.In 1984, spouses Guy found
title to the property which is the subject of the trust, that their son Gilbert has been disposing of the assets of
because title to such property is vested in the cestui que their corporations without authority. In order to protect
trust, if the PREDECESSOR-IN-INTEREST of the the assets of Northern Islands, the20,160 shares covered
SUCCESSORS-IN-INTEREST was a trustee, he or his by the two Stock Certificates were then registered in the
successors-in-interest could not and cannot be names of respondent sisters, thus enabling them to
compelled in an action for specific performance to assume an active role in the management of Northern
convey or assign the property – the subject of the trust – Islands.Thereafter, Simny was elected President; Grace
because in an action for specific performance the party as Vice-President for Finance;Geraldine as Corporate
to be compelled to perform is the owner of has title to Treasurer; and Gladys as Corporate Secretary. Gilbert
the property sought to be conveyed or assigned. retained hisposition as Executive Vice President. This
development started the warfare between Gilbertand his
ISSUE: ● Whether or not the SUCCESSORS-IN-INTEREST sisters.Lincoln Continental filed a Complaint for
may be compelled in an action for specific performance Annulment of the Transfer of Shares of Stock against
to convey or assign the property. respondents. The complaint basically alleges that Lincoln
Continental owns20,160 shares of stock of Northern
RULING: YES. Judgment affirmed. Islands; and that respondents, in order to oust
The juridical concept of a trust, which in a broad sense Gilbertfrom the management of Northern Islands, falsely
involves, arises from, or is the result of, a fiduciary transferred the said shares of stock inrespondent sisters’
relation between the trustee and the cestui que trust as names.The trial court held that the complaint was
regards certain property – real, personal, funds or baseless and an unwarranted suit amongfamily
money, or choses in action – must not be confused with members. That based on the evidence, Gilbert was only
an action for specific performance. entrusted to hold thedisputed shares of stock in his name
for the benefit of the other family members; and that
When the claim to the lots in the cadastral case was itwas only when Gilbert started to dispose of the assets
withdrawn by the CLAIMANTS relying upon the of the family’s corporations withouttheir knowledge that
assurance and promise made in open court by Dr. respondent sisters caused the registration of the shares
Mariano Yulo in behalf of the PREDECESSOR-IN- in their respective names.On appeal, the Court of
INTEREST, a trust or a fiduciary relation between them Appeals affirmed the Trial Court. Hence this petition.
arose, or resulted therefrom, or was created thereby.
The trustee cannot invoke the statute of limitations to ISSUES:
bar the action and defeat the right of the cestui que trust. Whether or not Gilbert was merely trust for the Guy
If the pretense of counsel for the SUCCESSORS-IN- sisters
INTEREST that the promise above adverted to cannot RULING:
prevail over the final decree of the cadastral court One thing is clear. It was established before the trial
holding the PREDECESSOR-IN-INTEREST of the court, affirmed by the Court of Appeals, that Lincoln
SUCCESSORS-IN-INTEREST to be the owner of the lots Continental held the disputed shares of stock of
claimed by the CLAIMANTS were to be sustained and Northern Islands merely in trust for the Guy sisters. In
upheld, then actions to compel a party to assign or fact, the evidence proffered by Lincoln Continental itself
convey the undivided share in a parcel of land registered 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, of deposit was officially only between PALII, in its own
therefore, final and conclusive upon this Court. capacity, and UCPB.
- ART. 1440. A person who establishes a trust is called the  On appeal, petitioner maintained that by opening the
trustor; one in whom confidence is reposed as regards ACCOUNT, PALII established a trust by which it was
property for the benefit of another person is known as the "trustee" and the HEIRS are the "trustors-
the trustee; and the person for whose benefit the trust beneficiaries;" thus, UCPB should be liable for
has been created is referred to as the beneficiary. allowing the withdrawal.
In the early case of Gayondato v. Treasurer of the  CA partially granted the petitioners appeal;
Philippine Islands, this Court defines trust, in its technical o affirmed the August 27, 2003 decision of
sense, as a right of property, real or personal, held by one the RTC, but deleted the award of
party for the benefit of another. Differently stated, a attorneys fees and litigation expenses;
trust is a fiduciary relationship with respect to property, o held that no express trust was created
subjecting the person holding the same to the obligation between the HEIRS and PALII. For a trust
of dealing with the property for the benefit of another to be established, the law requires,
person. among others, a competent trustor and
Both Lincoln Continental and Gilbert claim that the latter trustee and a clear intention to create a
holds legal title to the shares in question. But record trust, which were absent in this case;
shows that there is no evidence to support their claim. o Quoting the RTC with approval, the CA
Rather, the evidence on record clearly indicates that the noted that the contract of deposit was
stock certificates representing the contested shares are only between PALII in its own capacity
in respondent’s possession. Significantly, there is no and UCPB, and the words "ITF HEIRS"
proof to support his allegation that the transfer of the were insufficient to establish the
shares of stock to respondent sisters is fraudulent. As existence of a trust. The CA concluded
aptly held by the Court of Appeals, fraud is never that as no trust existed, expressly or
presumed but must be established by clear and impliedly, UCPB is not liable for the
convincing evidence. Gilbert failed to discharge this amount withdrawn.
burden. We, agree with the Court of Appeals that  MR was denied.
respondent sisters own the shares of stocks, Gilbert  petitioner argues in his petition for review on
being their mere trustee. certiorari that an express trust was created, as clearly
shown by PALIIs March 28, 1996 and November 15,
Goyanko v. UCPB, 690 SCRA 79 1996 letters, emphasizes that from the established
Facts: definition of a trust, citing jurisprudence,10 PALII is
clearly the trustor as it created the trust, UCPB is the
 Petition for review on certiorari1 trustee as it is the party in whom confidence is
 The late Joseph Goyanko, Sr. (Goyanko) invested Two reposed as regards the property for the benefit of
Million Pesos (P2,000,000.00) with Philippine Asia another and the HEIRS are the beneficiaries as they
Lending Investors, Inc. are the persons for whose benefit the trust is created.
 Family, represented by the petitioner, and his  UCPB posits, in defense:
illegitimate family presented conflicting claims to  that the ACCOUNT involves an ordinary deposit
PALII for the release of the investment. contract between PALII and UCPB only, which
 Pending the investigation of the conflicting claims, created a debtor-creditor relationship obligating
PALII deposited the proceeds of the investment with UCPB to return the proceeds to the account
UCPB on October 29, 19965 under the name "Phil holder-PALII;
Asia: ITF (In Trust For) The Heirs of Joseph Goyanko,  it was not negligent in handling the ACCOUNT
Sr." (ACCOUNT). when it allowed the withdrawal and the mere
 On September 27, 1997, the deposit under the designation of the ACCOUNT as "ITF" is
ACCOUNT was P1,509,318.76. insufficient to establish the existence of an
 On December 11, 1997, UCPB allowed PALII to express trust or charge it with knowledge of the
withdraw One Million Five Hundred Thousand Pesos relation between PALII and the HEIRS;
(P1,500,000.00) from the Account, leaving a balance  petitioner changed the theory of his case as
of only P9,318.76. before the CA, the petitioner argued that the
 When UCPB refused the demand to restore the HEIRS are the trustors-beneficiaries, and PALII is
amount withdrawn plus legal interest from December the trustee while in here, the petitioner
11, 1997, the petitioner filed a complaint before the maintains that PALII is the trustor, UCPB is the
RTC. trustee, and the HEIRS are the beneficiaries; c
 In its answer to the complaint, UCPB admitted, among  ontrary to the petitioners assertion, the records
others, the opening of the ACCOUNT under the name failed to show that PALII and UCPB executed a
"ITF (In Trust For) The Heirs of Joseph Goyanko, trust agreement, and PALIIs letters made it clear
Sr.," (ITF HEIRS) and the withdrawal on December 11, that PALII, on its own, intended to turn-over the
1997. proceeds of the ACCOUNT to its rightful owners.
 RTC dismissed the petitioners complaint and awarded
UCPB attorneys fees, litigation expenses and the costs ISSUE: WON an express trust was created between PALII
of the suit, not having considered the words "ITF as trustor and UCPB as trustee.
HEIRS" sufficient to charge UCPB with knowledge of
any trust relation between PALII and Goyankos HELD
heirs (HEIRS) and concluded that UCPB merely No. A trust, either express or implied,26 is the fiduciary
performed its duty as a depository bank in allowing relationship "x x x between one person having an
PALII to withdraw from the ACCOUNT, as the contract equitable ownership of property and another person
owning the legal title to such property, the equitable
ownership of the former entitling him to the the land sold to Juan Cruz was among the parcels of land
performance of certain duties and the exercise of certain to be transferred.
powers by the latter."27 Express or direct trusts are - On March 31, 1969 counsel for petitioner Mindanao
created by the direct and positive acts of the trustor or Development Authority wrote to respondent Ang Basing
of the parties.28 No written words are required to create to surrender the TCT for the disputed lot but the latter
an express trust. This is clear from Article 1444 of the Civil refused, hence on April 11, 1969, Mindanao
Code,29 but, the creation of an express trust must be Development Authority filed a complaint against
firmly shown; it cannot be assumed from loose and Francisco Ang Bansing before the Court of First Instance
vague declarations or circumstances capable of other of Davao City for the reconveyance of the title over Lot
interpretations.30?r?l1 1846-C, petitioner argued that defendant acted in the
capacity of and/or served as trustee for any and all
In Rizal Surety & Insurance Co. v. CA,31 we laid down the parties who become successor-in-interest to Juan Cruz
requirements before an express trust will be Yap Chuy.
recognized:cralawlibrary - CFI Davao rendered decision in favor of petitioner,
Basically, these elements include a competent trustor stating that express trust had been established and
and trustee, an ascertainable trust res, and sufficiently ordered the reconveyance of the title to Lot 1846-C of
certain beneficiaries. xxx each of the above elements is the Davao Cadastre to the petitioner Mindanao
required to be established, and, if any one of them is Development Authority. Upon appeal, CA reversed the
missing, it is fatal to the trusts (sic). Furthermore, there decision, stating that there was no express trust. Hence
must be a present and complete disposition of the trust this present petition.
property, notwithstanding that the enjoyment in the
beneficiary will take place in the future. It is essential, Issue: WON there was an express trust in the sale of lot
too, that the purpose be an active one to prevent trust between respondent Ang Bansing and Juan Cruz.
from being executed into a legal estate or interest, and
one that is not in contravention of some prohibition of Ruling:
statute or rule of public policy. There must also be some - No, no express trust had been created between Ang
power of administration other than a mere duty to Banging and Juan Cruz over Lot 1846-C of the Davao
perform a contract although the contract is for a Cadastre.
thirdparty beneficiary. A declaration of terms is - "Trusts are either express or implied. Express trusts are
essential, and these must be stated with reasonable created by the intention of the trustor or of the parties.
certainty in order that the trustee may administer, and Implied trusts come into being by operation of law."
that the court, if called upon so to do, may enforce, the - It is fundamental in the law of trusts that certain
trust. [emphasis ours] requirements must exist before an express trust will be
Under these standards, we hold that no express trust was recognized. these elements include a competent trustor
created. First, while an ascertainable trust res and and trustee, an ascertainable trust res, and sufficiently
sufficiently certain beneficiaries may exist, a competent certain beneficiaries. Furthermore, there must be a
trustor and trustee do not. Second, UCPB, as trustee of present and complete disposition of the trust property,
the ACCOUNT, was never under any equitable duty to notwithstanding that the enjoyment in the beneficiary
deal with or given any power of administration over it. will take place in the future. It is essential, too, that the
On the contrary, it was PALII that undertook the duty to purpose be an active one to prevent trust from being
hold the title to the ACCOUNT for the benefit of the executed into a legal estate or interest, and one that is
HEIRS. Third, PALII, as the trustor, did not have the right not in contravention of some prohibition of statute or
to the beneficial enjoyment of the ACCOUNT. Finally, the rule of public policy. There must also be some power of
terms by which UCPB is to administer the ACCOUNT was administration other than a mere duty to perform a
not shown with reasonable certainty. While we agree contract although the contract is for a third-party
with the petitioner that a trusts beneficiaries need not be beneficiary. A declaration of terms is essential, and these
particularly identified for a trust to exist, the intention to must be stated with reasonable certainty in order that
create an express trust must first be firmly established, the trustee may administer, and that the court, if called
along with the other elements laid above; absent these, upon so to do, may enforce, the trust."
no express trust exists. - In this case, the herein petitioner relies mainly upon the
following stipulation in the deed of sale executed by Ang
Mindanao Dev. Authority v. CA, 113 SCRA 429 Bansing in favor of Juan Cruz to prove that an express
Petitioner: MDA (Beneficiary) trust had been established with Ang Bansing as the
Respondent/s: CA; Ang Bansing (Trustor); Juan Cruz settlor and trustee and Juan Cruz as the cestui que trust
(Trustee) or beneficiary.
- The above-quoted stipulation, however, is nothing but
Facts: a condition that Ang Bansing shall pay the expenses for
- February 25, 1939 respondent Francisco Ang Bansing the registration of his land and for Juan Cruz to shoulder
sold a portion of his land with an area of about 5 hectares the expenses for the registration of the land sold to him.
to Juan Cruz Yap Chuy. Both agreed that the former will The stipulation does not categorically create an
work for the titling of the entire area of my land under obligation on the part of Ang Bansing to hold the
his own expenses and the latter will shoulder the property in trust for Juan Cruz. Hence, there is no express
expense in the registration of the land under his name. trust. It is essential to the creation of an express trust
- On February 25, 1965, Proclamation No. 459 was that the settlor presently and unequivocally make a
issued, which mandates the government to transfer disposition of property and make himself the trustee of
ownership of land situated in Sasa Davao City, to the property for the benefit of another.
petitioner Mindanao Development Authority, now the
Southern Philippines Development Administration, and Development Bank of the Phils. V. COA, 422 SCRA 459
● The Development Bank of the Philippines (DBP) Board
of Governors adopted Resolution No. 794 creating the Clearly, the trustees received and collected any income
DBP Gratuity Plan and authorizing the setting up of a and profit derived from the Fund, and they maintained
retirement fund to cover the benefits due to DBP retiring separate books of account for this purpose. The principal
officials and employees under Commonwealth Act No. and income of the Fund will not revert to DBP even if the
186. trust is subsequently modified or terminated. The
● a Trust Indenture was entered into by and between the Agreement states that the principal and income must be
DBPand the Board of Trustees of the Gratuity Plan Fund, used to satisfy all of the liabilities to the beneficiary
vesting in the latter the control and administration of the officials and employees. The beneficiaries or cestui que
Fund. The trustee, subsequently, appointed the DBP trust of the Fund are the DBP officials and employees
Trust Services Department (DBP-TSD) as the investment who will retire under Commonwealth Act No. 186.
manager thru an Investment Management Agreement,
with the end in view of making the income and principal The Agreement indisputably transferred legal title over
of the Fund sufficient to meet the liabilities of DBP under the income and properties of the Fund to the Funds
the Gratuity Plan. trustees. Thus, COAs directive to record the income of
● The Bank established a Special Loan Program availed the Fund in DBPs books of account as the miscellaneous
thru the facilities of the DBP Provident Fund and funded income of DBP constitutes grave abuse of discretion. The
by placements from the Gratuity Plan Fund. income of the Fund does not form part of the revenues
● DBP-TSD paid to the investor-members a total of P11, or profits of DBP, and DBP may not use such income for
626,414.25 representing the net earnings of the its own benefit. The principal and income of the Fund
investments for the years 1991 and 1992. together constitute the resor subject matter of the trust.
● The payments were disallowed by the Auditor under The Agreement established the Fund precisely so that it
Audit Observation Memorandum No. 93-2 dated March would eventually be sufficient to pay for the retirement
1, 1993, on the ground that the distribution of income of benefits of DBP employees under RA 1616 without
the Gratuity Plan Fund (GPF) to future retirees of DBP is additional outlay from DBP. COA itself acknowledged the
irregular and constituted the use of public funds for authority of DBP to set up the Fund. However, COAs
private purposes. subsequent directive would divest the Fund of income,
● The Auditor recommended that the DBP record in its and defeat the purpose for the Funds creation.
books as miscellaneous income the income of the
Gratuity Plan Fund (Fund).The Auditor reasoned that the NOTE: A trust is a fiduciary relationship with respect to
Fund is still owned by the Bank, the Board of Trustees is property which involves the existence of equitable duties
a mere administrator of the Fund in the same way that imposed upon the holder of the title to the property to
the Trust Services Department where the fund was deal with it for the benefit of another. A trust is either
invested was a mere investor and neither can the express or implied. Express trusts are those which the
employees, who have still an inchoate interest in the direct and positive acts of the parties create, by some
Fund be considered as rightful owner of the Fund. writing or deed, or will, or by words evincing an intention
● Former DBP Chairman Alfredo C. Antonio asked COA to to create a trust. In the present case, the DBP Board of
lift the disallowance of the P11,626,414.25 distributed as Governors (now Board of Directors) Resolution No. 794
dividends under the SLP on the ground that the latter and the Agreement executed by former DBP Chairman
was simply a normal loan transaction. Rafael Sison and the trustees of the Plan created an
● The COA en banc affirmed AOM No. 93-2. express trust, specifically, an employees trust. An
● DBP filed a special civil action for certiorari to set aside employees trust is a trust maintained by an employer to
the COA decision. provide retirement, pension or other benefits to its
employees. It is a separate taxable entity established for
In a trust, one person has an equitable ownership in the the exclusive benefit of the employees. Resolution No.
property while another person owns the legal title to 794 shows that DBP intended to establish a trust fund to
such property, the equitable ownership of the former cover the retirement benefits of certain
entitling him to the performance of certain duties and employees under Republic Act No. 1616 (RA 1616). The
the exercise of certain powers by the latter. A person principal and income of the Fund would be separate and
who establishes a trust is the trustor. One in whom distinct from the funds of DBP.
confidence is reposed as regards property for the benefit
of another is the trustee. The person for whose benefit Peñalber v. Ramos, 577 SCRA 509
the trust is created is the beneficiary. In the
present case, DBP, as the trustor, vested in the trustees FACTS: Petitioner is the mother of respondent Leticia and
of the Fund legal title over the Fund as well as control the mother-in-law of respondent Quirino, husband of
over the investment of the money and assets of the Leticia. Respondent Bartex, Inc., on the other hand, is a
Fund. The powers and duties granted to the trustees of domestic corporation which bought from respondent
the Fund under the Agreement were plainly more than spouses Ramos one of the two properties involved in this
just administrative, to wit: case. On 18 February 1987, petitioner filed before the
1. The BANK hereby vests the control and administration RTC a Complaint for Declaration of Nullity of Deeds and
of the Fund in the TRUSTEEs for the accomplishment of Titles, Reconveyance, Damages, with Application for a
the purposes for which said Fund is intended in defraying Writ of Preliminary Prohibitory Injunction against the
the benefits of the PLAN in accordance with its respondents. First cause of action: Petitioner alleged on
provisions, and the TRUSTEES hereby accept the trust her complaint that she was the owner of a parcel of land
2. The TRUSTEES shall receive and hold legal title to the referred to as Ugac properties. She averred that in the
money and/or property comprising the Fund, and shall middle part of 1986, she discovered her title to the said
hold the same in trust for its beneficiaries, in accordance parcel of land was cancelled because a new transfer of
with, and for the uses and purposes stated in the certificate of title was issued in its stead in the name of
provisions of the PLAN. respondent spouses Ramos. The basis of cancellation of
her title was a Deed of Donation which petitioner Cagayan be directed to issue another title in her name.
purportedly executed in favor of respondent spouses On the first cause of action, respondent Sps. Ramos
Ramos on April 27, 1983. Petitioner insisted that her alleged that petitioner, together with her son mortgaged
signature on the said Deed of Donation was a forgery the Ugac properties to DBP for the amount of
When petitioner confronted the respondent spouses P150,000.00 on August 19 , 1990. When the mortgage
Ramos about the false donation, the latter pleaded that was about to foreclose, petitioner asked respondents to
they would just pay for the Ugac properties in the redeem the mortgaged property or pay her mortgage
amount of P1 Million. Petitioner agreed. Petitioner found debt to DBP. In return, petitioner promised to cede,
out around January 10 1987 that respondent Sps. Ramos convey and transfer full ownership of the Ugac
were selling the Ugac properties to respondent Bartex properties to them. Respondents paid the debt and in
Inc. Petitioner then sent her son Johnson Paredes to compliance with her promise, petitioner transferred the
caution reapondent Bartex Inc that Sps. Ramos were not Ugac properties to respondents by way of Deed of
the owners. Petitioner also warned respondent Sps. Donation. After accepting the donation and having the
Ramos not to sell said properties or otherwise she will Deed of Donation registered, TCT No. T- 58043 was
file the necessary action against them. Petitioner issued to respondent spouses Ramos and they then took
executed an Affidavit of Adverse Claim over the Ugac actual and physical possession of the Ugac properties.
Properties on January 19, 1987 and caused the same to With regard to the second cause of action, respondent
be annotated on TCT No. T-58043 (TCT issued in the spouses Ramos contended that they were given not only
name of Sps. Ramos) on the same day. Respondent Sps. the management, but also the full ownership of the
Ramos still executed a deed of absolute sale for a total hardware store by the petitioner, on the condition that
price of P150,000.00 to Bartex, Inc and a new transfer the stocks and merchandise of the store will be
certificate of title was issued in favor of Bartex Inc. inventoried, and out of the proceeds of the sales thereof,
Second cause of action: Petitioner claimed that for many respondent spouses Ramos shall pay petitioners
years prior to 1984, she operated a hardware store in a outstanding obligations and liabilities. After settling and
building she owned along Bonifacio St., Tuguegarao, paying the obligations and liabilities of petitioner,
Cagayan. The commercial lot (Bonifacio property) is respondent spouses Ramos bought the Bonifacio
owned by and registered in the name of Maria Mendoza property from Mendoza out of their own funds. RTC –
(Mendoza), from whom petitioner rented the same. dismissed first cause of action and ruled in favor of
March 22, 1982 – petitioner allowed respondent spouses petitioner on the second cause of action CA –in so far as
Ramos to manage the hardware store. 1984 – Mendoza second cause of action is concerned,reversed the
put the Bonifacio property up for sale. As petitioner did decision of RTC. According to the Court of Appeals: It
not have available cash to buy the property, she allegedly appears that before management of the store was
entered into a verbal agreement with respondent transferred to [herein respondent spouses Ramos], a
spouses Ramos with the following terms: beginning inventory of the stocks of the hardware store
[1.] The lot would be bought [by herein respondent was made by [herein petitioners] other children showing
spouses Ramos] for and in behalf of [herein petitioner]; stocks amounting to Php226,951.05. After management
[2.] The consideration of P80,000.00 for said lot would be of the hardware store was returned to [petitioner], a
paid by [respondent spouses Ramos] from the second inventory was made with stocks amounting to
accumulated earnings of the store; [3.] Since Php110,004.88 showing a difference of Php116,946.15.
[respondent spouses Ramos] have the better credit Contrary, however, to the finding of the trial court, We
standing, they would be made to appear in the Deed of find that said inventory showing such difference is not
Sale as the vendees so that the title to be issued in their conclusive proof to show that the said amount was used
names could be used by [them] to secure a loan with to pay the purchase price of the subject lot. In fact, as
which to build a bigger building and expand the business testified by Johnson Paredes, son of [petitioner] who
of [petitioner]. In accordance with the above agreement, made the computation on the alleged inventories, it is
respondent spouses Ramos allegedly entered into a not known if the goods, representing the amount of
contract of sale with Mendoza over the Bonifacio Php116,946.17, were actually sold or not. It may have
property, and on October 24 1984, a transfer certificate been taken without actually being sold. However, an
of title was issued in the names of respondent spouses inference of the intention to create a trust, made from
Ramos. language, conduct or circumstances, must be made with
reasonable certainty. It cannot rest on vague, uncertain
On September 20 1984, the management of the or indefinite declarations.An inference of intention to
hardware store was returned to petitioner. On the bases create a trust, predicated only on circumstances, can be
of receipts and disbursements, petitioner asserted that made only where they admit of no other interpretation.
the Bonifacio property was fully paid out of the funds of Here, [petitioner] failed to establish with reasonable
the store and if respondent spouses Ramos had given any certainty her claim that the purchase of the subject lot
amount for the purchase price of the said property, they was pursuant to a verbal trust agreement with
had already sufficiently reimbursed themselves from the respondent spouses Ramos.
funds of the store. Consequently, petitioner demanded
from respondent spouses Ramos the reconveyance of ISSUE: WON the existence of a trust agreement between
the title to the Bonifacio property to her but the latter her and respondent spouses Ramos was clearly
unjustifiably refused. Petitioner insisted that respondent established, and such trust agreement was valid and
spouses Ramos were, in reality, mere trustees of the enforceable.
Bonifacio property, thus, they were under a moral and
legal obligation to reconvey title over the said property RULING: NO. In its technical legal sense, a trust is defined
to her. Petitioner, therefore, prayed that she be declared as the right, enforceable solely in equity, to the beneficial
the owner of the Bonifacio property; TCT No. T-62769, in enjoyment of property, the legal title to which is vested
the name of respondent spouses, be declared null and in another, but the word trust is frequently employed to
void; and the Register of Deeds for the Province of indicate duties, relations, and responsibilities which are
not strictly technical trusts. A person who establishes a Similarly, Johnson testified that on March 22 1982,
trust is called the trustor; one in whom confidence is petitioner turned over the management of the hardware
reposed is known as the trustee; and the person for store to respondent spouses Ramos. During that time, an
whose benefit the trust has been created is referred to inventory of the stocks of the store was made and the
as the beneficiary. There is a fiduciary relation between total value of the said stocks were determined to be
the trustee and the beneficiary (cestui que trust) as P226,951.05. When respondent spouses Ramos returned
regards certain property, real, personal, money or choses the management of the store to petitioner on 20
in action. September 1984, another inventory of the stocks was
made, with the total value of the stocks falling to
From the allegations of the petitioners Complaint, the P110,004.88. The difference of P116,946.16 was
alleged verbal trust agreement between petitioner and attributed to the purchase of the Bonifacio property by
respondent spouses Ramos is in the nature of an express the respondent spouses Ramos using the profits from the
trust as petitioner explicitly agreed therein to allow the sales of the store. A careful perusal of the records of the
respondent spouses Ramos to acquire title to the case reveals that respondent spouses Ramos did indeed
Bonifacio property in their names, but to hold the same fail to interpose their objections regarding the
property for petitioners benefit. Given that the alleged admissibility of the afore-mentioned testimonies when
trust concerns an immovable property, however, the same were offered to prove the alleged verbal trust
respondent spouses Ramos counter that the same is agreement between them and petitioner. Consequently,
unenforceable since the agreement was made verbally these testimonies were rendered admissible in evidence.
and no parol evidence may be admitted to prove the Nevertheless, while admissibility of evidence is an affair
existence of an express trust concerning an immovable of logic and law, determined as it is by its relevance and
property or any interest therein. competence, the weight to be given to such evidence,
once admitted, still depends on judicial evaluation. Thus,
On this score, we subscribe to the ruling of the RTC in its despite the admissibility of the said testimonies, the
Order dated July 17, 2000 that said spouses were Court holds that the same carried little weight in proving
deemed to have waived their objection to the parol the alleged verbal trust agreement between petitioner
evidence as they failed to timely object when petitioner and respondent spouses.
testified on the said verbal agreement. The requirement
in Article 1443 that the express trust concerning an Tan Senguan and Co. v. Phil. Trust Co., 58 Phil. 700
immovable or an interest therein be in writing is merely Facts:
for purposes of proof, not for the validity of the trust - Plaintiff Tan Sen Guan & Co. secured a judgment for a
agreement. Therefore, the said article is in the nature of sum of P21,426 against the Mindoro Sugar Co. of which
a statute of frauds. The term statute of frauds is the Philippine Trust is the trustee. The plaintiff entered
descriptive of statutes which require certain classes of into an agreement with the defendant Philippine Trust
contracts to be in writing. The statute does not deprive Co. wherein the former assigned, transferred, and sold to
the parties of the right to contract with respect to the the latter the full amount of said judgment against
matters therein involved, but merely regulates the Mindoro Sugar Co. together with all its rights thereto and
formalities of the contract necessary to render it the latter offered satisfactory consideration thereto.
enforceable. The effect of non-compliance is simply that - The agreement further stipulated that upon signing of
no action can be proved unless the requirement is the agreement, Phil Trust shall pay Tan Sen the sum of
complied with. Oral evidence of the contract will be P5000; should the Mindoro Sugar be sold or its
excluded upon timely objection. But if the parties to the ownership be transferred, an additional P10,000pesos
action, during the trial, make no objection to the will be paid to Tan Sen upon perfection of the sale; in
admissibility of the oral evidence to support the contract case any other creditor of Mindoro Sugar obtains in the
covered by the statute, and thereby permit such contract payment of his credit a greater proportion than the price
to be proved orally, it will be just as binding upon the paid to Tan Sen, the Phil Trust shall pay to the latter
parties as if it had been reduced to writing. Per whatever sum may be necessary to be proportioned the
petitioners testimony, the Bonifacio property was claim of the creditor. However, if the Mindoro Sugar is
offered for sale by its owner Mendoza. Petitioner told sold to any person who does not pay anything to the
respondent spouses Ramos that she was going to buy the creditors or pay them equal or less than 70% of their
lot, but the title to the same will be in the latters names. claim, or should the creditors obtain from other sources
The money from the hardware store managed by the payment of their claim equal to or less than 70
respondent spouses Ramos shall be used to buy the percent, the Phil Trust will only pay to Tan Sen the
Bonifacio property, which shall then be mortgaged by the additional sum of P10,000 upon the sale or transfer of
respondent spouses Ramos so that they could obtain a the Mindoro Sugar as above stated. The properties of
loan for building a bigger store. The purchase price of Mindoro Sugar were later on sold at public auction to the
P80,000.00 was paid for the Bonifacio property. On Roman Catholic Archbishop of Manila and base on the
September 20 1984, the respondent spouses Ramos agreement plaintiff Tan Sen brought suit against
returned the management of the store to petitioner. defendant Phil Trust for the sum of P10,000.
Thereafter, petitioner allowed her son Johnson to Defendant’s argument: Only a portion of the Mindoro
inventory the stocks of the store. Johnson found out that Sugar’s properties were sold.
the purchase price of P80,000.00 for the Bonifacio CFI: Absolved the defendant on two grounds: (a) in the
property was already fully paid. When petitioner told the contract, it was only bound as a trustee and notas an
respondent spouses Ramos to transfer the title to the individual; (b) that it has not been proved that all the
Bonifacio property in her name, the respondent spouses properties of the Mindoro Sugar had been sold.
Ramos refused, thus, prompting petitioner to file a
complaint against them. 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  Transocean and REPACOM entered into a partial
trustee of the properties of the Mindoro Sugar. compromise agreement and agreed to divide and
distribute the insurance proceeds in such a manner
Held: SC reversed CFI’s ruling. that each would receive as its initial share thereof that
NO. The Phil Trust Company in its individual capacity is portion not disputed by the other party (thus,
responsible for the contract as there was no express REPACOM - US$434,618.00, and private respondent
stipulation that the trust estate and notthe trustee US$1,931,153.00).
should be held liable on the contract in question. Not  With the authority of CB, private respondent and
only is there no express stipulation that the trustee REPACOM transferred the balance of the insurance
should not be held responsible but the ‘Wherefore’ proceeds, amounting to US$718,078.20, into an
clause of the contract states the judgment was expressly interest-bearing special dollar account with any local
assigned in favor of Phil Trust Company and not Phil Trust commercial bank.
Company, “the trustee”. It therefore follows that  REPACOM and private respondent then requested
appellant had a right to proceed directly against the Phil the petitioner to remit the said US$718,078.20 to the
Trust on its contract and has no claim against either Philippine National Bank, Escolta Branch for their joint
Mindoro Sugar or the trust estate. account.
In the absence of an express stipulation that the trust  Petitioner indicated that it would effect the requested
estate and not the trustee shall be liable on the contract, remittance when both REPACOM and private
the trustee is liable in its individual capacity. [But take respondent shall have unconditionally and
note that in order for a trustee to be liable as such, the absolutely released petitioner from all liabilities
trust must be express.] under its policies by executing and delivering the
Loss and Subrogation Receipt prepared by petitioner.
Rizal Surety & Insurance v. CA, 261 SCRA 69  Because the parties proposed certain amendments
and corrections to the Loss and Subrogation Receipt,
FACTS a revised version thereof was finally presented to the
Office of the Solicitor General, and on May 25, 1977,
 December 5, 1961, the Reparations Commission then Acting Solicitor General Vicente V. Mendoza
(hereinafter referred to as REPACOM) sold to private wrote petitioner demanding that:
respondent Transocean Transport Corporation the o it pays interest on the dollar balance per
vessel M/V TRANSOCEAN SHIPPER payable in the CB letter-authority from the date of
twenty (20) annual installments. receipt of the authorization by the
 June 22, 1974, the said vessel was insured with Central Bank at the authorized rates;
petitioner Rizal Surety & Insurance Company for o as trustee of the said funds it was
US$3,500,000.00, with stipulated value in Philippine petitioner’s duty to see to it that the
Currency of P23,763,000.00 under Marine Hull Policy same earned the interest authorized by
MH-1322 and MH-1331. the Central Bank;
 The said policies named REPACOM and herein private o as trustee, petitioner was morally and
respondent as the insured. legally bound to deposit the funds under
 Subsequently, petitioner reinsured the vessel with a terms most advantageous to the
foreign insurance firm. beneficiaries
 During the effectivity of the aforementioned marine o if it did not wish to transfer the deposit
insurance policies, the vessel M/V TRANSOCEAN from the Prudential Bank and Trust
SHIPPER was lost in the Mediterranean Sea and the Company, the sister company, to
insured filed claims against herein petitioner for the another bank where it could earn
insurance proceeds. interest, it was its obligation to require
 Shortly thereafter, a partial compromise agreement the Prudential Bank and Trust Company,
was entered into between the REPACOM and at least, to place the deposit to an
respondent Transocean regarding the insurance interest-bearing account; and
proceeds. o demanded in behalf of the Reparations
 On April 18, 1975, anticipating payment of the Commission payment of interest on the
insurance proceeds in dollars, private respondent dollar deposit from the date of receipt of
requested the Central Bank (CB) to allow it to retain the authorization by the Central Bank at
the expected dollar insurance proceeds for a period the authorized rates.
of three (3) months, to enable it to complete its study  Petitioner through counsel rejected the Acting
and decide on how to utilize the said amount. Solicitor Generals demand, asserting that:
 The CB granted the request subject to conditions, one o (i) there was no trust relationship,
of which was that the proceeds be deposited with a express or implied, involved in the
local commercial bank in a special dollar account up transaction;
to and until July 31, 1975. o (ii) there was no obligation on the part of
 On November 18, 1975, Transocean and REPACOM petitioner to transfer the dollar deposit
requested Rizal Surety to pay the insurance proceeds into an interest-bearing account
in their joint names, despite problems regarding the because the CB authorization was given
amount of their respective claims. to REPACOM and not to petitioner;
 On January 1976, Rizal Surety informed Transocean o (iii) REPACOM did not ask petitioner to
and REPACOM that the entire insurance proceeds for place the dollars in an interest-bearing
the loss of the vessel (both from local insurance account; and
companies and reinsurers and from the foreign o (iv) no Loss and Subrogation Receipt was
insurer) had been deposited with Prudential Bank. executed.
 RTC of Manila held that a trust relationship formalities are unnecessary, but nevertheless each of the
existed between petitioner as trustee and above elements is required to be established, and, if any
private respondent and REPACOM as one of them is missing, it is fatal to the trusts (sic).
beneficiaries. Furthermore, there must be a present and complete
 CA upheld the judgment of the trial court, and disposition of the trust property, notwithstanding that
confirmed that a trust had in fact been the enjoyment in the beneficiary will take place in the
established and that petitioner became liable for future. It is essential, too, that the purpose be an active
interest on the dollar account in its capacity as one to prevent trust from being executed into a legal
trustee, not as insurer. MR denied. estate or interest, and one that is not in contravention
of some prohibition of statute or rule of public policy.
ISSUE There must also be some power of administration other
WON trust relationship existed between petitioner as than a mere duty to perform a contract although the
trustee and private respondent and REPACOM as contract is for a third-party beneficiary. A declaration of
beneficiaries. terms is essential, and these must be stated with
reasonable certainty in order that the trustee may
HELD administer, and that the court, if called upon so to do,
Yes. may enforce, the trust. (citing Sec. 31, Trusts, Am Jur 2d,
We hold that the courts below were correct in concluding pp. 278-279.)
that a trust relationship existed. It is basic in law that a Undeniably, all the above-mentioned elements are
trust is the right, enforceable solely in equity, to the present in the instant case. Petitioners argument that it
beneficial enjoyment of property, the legal title to which was never a party to the Partial Compromise Agreement
is vested in another. It is a fiduciary relationship is unavailing, since, upon being furnished a copy of the
concerning property which obliges a person holding it same, it undoubtedly became aware if it was not already
(i.e., the trustee) to deal with the property for the benefit aware even prior thereto that the parties to said
of another (i.e., the beneficiary). The Civil Code provides agreement considered petitioner as their trustee in
that: respect of said dollar balance; in short, it is all too
Article 1441. Trusts are either express or implied. evident that petitioner fully grasped the situation and
Express trusts are created by the intention of the trustor realized that private respondent and REPACOM were
or of the parties. x x x. constituting petitioner their trustee. Yet, petitioner not
Article 1444. No particular words are required for the only did not manifest any objection thereto, but it
creation of an express trust, it being sufficient that a trust instead proceeded to accept its role and responsibility
is clearly intended. as such trustee by implementing the compromise
Express trusts are created by direct and positive acts of agreement. Equally as significant, petitioner never
the parties, by some writing or deed, or will, or by words committed any act amounting to an unequivocal
either expressly or impliedly evincing an intention to repudiation of its role as trustee.
create a trust.[27]
The evidence on record is clear that petitioner held on to Lorenzo v. Posadas, 64 Phil. 353
the dollar balance of the insurance proceeds because (1) Petitioner: Pablo Lorenzo (Trustee)
private respondent and REPACOM requested it to do so Defendant: Juan Posadas Jr., collector of internal
as they had not yet agreed on the amount of their revenue
respective claims, and the Final Compromise Agreement Trustor: Thomas Hanley
was yet to be executed, and (2) they had not, prior to
January 31, 1977, signed the Loss and Subrogation Facts:
Receipt in favor of petitioner. - on May 27, 1922, Thomas Hanley died in Zamboanga ,
Furthermore, petitioners letter dated November 20, leaving a will and considerable amount of real and
1975 addressed to the CB expressly stated that the personal properties. where on June 14, 1922, CFI
deposit in Prudential Bank was being made in its name Zamboanga began the proceedings for the probate of his
for the joint account of the private respondent and will and acted on the instructions to take care of his
REPACOM. Petitioner never claimed ownership over the property for 10 years and after which pass it to his
funds in said deposit. In fact, it made several tenders of nephew, Matthew Hanley. The lower court first
payment to the private respondent and REPACOM, albeit appointed petitioner as trusteee on February 29, 1932.
the latter declined to accept since the dispute as to their - defendant Collector of Internal Revenue alleged that
respective claims could not yet be resolved at that time. the estate left by deceased has penalties for deliquency
By its own allegation, petitioner held on to the dollar in payment amounted to P2,052.74. Hence, on March 15,
balance of the insurance proceeds to protect its interest, 1932, defendant filed a motion in the testamentary
as it was not yet granted the right of subrogation over proceedings pending before the Court of First Instance of
the total loss of the vessel. As petitioner continued Zamboanga praying petitioner herein pay to the
holding on to the deposit for the benefit of private Government the said sum of P2,052.74. The motion was
respondent and REPACOM, petitioner obviously granted and petitioner paid the protested amount at the
recognized its fiduciary relationship with said parties. same time that unless the amount was promptly
This is the essence of the trust flowing from the actions refunded suit would be brought for its recovery.
and communications of petitioner. defendant overruled the plaintiff's protest and refused to
In Mindanao Development Authority vs. Court of refund the said amount, arguing that . Hence petitioner
Appeals,[28] this Court held: went to court and filed a complaint against defendant
x x x It is fundamental in the law of trusts that certain but the lower court dismissed his complaint as well as
requirements must exist before an express trust will be defendants counterclaim. both parties appeled.
recognized. Basically, these elements include a Petitioner argued that the lower court erred in not
competent trustor and trustee, an ascertainable trust allowing as lawful deductions, in the determination of
res, and sufficiently certain beneficiaries. Stilted the net amount of the estate subject to said tax, the
amounts allowed by the court as compensation to the ● Based on evidence, the lands in question were
"trustees" and paid to them from the decedent's estate. originally owned by one Luis Palad, a school teacher, who
obtained titled to the land by composicion gratuita in
Issue: WON In determining the net value of the estate 1894. On January 25, 1892, Palad executed a holographic
subject to tax, it is proper to deduct the compensation will party, which states: “That the cocoanut land in
due to trustees? Colongcolong, which I have put under cultivation, be
used by my wife after my death during her life or until
Ruling: she marries. Xxxxx and if the times aforementioned
- No, Certain items are required by law to be deducted should arrive, I prepare and donate it to secondary
from the appraised gross in arriving at the net value of college to be erected in the capital of Tayabas; so this will
the estate on which the inheritance tax is to be be delivered by my wife and the executors to the
computed. Ayuntamiento of this town, should there be any, and if
- In the case at bar, the defendant and the trial court not, to the civil governor of this province in order to
allowed a deduction of only P480.81. This sum cause the manager thereof to comply with my wishes for
represents the expenses and disbursements of the the good of many and the welfare of the town.”
executors until March 10, 1924, among which were their ● Palad died on December 3, 1896, without descendants,
fees and the proven debts of the deceased. The plaintiff but leaving a widow, the appellant Dorotea Lopez.
contends that the compensation and fees of the trustees, ● On July 27, 1987, the Court of First Instance of Tayabas
which aggregate P1,187.28 should also be deducted ordered the protocolization of the will over the
under section 1539 of the Revised Administrative Code opposition of Leopoldo and Policarpio Palad, collateral
which provides, in part, as follows: "In order to heirs of the deceased and of whom the appellants Palad
determine the net sum which must bear the tax, when are descendants.
an inheritance is concerned, there shall be deducted, in ● On April 20, 1903, the aforesaid collateral heirs of Luis
case of a resident, . . . the judicial expenses of the Palad brought an action against the widow for the
testamentary or intestate proceedings, . . . ." partition of the lands here in question on the ground that
- A trustee, no doubt, is entitled to receive a fair she, by reason of her second marriage, had lost the right
compensation for his services (Barney vs. Saunders, 16 to their exclusive use and possession. In the same
How., 535; 14 Law. ed., 1047). But from this it does not action the municipality of Tayabas intervened claiming
follow that the compensation due him may lawfully be the land.
deducted in arriving at the net value of the estate subject ● The court below ordered the registration of the three
to tax. There is no statute in the Philippines which lots in the name of the governor of the Province of
requires trustees' commissions to be deducted in Tayabas in trust for a secondary school to be established
determining the net value of the estate subject to in the municipality of Tayabas. The claimants Palad and
inheritance tax (61 C. J., p. 1705). Furthermore, though a Dorotea Lopez appealed.
testamentary trust has been created, it does not appear
that the testator intended that the duties of his RULING:
executors and trustees should be separated. 1) In order that a trust may become effective there must,
- On the contrary, in paragraph 5 of his will, the testator of course, be a trustee and a cestui que trust, and counsel
expressed the desire that his real estate be handled and for the appellants Palad argues that we here have
managed by his executors until the expiration of the neither; that there is no ayuntamiento, no Gobernador
period of ten years therein provided. Judicial expenses Civil of the province, and no secondary school in the town
are expenses of administration (61 C. J., p. 1705) but, in of Tayabas.chanrobles virtual law library An
State vs. Hennepin County Probate Court (112 N. W., ayuntamiento corresponds to what in English is termed a
878; 101 Minn., 485), it was said: ". . . The compensation municipal corporation and it may be conceded that the
of a trustee, earned, not in the administration of the ordinary municipal government in these Island falls
estate, but in the management thereof for the benefit of short of being such a corporation. But we have provincial
the legatees or devises, does not come properly within governors who like
the class or reason for exempting administration their predecessors, the civil governors, are the chief
expenses. . . . Service rendered in that behalf have no executives of their respective provinces. It is true
reference to closing the estate for the purpose of a that in a few details the function and power of the two
distribution thereof to those entitled to it, and are not offices may vary somewhat, but it cannot be
required or essential to the perfection of the rights of the successfully disputed that one office is the legal
heirs or legatees. . . . Trusts . . . of the character of that successor of the other. It might as well be contended that
here before the court, are created for the the benefit of when under the present regime the title of the
those to whom the property ultimately passes, are of chief executive of the Philippine was changed from
voluntary creation, and intended for the preservation of Civil Governor to that of Governor-General, the latter
the estate. No sound reason is given to support the was not the legal successor of the former. There
contention that such expenses should be taken into can therefore be but very little doubt that the governor
consideration in fixing the value of the estate for the of the Province of Tayabas, as the successor of
purpose of this tax." the civil governor of the province under the Spanish
regime, may acts as trustee in the present case.
Government v. Abadilla, 46 Phil. 642 chanrobles virtual law library In regard to private trust it
FACTS: is not always necessary that the cestui que trust should
● Lot Nos. 3464, 3469, and 3470 are claimed by the be named, or even be in esse
municipality of Tayabas and the governor of the province at the time the trust is created in his favor.
on one side, and by Maria, Eufemio, Eugenia, Felix,
Caridad, Segunda, and Emilia Palad on the other. Lot No. 2) But counsel argues that assuming all this to be true the
3470 is also claimed by Dorotea Lopez. collateral heirs of the deceased would nevertheless
be entitled to the income of the land until the cestui RTC: ordered the insolvency Assignee to take possession
que trust is actually in esse of the trust fund.
. We do not think so. If the trustee holds the legal ISSUE: WON the trust fund can be used to satisfy the
title and the devise is valid, the natural heirs of the claims of other creditors of Legacy?
deceased have no remaining interest in the land RULING: No. The contention of SEC finds support under
except their right to the reversion in the event the devise Section 30 of the Pre-Need Code where in it clearly
for some reason should fail, an event which has provides that the proceeds of trust funds shall redound
not as yet taken place. From a reading of the solely to the planholders. In no case shall the trust fund
testamentary clause under discussion it seems quite assets be used to satisfy claims of other creditors of the
evident that the intention of the testator was to pre-need company. It must be stressed that a person is
have income of the property accumulate for the considered as a beneficiary of a trust if there is a manifest
benefit of the proposed school until the same should be intention to give such a person the beneficial interest
established. over the trust properties. This categorical declaration
doubtless indicates that the intention of the trustor is to
3) Therefore, the judgment appealed from must be make the planholders the beneficiaries of the trust
affirmed in regard to lots Nos. 3464 and 3469. properties, and not Legacy. It is clear that because the
chanrobles virtual law library As to lot No. 3470, it may beneficial ownership is vested in the planholders and the
be noted that though the Statute of Limitation legal ownership in the trustee, LBP, Legacy, as trustor, is
does not run as between trustee and cestui que trust left without any iota of interest in the trust fund. Legacy
as long as the trust relations subsist, it may run is out of the picture and exists only as a representative of
as between the trust and third persons. Contending that the trustee, LBP, with the limited role of facilitating the
the Colongcolong land was community property delivery of the benefits of the trust fund to the
of her marriage with Luis Palad and that lot No. beneficiaries -the planholders. The trust fund should not
3470 represented her share thereof, Dorotea Lopez has revert to Legacy, which has no beneficial interest over it.
held possession of said lot, adverse to all other Not being an asset of Legacy, the trust fund is immune
claimants, since the year 1904 and has now from its reach and cannot be included by the RTC in the
acquired title by prescription insolvency estate

Miguel J. Osorio Pension Foundation, Inc. v. CA, 621

SCRA 606
SEC v. Laigo, 768 SCRA 633 - Petitioner MJOPFI, a non-stock and non-profit
“Assets in the trust fund shall at all times remain for the corporation, was organized for the purpose of holding
sole benefit of the planholders. The trust fund assets title to and administering the employees’ trust or
cannot be used to satisfy claims of other creditors of the retirement funds (Employees’ Trust Fund) established for
pre-need company.” the benefit of the employees of Victorias Milling
Company, Inc. (VMC).
FACTS: Legacy Consolidated Plans, Inc. (Legacy), being a - Petitioner, as trustee, claims that the income earned by
pre-need provider, complied with the trust fund the Employees’ Trust Fund is tax exempt under Section
requirement of the petitioner, Securities and Exchange 53(b) of the National Internal Revenue Code (Tax Code).
Commission (SEC), and entered into a trust agreement - Petitioner bought the Madrigal Business Park (MBP lot)
with the Land Bank of the Philippines (LBP). The industry through VMC. Petitioner alleges that its investment in
collapsed and Legacy was unable to pay its obligation to the MBP lot came about upon the invitation of VMC and
the planholders.. Private respondents, as planholders, that its share in the lot is 49.59%. Petitioner’s investment
filed a petition for involuntary insolvency against Legacy manager, the Citytrust Banking Corporation (Citytrust),
before the the Regional Trial Court (RTC). Accordingly, in submitting its Portfolio Mix Analysis, regularly
Legacy was declared insolvent and was ordered to reported the Employees’ Trust Fund’s share in the MBP
submit an inventory of its assets and liabilities pursuant lot.
to the Insolvency Law. The RTC ordered the SEC to submit - On 26 March 1997, VMC eventually sold the MBP lot to
the documents pertaining to Legacy's assets and Metrobank.
liabilities. The SEC opposed the inclusion of the trust fund - Petitioner claims that it is a co-owner of the MBP lot as
in the inventory of corporate assets on the ground that trustee of the Employees’ Trust Fund, based on the
to do so would contravene the New Rules on Registration notarized Memorandum of Agreement. Petitioner
and Sale of Pre-Need Plans which treated trust funds as maintains that its ownership of the MBP lot is supported
principally established for the exclusive purpose of by the excerpts of the minutes and the resolutions of
guaranteeing the delivery of benefits due to the petitioner’s Board Meetings.
planholders. It was added that the inclusion of the trust Petitioner further contends that there is no dispute that
fund in the insolvent's estate and its being opened to the Employees’ Trust Fund is exempt from income tax.
claims by non-planholders would contravene the Since petitioner, as trustee, purchased 49.59% of the
purpose for its establishment. Despite the opposition of MBP lot using funds of the Employees’ Trust Fund,
the SEC, respondent Judge Reynaldo M. Laigo (Judge petitioner asserts that the Employees’ Trust Fund's
Laigo) ordered the insolvency Assignee to take 49.59% share in the income tax paid (or P3,037,697.40
possession of the trust fund. Judge Laigo viewed the trust rounded off to P3,037,500) should be refunded.
fund as Legacy's corporate assets and included it in the Petitioner filed a Petition for tax refund before the CTA.
insolvent's estate. The SEC contended that Judge Laigo CTA: denied petitioner's claim for refund of withheld
gravely abused his discretion in treating the trust fund as creditable tax of P3,037,500 arising from the sale of real
part of the insolvency estate of Legacy. It argued that the property of which petitioner claims to be a co-owner as
trust fund should redound exclusively to the benefit of trustee of the employees' trust or retirement funds.
the planholders, who are the ultimate beneficial owners.
CA: agreed with the CTA that pieces of documentary  The Plan as submitted was approved and qualified as
evidence submitted by petitioner are largely self-serving exempt from income tax by Petitioner Commissioner
and can be contrived easily. The CA ruled that these of Internal Revenue in accordance with Rep. Act No.
documents failed to show that the funds used to 4917.
purchase the  In 1984, Respondent GCL made investments and
MBP lot came from the Employees’ Trust Fund. earned therefrom interest income from which was
witheld the fifteen per centum (15%) final witholding
ISSUE: tax imposed by Pres. Decree No. 1959,2 which took
Whether or not petitioner, as trustee of the Employee’s effect on 15 October 1984.
Trust Fund, is the beneficial owner of 49.59% of the MBP  On 15 January 1985, Respondent GCL filed with
lot Petitioner a claim for refund in the amounts of
P1,312.66 withheld by Anscor Capital and Investment
RULING: Corp., and P2,064.15 by Commercial Bank of Manila.
Yes.  On 12 February 1985, it filed a second claim for refund
- SC ruled that petitioner, as trustee of the Employees’ of the amount of P7,925.00 withheld by Anscor,
Trust Fund, has more than sufficiently established that it stating in both letters that it disagreed with the
has an agreement with VMC and VFC to purchase jointly collection of the 15% final withholding tax from the
the MBP lot and to register the MBP lot solely in the interest income as it is an entity fully exempt from
name of VMC for the benefit of petitioner, VMC and VFC. income tax as provided under Rep. Act No. 4917 in
- Art. 1452. If two or more persons agree to purchase a relation to Section 56 (b) 3 of the Tax Code.
property and by common consent the legal title is taken  Refund requested was denied by CIR.
in the name of one of them for the benefit of all, a trust  On appeal, Court of Tax Appeals (CTA) ruled in favor
is created by force of law in favor of the others in of GCL, holding that employees' trusts are exempt
proportion to the interest of each. For Article 1452 to from the 15% final withholding tax on interest income
apply, all that a co-owner needs to show is that there is and ordering a refund of the tax withheld.
“common consent” among the purchasing co-owners to  CA upheld the CTA Decision.
put the legal title to the purchased property in the name
of one co-owner for the benefit of all. Once this ISSUE
“common consent” is shown, “ a trust is created by force WON the employees’ trusts were not exempted from
of law.” income tax and therefor subject to the final withholding
- The BIR has no option but to recognize such legal trust tax.
as well as the beneficial ownership of the real owners
because the trust is created by force of law. The fact that HELD
the title is registered solely in the name of one person is Yes, the employees’ trusts were exempted from income
not conclusive that he alone owns the property. Thus, tax and therefor, not subject to the final withholding tax.
this case turns on whether petitioner can sufficiently To begin with, it is significant to note that the GCL Plan
establish that petitioner, as trustee of the Employees’ was qualified as exempt from income tax by the
Trust Fund, has a common agreement with VMC and VFC Commissioner of Internal Revenue in accordance with
that petitioner, VMC and VFC shall jointly purchase the Rep. Act No. 4917 approved on 17 June 1967. This law
MBP lot and put the title to the MBP lot in the name of specifically provided:
VMC for the benefit petitioner, VMC and VFC. Sec. 1. Any provision of law to the contrary
- The CTA ruled that the documents presented by notwithstanding, the retirement benefits received by
petitioner cannot prove its co-ownership over the MBP officials and employees of private firms, whether
lot especially that the TCT, Deed of Absolute Sale and the individual or corporate, in accordance with a reasonable
Remittance Return disclosed that VMC is the sole owner private benefit plan maintained by the employer shall be
and taxpayer. However, the appellate courts failed to exempt from all taxes and shall not be liable to
consider the genuineness and due execution of the attachment, levy or seizure by or under any legal or
notarized Memorandum of Agreement acknowledging equitable process whatsoever except to pay a debt of the
petitioner’s ownership of the MBP lot. The BIR failed to official or employee concerned to the private benefit
present any clear and convincing evidence to prove that plan or that arising from liability imposed in a criminal
the notarized Memorandum of Agreement is fictitious or action; . . . (emphasis ours).
has no legal effect. Likewise, VMC, the registered owner, In so far as employees' trusts are concerned, the
did not repudiate petitioner’s share in the MBP lot. foregoing provision should be taken in relation to then
Further, Citytrust, a reputable banking institution, has Section 56(b) (now 53[b]) of the Tax Code, as amended
prepared a Portfolio Mix Analysis for the years 1994 to by Rep. Act No. 1983, supra, which took effect on 22
1997 showing that petitioner invested P5,504,748.25 in June 1957. This provision specifically exempted
the MBP lot. Absent any proof that the Citytrust bank employee's trusts from income tax and is repeated
records have been tampered or falsified, and the BIR has hereunder for emphasis:
presented none, the Portfolio Mix Analysis should be Sec. 56. Imposition of Tax. — (a) Application of tax. —
given probative value. The taxes imposed by this Title upon individuals shall
apply to the income of estates or of any kind of property
CIR v. CA, 207 SCRA 487 held in trust.
FACTS xxx xxx xxx
(b) Exception. — The tax imposed by this Title shall not
 Private Respondent, GCL Retirement Plan (GCL, for apply to employee's trust which forms part of a pension,
brevity) is an employees' trust maintained by the stock bonus or profit-sharing plan of an employer for the
employer, GCL Inc., to provide retirement, pension, benefit of some or all of his
disability and death benefits to its employees. employees . . .
The tax-exemption privilege of employees' trusts, as to abandon the premise or demolish the improvements
distinguished from any other kind of property held in the latter made and that petitioner claimed ownership of
trust, springs from the foregoing provision. It is the same.
unambiguous. Manifest therefrom is that the tax law has - Respondents then filed a complaint for recovery of
singled out employees' trusts for tax exemption. possession of the land against petitioner. When
And rightly so, by virtue of the raison de'etre behind the petitioner died, he was substituted by his heirs and one
creation of employees' trusts. Employees' trusts or of which is co-petitioner Pricislla Morales.
benefit plans normally provide economic assistance to - Trial court rendered decision in favor of respondents.
employees upon the occurrence of certain Petitioners appealed to CA but CA affirmed such
contingencies, particularly, old age retirement, death, decision. Hence, this present case. Petitioners argues
sickness, or disability. It provides security against certain that there is an implied trust when Celso Avelino
hazards to which members of the Plan may be exposed. purchase the such land from his parents in favor of the
It is an independent and additional source of protection trustor, Resendo Avelino and his heirs
for the working group. What is more, it is established for
their exclusive benefit and for no other purpose. Issue: WON there was an implied trust when Celso
The tax advantage in Rep. Act No. 1983, Section 56(b), Avelino purchased the house and lot in question as a
was conceived in order to encourage the formation and mere trustee, for the benefit of the trustor, his father,
establishment of such private Plans for the benefit of Rosendo Avelino, and the latter’s heirs.
laborers and employees outside of the Social Security
Act. Enlightening is a portion of the explanatory note to Ruling:
H.B. No. 6503, now R.A. 1983, reading: - No, Express trusts are created by the intention of the
Considering that under Section 17 of the social Security trustor or of the parties, while implied trusts come into
Act, all contributions collected and payments of sickness, being by operation of law, either through implication of
unemployment, retirement, disability and death benefits an intention to create a trust as a matter of law or
made thereunder together with the income of the through the imposition of the trust irrespective of, and
pension trust are exempt from any tax, assessment, fee, even contrary to, any such intention. In turn, implied
or charge, it is proposed that a similar system providing trusts are either resulting or constructive trusts.
for retirement, etc. benefits for employees outside the Resulting trusts are based on the equitable doctrine that
Social Security Act be exempted from income taxes. valuable consideration and not legal title determines the
(Congressional Record, House of Representatives, Vol. equitable title or interest and are presumed always to
IV, Part. 2, No. 57, p. 1859, May 3, 1957; cited in have been contemplated by the parties. They arise from
Commissioner of Internal Revenue v. Visayan Electric Co., the nature or circumstances of the consideration
et al., G.R. No. L-22611, 27 May 1968, 23 SCRA 715); involved in a transaction whereby one person thereby
emphasis supplied. becomes invested with legal title but is obligated in
It is evident that tax-exemption is likewise to be enjoyed equity to hold his legal title for the benefit of another. On
by the income of the pension trust. Otherwise, taxation the other hand, constructive trusts are created by the
of those earnings would result in a diminution construction of equity in order to satisfy the demands of
accumulated income and reduce whatever the trust justice and prevent unjust enrichment. They arise
beneficiaries would receive out of the trust fund. This contrary to intention against one who, by fraud, duress
would run afoul of the very intendment of the law. or abuse of confidence, obtains or holds the legal right to
The deletion in Pres. Decree No. 1959 of the provisos property which he ought not, in equity and good
regarding tax exemption and preferential tax rates under conscience, to hold.
the old law, therefore, can not be deemed to extent to - The preponderance of evidence, as found by the trial
employees' trusts. Said Decree, being a general law, can court and affirmed by the Court of Appeals, established
not repeal by implication a specific provision, Section positive acts of Celso Avelino indicating, without doubt,
56(b) now 53 [b]) in relation to Rep. Act No. 4917 that he considered the property he purchased from the
granting exemption from income tax to employees' Mendiolas as his exclusive property. He had its tax
trusts. Rep. Act 1983, which excepted employees' trusts declaration transferred in his name, caused the property
in its Section 56 (b) was effective on 22 June 1957 while surveyed for him by the Bureau of Lands, and faithfully
Rep. Act No. 4917 was enacted on 17 June 1967, long paid the realty taxes. Finally, he sold the property to
before the issuance of Pres. Decree No. 1959 on 15 private respondents.
October 1984. A subsequent statute, general in character - The theory of implied trust with Celso Avelino as the
as to its terms and application, is not to be construed as trustor and his parents Rosendo Avelino and Juan
repealing a special or specific enactment, unless the Ricaforte as trustees is not even alleged, expressly or
legislative purpose to do so is manifested. This is so even impliedly, in the verified Answer of Rodolfo Morales nor
if the provisions of the latter are sufficiently in the Answer in Intervention of Priscila A. Morales
comprehensive to include what was set forth in the - Art. 1448. There is an implied trust when property is
special act (Villegas v. Subido, G.R. No. L-31711, 30 sold, and the legal estate is granted to one party but the
September 1971, 41 SCRA 190). price is paid by another for the purpose of having the
beneficial interest of the property. The former is the
Morales v. CA, 274 SCRA 282 trustee, while the latter is the beneficiary. However, if
Facts: the person to whom the title is conveyed is a child,
- Private respondents Ranulfo Ortiz, Jr. and Erlinda Ortiz legitimate or illegitimate, of the one paying the price of
purchased a land from one Celso Avelino where the latter the sale, no trust is implied by law, it being disputably
purchased the said lot from his parents. After the sale, presumed that there is a gift in favor of the child
respondents examined the premises and talked with
petitioner Rodulfo Morales regarding the sale. Petitioner Pascual v. Meneses, 20 SCRA 219
promised to vacate the premise but despite due notice
from petitioner's uncle, Celso Avelino, petitioner refused Cuaycong v. Cuaycong, 21 SCRA 1192
FACTS: it clear that the plaintiffs alleged an express trust over an
Eduardo Cuaycong, married to Clotilde de Leon, died immovable, especially since it is alleged that the trustor
without issue but with three brothers and a sister expressly told the defendants of his intention to establish
surviving him: Lino, Justo, Meliton and Basilisa. Upon his the trust. Such a situation definitely falls under Article
death, his properties were distributed to his heirs as he 1443 of the Civil Code. Article 1453, one of the cases of
willed except two haciendas the Haciendas Sta. Cruz and an implied trust would apply if the person conveying the
Pusod both known as Hacienda Bacayan. Lino Cuaycong property did not expressly state that he was establishing
died and was survived by his children. Praxedes the trust, unlike the case at bar where he was alleged to
Cuaycong, married to Jose Betia, is already deceased and have expressed such intent.
is survived by her children, all surnamed Betia. Anastacio
Cuaycong, also deceased, is survived by his children, all Julio v. Dalandan, 21 SCRA 543
surnamed Cuaycong. Meliton and Basilisa died without Facts:
any issue. On October 3, 1961, the surviving children of Clemente Dalandan, deceased father of defendants
Lino Cuaycong; the surviving children of Anastacio; as Emiliano and Maria Dalandan, acknowledged that a four-
well as children of deceased Praxedes Cuaycong Betia, hectare piece of riceland in Las Piñas belonging to
filed as pauper litigants, a suit against Justo, Luis and Victoriana Dalandan, whose only child and heir is plaintiff
Benjamin Cuaycong for conveyance of inheritance and Victoria Julio, was posted as security for an obligation
accounting, before the Court of First Instance of Negros which he, Clemente Dalandan assumed but, however,
Occidental alleging among others that Luis, thru clever failed to fulfill. (he result was that Victoriana)s said land
strategy, fraud, misrepresentation and in disregard of was foreclosed. Clemente Dalandan promised to Victoria
Eduardo’s wishes by causing the issuance in his name of Julio a farm of about four hectares to replace the
certificates of title covering Hacienda Bacayan’s aforesaid foreclosed property. An affidavit was executed
properties. They also claimed that Eduardo had an by Clemente which herein petitioner accepted. One of
arrangement with Justo and Luis that the latter will hold the condition laid were neither delivery of the land nor
in trust what might belong to his brothers and sister as a the fruits thereof could immediately be demanded from
result of the arrangements and deliver them their share his children. After the death of Clemente Dalandan,
when time comes. The plaintiff repeatedly demanded for Victoria Julio requested from defendants, Clemente)s
their share in the property after Eduardo and Clotilde’s legitimate and surviving heirs who succeeded in the
death. Luis D. Cuaycong moved to dismiss the complaint. possession of the land thus conveyed, to deliver the
On December 16, 1961, the Court of First Instance ruled same to her; that defendants insisted that according to
that the trust alleged, particularly in paragraph 8 of the the agreement, neither delivery of the land nor the fruits
complaint, refers to an immovable which under Article thereof could immediately be demanded, and; that
1443 of the Civil Code may not be proved by parole plaintiff acceded to this contention of defendants and
evidence. Later, the court decreed that since there was allowed them to continue to remain in possession
no amended complaint filed, it was useless to declare thereof; that demands have been made upon defendants
Benjamin Cuaycong in default. Plaintiff thereafter to fix the period within which they would deliver to the
manifested that the claim is based on an implied trust as herein plaintiff the above-described parcels of land but
shown by paragraph 8 of the complaint. They added that defendants have refused and until now still refuse to fix
there being no written instrument of trust, they could a specific time within which they would deliver to
not amend the complaint to include such instrument. plaintiff the aforementioned parcels of land.
Paragraph 8 of the complaint state: That as the said two
haciendas were then the subject of certain transactions ISSUE: WON there is a trust instituted
between the spouses Eduardo Cuaycong and Clotilde de
Leon on one hand, and Justo and Luis D. Cuaycong on the RULING:
other, Eduardo Cuaycong told his brother Justo and his YES. There is trust instituted
nephew, defendant Luis D. Cuaycong, to hold in trust - Article 1444 of the Civil Code states that: "No particular
what might belong to his brothers and sister as a result words are required for the creation of an express trust, it
of the arrangements and to deliver to them their shares being sufficient that a trust is clearly intended." In reality,
when the proper time comes, to which Justo and Luis D. the development of the trust as a method of disposition
Cuaycong agreed. of property, so jurisprudence teaches, "seems in large
part due to its freedom from formal requirements." This
ISSUE: Whether the trust is express or implied. principle perhaps accounts for the provisions in Article
1444 just quoted. For, "technical or particular forms of
RULING: It is an express trust. Our Civil Code defines an words or phrases are not essential to the manifestation
express trust as one created by the intention of the of intention to create a trust or to the establishment
trustor or of the parties, and an implied trust as one that thereof." Nor would the use of some such words as
comes into being by operation of law. Express trusts are "trust" or "trustee" be essential to the constitution of a
those created by the direct and positive acts of the trust, as we have held in Lorenzo vs. Posadas, 64 Phil.
parties, by some writing or deed or will or by words 353, 368. Conversely, the mere fact that the word "trust"
evidencing an intention to create a trust. On the other or "trustee" was employed would not necessarily prove
hand, implied trusts are those which, without being an intention to create a trust. What is important is
expressed, are deducible from the nature of the whether the trustor manifested an intention to create
transaction by operation of law as matters of equity, in the kind of relationship which in law is known as a trust.
dependently of the particular intention of the parties. It is unimportant that the trustor should know that the
Thus, if the intention to establish a trust is clear, the trust relationship "which he intends to create is called a trust,
is express; if the intent to establish a trust is to be taken and whether or not he knows the precise characteristics
from circumstances or other matters indicative of such of the relationship which is called a trust." Here, that
intent, then the trust is implied. From these and from the trust is effective as against defendants and in favor of the
provisions of paragraph 8 of the complaint itself, we find
beneficiary thereof, plaintiff Victoria Julio, who accepted petitioners to file an action for reconveyance and to
it in the document itself. annotate a notice of lis pendens.
For, while it is true that said deed did not in definitive  The Register of Deeds of Cebu City issued the
words institute defendants as trustees, a duty is therein reconstituted title, TCT No. RT-7853, in the name of
imposed upon them - when the proper time comes - to Epifanio Labiste, married to Tomasa Mabitad, his
turn over both the fruits and the possession of the brothers and sisters, heirs of Jose Labiste on 14
property to Victoria Julio. December 1994.
 However, respondents did not honor the compromise
Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, 587 agreement.
SCRA 417  Petitioners filed a complaint for annulment of title
FACTS seeking the reconveyance of property and damages
on 13 January 1995, docketed as Civil Case No. CEB-
 Petition for review under Rule 45. 16943, with the RTC of Cebu City.
 29 September 1919, the late Epifanio Labiste  Respondents claimed that the Affidavit of Epifanio
(Epifanio), on his own and on behalf of his brothers and the Calig-onan sa Panagpalit were forgeries and
and sisters who were the heirs of Jose Labiste (Jose), that petitioners action had long prescribed or barred
purchased from the Bureau of Lands Lot No. 1054 of by laches.
the Banilad Friar Lands Estate, with an area of 13,308  RTC ruled in favor of petitioners, found that the
square meters, located at Guadalupe, Cebu City for documents are genuine and authentic as ancient
P36.00. documents and that they are valid and enforceable,
 Subsequently, on 9 June 1924, then Bureau of Lands held that the action had not prescribed as the
Director Jorge B. Vargas executed Deed of complaint was filed about a year after the
Conveyance No. 12536 selling and ceding Lot No. reconstitution of the title by respondents.
1054 to Epifanio and his brothers and sisters who  The judicial reconstitution was even opposed by
were the heirs of Jose. petitioners until a compromise agreement was
 Epifanio executed an Affidavit(Affidavit of Epifanio) in reached by the parties and approved by the RTC
Spanish on 10 July 1923, after full payment of the which ordered the reconstitution.
purchase price but prior to the issuance of the deed  RTC further held that the reconstituted title did not
of conveyance, affirming that he, as one of the heirs give any more right to respondents than what their
of Jose, and his uncle and petitioners predecessor-in- predecessors-in-interest actually had as it is limited to
interest, Tranquilino Labiste (Tranquilino), then co- the reconstitution of the certificate as it stood at the
owned Lot No. 1054 because the money that was paid time of its loss or destruction.
to the government came from the two of them.  CA, while affirming petitioners right to the property,
Tranquilino and the heirs of Jose continued to hold as the Affidavit and the Calig-onan sa Panagpalit are
the property jointly. genuine and authentic, and that the same are valid
 On 2 May 1928, Engineer Espiritu Bunagan (Engr. and enforceable documents. Nevertheless, it
Bunagan), Deputy Public Land Surveyor, subdivided reversed the RTCs decision on the ground of
Lot No. 1054 into two lots: Lot No. 1054-A with an prescription and laches, citing Article 1144 of the Civil
area of 6,664 square meters for Tranquilino and Lot Code, held that petitioners cause of action had
No. 1054-B with an area of 6,664 square meters for prescribed for the action must be brought within ten
Epifanio. (10) years from the time the right of action accrues
 Subsequently, on 18 October 1939, the heirs of upon the written contract which in this case was
Tranquilino purchased the one-half (1/2) interest of when petitioners predecessors-in-interest lost
the heirs of Jose[9] over Lot No. 1054 for P300.00, as possession over the property after World War II.
evidenced by the Calig-onan sa Panagpalit[10] Also, the lapse of time to file the action constitutes
executed by the parties in the Visayan dialect. The neglect on petitioners’ part so the principle of laches
heirs of Tranquilino immediately took possession of is applicable.
the entire lot.
 When World War II broke out, the heirs of Tranquilino ISSUE
fled Cebu City and when they came back they found WON the Affidavit executed by Epifanio was proof of
their homes and possessions destroyed. The records express trust, and if such, won an unrepudiated written
in the Office of the Register of Deeds, Office of the express trust is imprescriptible.
City Assessor and other government offices were also
destroyed during the war. Squatters have practically HELD
overrun the entire property, such that neither YES.
petitioners nor respondents possess it. Trust is the right to the beneficial enjoyment of property,
 In October 1993, petitioners learned that one of the the legal title to which is vested in another. It is a
respondents, Asuncion Labiste, had filed on 17 fiduciary relationship that obliges the trustee to deal
September 1993 a petition for reconstitution of title with the property for the benefit of the beneficiary. Trust
over Lot No. 1054. relations between parties may either be express or
 Petitioners opposed the petition at first but by a implied. An express trust is created by the intention of
compromise agreement between the parties dated the trustor or of the parties. An implied trust comes into
25 March 1994, petitioners withdrew their opposition being by operation of law.
to expedite the reconstitution process. Express trusts are created by direct and positive acts of
 Under the compromise agreement, petitioners were the parties, by some writing or deed, or will, or by words
to be given time to file a complaint so that the issues either expressly or impliedly evincing an intention to
could be litigated in an ordinary action and the create a trust. Under Article 1444 of the Civil Code, "[n]o
reconstituted title was to be deposited with the Clerk particular words are required for the creation of an
of Court for a period of sixty (60) days to allow
express trust, it being sufficient that a trust is clearly at the expense of the respondents who, as compulsory
intended." heirs, were also entitled to their share in the subject
The Affidavit of Epifanio is in the nature of a trust property, the RTC directed Bella, et al. to pay plaintiffs,
agreement. Epifanio affirmed that the lot brought in his jointly and severally.
name was co-owned by him, as one of the heirs of Jose,
and his uncle Tranquilino. And by agreement, each of CA: upheld the RTC's finding that an implied trust was
them has been in possession of half of the property. Their constituted between Felisa, during her lifetime, and
arrangement was corroborated by the subdivision plan Bella, Delfin, Sr., and Felimon, Sr. when the former sold
prepared by Engr. Bunagan and approved by Jose P. the subject property to the latter, and that the present
Dans, Acting Director of Lands. action for reconveyance has not prescribe. However,
As such, prescription and laches will run only from the Wilson and Peter were found to not be purchasers im
time the express trust is repudiated. The Court has held good faith due to their knowledge of the adverse claim.
that for acquisitive prescription to bar the action of the
beneficiary against the trustee in an express trust for Issues:
the recovery of the property held in trust it must be 1. Whether or not a trust was established
shown that: (a) the trustee has performed unequivocal between Felisa and Bella, Delfin,Sr., and Felimon, Sr.
acts of repudiation amounting to an ouster of the cestui 2. Whether or not the action for reconveyance
que trust; (b) such positive acts of repudiation have been has prescribed.
made known to the cestui que trust, and (c) the evidence 3. Whether or not Wilson and Peter are
thereon is clear and conclusive. Respondents cannot rely purchasers in good faith.
on the fact that the Torrens title was issued in the name
of Epifanio and the other heirs of Jose. It has been held HELD:
that a trustee who obtains a Torrens title over property 1. An express trust was created. Trust is the right to the
held in trust by him for another cannot repudiate the beneficial enjoyment of property, the legal title to which
trust by relying on the registration. The rule requires a is vested in another. It is a fiduciary relationship that
clear repudiation of the trust duly communicated to the obliges the trustee to deal with the property for the
beneficiary. The only act that can be construed as benefit of the beneficiary. Trust relations between
repudiation was when respondents filed the petition for parties may either be express or implied. An express trust
reconstitution in October 1993. And since petitioners is created by the intention of the trustor or of the parties,
filed their complaint in January 1995, their cause of while an implied trust comes into being by operation of
action has not yet prescribed, laches cannot be law.
attributed to them.
Express trusts are created by direct and positive acts of
Gamboa v. Gamboa, 52 Phil. 503 the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to
Cañezo v. Rojas, 538 SCRA 242 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
Go v. Estate of Felisa Tamio de Buenaventura, 763 SCRA accommodate them in securing a loan from the GSIS. She
632 likewise stated clearly that she was retaining her
Facts: ownership over the subject property and articulated her
Felisa Buenaventura, the mother of the Petitioner Bella wish to have her heirs share equally therein. Hence,
and respondents Resurreccion, Rhea and Regina, owned while in the beginning, an implied trust was merely
a parcel of land with a three-storey building. In 1960, created between Felisa, as trustor, and Bella, Delfin, Sr.,
Felisa transferred the same to her daughter Bella, and Felimon, Sr., as both trustees and beneficiaries, the
married to Delfin, Sr., and Felimon, Sr., the common-law execution of the September 21, 1970 letter settled, once
husband of Felisa, to assist them in procuring a loan from and for all, the nature of the trust established between
the GSIS. In view thereof, her title over the property, TCT them as an express one, their true intention irrefutably
No. 45951/T-233, was cancelled and a new one, TCT No. extant thereon.
49869, was issued in the names of Bella, married to
Delfin, Sr., and Felimon, Sr. 2. Anent the issue of prescription, the Court finds that the
Upon Felisa's death in 1994, the Bihis Family, Felisa's action for reconveyance instituted by respondents has
other heirs who have long been occupying the subject not yet prescribed, following the jurisprudential rule that
property, caused the annotation of their adverse claim express trusts prescribe in ten (10) years from the time
over the property. However, the annotation was the trust is repudiated.
cancelled, and thereafter a new TCT over the property In this case, there was a repudiation of the express trust
was issued in the names of Bella, et al. Finally, by virtue when Bella, as the remaining trustee, sold the subject
of a Deed of Sale dated January 23, 1997, the subject property to Wilson and Peter on January 23, 1997. As the
property was sold to Wilson and Peter, in whose names complaint for reconveyance and damages was filed by
TCT No. 170475 currently exists. A complaint for respondents on October 17, 1997, or only a few months
reconveyance was then filed. after the sale of the subject property to Wilson and Peter,
RTC: there was an implied trust between Felisa, on the it cannot be said that the same has prescribed.
one hand, and Bella and Felimon, Sr., on the other, 3. Wilson and Peter are not purchasers in good faith. A
created by operation of law. However, the RTC held that purchaser in good faith is one who buys the property of
reconveyance can no longer be effected since the subject another without notice that some other person has a
property had already been transferred to Wilson and right to, or an interest in, such property and pays a full
Peter, whom it found to be purchasers in good. Also, and fair price for the same at the time of such purchase,
Bella, Delfin, Sr., and Felimon, Sr. were unjustly enriched
or before he has notice of some other person 's claim or respondent as the creditor from whom she and her
interest i n the property. The husband obtained the loan the Contract secured; and (3)
existence of an annotation on the title covering the respondent shouldered the payment of the foreclosure
subject property and of the occupation thereof by expenses. Instead, however, of annulling the Contract,
individuals other than the sellers negate any the CA held that reformation was the proper remedy,
presumption of good faith on the part of Wilson and with the MOA "serv[ing] as the correction done by the
Peter when they purchased the subject property. parties to reveal their true intent."

Juan v. Yap, Sr., 646 SCRA 753 ISSUE: Whether an implied trust arose between
FACTS: petitioner and respondent, binding petitioner to hold the
The spouses Maximo and Dulcisima Cañeda mortgaged beneficial title over the mortgaged properties in trust for
to petitioner Richard Juan (petitioner), employee and respondent
nephew of respondent Gabriel Yap, Sr. (respondent), two
parcels of land in Talisay, Cebu to secure a loan of P1.68 RULING:
million, payable within one year. Yes, there is an implied trust between the petitioner and
Petitioner, represented by Atty. Solon, sought the the respondent.
extrajudicial foreclosure of the mortgage. Although An implied trust arising from mortgage contracts is not
petitioner and respondent participated in the auction among the trust relationships the Civil Code enumerates.
sale, the properties were sold to petitioner for tendering The Code itself provides, however, that such listing "does
the highest bid of P2.2 million. No certificate of sale was not exclude others established by the general law on
issued to petitioner, however, for his failure to pay the trust x x x." Under the general principles on trust, equity
sale’s commission. converts the holder of property right as trustee for the
Respondent and the Cañeda spouses executed a benefit of another if the circumstances of its acquisition
memorandum of agreement (MOA) where (1) the makes the holder ineligible "in x x x good conscience [to]
Cañeda spouses acknowledged respondent as their "real hold and enjoy [it]." As implied trusts are remedies
mortgagee-creditor x x x while Richard Juan [petitioner] against unjust enrichment, the "only problem of great
is merely a trustee" of respondent; (2) respondent importance in the field of constructive trusts is whether
agreed to allow the Cañeda spouses to redeem the in the numerous and varying factual situations presented
foreclosed properties for P1.2 million; and (3) the Cañeda x x x there is a wrongful holding of property and hence, a
spouses and respondent agreed to initiate judicial action threatened unjust enrichment of the defendant."
"either to annul or reform the [Contract] or to compel Applying these principles, this Court recognized
Richard Juan to reconvey the mortgagee’s rights" to unconventional implied trusts in contracts involving the
respondent as trustor. purchase of housing units by officers of tenants’
Three days later, the Cañeda spouses and respondent associations in breach of their obligations, the
sued petitioner in the Regional Trial Court of Cebu City partitioning of realty contrary to the terms of a
(trial court) to declare respondent as trustee of compromise agreement, and the execution of a sales
petitioner vis a vis the Contract, annul petitioner’s bid for contract indicating a buyer distinct from the provider of
the foreclosed properties, declare the Contract the purchase money. In all these cases, the formal
"superseded or novated" by the MOA, and require holders of title were deemed trustees obliged to transfer
petitioner to pay damages, attorney’s fees and the costs. title to the beneficiaries in whose favor the trusts were
The Cañeda spouses consigned with the trial court the deemed created. We see no reason to bar the
amount of P1.68 million as redemption payment. recognition of the same obligation in a mortgage
Petitioner insisted on his rights over the mortgaged contract meeting the standards for the creation of an
properties. Petitioner also counterclaimed for damages implied trust.
and attorney’s fees and the turn-over of the owner’s
copy of the titles for the mortgaged properties. Heirs of Narvasa, Sr. v. Imbornal, 732 SCRA 171
RTC: ruled against respondent and his co-plaintiffs and FACTS
granted reliefs to petitioner by declaring petitioner the
"true and real" mortgagee, ordering respondent to pay  Petition for review on certiorari.
moral damages and attorney’s fees, and requiring  Basilia Imbornal+ (Basilia) had four (4) children,
respondent to deliver the titles in question to petitioner. namely, Alejandra, Balbina, Catalina, and Pablo.
The trial court, however, granted the Cañeda spouses’  Petitioners are the heirs and successors-in-interest of
prayer to redeem the property and accordingly ordered Alejandra and Balbina.
the release of the redemption payment to petitioner. In  Respondents are heirs and successors-in-interest of
arriving at its ruling, the trial court gave primacy to the Pablo.
terms of the Contract, rejecting respondent’s theory in  Basilia owned a parcel of land situated at Sabangan,
light of his failure to assert beneficial interest over the Barangay Nibaliw West, San Fabian, Pangasinan
mortgaged properties for nearly four years. which she conveyed to her three (3) daughters
Respondent appealed to CA Balbina, Alejandra, and Catalina (Imbornal sisters)
CA: granted the petition, set aside the trial court’s ruling, sometime in 1920.
declared respondent the Contract’s mortgagee, directed  Meanwhile, Catalina’s husband, Ciriaco Abrio
the trial court to release the redemption payment to (Ciriaco), applied for and was granted a homestead
respondent, and ordered petitioner to pay damages and patent over a 31,367-sq. m. riparian land
attorney’s fees. The CA found the following (Motherland) adjacent to the Cayanga River in San
circumstances crucial in its concurrence with Fabian, Pangasinan on December 5, 1933.
respondent’s theory, notwithstanding the terms of the  The certificate of title to such patent was eventually
Contract: (1) Solon testified that he drew up the Contract issued to his heirs in 1973.
naming petitioner as mortgagee upon instructions of
respondent; (2) Dulcisima Cañeda acknowledged
 Ciriaco and his heirs had since occupied the northern ISSUE
portion of the Motherland, while respondents WON an implied trust existed between Ciriaco and
occupied the southern portion. Imbornal sisters.
 In 1949 and 1971, First and Second Accretion
adjoined the southern portion of the Motherland. HELD
 OCT to the First Accretion was issued to Victoriano, No.
one of the respondents, and OCT for the Second An implied trust arises, not from any presumed intention
Accretion was issued to all respondents. of the parties, but by operation of law in order to satisfy
 Petitioners Francisco, et al., as the children of the demands of justice and equity and to protect against
Alejandra and Balbina, filed on February 27,1984 an unfair dealing or downright fraud.44 To reiterate, Article
Amended Complaint for reconveyance, partition, 1456 of the Civil Code states that "[i]f property is
and/or damages against respondents, claiming rights acquired through mistake or fraud, the person obtaining
over the entire Motherland. it is, by force of law, considered a trustee of an implied
 They anchored their claim on the allegation that trust for the benefit of the person from whom the
Ciriaco, with the help of his wife Catalina, urged property comes.
Balbina and Alejandra to sell the Sabangan property, The burden of proving the existence of a trust is on the
and that Ciriaco used the proceeds therefrom to fund party asserting its existence, and such proof must be
his then-pending homestead patent application over clear and satisfactorily show the existence of the trust
the Motherland. As such, Francisco, et al. claim that and its elements.45 While implied trusts may be proven
they are, effectively, co-owners of the Motherland by oral evidence, the evidence must be trustworthy and
together with Ciriaco’s heirs. received by the courts with extreme caution, and should
 In return, Ciriaco agreed that once his homestead not be made to rest on loose, equivocal or indefinite
patent is approved, he will be deemed to be holding declarations. Trustworthy evidence is required because
the Motherland – which now included both oral evidence can easily be fabricated.46
accretions – in trust for the Imbornal sisters. In this case, it cannot be said, merely on the basis of the
 RTC found that the factual circumstances surrounding oral evidence offered by Francisco, et al., that the
the present case showed that an implied trust existed Motherland had been either mistakenly or fraudulently
between Ciriaco and the Imbornal sisters with respect registered in favor of Ciriaco. Accordingly, it cannot be
to the Motherland, giving probative weight to said either that he was merely a trustee of an implied
Francisco, et al.’s allegation that the Sabangan trust holding the Motherland for the benefit of the
property, inherited by the Imbornal sisters from their Imbornal sisters or their heirs.
mother, Basilia, was sold in order to help Ciriaco raise As the CA had aptly pointed out,47 a homestead patent
funds for his then-pending homestead patent award requires proof that the applicant meets the
application. In exchange therefor, Ciriaco agreed that stringent conditions48 set forth under Commonwealth
he shall hold the Motherland in trust for them once Act No. 141, as amended, which includes actual
his homestead patent application had been possession, cultivation, and improvement of the
approved. As Ciriaco was only able to acquire the homestead. It must be presumed, therefore, that Ciriaco
Motherland subject of the homestead patent through underwent the rigid process and duly satisfied the strict
the proceeds realized from the sale of the Sabangan conditions necessary for the grant of his homestead
property, the Imbornal sisters and, consequently, patent application. As such, it is highly implausible that
Francisco, et al. (as the children of Alejandra and the Motherland had been acquired and registered by
Balbina) are entitled to their proportionate shares mistake or through fraud as would create an implied
over the Motherland, notwithstanding the trust between the Imbornal sisters and Ciriaco, especially
undisputed possession of respondents over its considering the dearth of evidence showing that the
southern portion since 1926. Imbornal sisters entered into the possession of the
 With respect to the accretions that formed adjacent Motherland, or a portion thereof, or asserted any right
to the Motherland, the RTC ruled that the owner of over the same at any point during their lifetime. Hence,
the Motherland is likewise the owner of the said when OCT No. 1462 covering the Motherland was issued
accretions. Considering that the Imbornal sisters in his name pursuant to Homestead Patent No. 24991 on
have become proportionate owners of the December 15, 1933, Ciriaco’s title to the Motherland had
Motherland by virtue of the implied trust created become indefeasible. It bears to stress that the
between them and Ciriaco, they (Imbornal sisters) proceedings for land registration that led to the issuance
and their heirs are also entitled to the ownership of of Homestead Patent No. 24991 and eventually, OCT No.
said accretions despite the fact that respondents 1462 in Ciriaco’s name are presumptively regular and
were able to register them in their names. proper,49 which presumption has not been overcome by
 CA rendered a Decision reversing and setting aside the evidence presented by Francisco, et al.
the RTC Decision, declaring: (a) the descendants of In this light, the Court cannot fully accept and accord
Ciriaco as the exclusive owners of the Motherland; (b) evidentiary value to the oral testimony offered by
the descendants of respondent Victoriano as the Francisco, et al. on the alleged verbal agreement
exclusive owners of the First Accretion; and (c) the between their predecessors, the Imbornal sisters, and
descendants of Pablo (i.e., respondents collectively) Ciriaco with respect to the Motherland. Weighed against
as the exclusive owners of the Second Accretion. As the presumed regularity of the award of the homestead
to Motherland, CA found that Ciriaco alone was patent to Ciriaco and the lack of evidence showing that
awarded a homestead patent, which later became the same was acquired and registered by mistake or
the basis for the issuance of a Torrens certificate of through fraud, the oral evidence of Francisco, et al.
title in his name, consequently, since the entire would not effectively establish their claims of ownership.
Motherland was titled in Ciriaco’s name, his It has been held that oral testimony as to a certain fact,
descendants should be regarded as the absolute depending as it does exclusively on human memory, is
owners thereof. not as reliable as written or documentary evidence,50
especially since the purported agreement transpired counterclaim for damages was dismissed. The appeals
decades ago, or in the 1920s. Hence, with respect to the were made to the Court of Appeals. However, as the
Motherland, the CA did not err in holding that Ciriaco and amounts involved exceed two hundred thousand pesos,
his heirs are the owners thereof, without prejudice to the the Court of Appeals elevated the case to this Court in its
rights of any subsequent purchasers for value of the said resolution of October 3, 1966 (CA-G.R. No. 30014-R).
Issue: Whether or not the Calunuran fishpond was held
Salao v. Salao, 70 SCRA 65 in trust for Valentin Salao by Juan Y. Salao, Sr. and
Facts: Ambrosia Salao.
- The spouses Manuel Salao and Valentina Ignacio of
Barrio Dampalit, Malabon, Rizal begot four children Held:
named Patricio, Alejandra, Juan (Banli) and Ambrosia.
Manuel Salao died in 1885. His eldest son, Patricio, died - No, there was no resulting trust in this case
because there never was any intention on the
in 1886 survived by his only child, Valentin Salao. After
Valentina’s death, her estate was administered by her part of Juan Y. Salao, Sr., Ambrosia Salao and
daughter Ambrosia. Valentin Salao to create any trust. There was no
- The documentary evidence proves that in 1911 or prior constructive trust because the registration of the
to the death of Valentina Ignacio her two children, Juan two fishponds in the names of Juan and
Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, Ambrosia was not vitiated by fraud or mistake.
OCT No. 185 of the Registry of Deeds of Pampanga, in This is not a case where to satisfy the demands
their names of justice it is necessary to consider the
-The property in question is the forty-seven-hectare Calunuran fishpond” being held in trust by the
fishpond located at Sitio Calunuran, Lubao, Pampanga, heirs of Juan Y. Salao, Sr. for the heirs of Valentin
wherein Benita Salao-Marcelo daughter of Valentin Salao
claimed 1/3 interest on the said fishpond. - "Implied trusts are those which, without being
-The defendant Juan Y. Salao Jr. inherited from his father expressed, are deducible from the nature of the
Juan Y. Salao, Sr. ½ of the fishpond and the other half transaction as matters of intent, or which are
from the donation of his auntie Ambrosia Salao. superinduced on the transaction by operation of
-It was alleged in the said case that Juan Y. Salao, Sr and law as matter of equity, independently of the
Ambrosia Salao had engaged in the fishpond business. particular intention of the parties" (89 C.J.S.
Where they obtained the capital and that Valentin Salao 724). They are ordinarily subdivided into
and Alejandra Salao were included in that joint venture, resulting and constructive trusts.
that the funds used were the earnings of the properties - Resulting trust. is broadly defined as a trust
supposedly inherited from Manuel Salao, and that those which is raised or created by the act or
construction of law, but in its more restricted
earnings were used in the acquisition of the Calunuran
fishpond. There is no documentary evidence to support sense it is a trust raised by implication of law and
that theory. presumed to have been contemplated by the
-The lawyer of Benita Salao and the Children of Victorina parties, the intention as to which is to be found
Salao in a letter dated January 26, 1951 informed Juan S. in the nature of their transaction, but not
Salao, Jr. that his clients had a one-third share in the two expressed in the deed or instrument of
fishponds and that when Juani took possession thereof conveyance
in 1945, in which he refused to give Benita and - Constructive trust is -a trust "raised by
Victorina’s children their one-third share of the net fruits construction of law, or arising by operation of
which allegedly amounted to P200, 000. However, there law". In a more restricted sense and as contra-
was no mention on the deeds as to the share of Valentin distinguished from a resulting trust, a
and Alejandra. constructive trust is "a trust not created by any
-Juan S. Salao, Jr. in his answer dated February 6, 1951 words, either expressly or impliedly evincing a
categorically stated that Valentin Salao did not have any direct intension to create a trust, but by the
interest in the two fishponds and that the sole owners construction of equity in order to satisfy the
thereof his father Banli and his aunt Ambrosia, as shown demands of justice." It does not arise "by
in the Torrens titles issued in 1911 and 1917, and that he agreement or intention, but by operation of
Juani was the donee of Ambrosia’s one-half share. law."
- Not a scintilla of documentary evidence was
-Benita Salao and her nephews and niece asked for the
annulment of the donation to Juan S. Salao, Jr. and for presented by the plaintiffs to prove that there
the reconveyance to them of the Calunuran fishpond as was an express trust over the Calunuran
Valentin Salao’s supposed one-third share in the 145 fishpond in favor of Valentin Salao. Purely parol
hectares of fishpond registered in the names of Juan Y. evidence was offered by them to prove the
Salao, Sr. and Ambrosia Salao. alleged trust. Their claim that in the oral partition
-Juan S. Salao, Jr. pleaded the indefeasibility of the in 1919 of the two fishponds the Calunuran
Torrens title secured by his father and aunt. As counter- fishpond was assigned to Valentin Salao is legally
claims, he asked for moral damages attorney's fees and untenable.
litigation expenses reimbursement of the premiums. Ratio:
Juan S. Salao, Jr. died in 1958 and was substituted by his
widow, Mercedes Pascual and his six children and by the - A Torrens Title is generally a conclusive evidence
administrator of his estate. of the ownership of the land referred to therein.
-trial court dismissed the amended complaint and the (Sec. 47, Act 496). A strong presumption exists
counter-claim. Both parties appealed. The plaintiffs that Torrens titles were regularly issued and that
appealed because their action for reconveyance was they are valid. In order to maintain an action for
dismissed. The defendants appealed because their
re-conveyance, proof as to the fiduciary relation Respondent claims that it was the father who bought the
of the parties must be clear and convincing. property the reason why tax declaration was in his name
- The plaintiffs utterly failed to prove by clear, and was in possession until death and property was
satisfactory and convincing evidence. It cannot included in ESTATE which petitioner RECEIVED her share
rest on vague and uncertain evidence or on in the estate.
loose, equivocal or indefinite declarations. Respondent claims that father bought the property in
- Trust and trustee; establishment of trust by parol 1948 and that is why the tax declarations was in father’s
evidence; certainty of proof. — Where a trust is name.
to be established by oral proof, the testimony Father possessed and cultivated the land until his death.
supporting it must be sufficiently strong to prove Upon death in 1978, property was part of ESTATE.
the right of the alleged beneficiary with as much Respondent claims that petitioner ought to have
certainty as if a document proving the trust were impleaded all of the heirs as defendants.
shown. A trust cannot be established, contrary to Further claims that petitioner has abandoned her right
the recitals of a Torrens title, upon vague and over the property since she just filed her complaint in
inconclusive proof. 1997
- Trusts; evidence needed to establish trust on MTC ruled in favor of petitioner saying that there was no
parol testimony. — In order to establish a trust proof that father bought the property
in real property by parol evidence, the proof RTC reversed and ruled in favor of Petitioner. RTC 1st
should be as fully convincing as if the act giving reversed MTC stating that prescription took place and
rise to the trust obligation were proven by an acquisitive prescription has already set. RTC reveres its
authentic document. Such a trust cannot be original decision stating that no prescription took place
established upon testimony consisting in large since petitioner ENTRUSTED the property to her father,
part of insecure surmises based on ancient and that 10-year prescription starts from the day the
hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 trustee REPUDIATES the trust. RTC found no evidence
Phil. 110). showing such.
- The foregoing rulings are good under article
1457 of the Civil Code which, as already noted, CA ruled in favor of the respondents. Father is owner,
allows an implied trust to be proven by oral petitioner’s inaction for 17 years since discovery of
evidence. Trustworthy oral evidence is required possession of 2nd wife tax declaration was in father’s
to prove an implied trust because, oral evidence name, father was in adverse possession, and property
can be easily fabricated. was included in estate. Even assuming implied trust,
- On the other hand, a Torrens title is generally a petitioners right of action to recover is barred by
conclusive of the ownership of the land referred prescription - 49 YEARS lapsed.
to therein (Sec. 47, Act 496). A strong Petitioner contends that there was EXPRESS TRUST
presumption exists. That Torrens titles were hence prescription will not set in.
regularly issued and that they are valid. In order
to maintain an action for reconveyance, proof as ISSUE: WON trust existed.
to the fiduciary relation of the parties must be
clear and convincing. HELD: NO, neither express nor implied resulting TRUST
- The real purpose of the Torrens system is, to existed in this case
quiet title to land. “Once a title is registered, the Intention to create trust CANNOT be inferred from
owner may rest secure, without the necessity of petitioner’s testimony and on the facts and circumstance
waiting in the portals of the court, or sitting in Petitioner only TESTIFIED that father agreed to give her
the mirador de su casa, to avoid the possibility of proceeds of the production of the land
losing his land”. SC states that had it been had it been her intention to
create trust, she should not have made an issue of the
Municipality of Victorias v. CA, 149 SCRA 32 tax declarations. Trustee would necessarily have legal
title hence right to transfer the tax declarations in his
Booc V. Five Start Marketing Co., Inc., 538 SCRA 42 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
Cañezo v. Rojas, 538 SCRA 242 uninterrupted possession of the subject property for 49
Facts: years, coupled with the performance of acts of
Petitioner (Canezo) filed complaint for recovery of real ownership, such as payment of real estate taxes, ripened
property against respondent Rojas into ownership.
Petitioner filed complaint for recovery of real property Assuming trust existed it was terminated upon DEATH of
against Rojas(2nd wife of her dad) plus damages- subject father
property is a 4k sqm unregistered land in Biliran
Petitioner alleges she bought the land from Limpiado and PNB v. CA, 217 SCRA 347
the transaction was not reduced in writing. She
immediately took possession of said property
 Private Respondent B. P. Mata & Co. Inc. (Mata), is a
She allegedly ENTRUSTED the property to his father
private corporation engaged in providing goods and
when she and hubby left for Mindanao in 1984 and said
services to shipping companies and since 1966, acted
father took possession of land and cultivated it.
as a manning or crewing agent for several foreign
1980 she found out that RESPONDENT(2nd wife) was in
firms, one of which is Star Kist Foods, Inc., USA (Star
possession/cultivating the same as well as tax
declarationsin Crispulo Rojas’ name (father)
 As part of their agreement, Mata makes advances for ISSUE
the crew’s medical expenses, National Seaman’s
Board fees, Seaman’s Welfare fund, and standby fees 1. WON Mata’s obligation to return US$14,000 is
and for the crew’s basic personal needs, sending governed, in the alternative, by either Article 1456 on
monthly billings to its foreign principal Star Kist, which constructive trust or Article 2154 of the Civil Code on
in turn reimburses Mata by sending a telegraphic quasi-contract.
transfer through banks for credit to the latter’s 2. WON petitioner may still claim the US$14,000 it
account. erroneously paid private respondent under a
 Against this background Security Pacific National constructive trust.
Bank (SEPAC) of Los Angeles which had an agency
arrangement with Philippine National Bank (PNB),
transmitted a cable message to the International HELD
Department of PNB to pay the amount of US$14,000
to Mata by crediting the latter’s account with the 1. Constructive trust. The Civil Code does not confine
Insular Bank of Asia and America (IBAA), per order of itself exclusively to the quasi-contracts enumerated
Star Kist. from Articles 2144 to 2175 but is open to the
 Upon receipt of this cabled message on February 24, possibility that, absent a pre-existing relationship,
1975, PNB’s International Department noticed an there being neither crime nor quasi-delict, a quasi-
error and sent a service message to SEPAC Bank. The contractual relation may be forced upon the parties
latter replied with instructions that the amount of to avoid a case of unjust enrichment. 17 There being
US$14,000 should only be forUS$1,400. no express consent, in the sense of a meeting of
 On the basis of the cable message dated February 24, minds between the parties, there is no contract to
1975, Cashier’s Check No. 269522 in the amount of speak of. However, in view of the peculiar
US$1,400 (P9,772.96) representing reimbursement circumstances or factual environment, consent is
from Star Kist, was issued by the Star Kist for the presume to the end that a recipient of benefits or
account of Mata on February 25, 1975 through the favors resulting from lawful, voluntary and unilateral
Insular Bank of Asia and America (IBAA). acts of another may not be unjustly enriched at the
 libHowever, fourteen days after or on March 11, expense of another.cralawnad
1975, PNB effected another payment through
Cashier’s Check No. 270271 in the amount of Undoubtedly, the instant case fulfills the
US$14,000 (P97,878.60) purporting to be another indispensable requisites of solutio indebiti as defined
transmittal of reimbursement from Star Kist, private in Article 2154: that something (in this case money)
respondent’s foreign principal. has been received when there was no right to
 Six years later, or more specifically, on May 13, 1981, demand it and (2) the same was unduly delivered
PNB requested Mata for refund of US$14,000 through mistake. There is a presumption that there
(P97,878.60) after it discovered its error in effecting was a mistake in the payment "if something which
the second payment. had never been due or had already been paid was
 On February 4, 1982, PNB filed a civil case for delivered; but he from whom the return is claimed
collection and refund of US$14,000 against Mata may prove that the delivery was made out of liberality
arguing that based on a constructive trust under or for any other just cause." 18
Article 1456 of the Civil Code, it has a right to recover
the said amount it erroneously credited to In the case at bar, a payment in the corrected amount
respondent Mata. of US$1,400 through Cashier’s Check No. 269522 had
 RTC of Manila rendered judgment dismissing the already been made by PNB for the account of Mata
complaint ruling that the instant case falls squarely on February 25, 1975. Strangely, however, fourteen
under Article 2154 on solutio indebiti and not under days later, PNB effected another payment through
Article 1456 on constructive trust, applying strictly Cashier’s Check No. 270271 in the amount of
the technical definition of a trust as "a right of US$14,000, this time purporting to be another
property, real or personal, held by one party for the transmittal of reimbursement from Star Kist, private
benefit of another; that there is a fiduciary relation respondent’s foreign principal.
between a trustee and a cestui que trust as regards
certain property, real, personal, money or choses in While the principle of undue enrichment or solutio
action." indebiti, is not new, having been incorporated in the
 CA affirmed, added in its opinion that under Article subject on quasi-contracts in Title XVI of Book IV of
2154 on solutio indebiti, the person who makes the the Spanish Civil Code entitled "Obligations incurred
payment is the one who commits the mistake vis-a-vis without contract," 19 the chapter on Trusts is fairly
the recipient who is unaware of such a mistake and recent, having been introduced by the Code
consequently, recipient is duty bound to return the Commission in 1949. Although the concept of trusts is
amount paid by mistake. But the appellate court nowhere to be found in the Spanish Civil Code, the
concluded that petitioner’s demand for the return of framers of our present Civil Code incorporated
US$14,000 cannot prosper because its cause of implied trusts, which includes constructive trusts, on
action had already prescribed under Article 1145, top of quasi-contracts, both of which embody the
paragraph 2 of the Civil Code. principle of equity above strict legalism. 20
 Hence, the instant petition for certiorari proceeding
seeking to annul the decision of the appellate court In analyzing the law on trusts, it would be instructive
on the basis that Mata’s obligation to return to refer to Anglo-American jurisprudence on the
US$14,000 is governed, in the alternative, by either subject. Under American Law, a court of equity does
Article 1456 on constructive trust or Article 2154 of not consider a constructive trustee for all purposes as
the Civil Code on quasi-contract. though he were in reality a trustee; although it will
force him to return the property, it will not impose error only seven years later. As a universal bank with
upon him the numerous fiduciary obligations worldwide operations, PNB cannot afford to commit
ordinarily demanded from a trustee of an express such costly mistakes. Moreover, as between parties
trust. 21 It must be borne in mind that in an express where negligence is imputable to one and not to the
trust, the trustee has active duties of management other, the former must perforce bear the consequences
while in a constructive trust, the duty is merely to of its neglect. Hence, petitioner should bear the cost of
surrender the property. its own negligence.

Still applying American case law, quasi-contractual

obligations give rise to a personal liability ordinarily Aznar Brothers Realty Co. v. Aying, 458 SCRA 496
enforceable by an action at law, while constructive Facts:
trusts are enforceable by a proceeding in equity to - Crisanta Maloloy-on petitioned for the issuance of a
compel the defendant to surrender specific property. cadastral decree in her favor over said parcel of land.
To be sure, the distinction is more procedural than after she died, Cadastral Court issued a Decision, a
substantive. 22 decree in the name of Crisanta Maloloy-ons eight
children. but certificate of title was, however, lost during
Further reflection on these concepts reveals that a the war.
constructive "trust" is as much a misnomer as a - ll the heirs of the Aying siblings executed an Extra-
"quasi-contract," so far removed are they from trusts Judicial Partition of Real Estate with Deed of Absolute
and contracts proper, respectively. In the case of a Sale dated March 3, 1964, conveying subject parcel of
constructive trust, as in the case of quasi-contract, a land to herein petitioner Aznar Brothers Realty
relationship is "forced" by operation of law upon the Company. since then, petitioner had been religiously
parties, not because of any intention on their part but paying real property taxes on said property.
in order to prevent unjust enrichment, thus giving rise - 1991, petitioner sent out notices to vacate, addressed
to certain obligations not within the contemplation of to persons occupying the property. Unheeded, petitioner
the parties. 23 then filed a complaint for ejectment against the
occupants before the Metropolitan Trial Court (MTC),
Although we are not quite in accord with the opinion Lapu-Lapu City.
that "the trusts known to American and English equity - February 1, 1994, the MTC ordered the occupants to
jurisprudence are derived from the fidei commissa of vacate the property. The case eventually reached this
the Roman Law," 24 it is safe to state that their roots Court. March 7, 2000, a Decision was promulgated in
are firmly grounded on such Civil Law principles as favor of herein petitioner.
expressed in the Latin maxim, "Nemo cum alterius - respondents the aforementioned extra-judicial
detrimento locupletari potest," 25 particularly the partition of real estate with deed of absolute sale is a
concept of constructive trust. fraud and is null and void ab initio because not all the co-
owners of subject property affixed their signature on said
Returning to the instant case, while petitioner may document and some of the co-owners who supposedly
indeed opt to avail of an action to enforce a signed said document had been dead at the time of the
constructive trust or the quasi-contract of solutio execution thereof; petitioner entered subject land in bad
indebiti, it has been deprived of a choice, for faith, knowing fully well that it did not have any right to
prescription has effectively blocked quasi-contract as the land and used force, threat and intimidation against
an alternative, leaving only constructive trust as the respondents; and they suffered moral damages
feasible option - Petitioner argues that when an action to recover
property based on an implied trust should be instituted
2. No. within 4 years from discovery of the fraud.
- After trial, the RTC rendered a Decision, respondents
Although we are aware that only seven (7) years lapsed evidence failed to prove that the extra-judicial partition
after petitioner erroneously credited private respondent with deed of absolute sale was a totally simulated or
with the said amount and that under Article 1144, fictitious contract and concluded that said document is
petitioner is well within the prescriptive period for the valid, thus, effectively conveying to petitioner the
enforcement of a constructive or implied trust, we rule property in question. espondents action had prescribed,
that petitioner’s claim cannot prosper since it is already action is considered as one for reconveyance based on
barred by laches. It is a well-settled rule now that an implied or constructive trust, it prescribed in 10 years
action to enforce an implied trust, whether resulting or from the registration of the deed on March 6, 1964; and
constructive, may be barred not only by prescription but if the action is considered as one for annulment of
also by laches. contract on the ground of fraud, it should have been filed
within 4 years from discovery of the fraud.
While prescription is concerned with the fact of delay, - respondents appealed the foregoing decision to the CA.
laches deals with the effect of unreasonable delay. It is CA affirmed the decision with modification, heirs of
amazing that it took petitioner almost seven years before Emiliano Aying, Simeon Aying and Roberta Aying are
it discovered that it had erroneously paid hereby declared as the lawful owners of the contested
private Respondent. Petitioner would attribute its property but equivalent only to 3/8. Hence, the present
mistake to the heavy volume of international petition for review on certiorari assailing the CA decision
transactions handled by the Cable and Remittance
Division of the International Department of PNB. Such Issue: WON COURT OF APPEALS ERRED IN FAILING TO
specious reasoning is not persuasive. It is unbelievable APPLY THE RULE THAT THE ACT OF REGISTRATION OF
for a bank, and a government bank at that, which THE DEED OF PARTITION WITH SALE MAY BE
regularly publishes its balanced financial statements CONSIDERED AN UNEQUIVOCAL REPUDIATION OF THE
annually or more frequently, by the quarter, to notice its TRUST GIVING RISE TO PRESCRIPTION.
illustrates this rule. Undoubtedly, it is now well-settled
Ruling: that an action for reconveyance based on an implied or
- (.....) facts on record show that petitioner acquired the constructive trust prescribes in ten years from the
entire parcel of land with the mistaken belief that all the issuance of the Torrens title over the property.[13] It has
heirs have executed the subject document. Thus, the trial also been ruled that the ten-year prescriptive period
court is correct that the provision of law applicable to this begins to run from the date of registration of the deed or
case is Article 1456 of the Civil Code which states: ART. the date of the issuance of the certificate of title over the
1456. If property is acquired through mistake or fraud, property, but if the person claiming to be the owner
the person obtaining it is, by force of law, considered a thereof is in actual possession of the property, the right
trustee of an implied trust for the benefit of the person to seek reconveyance, which in effect seeks to quiet title
from whom the property comes. to the property, does not prescribe.[14] In the present
- A constructive trust, unlike an express trust, does not case, respondents Wenceslao Sumalinog, an heir of
emanate from, or generate a fiduciary relation. While in Roberta Aying; Laurencio Aying, an heir of Emiliano
an express trust, a beneficiary and a trustee are linked by Aying; and Paulino Aying, an heir of Simeon Aying, all
confidential or fiduciary relations, in a constructive trust, testified that they had never occupied or been in
there is neither a promise nor any fiduciary relation to possession of the land in dispute.[15] Hence, the
speak of and the so-called trustee neither accepts any prescriptive period of ten years would apply to herein
trust nor intends holding the property for the respondents. The question then arises as to the date
beneficiary.[9] The concept of constructive trusts was from which the ten-year period should be reckoned,
further elucidated in the same case, as follows: . . . considering that the Extra-Judicial Partition of Real Estate
implied trusts are those which, without being expressed, with Deed of Absolute Sale was registered under Act No.
are deducible from the nature of the transaction as 3344 and not under Act No. 496 (Land Registration Act),
matters of intent or which are superinduced on the despite the fact the land in dispute was already titled
transaction by operation of law as matters of equity, under Act No. 496 in the names of the Aying siblings at
independently of the particular intention of the parties. the time the subject document was executed.
In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as Ossorio Pension Foundation v. CA, 621 SCRA 606
follows: Resulting trusts are based on the equitable
doctrine that valuable consideration and not legal title Rosario v. CA, 310 SCRA 464
determines the equitable title or interest and are
presumed always to have been contemplated by the Paringit v. Bajit, 631 SCRA 584
parties. They arise from the nature of circumstances of
the consideration involved in a transaction whereby one Uy Aloc v. Cho Jan Jing, 19 Phil. 202
person thereby becomes invested with legal title but is Facts:
obligated in equity to hold his legal title for the benefit of
another. On the other hand, constructive trusts are  A number of Chinese merchants raised a fund by
created by the construction of equity in order to satisfy voluntary subscription with which they purchased a
the demands of justice and prevent unjust enrichment. valuable tract of land and erected a large building to
They arise contrary to intention against one who, by be used as a sort of club house for the mutual benefit
fraud, duress or abuse of confidence, obtains or holds of the subscribers to the fund.
the legal right to property which he ought not, in equity  The subscriber organized themselves into an irregular
and good conscience, to hold. association, which had no regular articles in the
- Based on such concept of constructive trusts, the Court commercial registry or elsewhere.
ruled in said case that: The rule that a trustee cannot  The association not having any existence as a legal
acquire by prescription ownership over property entity, it was agreed to have the title to the property
entrusted to him until and unless he repudiates the trust, placed in the name of one of the members, the
applies to express trusts and resulting implied trusts. defendant, Cho Jan Ling, who on his part accepted the
However, in constructive implied trusts, prescription trust, and agreed to hold the property as the agent of
may supervene even if the trustee does not repudiate the members of the association.
the relationship. Necessarily, repudiation of said trust is  After the club building was completed with the funds
not a condition precedent to the running of the of the members of the association, Cho Jan Ling
prescriptive period collected some P25,000 in rents for which he failed
- The next question is, what is the applicable prescriptive and refused to account, and upon proceedings being
period? Court expounded on the prescriptive period instituted to compel him to do so, he set up title in
within which to bring an action for reconveyance of himself to the club property as well as to the rents
property based on implied or constructive trust, to wit: . accruing therefrom, falsely alleging that he had
. . under the present Civil Code, we find that just as an bought the real estate and constructed the building
implied or constructive trust is an offspring of the law with his own funds, and denying the claims of the
(Art. 1456, Civil Code), so is the corresponding obligation members of the association that it was their funds
to reconvey the property and the title thereto in favor of which had been used for that purpose.
the true owner. In this context, and vis--vis prescription,  Decree of the trial court provides for the conveyance
Article 1144 of the Civil Code is applicable. Article 1144. of the club house and the land on which it stands from
The following actions must be brought within ten years the defendant, Cho Jan Ling, in whose name it is
from the time the right of action accrues: (1) Upon a registered, to the members of the association, and
written contract; (2) Upon an obligation created by law; further makes provision for an accounting by him for
(3) Upon a judgment. An action for reconveyance based rents had and received.
on an implied or constructive trust must perforce
prescribe in ten years and not otherwise. A long line of ISSUE
decisions of this Court, and of very recent vintage at that,
WON implied trust existed between the association and that the implication created by law under Art. 1448 does
Cho Jan Ling. not apply if the property was in the name of the
purchaser’s child. They agreed that plaintiff partly paid
HELD for the EDSA property. Plaintiff appealed.
In that case at bar we think that the evidence clearly Issue: whether there was an implied trust under Art.
discloses not only that the funds with which the property 1448 of the Civil Code?
in question was purchased were furnished by the
members of the association, but that Cho Jan Ling, in Held:
whose name it was registered, received and holds the No, there was no implied trust created in relation to the
property as the agent and trustee of the association; that EDSA property. If the person to whom the title is
on at least one occasion he admitted the beneficial conveyed is the child of the one paying the price of the
ownership to be in the association; and that while the sale, no trust is implied by law under Art. 1448, the so-
legal registered title is in his name the beneficial called purchase money resulting trust. The said article
ownership is in the association. Nor has the doctrine laid provides an exception: “if the person to whom the title is
down in the Topiño case any direct bearing upon the conveyed is a child, legitimate or illegitimate, of the one
facts proven and the relief sought and granted in this paying the price of the sale, NO TRUST is IMPLIED by
case. The Topiño case turned on the determination of the LAW, it being disputable presumed that there is a gift in
question of the legal title of the grantor of the favor of the child.” The Court also noted that plaintiff
conveyance inscribed in the land registry, and the further failed to prove that he did not intend a donation.
question of the right of the holder of a duly registered
title to be secured in his right of possession as against Regarding the Meridien Condo and Wack Wack property,
third persons who do not claim through him, until and the court said that plaintiff failed to prove that purchase
unless the inscription of his title has been judicially money came from him. They also said that Alexander was
cancelled. In the case at bar the legal title of the holder capable of purchasing the property as he had been
of the registered title is not questioned; it is admitted working for nine years, had a car care business, and was
that the members of the association voluntarily obtained actively engaged in the business dealings of several
the inscription in the name of Cho Jan Ling and that they family corporations from which he received emoluments
have no right to have that inscription cancelled; they do and other benefits. Hence, no implied trust created
not seek such cancellation, and on the contrary they because there was no proof that plaintiff had paid for
allege and prove that the duly registered legal title to the said properties.
property is in Cho Jan Ling, but they maintain, and we
think that they rightly maintain, that he holds it under an Padilla v. CA, 53 SCRA 168
obligation, both express and implied, to deal with it
exclusively for the benefit of the members of the Gabutan v. Nacalaban, 795 SCRA 115
association and subject to their will.
PNB v. Aznar, 649 SCRA 214
Ty v. Ty, 553 SCRA 306
Sime Darby Pilipinas v. Mendoza, 699 SCRA 290
Facts: FACTS
Alexander Ty, son of Alejandro Ty and husband of Sylvia
Ty, dies of cancer at the age of 34. Sylvia files petition for  Petition for review on certiorari.
the settlement of Alexander’s intestate estate. She also  Petitioner Sime Darby Pilipinas, Inc. (Sime Darby)
asks court to sell or mortgage properties in order to pay employed Jesus B. Mendoza (Mendoza) as sales
the estate tax amounting to P4,714,560.02 assessed by manager to handle sales, marketing, and distribution
the BIR. The properties include a parcel of land in EDSA of the company's tires and rubber products.
Greenhills, a residential land in Wack Wack, and the  Sime Darby bought a Class "A" club share4 in Alabang
Meridien condo unit in Annapolis, Greenhills. Country Club (ACC) from Margarita de Araneta as
evidenced by a Deed of Absolute Sale.
Alejandro Ty opposed the move and filed for recovery of  The share, however, was placed under the name of
the property with prayer for preliminary injunction Mendoza in trust for Sime Darby since the By-Laws6
and/or temporary restraining order. Plaintiff Alejandro of ACC state that only natural persons may own a club
claims that he owns the EDSA, Wack Wack and Meridien share.
condo unit because he paid for them. The property was  As part of the arrangement, Mendoza endorsed the
supposedly registered in trust for Alexander’s brothers Club Share Certificate in blank and executed a Deed
and sisters in case plaintiff dies. Plaintiff also claimed that of Assignment, also in blank, and handed over the
Alex had no financial capacity to purchase the disputed documents to Sime Darby.
property, as the latter was only dependent on the  From the time of purchase in 1987, Sime Darby paid
former. for the monthly dues and other assessments on the
club share.
Sylvia countered that Alexander had purchased the  When Mendoza retired in April 1995, Sime Darby fully
property with his money. Alexander was financially paid Mendoza his separation pay amounting to more
capable of purchasing it because he had been managing than ₱3,000,000.
the family corporations since he was 18 years old and  Nine years later, or sometime in July 2004, Sime
was also engage in other profitable businesses. Darby found an interested buyer of the club share for
₱1,101,363.64. Before the sale could push through,
The RTC granted the application for preliminary the broker required Sime Darby to secure an
injunction and decides in favor of plaintiff regarding the authorization to sell from Mendoza since the club
recovery of the property. CA reversed the RTC stating share was still registered in Mendoza’s name.
 However, Mendoza refused to sign the required
authority to sell or special power of attorney unless  Mendoza presented two witnesses: (1) himself; and
Sime Darby paid him the amount of ₱300,000, (2) Ranel Villar, the same employee of ACC who also
claiming that this represented his unpaid separation testified for Sime Darby, who confirmed that the club
benefits. share could not be sold to a corporation like Sime
 As a result, the sale did not push through and Sime Darby.
Darby was compelled to return the payment to the  Mendoza testified that (1) he owns the disputed club
prospective buyer. share; (2) Sime Darby allowed him to personally
 Sime Darby filed a complaint for damages with writ of choose the share that he liked as part of his benefits;
preliminary injunction against Mendoza with the (3) as a condition for membership in ACC, he had to
Regional Trial Court (RTC) of Makati City, Branch 132. personally undergo an interview with regard to his
 Sime Darby claimed that it was the practice of the background and not the company’s; (4) though he
company to extend to its senior managers and retired in 1995, he only started paying the club share
executives the privilege of using and enjoying the dues in 2004 because after his retirement, he
facilities of various club memberships. migrated to the United States until he came back in
 Sime Darby added that during Mendoza’s 1999 and since then he had been going back and forth
employment with the company until his retirement in to the United States; (5) in May 2004, he met with
April 1995, Sime Darby regularly paid for the monthly Atty. Ronald E. Javier, Sime Darby’s representative, to
dues and other assessments on the ACC Class "A" club discuss the supposed selling of the club share which
share. he refused since there were still unpaid retirement
 Further, Sime Darby alleged that Mendoza sent a benefits due him; and (6) ACC recognizes him as the
letter11dated 9 August 2004 to ACC and requested all owner of the club share.
billings effective September 2004 be sent to his  RTC rendered a Decision in favor of Sime Darby.
personal address.  CA reversed the ruling of RTC, held ruled that Sime
 Despite having retired from Sime Darby for less than Darby failed to prove that it has a clear and
10 years and long after the employment contract of unmistakable right over the club share of ACC. MR
Mendoza with the company has been severed, was denied.
Mendoza resumed using the facilities and privileges
of ACC, to the damage and prejudice of Sime Darby. ISSUE
Thus, Sime Darby prayed that a restraining order be WON implied trust existed.
issued, pending the hearing on the issuance of a writ
of preliminary injunction, enjoining Mendoza from HELD
availing of the club’s facilities and privileges as if he is Yes.
the owner of the club share. In Thomson v. Court of Appeals,20 we held that a trust
 Mendoza filed an Answer alleging ownership of the arises in favor of one who pays the purchase price of a
club share, stated that Sime Darby purchased the property in the name of another, because of the
Class "A" club share and placed it under his name as presumption that he who pays for a thing intends a
part of his employee benefits and bonus for past beneficial interest for himself. While Sime Darby paid for
exemplary service. the purchase price of the club share, Mendoza was given
 Mendoza admitted endorsing in blank the stock the legal title. Thus, a resulting trust is presumed as a
certificate covering the club share and signing a blank matter of law. The burden then shifts to the transferee
assignment of rights only for the purpose of securing to show otherwise of the Company."
Sime Darby’s right of first refusal in case he decides to Being a corporation which is expressly disallowed by
sell the club share. ACC’s By-Laws to acquire and register the club share
 Mendoza also alleged that when he retired in 1995, under its name, Sime Darby had the share registered
Sime Darby failed to give some of his retirement under the name of respondent Mendoza, Sime Darby’s
benefits amounting to ₱300,000. former sales manager, under a trust arrangement. Such
 RTC denied Sime Darby’s prayer for restraining order fact was clearly proved when in the application form17
and preliminary injunction and denied Sime Darby’s dated 17 July 1987 of the ACC for the purchase of the
Motion for Summary Judgment explaining that a trial club share, Sime Darby placed its name in full as the
was no longer necessary since there was no issue as owner of the share and Mendoza as the assignee of the
to any material fact. club share. Also, in connection with the application for
 Sime Darby presented witnesses who: membership, Sime Darby sent a letter18 dated 17
o testified that Mendoza refused to give September 1987 addressed to ACC confirming that
Sime Darby his authorization to sell the "Mendoza, as Sime Darby’s Sales Manager, is entitled to
club share unless he was paid ₱300,000 club membership benefit. While the share was bought by
as additional retirement benefit; Sime Darby and placed under the name of Mendoza, his
o testified that the club share was title is only limited to the usufruct, or the use and
registered under the name of Mendoza enjoyment of the club’s facilities and privileges while
since ACC’s By-Laws prohibits juridical employed with the company
persons from acquiring a club share and
attested that Sime Darby paid for the Paringit v. Bajit, 631 SCRA 584
monthly dues of the share since it was Facts:
purchased in 1987; and - spouses Julian and Aurelia Paringit leased a lot, built
o testified that Mendoza was asked to their home there and raised five children.
endorse ACC Stock Certificate No. A- - having occupied the lot for years, Terocel Realty offered
1880 at the back and to sign the to sell it to Julian but he did not have enough money.
assignment of rights, as required by Sime Julian sought help from his children to buy the property
Darby. but only his son Felipe and wife Josefa had the financial
resources he needed at that time. on January 16, 1984 same, taken steps to secure their conformity to the
Julian executed a deed of assignment of leasehold right purchase. These did not happen.
in favor of Felipe and his wife that would enable them to - Second. Julian said in his affidavit that Felipe and his
acquire the lot. On April 12, 1984 Felipe and his wife paid wife bought the lot from Terocel Realty on his behalf and
the last installment and the realty company executed a on behalf of his other children. Felipe and his wife
Deed of Absolute Sale in their favor advanced the payment because Julian and his other
- February 25, 1985, due to issues among Julians children children did not then have the money needed to meet
regarding the ownership of the lot, Julian executed an the realty companys deadline for the purchase. Julian
affidavit clarifying the nature of Felipe and his wifes added that his other children were to reimburse Felipe
purchase of the lot, He claimed that it was bought for the for the money he advanced for them.
benefit of all his children.
- Expressing their concurrence with what their father said Notably, Felipe, acting through his wife, countersigned
in his affidavit, Felipes siblings signed the same. Josefa, Julians affidavit the way his siblings did. The document
signed the affidavit for Felipe who was in Saudi Arabia. expressly acknowledged the parties intention to
Only Florencio, did not sign. establish an implied trust between Felipe and his wife, as
- Despite the title, felipe and wife moved to another trustees, and Julian and the other children as trustors.
house on the same street in 1988. Marciana, et al Josefa, Felipes wife, of course claims that she signed the
continued to occupy the lot with their families without document only to show that she received a copy of it. But
paying rent. her signature did not indicate that fact. She signed the
- On December 18, 1995 Felipe and his wife sent a document in the manner of the others.
demand letter to Marciana, et al asking them to pay - If Felipe and his wife really believed that the
rental arrearages for occupying the property from March assignment of the house and the right to buy the lot were
1990 to December 1995. Marciana, et al refused to pay what their transactions with Julian were and if the
or reply to the letter. Hence, On March 11, 1996 Felipe spouses also believed that they became absolute owners
and his wife filed an ejectment suit against them in which of the same when they paid for the lot and had the title
the suit prospered. to it transferred in their name in 1987, then their moving
- on July 24, 1996 Marciana, et al filed the present action out of the house in 1988 and letting Marciana, et al
against Felipe and his wife for annulment of title and continue to occupy the house did not make sense. They
reconveyance of property before the Regional Trial Court would make sense only if, as Marciana, et al and their
(RTC) of Manila. RTC rendered a decision, finding the deceased father claimed, Felipe and his wife actually
evidence of Marciana, et al insufficient to prove by acquired the lot only in trust for Julian and all the
preponderance of evidence that Felipe and his wife children.
bought the subject lot for all of the siblings. Not satisfied - In an implied trust, the beneficiarys cause of action
with that decision, Marciana, et al appealed to the Court arises when the trustee repudiates the trust, not when
of Appeals, where CA reversed the decision of the RTC the trust was created as Felipe and his wife would have
and ordered Felipe and his wife to reconvey to Marciana, it. The spouses of course registered the lot in their names
et al their proportionate share in the lot. in January 1987 but they could not be said to have
repudiated the implied trust by that registration. Their
Issues: Whether or not the CA erred in finding that Felipe purchase of the land and registration of its title in their
and his wife purchased the subject lot under an implied names are not incompatible with implied trust. It was
trust for the benefit of all the children of Julian understood that they did this for the benefit of Julian and
all the children
- Yes De Ocampo v. Zaporteza, 53 Phil. 442
- this case are actually what implied trust is about.
Although no express agreement covered Felipe and his Miguel J. Ossorio Pension Foundation, v. CA, 621 SCRA
wifes purchase of the lot for the siblings and their father, 606
it came about by operation of law and is protected by it.
The nature of the transaction established the implied Heirs of Tanak Pangaaran Patiwayon v. Martinez, 142
trust and this in turn gave rise to the rights and SCRA 252
obligations provided by law. Implied trust is a rule of
equity, independent of the particular intention of the Martinez v. Graño, 42 Phil. 35
parties FACTS
- evidence shows that Felipe and his wife bought the lot
for the benefit of Julian and his children, rather than for  Juan Martinez and his wife, Macaria Ticson, were
themselves: owners in their lifetime of seven parcels of land of
- First. There is no question that the house originally considerable value, located in the municipality of San
belonged to Julian and Aurelia who built it. When Aurelia Pablo, in the Province of Laguna, which property,
died, Julian and his children inherited her conjugal share upon the death in 1910 of the last of the two spouses
of the house. When Terocel Realty, therefore, granted its abovementioned, devolved by inheritance upon their
long time tenants on Norma Street the right to acquire numerous living children and the descendants of such
the lots on which their house stood, that right technically as were dead.
belonged to Julian and all his children. If Julian really  In due time partition was effected, with the approval
intended to sell the entire house and assign the right to of the Court of First Instance of Laguna, and
acquire the lot to Felipe and his wife, he would have appropriate portions were assigned to the several
arranged for Felipes other siblings to give their heirs.
conformity as co-owners to such sale. And if Felipe and  The persons participating in this division, according to
his wife intended to buy the lot for themselves, they the project of partition approved by the court on July
would have, knowing that Felipes siblings co-owned the 7, 1915, were, first, the four children, Sebastiana
Martinez, Julio Martinez, Isidro Martinez, and made in the next succeeding paragraph
Benedicto Martinez, to each of whom was assigned a hereof.
child's part. Three other brothers, Inocente, o (3) A notarial declaration, signed and
Eleuterio, and Apolonio had meantime died. acknowledged by Clemencia Grano, in
Inocente Martinez left a widow, named Rosario which she states, among other things, that
Ebron, and four children named respectively Alfredo, she had intervened in the aforementioned
Florinio, Maria-Salome, and Maria-Jacobe. To these transactions in behalf of all the Martinez
accordingly was assigned in common the portion heirs and that the seven parcels of property
which would have pertained to their father, Inocente. proceeding from the Martinez estate which
The second deceased brother, Eleuterio Martinez, had been mortgaged by her to "El Hogar
also left four orphan children, named respectively Filipino" belonged to said heirs. She also
Leoncio, Ulpiano, Zosima, and Maximo, his wife states in the same declaration that the
having died about the same time as himself or soon parcel (k), included in the mortgage to "El
thereafter. To these four children, therefore, was Hogar Filipino," is the property of Julio
assigned in common the portion that would have Martinez, which had been conveyed to her
pertained to their father, Eleuterio. The third in order that it might be included in the
deceased brother, Apolonio Martinez, was survived mortgage as additional security.
by his widow, Clemencia Grano, and by their only  As "El Hogar Filipino," upon making a loan, required
child, a boy named Jose, to whom was assigned the the borrower to become subscriber to a sufficient
portion that would have pertained to Apolonio. There number of shares of the stock of the association to
was still another brother of the Martinez family, amortize the loan upon maturity of the shares, all of
named Ciriaco, but as he died without issue no the adult Martinez heirs personally and the
account need be taken of him. guardians of the minor heirs executed a document
 The property comprising the estate of the deceased jointly with Clemencia Grano, personally and as
spouses was encumbered with indebtedness, and the guardian of her own minor son Jose, in consideration
parties in interest had long since been compelled to of the responsibility thus to be assumed by Clemencia
resort to the dangerous expedient of selling their Grano, as borrower, in which it was agreed that
inheritance under a contract of sale with pacto de Clemencia Grano should have exclusive possession
retro. of all the land pertaining to the Martinez estate and
 Prior to the year 1911, one W. W. Robinson had administer the same for the purpose of raising the
acquired title to the property under such a contract; necessary revenue to meet her obligations to "El
and on October 11 of that year the property was Hogar Filipino."
again sold under pacto de retro to Alfonso Tiaoqui,  Another document, bearing the signatures of Isidro
of Manila, for the sum of P12,000, apparently in order Martinez, Julia Martinez, Sebastiana Martinez,
to get the means to redeem the property from Rosario Ebron, and Clemencia Grano, and
Robinson. acknowledged before a notary public on December
 The parties-in-interest secured a loan from "El Hogar 17, 1917, defined in the fullest and most satisfactory
Filipino," a mutual building and loan association of way the interests of all the parties in the property
Manila to be used to redeem said property. derived from the Martinez estate, explained clearly
 As the parties in interest were numerous and many the function to be undertaken by Clemencia Grano
were minors, the adult parties in interest appointed in respect thereto, which stated, among other things:
Clemencia Grano to effect the redemption from o (1) that, although the period for
Alfonso Tiaoqui, as the repository of this trust, the repurchase under the contract of sale to
widow of Apolonio Martinez and mother and Alfonso Tiaoqui had expired on
guardian of Jose. September 28, 1917, he had
 Upon delivery of a check by proper representative of nevertheless been extending the time
"El Hogar Filipino" to Clemencia Grano, she until then;
immediately indorsed and delivered it to Alfonso o (2) that a mortgage of the property
Tiaoqui, in satisfaction of the stipulated price of which had been sold to Tiaoqui was
repurchase (P20,000), together with rents in arrears, under contemplation to "El Hogar
due from the Martinez heirs, and the amount of Filipino," as a means of raising the
P4,759.61, including interest. Upon this occasion the money to pay off Tiaoqui; but that
following documents were executed and duly o (3) it had been found impossible, owing
acknowledged by the parties respectively concerned to the continued absence of a judge of
therein: First Instance from the Province of
o (1) A deed of sale from Alfonso Tiaoqui, Laguna, to obtain judicial approval of the
conveying to Clemencia Grano all the mortgaging of the minors' interest;
property which had been sold to him by the wherefore the parties in interest had
Martinez heirs under contract of sale with decided to permit the property to be
pacto de retro, dated September 28, 1916; consolidated in Tiaoqui, to the end that
o (2) A mortgage of real estate from he might convey the same absolutely to
Clemencia Grano, conveying to "El Hogar Clemencia Grano.
Filipino," in consideration of a loan of  In the same document, Clemencia Grano,
P30,000, all of the seven parcels pertaining solemnly and under oath, stated that after the
to the Martinez estate which had been expiration of the period of the mortgage to the
obtained by her under the deed of purchase 'Hogar Filipino' and the payment of all sums
from Alfonso Tiaoqui, together with four owing to it, with bind herself to deliver said
additional parcels, to one of which, the lands to the heirs, according to their respective
parcel (k), more particular reference will be shares, in accordance with the partition made by
us on April 9, 1915, duly approved by the Court the matter of taking over the property from Alfonso
of First Instance of Laguna and shall render an Tiaoqui is to be found in the fact that her own minor son,
account of all the income and expenses Jose Martinez, was himself one of those heirs; and there
occasioned during the five years that the can be no doubt that at the time the agreement was
properties were mortgaged to the 'Hogar made she had a natural desire to assist all her relatives,
Filipino' in order that each heir may know the as well as her own son, in recovering the property. This
amount of the income and expenses and the circumstance adds weight to the antecedent probability
portion thereof corresponding to each of them that she would have entered into the exact agreement
after the termination of the five-year period of which she now seeks to evade.
the mortgage in favor of the 'Hogar Filipino. Moreover, upon examining the proof relative to the
 Notwithstanding the very clear statements efforts of the Martinez heirs to redeem the property, and
contained in the documents, she nevertheless considering the just attitude of continuous indulgence
asserted that she is the sole and absolute owner exhibited by Tiaoqui, it is entirely clear that all he wanted
of all the property obtained by her from Tiaoqui was to get back the money which had been advanced by
and denies that the Martinez heirs have any him, together with the stipulated rent. He at no time
interest whatever therein. showed any desire to keep the property or assert title as
 The Martinez heirs, who are named as plaintiffs owner by purchase otherwise than as was necessary to
herein, instituted the present action in the secure the money which he had advanced upon the
Court of First Instance of Laguna against property. In other words, the sale with pacto de retro to
Clemencia Grano, both in her own right and as him involved a mere loan to the Martinez heirs, secured
guardian of Jose Martinez, and against "El Hogar by that form of conveyance. This being true, the property
Filipino", in view of the hostile attitude thus had not consolidated in him; and the heirs could still have
assumed by Clemencia Grano, as well as in view enforced the right of redemption.
of certain acts of maladministration attributed As the Martinez heirs thus demonstrably retained their
to her in respect to the application of the redemptionary interest in the property in question at the
income derived from the property in question. time it was acquired by Clemencia Grano, the latter was
 Plaintiffs prayed that the agreement under unquestionably bound by the stipulations contained in
which Clemencia Grano had been made the documents in which she had recognized their rights
administrator of the property and had been and had agreed to hold and administer the property for
allowed to acquire the legal title in her own the common benefit of all. Those stipulations are not
name should be rescinded for her manifest mere nuda pacta, but are supported by a sufficient
failure to comply with the trust reposed in her. consideration in law, which is found in the circumstance
 The trial court rendered judgment declaring that by virtue of those agreements Clemencia Grano was
Clemencia Grano to be the sole and exclusive able to acquire, and did acquire, the legal title to
owner of all the property in question, subject to property in which others had a subsisting interest,
the mortgage to "El Hogar Filipino", based on the whereby she became entitled to use and administer the
fact that defendant, Clemencia Grano, was the same for the purpose and to the end contemplated. Nor
holder of the legal title to the questioned is the situation in anywise changed by the circumstance
property by the deed of conveyance directly that when the property in question was hypothecated to
from Alfonso Tiaoqui, dated December 19, 1917 "El Hogar Filipino," a few other parcels, some of which
and rejected the three several documents belonged exclusively to Clemencia Grano, were included
wherein Clemencia Grano had recognized that in the mortgage.
she was to acquire, or had acquired, said
property in behalf of all the Martinez heirs. Heirs of Emilio Candelaria v. Romero, 109 Phil. 500
ISSUE: WON defendant was the trustee of the Martinez - complaint was filed on December 20, 1956 by Ester
heirs. Candelaria and in representation of the other alleged
heirs of Emilio Candelaria, alleges sometime prior to
HELD 1917 the latter and his brother Lucas Candelaria bought
Yes. each a lot on the installment basis; Lucas paid first two
All three of the notarial documents mentioned tell the installments to his lot, but was unable to continue
same story and conclusively showed that Clemencia because he was sick. Latter hold his insterest to his
Grano intended to act for all the Martinez heirs in brother
repurchasing the questioned property from Alfonso - subsequent payments made by Emilio Candelaria in the
Tiaoqui. name of Lucas Candelaria with the understanding that
In addition to the conclusive proof supplied by the three the necessary documents of transfer will be made later.
notarial documents to which reference has been made, - in 1918 a transfer certificate of title was issued n the
we may add that an examination of the entire history of name of "Lucas Candelaria married to Luisa Romero.
the efforts of the parties in interest to recover the Lucas held the title to said lot merely in trust for Emilio
property from Alfonso Tiaoqui, as revealed in other - Lucas' possession of the lot was merely tolerated by
evidence, both oral and documentary, is convincing that Emilio. Lucas had been collecting all its rents for his own
the intention of everybody concerned was that when use as financial aid. although from 1926 when Emilio was
the property was finally recovered and disencumbered confined up to his death, Lucas had been giving part of
if fortunately this could be accomplished it should the rents to Fortunata Bautista, the second wife of
belong to all the Martinez heirs in the respective Emilio, in accordance with the latter's wishes
proportions indicated in the judicial partition. - Lucas died in August, 1942, survived by the present
defendants and that said defendants are still in
It should not pass unnoticed that a strong motive on the possession of the lot, having refused to reconvey it to
part of Clemencia Grano to act for the Martinez heirs in plaintiff despite repeated demands.
- Heirs filed a complaint. However, Instead of answering default thereof to pay her the sum of P800,000 in
the complaint, the defendants filed a motion to dismiss, damages for wrongfully causing said land to be
alleging plaintiff's cause of action is unenforceable and registered in his own name.
that the action has already prescribed. The court upheld  Felicitas Villanueva, in her capacity as administratrix
the motion of defendants, hence this appeal. of the estate of Melecio Severino, has filed a
complaint in intervention claiming the same relief as
ISSUE: WON plaintiff's cause of action prescribed the original plaintiff, except in so far as she prays that
because the the trust created was an express trust. the conveyance be made, or damages paid, to the
estate instead of to the plaintiff Fabiola Severino.
RULING:  Melecio Severino died on the 25th day of May, 1915;
- No, The trust alleged to have been created s an implied that some 428 hectares of the land were recorded in
trust. where property is taken by a person under an the Mortgage Law Register in his name in the year
agreement to hold it for, or convey it to another or the 1901 by virtue of possessory information proceedings
grantor, a resulting or implied trust arises in favor of the instituted on the 9th day of May of that year by his
person for whose benefit the property was intended. brother Agapito Severino in his behalf.
- It is also the rule there that an implied trust arises where  During the lifetime of Melecio Severino the land was
a person purchases land with his own money and takes a worked by the defendant, Guillermo Severino, his
conveyance thereof in the name of another. In such a brother, as administrator for and on behalf of the said
case, the property is held on a resulting trust in favor of Melecio Severino; that after Melencio’s death, the
the one furnishing the consideration for the transfer, defendant Guillermo Severino continued to occupy
unless a different intention or understanding appears. the land.
The trust which results under such circumstances does  In 1916 a parcel survey was made of the lands in the
not arise from contract or agreement of the parties, but municipality of Silay, including the land here in
from the facts and circumstances, that is to say, it results question, and cadastral proceedings were instituted
because of equity and arises by implication or operation for the registration of the land titles within the
of law. surveyed area.
- In the present case it is apparent that Emilio Candelaria  Roque Hofileña, as lawyer for Guillermo Severino,
who furnished the consideration intended to obtain a filed answers in behalf of the latter in said
beneficial interest in the property in question. it may proceedings claiming the lots as the property of his
naturally be presumed that he intended the purchase for client and since no opposition was presented in the
his own benefit. evident from the above-quoted proceedings to the claims of Guillermo Severino, the
allegation in the complaint that the property in question court therefore decreed the title in his favor, in
was acquired by Lucas Candelaria under circumstances pursuance of which decree certificates of title were
which show it was conveyed to him on the faith of his issued to him in the month of March, 1917.
intention to hold it for, or convey it to the grantor, the  It was alleged that Guillermo Severino did not appear
plaintiff's predecessor in interest. personally in proceedings and did not there testify
- Constructive or implied trusts may, of course, be barred and the only testimony in support of his claim was
by lapse of time. The rule in such trusts is that laches that of his attorney Hofileña, who swore that he knew
constitutes a bar to actions to enforce the trust, and the land and that he also knew that Guillermo
repudiation is not required, unless there is a Severino inherited the land from his father and that
concealment of the facts giving rise to the trust. he, by himself, and through his predecessors in
Continuous recognition of a resulting trust, however, interest, had possessed the land for thirty years.
precludes any defense of laches in a suit to declare and  At the time of the cadastral proceedings the plaintiff
enforce the trust. The beneficiary of a resulting trust Fabiola Severino was a minor.
may, therefore, without prejudice to his right to enforce  The lower court rendered a judgment recognizing the
the trust, prefer the trust to persist and demand no plaintiff Fabiola Severino as the acknowledged
conveyance from the trustee. natural child of the said Melecio Severino and
- It being alleged in the complaint that Lucas held the title ordering the defendant to convey 428 hectares of
to the lot in question merely in trust for Emilio and that the land in question to the intervenor as
this fact was acknowledged not only by him but also by administratrix of the estate of the said Melecio
his heirs, herein defendants — which allegation is Severino, to deliver to her the proceeds in his
hypothetically admitted — we are not prepared to rule possession of a certain mortgage placed thereon by
that plaintiff's action is already barred by lapse of time him and to pay the costs.
 On appeal, defendant argued the trial court erred in
Cuaycong v. Cuaycong, 21 SCRA 1192 rejecting his offer of evidence to the effect that the
land was owned in common by all the heirs of Ramon
Rosario v. CA, 310 SCRA 464 Severino and did not belong to Melecio Severino
exclusively and that such evidence, if admitted, would
Adaza v. CA, 171 SCRA 369 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.
Severino v. Severino, 44 Phil. 343 ISSUE
FACTS WON defendant was a trustee, therefore obliged to
return, or retransfer, to the heirs or the estate of its
 This is an action brought by the plaintiff as the principal, the property committed to his custody.
alleged natural daughter and sole heir of one
Melecio Severino, deceased, to compel the HELD
defendant Guillermo Severino to convey to her four Yes.
parcels of land described in the complaint, or in
The relations of an agent to his principal are fiduciary and 747, 761-A, 762-A, 763-A, 942, and 947 of the Banilad
it is an elementary and very old rule that in regard to Estate.
property forming the subject-matter of the agency, he is  As the landowners would later claim, the government
estopped from acquiring or asserting a title adverse to negotiating team, as a sweetener, assured them that
that of the principal. His position is analogous to that of they could repurchase their respective lands should
a trustee and he cannot consistently, with the principles the Lahug Airport expansion project do not push
of good faith, be allowed to create in himself an interest through or once the Lahug Airport closes or its
in opposition to that of his principal or cestui que trust. operations transferred to Mactan-Cebu Airport.
Upon this ground, and substantially in harmony with the  Some of the landowners accepted the assurance and
principles of the Civil Law (see sentence of the supreme executed deeds of sale with a right of repurchase.
court of Spain of May 1, 1900), the English Chancellors  Others, however, including the owners of the
held that in general whatever a trustee does for the aforementioned lots, refused to sell because the
advantage of the trust estate inures to the benefit of the purchase price offered was viewed as way below
cestui que trust. (Greenlaw v. King, 5 Jur., 18; Ex parte market, forcing the hand of the Republic, represented
Burnell, 7 Jur., 116; Ex parte Hughes, 6 Ves., 617; Ex parte by the then Civil Aeronautics Administration (CAA), as
James, 8 Ves., 337; Oliver v. Court, 8 price, 127.) The successor agency of the NAC, to file a complaint for
same principle has been consistently adhered to in so the expropriation of Lot Nos. 744-A, 745-A, 746, 747,
many American cases and is so well established that 761-A, 762-A, 763-A, 942, and 947, among others,
exhaustive citations of authorities are superfluous and docketed as Civil Case No. R-1881 entitled Republic v.
we shall therefore limit ourselves to quoting a few of the Damian Ouano, et al, which Court of First Instance
numerous judicial expressions upon the subject. (CFI) of Cebu rendered judgment for the Republic
That the defendant came into the possession of the declaring expropriation.
property here in question as the agent of the deceased  In view of the adverted buy-back assurance made by
Melecio Severino in the administration of the property, the government, the owners of the lots no longer
cannot be successfully disputed. His testimony in the appealed the decision of the trial court.
case of Montelibano v. Severino (civil case No. 902 of the  Following the finality of the judgment of
Court of First Instance of Occidental Negros and which condemnation, certificates of title for the covered
forms a part of the evidence in the present case) is, in parcels of land were issued in the name of the
fact, conclusive in this respect. He there stated under Republic which, pursuant to Republic Act No. 6958,
oath that from the year 1902 up to the time the were subsequently transferred to MCIAA.
testimony was given, in the year 1913, he had been  At the end of 1991, or soon after the transfer of the
continuously in charge and occupation of the land as the aforesaid lots to MCIAA, Lahug Airport completely
encargado or administrator of Melecio Severino; that he ceased operations, Mactan Airport having opened to
had always known the land as the property of Melecio accommodate incoming and outgoing commercial
Severino; and that the possession of the latter had been flights. On the ground, the expropriated lots were
peaceful, continuous, and exclusive. In his answer filed in never utilized for the purpose they were taken as no
the same case, the same defendant, through his expansion of Lahug Airport was undertaken. This
attorney, disclaimed all personal interest in the land and development prompted the former lot owners to
averred that it was wholly the property of this brother formally demand from the government that they be
Melecio. allowed to exercise their promised right to
Neither is it disputed that the possession enjoyed by the repurchase. The demands went unheeded. Civil suits
defendant at the time of obtaining his decree was of the followed.
same character as that held during the lifetime of his  On G.R. No. 168770: On August 18, 1997, the Ouanos
brother, except in so far as shortly before the trial of the instituted a complaint before the Cebu City RTC
cadastral case the defendant had secured from his against the Republic and the MCIAA for
brothers and sisters a relinquishment in his favor of such reconveyance, docketed as Civil Case No. CEB-20743.
rights as they might have in the land. RTC, Branch 57 in Cebu City ruled in favor of the
Ouanos and against the Republic of the Philippines
Castro v. Castro, 57 Phil. 675 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
Ting Ho, Jr. v. Teng Gui, 558 SCRA 421 the motion of the Republic and MCIAA for
reconsideration, however, the RTC, Branch 57 in
Diaz v. Gorricho and Aguado, 103 Phil. 261 Cebu City, presided this time by Judge Enriqueta L.
Belarmino, issued, on December 9, 2002, an Order
Sumaoang v. Judge, RTC Br. XXXI, Buimba, Nueva Ecija, that reversed its earlier decision of November 28,
215 SCRA 136 2000 and dismissed the Ouanos complaint. CA
affirmed the RTC decision, invoking Civil Case No. R-
Vda. de Ouano v. Republic, 642 SCRA 384 1881 entitled Republic v. Damian Ouano, et al., that
FACTS the decision did not state any condition that Lot No.
 Consolidated case. Petitions for Review on Certiorari. 763-A of the Ouanos and all covered lots for that
 In 1949, the National Airport Corporation (NAC), matter would be returned to them or that they could
MCIAAs predecessor agency, pursued a program to repurchase the same property if it were to be used
expand the Lahug Airport in Cebu City. Through its for purposes other than for the Lahug Airport.
team of negotiators, NAC met and negotiated with  On G.R. No. 168812: On February 8, 1996, Ricardo L.
the owners of the properties situated around the Inocian and four others (all children of Isabel Limbaga
airport, which included Lot Nos. 744-A, 745-A, 746, 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 use very much different from the original or deviates
two (2) of the condemned lots (collectively, the from the declared purpose to benefit another private
Inocians), filed before the RTC in Cebu City a person. It has been said that the direct use by the state
complaint for reconveyance of real properties and of its power to oblige landowners to renounce their
damages against MCIAA. The complaint, docketed as productive possession to another citizen, who will use it
Civil Case No. CEB-18370, was eventually raffled to predominantly for that citizens own private gain, is
Branch 13 of the court. On September 29, 1997, one offensive to our laws.[42]
Albert Chiongbian (Chiongbian), alleging to be the A condemnor should commit to use the property
owner of Lot Nos. 761-A and 762-A but which the pursuant to the purpose stated in the petition for
Inocians were now claiming, moved and was later expropriation, failing which it should file another petition
allowed to intervene. RTC directed defendant Mactan for the new purpose. If not, then it behooves the
Cebu International Airport Authority (MCIAA) to condemnor to return the said property to its private
reconvey (free from liens and encumbrances) to owner, if the latter so desires. The government cannot
plaintiffs the disputed lots, after plaintiffs shall have plausibly keep the property it expropriated in any
paid MCIAA the sums indicated in the decision in Civil manner it pleases and, in the process, dishonor the
Case No. R-1881 and to pay the aforementioned judgment of expropriation. This is not in keeping with the
plaintiffs the sum or P50,000.00 as and for attorney’s idea of fair play,
fees and P10,000.00 for litigation expenses. CA The notion, therefore, that the government, via
affirmed the judgment of the RTC, citing and expropriation proceedings, acquires unrestricted
reproducing excerpts from Heirs of Moreno, virtually ownership over or a fee simple title to the covered land,
held that the decision in Civil Case No. R-1881 was is no longer tenable. We suggested as much in Heirs of
conditional, that should MCIAA, or its precursor Moreno and in Tudtud and more recently in Lozada, Sr.
agency, discontinue altogether with the operation of Expropriated lands should be differentiated from a piece
Lahug Airport, then the owners of the lots of land, ownership of which was absolutely transferred
expropriated may, if so minded, demand of MCIAA by way of an unconditional purchase and sale contract
to make good its verbal assurance to allow the freely entered by two parties, one without obligation to
repurchase of the properties. buy and the other without the duty to sell. In that case,
 In this petition for review, the Ouanos asserted their the fee simple concept really comes into play. There is
entitlement to recover the litigated property, while really no occasion to apply the fee simple concept if the
MCIAA asserted their absolute and unconditional title transfer is conditional. The taking of a private land in
to the subject expropriated properties. expropriation proceedings is always conditioned on its
continued devotion to its public purpose. As a necessary
ISSUE corollary, once the purpose is terminated or
WON MCIAA can be compelled by the former peremptorily abandoned, then the former owner, if he
landowners to reconvey the parcels of land to them after so desires, may seek its reversion, subject of course to
the payment of the condemnation price, as the the return, at the very least, of the just compensation
government merely held the properties condemned in received.
trust subject to condition, failed to perform the To be compelled to renounce dominion over a piece of
obligation that is the basis of the transfer of the property. land is, in itself, an already bitter pill to swallow for the
owner. But to be asked to sacrifice for the common good
HELD and yield ownership to the government which reneges
Yes. on its assurance that the private property shall be for a
Constructive trusts are fictions of equity that courts use public purpose may be too much. But it would be worse
as devices to remedy any situation in which the holder of if the power of eminent domain were deliberately used
the legal title, MCIAA in this case, may not, in good as a subterfuge to benefit another with influence and
conscience, retain the beneficial interest. We add, power in the political process, including development
however, as in Heirs of Moreno, that the party seeking firms. The mischief thus depicted is not at all far-fetched
the aid of equity the landowners in this instance, in with the continued application of Fery. Even as the Court
establishing the trust must himself do equity in a manner deliberates on these consolidated cases, there is an
as the court may deem just and reasonable. uncontroverted allegation that the MCIAA is poised to
In esse, expropriation is forced private property taking, sell, if it has not yet sold, the areas in question to Cebu
the landowner being really without a ghost of a chance Property Ventures, Inc. This provides an added
to defeat the case of the expropriating agency. In other dimension to abandon Fery.
words, in expropriation, the private owner is deprived of Given the foregoing disquisitions, equity and justice
property against his will. Withal, the mandatory demand the reconveyance by MCIAA of the litigated
requirement of due process ought to be strictly followed, lands in question to the Ouanos and Inocians. In the same
such that the state must show, at the minimum, a token, justice and fair play also dictate that the Ouanos
genuine need, an exacting public purpose to take private and Inocian return to MCIAA what they received as just
property, the purpose to be specifically alleged or least compensation for the expropriation of their respective
reasonably deducible from the complaint. properties plus legal interest to be computed from
Public use, as an eminent domain concept, has now default, which in this case should run from the time
acquired an expansive meaning to include any use that is MCIAA complies with the reconveyance obligation.[43]
of usefulness, utility, or advantage, or what is productive They must likewise pay MCIAA the necessary expenses it
of general benefit [of the public].[41] If the genuine might have incurred in sustaining their respective lots
public necessitythe very reason or condition as it were and the monetary value of its services in managing the
allowing, at the first instance, the expropriation of a lots in question to the extent that they, as private
private land ceases or disappears, then there is no more owners, were benefited thereby.
cogent point for the governments retention of the In accordance with Art. 1187 of the Civil Code on mutual
expropriated land. The same legal situation should hold compensation, MCIAA may keep whatever income or
if the government devotes the property to another public
fruits it may have obtained from the parcels of land contract indicating a buyer distinct from the provider of
expropriated. In turn, the Ouanos and Inocians need not the purchase money.20 In all these cases, the formal
require the accounting of interests earned by the holders of title were deemed trustees obliged to transfer
amounts they received as just compensation.[44] title to the beneficiaries in whose favor the trusts were
deemed created. We see no reason to bar the
Juan v. Yap, Sr., 646 SCRA 753 recognition of the same obligation in a mortgage
Facts: contract meeting the standards for the creation of an
- On 31 July 1995, (Cañeda spouses) mortgaged to implied trust. An implied trust arising from mortgage
petitioner Richard Juan (petitioner), nephew of contracts is not among the trust relationships the Civil
respondent Gabriel Yap, Sr. (respondent), two parcels of Code enumerates.14 The Code itself provides, however,
land in Talisay, Cebu to secure a loan of ?1.68 million, that such listing "does not exclude others established by
payable within one year. the general law on trust x x x."15 Under the general
- 30 June 1998, petitioner sought the extrajudicial principles on trust, equity converts the holder of
foreclosure of the mortgage property right as trustee for the benefit of another if the
- 5 February 1999, respondent and the Cañeda spouses circumstances of its acquisition makes the holder
executed a memorandum of agreement Cañeda spouses ineligible "in x x x good conscience [to] hold and enjoy
acknowledged respondent as their "real mortgagee- [it]."16 As implied trusts are remedies against unjust
creditor Richard Juan [petitioner] is merely a trustee. enrichment, the "only problem of great importance in
- Three days later, the Cañeda spouses and respondent the field of constructive trusts is whether in the
sued petitioner in the Regional Trial Court of Cebu City numerous and varying factual situations presented x x x
(trial court) to declare respondent as trustee of there is a wrongful holding of property and hence, a
petitioner annul petitioner’s bid for the foreclosed threatened unjust enrichment of the defendant."17
properties, declare the Contract "superseded or Applying these principles, this Court recognized
novated" by the MOA, and require petitioner to pay unconventional implied trusts in contracts involving the
damages, attorney’s fees and the costs. petitioner purchase of housing units by officers of tenants’
insisted on his rights over the mortgaged properties associations in breach of their obligations,18 the
- trial court ruled against respondent and his co-plaintiffs partitioning of realty contrary to the terms of a
and granted reliefs to petitioner by declaring petitioner compromise agreement,19 and the execution of a sales
the "true and real" mortgagee, ordering respondent to contract indicating a buyer distinct from the provider of
pay moral damages and attorney’s fees, and requiring the purchase money.20 In all these cases, the formal
respondent to deliver the titles in question to petitioner holders of title were deemed trustees obliged to transfer
however, granted the Cañeda spouses’ prayer to redeem title to the beneficiaries in whose favor the trusts were
the property and accordingly ordered the release of the deemed created. We see no reason to bar the
redemption payment to petitioner. recognition of the same obligation in a mortgage
- CA granted the petition, set aside the trial court’s ruling, contract meeting the standards for the creation of an
declared respondent the Contract’s mortgagee, directed implied trust.
the trial court to release the redemption payment to
respondent, and ordered petitioner to pay damages and Sing Juco and Sing Bengco v. Sunyantong and Llorente,
attorney’s fees. Hence, petitioner prays for the reversal 43 Phil. 589
of the CA’s ruling.
Hernandez v. Hernandez, 645 SCRA 24
Issue: Whether an implied trust arose between
petitioner and respondent, binding petitioner to hold the Gonzales v. Jimenez, Sr., 13 SCRA 80
beneficial title over the mortgaged properties in trust for
respondent Lopez v. CA, 574 SCRA 26
- Yes, Court hold affirmative on the issue.  An action for reconveyance instituted by petitioner
- An implied trust arising from mortgage contracts is not Richard B. Lopez in his capacity as trustee of the
among the trust relationships the Civil Code estate of the late Juliana Lopez Manzano (Juliana) to
enumerates.14 The Code itself provides, however, that recover from respondents several large tracts of lands
such listing "does not exclude others established by the allegedly belonging to the trust estate of Juliana.
general law on trust x x x."15 Under the general  The decedent, Juliana, was married to Jose Lopez
principles on trust, equity converts the holder of Manzano (Jose) and their union did not bear any
property right as trustee for the benefit of another if the children.
circumstances of its acquisition makes the holder  Juliana was the owner of several properties, among
ineligible "in x x x good conscience [to] hold and enjoy them, the properties subject of this dispute and the
[it]."16 As implied trusts are remedies against unjust same were the exclusive paraphernal properties of
enrichment, the "only problem of great importance in Juliana together with a parcel of land situated in
the field of constructive trusts is whether in the Mindoro known as Abra de Ilog and a fractional
numerous and varying factual situations presented x x x interest in a residential land on Antorcha St., Balayan,
there is a wrongful holding of property and hence, a Batangas.
threatened unjust enrichment of the defendant."17  Juliana executed a notarial will, whereby she
Applying these principles, this Court recognized expressed that she wished to constitute a trust fund
unconventional implied trusts in contracts involving the for her paraphernal properties, denominated as
purchase of housing units by officers of tenants’ Fideicomiso de Juliana Lopez Manzano (Fideicomiso),
associations in breach of their obligations,18 the to be administered by her husband and if her husband
partitioning of realty contrary to the terms of a were to die or renounce the obligation, her nephew,
compromise agreement,19 and the execution of a sales Enrique Lopez, was to become administrator and
executor of the Fideicomiso. Two-thirds (2/3) of the properties were cancelled and new ones issued in the
income from rentals over these properties were to names of respondents.
answer for the education of deserving but needy  RTC of Batangas, Branch 9 appointed petitioner as
honor students, while one-third 1/3 was to shoulder trustee of Juliana’s estate in S.P. No. 706.
the expenses and fees of the administrator. As to her  On 11 December 1984, petitioner instituted an action
conjugal properties, Juliana bequeathed the portion for reconveyance of parcels of land with sum of
that she could legally dispose to her husband, and money before the RTC of Balayan, Batangas against
after his death, said properties were to pass to her respondents alleging that Jose was able to register in
biznietos or great grandchildren. his name the disputed properties, which were the
 Juliana initiated the probate of her will five (5) days paraphernal properties of Juliana, either during their
after its execution, but she died on 12 August 1968, conjugal union or in the course of the performance of
before the petition for probate could be heard. his duties as executor of the testate estate of Juliana
 The petition was pursued instead in Special and that upon the death of Jose, the disputed
Proceedings (S.P.) No. 706 by her husband, Jose, who properties were included in the inventory as if they
was the designated executor in the will and the Court formed part of Jose’s estate when in fact Jose was
of First Instance, Branch 3, Balayan, Batangas, acting holding them only in trust for the trust estate of
as probate court, admitted the will to probate and Juliana.
issued the letters testamentary to Jose who then  RTC rendered a summary judgment dismissing the
submitted an inventory of Juliana’s real and personal action on the ground of prescription of action. The
properties with their appraised values, which was RTC also denied respondents motion to set date of
approved by the probate court. hearing on the counterclaim.
 Thereafter, Jose filed a report, which included a  CA denied the appeals filed by both petitioner and
proposed project of partition and explained that as respondents and also denied petitioners motion for
the only compulsory heir of Juliana, he was entitled reconsideration for lack of merit.
by operation of law to one-half (1/2) of Julianas  Petitioner insists that an express trust was
paraphernal properties as his legitime, while the constituted over the disputed properties; thus the
other one-half (1/2) was to be constituted into the registration of the disputed properties in the name of
Fideicomiso and at the same time alleged that he and Jose as trustee cannot give rise to prescription of
Juliana had outstanding debts totaling P816,000.00 action to prevent the recovery of the disputed
excluding interests, and that these debts were properties by the beneficiary against the trustee.
secured by real estate mortgages and that if these
debts were liquidated, the residuary estate available ISSUE
for distribution would, value-wise, be very small. WON the fiduciary relation assumed by the late Jose
 Jose proceeded to offer a project of partition listing Lopez Manzano, as trustee, pursuant to the last will and
relevant properties belonging to Fideicomiso and testament of Juliana Lopez Manzano was implied trust,
those properties which he alleged were registered in instead of express trust.
both his and Julianas names, totaling 13 parcels in all
including the disputed properties consisting of six (6) HELD
parcels, all located in Balayan, Batangas. Yes.
On the premise that the disputed properties were the
 The probate court issued an order approving the
project of partition ordered that new certificates be paraphernal properties of Juliana which should have
issued in favor of Jose as trustee of the Fideicomiso been included in the Fideicomiso, their registration in the
covering one-half (1/2) of the properties listed under name of Jose would be erroneous and Joses possession
paragraph 14 of the project of partition; and would be that of a trustee in an implied trust. Implied
regarding the other half, to be registered in the name trusts are those which, without being expressed, are
of Jose as heir of Juliana. deducible from the nature of the transaction as matters
of intent or which are superinduced on the transaction
 The properties which Jose had alleged as registered in
by operation of law as matters of equity, independently
his and Julianas names, including the disputed lots,
of the particular intention of the parties.[14]
were adjudicated to Jose as heir, subject to the
The provision on implied trust governing the factual
condition that Jose would settle the obligations
milieu of this case is provided in Article 1456 of the Civil
charged on these properties. The probate court, thus,
Code, which states:
directed that new certificates of title be issued in
favor of Jose as the registered owner thereof and on
ART. 1456. If property is acquired through mistake or
even date, the certificates of title of the disputed
fraud, the person obtaining it is, by force of law,
properties were issued in the name of Jose.
considered a trustee of an implied trust for the benefit of
 The Fideicomiso was constituted in S.P No. 706
the person from whom the property comes.
encompassing one-half (1/2) of the Abra de Ilog lot on
In Aznar Brothers Realty Company v. Aying,[15] the Court
Mindoro, the 1/6 portion of the lot in Antorcha St. in
differentiated two kinds of implied trusts, to wit:
Balayan, Batangasand all other properties inherited
x x x In turn, implied trusts are either resulting or
ab intestato by Juliana from her sister, Clemencia, in
constructive trusts. These two are differentiated from
accordance with the order of the probate court in S.P.
each other as follows:
No. 706. The disputed lands were excluded from the
Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the
 Jose died on 22 July 1980, leaving a holographic will
equitable title or interest and are presumed always to
disposing of the disputed properties to respondents.
have been contemplated by the parties. They arise from
Pursuant to Jose’s will, the RTC ordered on 20
the nature of circumstances of the consideration
December 1983 the transfer of the disputed
involved in a transaction whereby one person thereby
properties to the respondents as the heirs of Jose.
becomes invested with legal title but is obligated in
Consequently, the certificates of title of the disputed
equity to hold his legal title for the benefit of another. On No. 2139 in favor of respondents father, Dr. Monterroyo,
the other hand, constructive trusts are created by the by virtue of an oral contract. On 5 January 1995, Arturo
construction of equity in order to satisfy the demands of executed a Deed of Confirmation of Absolute Sale of
justice and prevent unjust enrichment. They arise Unregistered Land in favor of Dr. Monterroyos heirs.
contrary to intention against one who, by fraud, duress - Hence petitioner filed the case against respondents.
or abuse of confidence, obtains or holds the legal right to - RTC ruled in favor of defendants. Petitioners appeled to
property which he ought not, in equity and good the CA but CA affirmed the decision of the RTC. Thus this
conscience, to hold.[16] present case
A resulting trust is presumed to have been contemplated
by the parties, the intention as to which is to be found in ISSUE: WON the property in question belonged to the
the nature of their transaction but not expressed in the defendants by virtue of constructive trust.
deed itself.[17] Specific examples of resulting trusts may
be found in the Civil Code, particularly Arts. 1448,[18] Ruling:
1449,[19] 1451,[20] 1452[21] and 1453.[22] - Yes, Under the principle of constructive trust,
A constructive trust is created, not by any word evincing registration of property by one person in his name,
a direct intention to create a trust, but by operation of whether by mistake or fraud, the real owner being
law in order to satisfy the demands of justice and to another person, impresses upon the title so acquired the
prevent unjust enrichment.[23] It is raised by equity in character of a constructive trust for the real owner,
respect of property, which has been acquired by fraud, which would justify an action for reconveyance.
or where although acquired originally without fraud, it is - In the action for reconveyance, the decree of
against equity that it should be retained by the person registration is respected as incontrovertible but what is
holding it.[24] Constructive trusts are illustrated in Arts. sought instead is the transfer of the property wrongfully
1450,[25] 1454,[26] 1455[27] and 1456.[28] or erroneously registered in anothers name to its rightful
The disputed properties were excluded from the owner or to one with a better right. [30] If the
Fideicomiso at the outset. Jose registered the disputed registration of the land is fraudulent, the person in
properties in his name partly as his conjugal share and whose name the land is registered holds it as a mere
partly as his inheritance from his wife Juliana, which is trustee, and the real owner is entitled to file an action for
the complete reverse of the claim of the petitioner, as reconveyance of the property
the new trustee, that the properties are intended for the - In the case before us, respondents were able to
beneficiaries of the Fideicomiso. Furthermore, the establish that they have a better right to Lot No. 2139
exclusion of the disputed properties from the since they had long been in possession of the property in
Fideicomiso was approved by the probate court and, the concept of owners, by themselves and through their
subsequently, by the trial court having jurisdiction over predecessors-in-interest. Hence, despite the
the Fideicomiso. The registration of the disputed irrevocability of the Torrens titles issued in their names
properties in the name of Jose was actually pursuant to and even if they are already the registered owners under
a court order. The apparent mistake in the adjudication the Torrens system, petitioners may still be compelled
of the disputed properties to Jose created a mere implied under the law to reconvey the property to respondents.
trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso. Hortizuela v. Tagufa, 751 SCRA 371
Now that it is established that only a constructive trust
was constituted over the disputed properties, may Home Guaranty Corp. v. La Savoje Dev. Corp., 748 SCRA
prescription for the recovery of the properties 312
Ramos v. Ramos, 61 SCRA 284, 299
Pasiño v. Monterroyo, 560 SCRA 739
FACTS: Diaz v. Gorricho and Aguado, 103 Phil. 261
- Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. FACTS
2139) was part of a 24-hectare land occupied, cultivated
and cleared by Laureano Pasio (Laureano) in 1933. 18  Lots Nos. 1941 and 3073 of the Cadastral Survey of
February 1935, Laureano filed a homestead application Cabanatuan originally belonged to the conjugal
over the entire 24-hectare land. On 11 September 1941, partnership of the spouses Francisco Diaz and Maria
the Director of Lands issued an Order [7] approving Sevilla, having been registered in their name under
Laureanos homestead application and was recorded in Original Certificates of Title Nos. 3114 and 3396.
his name.  Francisco Diaz died in 1919, survived by his widow
- Laureano died on 24 March 1950 15 April 1952, the Maria Sevilla and their three children — Manuel Diaz
Director of Lands issued an Order issuance of a born in 1911, Lolita Diaz born in 1913, and Constancia
homestead patent in favor of Laureano, Laureanos heirs Diaz born in 1918.
did not receive the order and consequently, the land was  Appellee Carmen J. Gorricho filed an action against
not registered under Laureanos name or under that of Maria Sevilla in the Court of First Instance of Manila
his heirs. (C. C. No. 43474) and in connection therewith, a writ
- Petitioners claimed that Laureanos heirs continuously of attachment was issued upon the shares of Maria
possessed and cultivated both lots. Petitioners alleged Sevilla in said lots numbers 1941 and 3073.
that their possession of Lot No. 2139 was interrupted on  Thereafter, said parcels were sold at public auction
3 January 1993 when respondents forcibly took and purchased by the plaintiff herself, Carmen J.
possession of the property. Gorricho. Maria Sevilla failed to redeem within one
- Respondents alleged that they had been in open, year, whereupon the acting provincial sheriff
continuous, exclusive and notorious possession of Lot executed a final deed of sale in favor of Carmen J.
No. 2139, by themselves and through their predecessors- Gorricho.
in-interest, since 10 July 1949. In 1992, Arturo sold Lot
 In said final deed, however, the sheriff conveyed to trustee has died, will not be aided by a court of equity
Gorricho the whole of parcels numbers 1941 and to establish his trust." (54 Am. Jur., pp. 448-450.)
3073 instead of only the half-interest of Maria Sevilla The reason for the difference in treatment is obvious. In
therein. express trusts, the delay of the beneficiary is directly
 Pursuant to said deed, Carmen J. Gorricho obtained attributable to the trustee who undertakes to hold the
Transfer Certificate of Title Nos. 1354 and 1355 in her property for the former, or who is linked to the
name on April 13, 1937, and has been possessing said beneficiary by confidential or fiduciary relations. The
lands as owner ever since. trustee’s possession is, therefore, not adverse to the
 In November, 1951, Maria Sevilla died and her beneficiary, until and unless the latter is made aware that
children Manuel Diaz, Constancia Diaz, and Sor Petra the trust has been repudiated. But in constructive trusts
Diaz (Lolita Diaz) filed the present action (C. C. No. 926 (that are imposed by law), there is neither promise nor
of the Court of First Instance of Nueva Ecija) against fiduciary relation; the so-called trustee does not
Carmen Gorricho and her husband Francisco Aguado recognize any trust and has no intent to hold for the
to compel defendants to execute in their favor a deed beneficiary; therefore, the latter is not justified in
of reconveyance over an undivided one-half interest delaying action to recover his property. It is his fault if
over the lots in question (the share therein of their he delays; hence, he may be estopped by his own
deceased father Francisco Diaz illegally conveyed by laches.
the provincial sheriff to Gorricho), which defendants Of course, the equitable doctrine of estoppel by laches
were allegedly holding in trust for them. requires that the one invoking it must show, not only
 Defendants answered denying the allegations of the the unjustified inaction, but that some unfair injury
complaint and alleging, as a special defense, that would result to him unless the action is held barred (Go
plaintiffs’ action has long prescribed. Chi Gun v. Co Cho, 96 Phil., 622; Mejia v. Gamponia, * 53
 The court held that while a constructive trust in Off. Gaz., 677). This requirement the appellees have not
plaintiffs’ favor arose when defendant Gorricho took met, and they are thereby bereft of the protection of
advantage of the error of the provincial sheriff in this rule.
conveying to her the whole of the parcels in question Article 1456 of the new Civil Code, while not retroactive
and obtained title in herself, the action of plaintiffs in character, merely expresses a rule already recognized
was, however, barred by laches and prescription. by our courts prior to the Code’s promulgation (see
 On appeal, appellants contended that: Gayondato v. Insular Treasurer, 49 Phil., 244). Appellants
o their father’s half of the disputed are, however, in error in believing that like express trusts,
property was acquired by Carmen J. such constructive trusts may not be barred by lapse of
Gorricho through an error of the time. The American law on trusts has always maintained
provincial sheriff; a distinction between express trusts created by intention
o that having been acquired through error, of the parties, and the implied or constructive trusts that
it was subject to an implied trust, as are exclusively created by law, the latter not being trusts
provided by Article 1456 of the new Civil in their technical sense (Gayondato v. Insular Treasurer,
Code; and supra). The express trusts disable the trustee from
o since the trust is continuing and acquiring for his own benefit the property committed to
subsisting, the appellants may compel his management or custody, at least while he does not
reconveyance of the property despite openly repudiate the trust, and makes such repudiation
the lapse of time, specially because known to the beneficiary or cestui que trust. For this
prescription does not run against titles reason, the old Code of Civil Procedure (Act 190)
registered under Act 496. declared that the rules on adverse possession do not
apply to "continuing and subsisting" (i.e., unrepudiated)
ISSUE trusts.
WON implied trust may not be barred by laches and But in constructive trusts, as pointed out by the court
prescription. below, the rule is that laches constitutes a bar to actions
to enforce the trust, and repudiation is not required,
HELD unless there is concealment of the facts giving rise to
Yes, implied trust may be barred by laches and the trust (54 Am. Jur., secs. 580, 581; 65 C. J., secs. 956,
prescription. 957, 958; Amer. Law Institute, Restatement on Trusts,
Laches may constitute a bar to an action to declare and section 219; on Restitution, section 179; Stianson v.
enforce a resulting trust, but lapse of time is only one of Stianson, 6 ALR 287; Claridad v. Benares, 97 Phil., 973).
the many circumstances from which the conclusion of
laches in the enforcement of such a trust must be Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, 587
drawn, and each case must be determined in the light SCRA 417
of the particular facts shown. No laches exists in respect
of failure to assert a resulting trust of which a beneficiary Escay v. CA, 61 SCRA 369
has no knowledge or of which he is not chargeable with
knowledge. Continuous recognition of a resulting trust Government v. Abadilla, 46 Phil. 642
precludes any defense of laches in a suit to declare and
enforce the trust. It has been held that the beneficiary of Tong v. Go Tiat Kun, 722 SCRA 623
a resulting trust may, without prejudice to his right to
enforce the trust, prefer the trust to persist and demand Heirs of Candelaria v. Romero, 109 Phil. 500
no conveyance from the trustee. On the other hand, it FACTS
has been held that the one who permits a claim to
establish a resulting trust to lie dormant for an  Ester Candelaria, filed a complaint on December 20,
unreasonable length of time, and until the alleged 1956 , in her own behalf and in representation of the
other alleged heirs of Emilio Candelaria.
 Petitioners alleged that sometime prior to 1917 is founded upon equity. The rule is the same in the
Emiliano Candelaria and his brother Lucas Candelaria United States, particularly where, on the faith of the
bought each a lot in the Solokan Subdivision on the agreement or the understanding, the grantee is enabled
installment basis; that Lucas paid the first two to gain an advantage in the purchase of the property or
installments corresponding to his lot, then unable to where the consideration or part thereof has been
meet the subsequent installments because of furnished by or for such other. Thus, it has been held that
sickness which caused him to be bedridden, sold his where the grantee takes the property under an
interest therein to his brother Emilio, who then agreement to convey another on certain conditions, a
reimbursed him the amount he had already paid, and trust results for the benefit of such other or his heirs,
thereafter continued payment of the remaining which equity will enforce according to the agreement.
installments until the whole purchase price had been (89 C.J.S. 960.) It is also the rule there that an implied
fully satisfied, trust arises where a person purchases land with his own
 It was further alleged that the subsequent payments money and takes a conveyance thereof in the name of
made by Emilio Candelaria until fully paid were made another. In such a case, the property is held on a
in the name of Lucas Candelaria, with the resulting trust in favor of the one furnishing the
understanding that the necessary documents of consideration for the transfer, unless a different
transfer will be made later, the reason that the intention or understanding appears. The trust which
transaction being from brother to brother. results under such circumstances does not arise from
 Moreover, it was alleged that a transfer certificate of contract or agreement of the parties, but from the facts
title for said lot was issued by the register of deeds of and circumstances, that is to say, it results because of
Manila in the name of "Lucas Candelaria married to equity and arises by implication or operation of law. (See
Luisa Romero" and Lucas held the title to said lot 89 C.J.S. 964-968.)
merely in trust for Emilio and that this fact was Constructive or implied trusts may, of course, be barred
acknowledged not only by him but also by the by lapse of time. The rule in such trusts is that laches
defendants (his heirs) on several occasions. constitutes a bar to actions to enforce the trust, and
 Lucas' possession of the lot was merely tolerated by repudiation is not required, unless there is a
Emilio and his heirs and from the time Emilio bought concealment of the facts giving rise to the trust. (Diaz,
the lot from his brother, Lucas had been collecting all et al. vs. Gorricho, et al., 103 Phil., 261; 54 Off. Gaz. [37]
its rents for his own use as financial aid to him as a 8429.) Continuous recognition of a resulting trust,
brother in view of the fact that he was bedridden however, precludes any defense of laches in a suit to
without any means of livelihood and with several declare and enforce the trust. (See 581, 54 Am Jur. pp.
children to support, although from 1926, when Emilio 448-450.) The beneficiary of a resulting trust may,
was confined at the Culion Leper Colony up to his therefore, without prejudice to his right to enforce the
death on February 5, 1936, Lucas had been giving part trust, prefer the trust to persist and demand no
of the rents to Fortunata Bautista, the second wife of conveyance from the trustee. It being alleged in the
Emilio, in accordance with the latter's wishes. complaint that Lucas held the title to the lot in question
 Lucas died in August, 1942, survived by the present merely in trust for Emilio and that this fact was
defendants, who are his spouse Luisa Romero and acknowledged not only by him but also by his heirs,
several children; and that said defendants are still in herein defendants — which allegation is hypothetically
possession of the lot, having refused to reconvey it to admitted — we are not prepared to rule that plaintiff's
plaintiff despite repeated demands. action is already barred by lapse of time. On the contrary,
 Defendants filed a motion to dismiss, alleging, among we think the interest of justice would be better served if
other things, that plaintiff's cause of action is she and her alleged co-heirs were to be given an
unenforceable under the new Civil Code and that the opportunity to be heard and allowed to present proof in
action has already prescribed. support of their claim.
 The lower grant granted the motion to dismiss,
held that an express and not an implied trust was Heirs of Yambao v. Heirs of Yambao, 789 SCRA 361
created as may be gleaned from the facts alleged
in the complaint, which is unenforceable without Varsity Hills v. Navarro, 43 SCRA 503
any writing, and that since Transfer Certificate of
Title No. 9584 covering the land in question had Cañezo v. Rojas, 538 SCRA 242
been issued to Lucas Candelaria way-back in
1918 or 38 years before the filing of the Figuracion v. Figuracion-Gerilla, 690 SCRA 495
complaint, the action has already prescribed.
Cavile v. Litania-Hong, 581 SCRA 408
WON the implied trust, in the case at bar, prescribed by
laches.  On 5 April 1937, a Deed of Partition was entered into
by the heirs of the spouses Bernardo Cavile and
HELD Tranquilina Galon.
No.  Said heirs included the legitimate children of
The trust alleged to have been created, in our opinion, is Bernardo and Tranquilina, namely, (1) Susana Cavile,
an implied trust. As held, in effect, by this Court in the (2) Castor Cavile, and (3) Benedicta Cavile; as well as
case of Martinez vs. Graño (42 Phil., 35), where property the children of Bernardo by his previous marriages,
is taken by a person under an agreement to hold it for, or specifically: (4) Simplicia Cavile, (5) Fortunato Cavile,
convey it to another or the grantor, a resulting or implied and (6) Vevencia Cavile.
trust arises in favor of the person for whose benefit the  Subject of the Deed of Partition were several parcels
property was intended. This rule, which has been of land situated in the Municipality of Tolong, Negros
incorporated in the new Civil Code in Art. 1453 thereof, Oriental, which were then covered by Tax
Declarations No. 5615, No. 5729, No. 7143, No. 7421 respondents from the subject lots and when Castor
and No. 7956, all under the name of Bernardo. died in 1968, petitioner spouses continued their
 In accordance with the Deed of Partition, the conjugal unlawful occupancy of the subject lots, planting on
properties of Bernardo and Tranquilina were divided the same and harvesting the products.
into two parts. The first part, corresponding to  Petitioner spouses asserted that the Confirmation of
Bernardos share, was further divided into six equal Extrajudicial Partition dated 5 August 1960 involving
shares and distributed among his six heirs. The the subject lots was a nullity since said properties
second part, corresponding to Tranquilinas share, were never owned nor adjudicated in favor of
was subdivided only into three shares and distributed Susana, respondents predecessor-in-interest; that
among her children with Bernardo, i.e., Susana, Castor and Susana executed the Confirmation of
Castor, and Benedicta. Extrajudicial Partition merely to accommodate the
 Also stated in the Deed of Partition was the sale by latter who then needed security for the loan she was
the other aforementioned legal heirs to their co-heir trying to obtain from the Rural Bank of Dumaguete
Castor of their aliquot shares in the lots covered by City.
Tax Declarations No. 7143, No. 7421, and No. 7956;  RTC declared herein petitioner spouses as the
thus, making Castor the sole owner of the said absolute owners over the parcels of land in
properties. Similarly, the Deed of Partition litigation, dismissed the complaint and counterclaim
acknowledged the sale by all the legal heirs to was likewise dismissed for lack of merit held that the
Ulpiano Cavile of their respective shares in the lot petitioner spouses evidence was more worthy of
covered by Tax Declaration No. 5729, thus, credence in establishing their ownership of the
transferring to the latter absolute ownership of said subject lots based on Perfecta’s testimonies that (1)
parcel of land. Castor immediately took possession of the subject
 On 5 August 1960, Castor and Susana executed a lots after the Deed of Partition was executed in 1937
Confirmation of Extrajudicial Partition, whereby and such fact was supported by the unrebutted
Castor recognized and confirmed that the lots testimony of Luciana Navarra, petitioner Perfectas
covered by Tax Declarations No. 2039 and No. 2040 cousin, who declared that her husband was petitioner
were the just and lawful shares of Susana in the Perfectas tenant on the subject lots since 1947 and
properties left by their deceased parents Bernardo that respondents never actually occupied the said
and Tranquilina, and that Susana was in actual properties and that (2) the Confirmation of
possession of the said properties. Extrajudicial Partition was executed by Castor solely
 According to the Confirmation of Extrajudicial to accommodate Susana, enabling her to obtain a
Partition, the lot covered by Tax Declaration No. 2039 bank loan using the subject lots as collateral; that it
was bounded on the North by Simplicio Cavile, on the was highly questionable and contrary to human
East by Rio Bayawan, on the South by Napasu-an, and experience that respondents waited nine long years
on the West by Napasu-an Creek and Julian Calibog; after their ejection from the subject lots in 1965
while the one covered by Tax Declaration No. 2040 before taking any legal step to assert their rights over
was bounded on the North by Hilario Navvaro (sic), on the same and RTC concluded that the Confirmation of
the South by Fortunato Cavile, on the East by Silverio Extrajudicial Partition was a simulated contract which
Yunting, and on the West by Maximino (sic) was void and without any legal effect.
Balasabas.  CA rendered the assailed Decision in favor of
 The descriptions of the lots covered by Tax respondents, held that:
Declarations No. 2039 and No. 2040 in the o respondents’ contention that the Confirmation
Confirmation of Extrajudicial Partition were of Extrajudicial Partition was not a simulated
strikingly close to those of the lots covered by Tax document as it was executed by and between
Declarations No. 7421 and No. 7956, respectively, in parties who had firsthand knowledge of the
the Deed of Partition. The lot covered by Tax Deed of Partition of 1937, that the
Declaration No. 7421 was described in the Deed of Confirmation of Extrajudicial Partition
Partition as bounded on the North by Simplicio Cavile constituted evidence that was of the highest
antes Roman Echaves, on the East by Rio Bayawan, on probative value against the declarant, Castor,
the South by Riachuelo Napasu-an, and on the West because it was a declaration against his
by Riachuelo Napasu-an y Julian Calibug antes proprietary interest;
Francisco Tacang. The lot covered by Tax Declaration o that other than petitioner Perfectas testimony,
No. 7956 was identified to be the one bounded on the the appellate court found no other proof extant
North by Hilario Navaro, on the East by Silverio in the records to establish that the
Yunting, on the South by Fortunato Cavile, and on the Confirmation of Extrajudicial Partition was a
West by Maximiano Balasabas. simulated document or that it did not express
 Fourteen years after the execution of the the true intent of the parties.
Confirmation of Extrajudicial Partition in 1960, o The Court of Appeals likewise highlighted the
respondents filed on 23 December 1974 a Complaint fact that Castor did not attempt to have the
for Reconveyance and Recovery of Property with subject lots declared in his name during his
Damages before the RTC against Perfecta Cavile, the lifetime and that petitioner Perfecta herself
daughter of Castor, Jose de la Cruz, the husband of admitted that she only started paying real
Perfecta (hereinafter petitioner spouses), and the estate taxes for the subject lots in 1993. It was
Rural Bank of Bayawan, Inc. Susana and, later, her children, respondents
 Respondents invoked the Confirmation of Justina and Genoveva, who had been paying for
Extrajudicial Partition dated 5 August 1960 wherein the realty taxes on the subject lots since 1937.
Castor purportedly recognized Susanas ownership of
the subject lots alleged that Castor and petitioner
spouses eventually intruded upon and excluded
WON the action for reconveyance based on implied or showed that Melecia owned the building on the land
constructive trust which prescribes in 10 years from the owned by Godofredo.
date of the issuance of the Certificate of Title over the  Baldomera died on September 11, 1994.
property may still be filed, in the case at bar.  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,
HELD TCT No. T-2259 was cancelled and TCT No. T-
No. 11184616 covering the property was issued in the
Verily, an aggrieved party may still file an action for name of the College.
reconveyance based on implied or constructive trust,  In a letter dated May 5, 1997, the College demanded
which prescribes in 10 years from the date of the issuance Trifonia D. Gabutan, Mary Jane Gilig, Allan Ubaub,
of the Certificate of Title over the property, provided that and Evelyn Dailo, the heirs of Melecia, who were
the property has not been acquired by an innocent occupying the house on the property, to vacate the
purchaser for value. An action for reconveyance is one premises.
that seeks to transfer property, wrongfully or  On July 7, 1997, Gabutan, et al. filed a Complaint for
fraudulently registered by another, to its rightful and Reconveyance of Real Property, Declaration of
legal owner. If the registered owner, be he the patentee Nullity of Contracts, Partition and Damages with
or his successor-in-interest to whom the free patent was Writ of Preliminary Attachment and Injunction
transferred, knew that the parcel of land described in the against Nacalaban, et al. and the College alleging
patent and in the Torrens title belonged to another, who that:
together with his predecessors-in-interest had been in o (1) Melecia bought the property using her own
possession thereof, and if the patentee and his money but Godofredo had the Deed of
successor-in-interest were never in possession thereof, Absolute Sale executed in his name instead of
the true owner may bring an action to have the his mother-in-law;
ownership of or title to the land judicially settled. The o (2) Godofredo and Baldomera were only
court in the exercise of its equity jurisdiction, without trustees of the property in favor of the real
ordering the cancellation of the Torrens titled issued owner and beneficiary, Melecia;
upon the patent, may direct the defendant, the o (3) they only knew about the Extrajudicial
registered owner, to reconvey the parcel of land to the Settlement with Sale upon verification with the
plaintiff who has been found to be the true owner Registry of Deeds; and
thereof. o (4) the College was a buyer in bad faith, being
In the instant case, respondents brought the action for aware they were co-owners of the property.
reconveyance of the subject lots before the RTC only on  College claimed that it is a buyer in good faith and for
23 December 2004, or more than 12 years after the value, having "made exhaustive investigations and
Torrens titles were issued in favor of petitioner Perfecta verifications from all reliable sources" that Melecia
on 9 October 1962. The remedy is, therefore, already and her heirs were staying in the property by mere
time-barred. tolerance alleging that:
o (1) in the tax declaration of the residential
Heirs of Domingo Valientes v. Ramas, 638 SCRA 444 house, Melecia admitted that the lot owner is
Geronimo and Isidro v. Nava and Aquino, 105 Phil. 145 o (2) the occupancy permit of Melecia was issued
only after Godofredo issued a certification to
Adaza v. CA, 171 SCRA 369 the effect that Melecia was allowed to occupy
a portion of the property; and
Castro v. Castro, 57 Phil. 675 o (3) the Extrajudicial Settlement with Sale was
published in three consecutive issues of
Gabutan v. Nacalaban, 795 SCRA 115 Mindanao Post, a newspaper of general
FACTS circulation.
 On January 25, 1957, Godofredo Nacalaban  Nacalaban, et al. denied the allegations of Gabutan,
(Godofredo) purchased an 800-square meter parcel et al. and claimed to have acquired the property by
of prime land (property) in Poblacion, Cagayan de Oro intestate succession from their parents, who in their
City from Petra, Fortunata, Francisco and Dolores, all lifetime, exercised unequivocal and absolute
surnamed Daamo. ownership over the property and also set up the
defenses of laches and prescription, and asserted
 Pursuant to the sale, Transfer Certificate of Title (TCT)
that the action for reconveyance was improper
No. T-22597 covering the property was issued in the
because the property had already been sold to an
name of Godofredo. He thereafter built a house on it.
innocent purchaser for value.
 Godofredo died on January 7, 1974 and was survived
 College filed a separate Complaint for Unlawful
by his wife, Baldomera, and their children, Dante,
Detainer and Damages with the Municipal Trial Court
Helen, and Susan.
in Cities (MTCC) against Trifonia, Mary Jane, Allan,
 On March 19, 1979, Baldomera issued a Certification
Evelyn and Nicolas Dailo (Heirs of Melecia).
in favor of her mother, Melecia which provided, in
 In their Answer with Affirmative and/or Negative
effect, that Baldomera was allowing her mother to
Defenses with Compulsory Counterclaim,37 the Heirs
build and occupy a house on the portion of the
of Melecia claimed that they own and possess the
property in co-ownership with Nacalaban, et al. and
 Accordingly, the house was declared for taxation
Gabutan, et al. because it was purchased by Melecia,
purposes. The tax declaration presented in evidence
their common predecessor.38 They also claimed that
the house in which they reside was constructed at her Article 1448 of the Civil Code provides in part that there
expense and that College had prior knowledge of this is an implied trust when property is sold, and the legal
co-ownership, and hence, was a purchaser in bad estate is granted to one party but the price is paid by
faith; also raised the defense of forum-shopping in another for the purpose of having the beneficial interest
view of the pendency of the action for reconveyance of the property. The former is the trustee, while the
and concluded that in view of the issues and the value latter is the beneficiary. The trust created here, which is
of the property, as well, the MTCC had no jurisdiction also referred to as a purchase money resulting trust,89
over the case. occurs when there is (1) an actual payment of money,
 MTCC found it had jurisdiction to hear the case and property or services, or an equivalent, constituting
ruled in favor of the College ordering each of the valuable consideration; (2) and such consideration must
defendants immediately vacate the property of the be furnished by the alleged beneficiary of a resulting
plaintiff. trust.90 These two elements are present here.
 RTC affirmed the MTCC's Decision in all respects, Gabutan, et al., through the testimonies of Felisia,
except that the Heirs of Melecia were given 30 days Crisanta, and Trifonia, established that Melecia's money
from notice to vacate the property. was used in buying the property, but its title was placed
 In the reconveyance case, the RTC rendered a in Godofredo's name. She purchased the property
Decision in favor of Gabutan, et al. found the because Felisia wanted to build a pharmacy on it.91 On
testimonies of their witnesses credible, in that the one occasion in Melecia's house, and when the entire
money of Melecia was used in buying the property family was present, Melecia gave Godofredo the money
but the name of Godofredo was used when the title to purchase the property.92Melecia entrusted the
was obtained because Godofredo lived in Cagayan de money to Godofredo because he was in Cagayan de Oro,
Oro City while Melecia lived in Bornay, Gitagum, and per Melecia's instruction, the deed of sale covering
Misamis Oriental and held that a trust was the property was placed in his name.93 It was allegedly
established by operation of law pursuant to Article her practice to buy properties and place them in her
1448 of the Civil Code. children's name, but it was understood that she and her
 CA dismissed the consolidated appeals and affirmed children co-own the properties.94chanrobleslaw
in toto the RTC Decisions in the unlawful detainer case Melecia built a residential building on the property,
and the action for reconveyance, CA held that the where her daughter Crisanta and some of her
action for reconveyance has not yet prescribed grandchildren resided.95 Godofredo also thereafter built
because Gabutan, et al. are in possession of the a house on the property. Twice, he also mortgaged the
property. property to secure loans. Melecia allowed him to do so
because she trusted him.96 After Godofredo's death,
ISSUE: WON an action for reconveyance based on and when Baldomera fell ill, there were family
implied or constructive trust is imprescriptible if the discussions to transfer the title in Melecia's name so
plaintiff or the person enforcing the trust is in possession Melecia's children can divide it together with the rest of
of the property. Melecia's properties. The plans, however, always fell
HELD Both the RTC and CA found credence on these pieces of
Yes. testimonial evidence that an implied resulting trust
An action for reconveyance based on an implied or a exists. Reliance on these testimonies will not violate the
constructive trust prescribes 10 years from the alleged parol evidence rule, as Nacalaban, et al. once raised. In
fraudulent registration or date of issuance of the Tong v. Go Tiat Kun,98 we ruled that since an implied
certificate of title over the property. However, an action trust is neither dependent upon an express agreement
for reconveyance based on implied or constructive trust nor required to be evidenced by writing, Article 1457 of
is imprescriptible if the plaintiff or the person enforcing our Civil Code authorizes the admission of parol evidence
the trust is in possession of the property. In effect, the to prove their existence. What is crucial is the intention
action for reconveyance is an action to quiet the property to create a trust.99We cautioned, however, that the
title, which does not prescribe.111 The reason is that the parol evidence that is required to establish the existence
one who is in actual possession of the land claiming to be of an implied trust necessarily has to be trustworthy and
its owner may wait until his possession is disturbed or his it cannot rest on loose, equivocal or indefinite
title is attacked before taking steps to vindicate his right. declarations.100 The testimonies of Felisia, Crisanta, and
His undisturbed possession gives him a continuing right Trifonia satisfy these requirements. They are consistent
to seek the aid of a court of equity to ascertain and and agree in all material points in reference to the
determine the nature of the adverse claim of a third circumstances behind the arrangement between Melecia
party and its effect on his own title, which right can be and Godofredo. We agree with the RTC when it said that
claimed only by one who is in possession. this arrangement among family members is not unusual,
The fact of actual possession of Gabutan, et al. of the especially in the 1950s.101chanrobleslaw
property, during the lifetime of Melecia and even after Nacalaban, et al., on the other hand, denied the
her death, is an undisputed and established fact. The arrangement between Melecia and Godofredo, and
College has even filed an ejectment case against the maintained that it was really the latter who purchased
Heirs of Melecia for this reason.113 Thus, their complaint the property from its original owners, as evidenced by
for reconveyance is imprescriptible. It follows, with more their possession of the Deed of Conditional Sale and the
reason, that Gabutan, et al. cannot be held guilty of title being in Godofredo's name.102It is telling, however,
laches as the said doctrine, which is one in equity, cannot that Nacalaban, et al. failed to provide the details of the
be set up to resist the enforcement of an imprescriptible sale, specifically with regard to how Godofredo could
legal right. have been able to afford the purchase price himself,
which would have directly refuted the allegation that
Note: 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