PACHECO v.
ARRO (Paul, C2020) claims and the cadastral court confirmed the title of the lots and
Feb. 16, ’50 | Padilla, J. | Compelling Trustee via Specific Performance
PETITIONER: Dolores Pacheco, guardian of minors Concepcion, Alicia,
Herminia Yulo (Successors-in-interest of deceased Jose Yulo)
RESPONDENTS (DEFENDANT-CLAIMANTS): Santiago Arro, et. al,
Demetria Firmeza
SUMMARY: In the civil case in the cadastral court in the CFI of
Occidental Negros, respondents herein were claiming their lots as their
property, and were already presenting evidence to support their claims.
Dr. Mariano Yulo, who then represented Jose Yulo, promised that after
the change of names of the Zamora and Quennon Streets in Isabela, to
the names of Jose Yulo's parents - T. Yulo and G. Regalado streets - he
will convey and assign the lots to the defendants. Because of this,
defendant-claimants withdrew their claims in court and the court
confirmed the title to Jose Yulo. The names of the streets were indeed
changed and Jose Yulo then started to convey some of the lots by deed of
donation to some of the claimants. Petitioners (successors-in-interest of
Jose Yulo because he died before the case was resolved), were then saying
that since they were mere trustees, they do not have the titles to it, and
an action for specific performance can only compel the true owner of the
land. The SC held that this argument cannot stand because a trust is a
fiduciary relationship that cannot be confused with specific performance
because the mere assertions of the title - the final decree of the cadastral
court holding Jose Yulo to be the owner of the land - cannot prevail over
the promises made which resulted in the trust.
DOCTRINE: The judicial concept of a trust involves, arises from, or is
the result of a fiduciary relationship between the trustee and the
cestui que trust as regards certain property - real, personal, funds, money,
or actions. This must not be confused with the action of specific
performance.
FACTS:
1. Defendants herein, claimed ownership of several plots of land, in
a cadastral case in the CFI of Occidental Negros.
2. In the case before the CFI, the defendants were already
presenting evidence to support their claims.
3. Dr. Mariano Yulo then, representing Jose Yulo, promised in open
court that after the names of Zamora and Quennon Streets in
Isabela were changed to the names of Jose’s parents - T. Yolo and
G. Regalado Streets - Jose would convey and assign the lots to the
claimants.
4. Relying on this promise, defendant-claimants withdrew their
registered them in the name of Jose Yulo.
5. Eventually, the street names were indeed changed by the
Municipality, and Jose Yulo donated some of the lands but not all.
6. The defendants claimants now are the ones whose lands have not
yet been ceded, and when they went to Jose, they found out he
was dead, and his now Attorney Rodriguez, said that Jose did not
want to sign the deeds because he claims that the defendants
were ungrateful to him for not supporting him in the last
elections.
7. Petitioners now are trying to argue that first, the agreement
made by Mariano Yulo on behalf of Jose Yulo has prescribed.
Second, Jose Yulo was a mere trustee. Therefore, he does not have
the title of the subject property because the title is actually with
the cestui que trust. This means that Jose cannot be compelled in
an action for specific performance to convey or assign the said lots
because the said action can only compel the owner or the one who
has the title of the property.
8. The CA ruled in favor of the defendant-claimants and ordered
Jose Yulo to convey the disputed lots to them.
ISSUES:
1. W/N Petitioners can be compelled by Specific
Performance? - YES
2. W/N the Statute of Frauds can apply to this case? NO
RULING: The judgment under review is affirmed, with costs against the
petitioner
RATIO:
1. The judicial concept of a trust involves, arises from, or is the
result of a fiduciary relationship between the trustee and the
cestui que trust as regards certain property - real, personal,
funds, money, or actions.
2. This must not be confused with the action of specific
performance.
3. When the defendant-claimants withdrew their claims in the
cadastral case because of the promise made by Dr. Mariano Yulo
in behalf of Jose Yulo, a trust or fiduciary relation between
the parties was created.
4. The trustee now cannot invoke the Statute of Limitations
(prescription) to bar the action and defeat the rights of the cestui
que trust.
5. If the SC would uphold the arguments of the petitioners, it would
 mean that the mere final decree of the cadastral court which
declared Jose Yulo to be the owner would prevail over the
promises made by Mariano Yulo which caused the defendant-
claimants to withdraw their claims anyway.
6. This would mean that actions to compel a party to assign or
convey the undivided shares in a parcel of land registered in his
name to his co-owner/heir can no longer be brought and no longer
succeed and propser.

Minor issues on admissibility of the transcript of the lower court

(their promises therein)
7. Moreover, the promises made in the lower court was put in the
original transcript and was part of the record, and thus, part of
the basis used by the cadastral court in rendering its decision.
8. No objection was also made before and it cannot be questioned
now before the SC.
9. To add, Jose Yulo has partially complied by executing deeds of
donations or assignments to some of the claimants and is
therefore a strong proof of corroboration.

Personal analysis (6 out of the 7 pages of the case are in Spanish - what
happened in the CA and only the super detailed version of the 1 page in
English at the end, and because google translate was also vague haha): I
guess just remember the essence of what a trust is. Basically, what the
SC is saying is that if they uphold what the petitioners are trying to
argue, then the concept of trust is useless because in trust, the trustee
holds the title for the trustor. Therefore, if they simply disregard the
promises made in the cadastral court and just merely look at the names
in the title as decreed by the lower court, then the there would be great
injustice because a trust was created when Mariano promised the lands
to defendant-claimants, and caused the latter to withdraw their claims in
the first place.
 TANSENGUAN AND CO. v. PHIL. TRUST CO. (Torio, D2021) RATIO:
58 Phil. 700 (1933) 1. While in the contract in question the Philippine Trust Company
was usually referred to as trustee, nowhere in the deed of trust
Petitioners: TAN SENGUAN & CO., INC
between Mindoro Sugar Co and PhilTrust was PhilTrust given
Respondents: PHILIPPINE TRUST COMPANY
any authority to enter into a contract such as is here presented.
The Philippine Trust Company held the legal title to the
DOCTRINE: When the transaction at hand could have been entered into
properties of the Mindoro Sugar Company to protect the bond
by a trustee either as such or in his individual capacity, then it must be
holders. So far as the Philippine Trust Company was concerned, it
clearly indicated that the liabilities arising therefrom shall be chargeable
was not authorized to manage the affairs of the Mindoro Sugar
to the trust estate, otherwise, they are due from the trustee in his
Company or to enter into contracts in its behalf.
personal capacity.
2. Even if the contract had been authorized by the trust indenture,
the Philippine Trust Company in its individual capacity would
FACTS still be responsible for the contract as there was no express
1. In a deed of trust, Mindoro Sugar Company and PhilTrust stipulation that the true estate and not the true trustee should be
entered into a trust agreement where PhilTrust (trustee) will hold held liable on the contract in question.
in trust the real estate, franchises, and personal property of 3. Not only is there no express stipulation that the trustee should
Mindoro Sugar Company(trustor). The trust was created to not be held responsible but in the "Wherefore" clause of the
protect protect certain bonds to be issued by the Mindoro Sugar contract, the judgment was expressly assigned in favor of the
Company and to be purchased by the Philippine Trust Company. Philippine Trust Company, not the Philippine Trust Company,
2. Later, TanSenguan & Co. secured a judgment against the trustee. TanSenguan can go after PhilTrust on its contract and
Mindoro Sugar Company; and sold, transferred, and assigned has no claim against either the Mindoro Sugar Company or the
that judgment to PhilTrust. trust estate.
3. In the contract between TanSenguan and PhilTrust, PhilTrust
was referred to as 'trustee' (of Mindoro Sugar Company). One of RULING: The judgment of the Court of First Instance is therefore
the stipulations in the contract states: "xxx 2. The Philippine reversed, and a judgment will be entered in favor of plaintiff- appellant
Trust Company, Trustee, agrees that should the Mindoro Sugar and against defendant-appellee in the sum of P10,000, with legal interest
Co., be sold, assigned or its ownership transferred in any manner from the 8th of October, 1931, until paid, and with costs in both instances
whatsoever to any person or entity including the Philippine Trust against defendant-appellee. So ordered
Company, Trustee, itself, it shall pay to Tan Sen Guan & Co., an
additional sum of ten thousand (10,000) pesos, said amount to be
paid immediately upon the perfection of said sale or transfer and
irrespective to the amount which might be paid for it."
4. The properties of Mindoro Sugar Co. were sold at an auction to
the Roman Catholic Archbishop of Manila so TanSenguan is
claiming its Php10K, which was stated in their agreement.
PhilTrust refused to pay. TanSenguan sued PhilTrust to collect
the Php10K.
5. CFI ruled in favor of PhilTrust and absolved it from paying the
Php10. CFI said that in the contract PhilTrust was bound only as
a trustee and not as an individual. TanSenguan appealed the CFI
decision, hence the case at bar.

ISSUE: Is PhilTrust personally liable for the Php10K?-- YES

 RIZAL SURETY & INSURANCE v. CA (Tsang, D2021)
261 SCRA 69 (1996)
Petitioner: Rizal Surety & Insurance Company (Rizal Insurance)
Respondent: CA & Transocean Transport Corporation (Transocean)
Doctrine: Express trusts are created by direct and positive acts of the
parties, by some writing or deed, or will, or by words either expressly or
impliedly evincing an intention to create a trust.
Facts:
1. 1961 - Reparations Commission (Repacom) sold to Transocean
vessel “M/V Transocean Shipper” for 20 annual installments.
2. 1974, vessel was insured with Rizal insurance for $3.5M (P23M)
under 2 Marine Hule Policies. Repacom was named as insured.
a. Rizal insurance RE-insured vessel with foreign insurance
firm.
3. 1975, vessel lost in Mediterranean sea, Repacom filed claims.
a. Partial compromise agreement (PCA1) entered between
Repacom and Transocean for the insurance proceeds
4. Anticipating insurance proceeds, Transocean requested Central
Bank (CB) to allow it to retain dollar insurance proceeds for
3mos., to enable it to complete its study & decide how to utilize
such.
a. CB granted with condition: Proceeds deposited with local
bank in special dollar account until 6/31/1975
5. Transocean & Repacom requested Rizal Insurance to pay
proceeds in their joint names, despite problems with amount of
each claim.
a. CB authorized Rizal to receive foreign currency proceeds
from English reinsurance firm & deposit it with local
bank in a non -interest bearing acct. jointly in Transocean
& repacom’s name.
6. CB authorized Rizal to receive & deposit $ proceeds in a non-
interest bearing acct. in Rizal Insurance’s name for insured’s joint
account.
7. 1976, Rizal informed Transocean & Repacom entire insurance:
a. P2,614,150.00 from local insurance companies
b. $3,083,850.00 from Rizal Insurance’s London insurance
broker, deposited in non-interest bearing account as
authorized by CB
i. Both deposited with Prudential Bank Manila.
8. Transocean & Repacom entered into a PCA2 to distribute
proceeds Repacom $434,618., & Transocean $1,931,153, leaving
balance kept in bank in trust for future settlement via court or
compromise.
9. CB authorized Transocean & Repacom to transfer insurance
balance ($718,078.2) into interest-bearing dollar account with
local bank.
a. Repacom & Transocean requested Rizal to remit balance
to PNB
10. Rizal would effect request if both unconditionally & absolutely
release it from all liabilities by executing Loss & Subrogation
Receipt (LSR).
11. Parties submitted revised LSR to OSG, who demanded Rizal as
funds trustee, with obligation to deposit to an interest bearing
acct., to pay interest on dollar balance, as authorized by CB in a
letter.
12. Rizal rejected OSG’s demand asserting:
13. No trust relationship, express/implied, involved in the
transaction;
14. No obligation to transfer dollar deposit into interest bearing
account because CB authorization given to repacom & not them
a. Transocean & Repacom sent Rizal duly executed LSR.
15. Final Compromise agreement entered by Transocean & Repacom,
who transferred to Transocean all its proceeds rights in
consideration of P1M. Dollar balance remitted to PNB to
Transocean’s acct.
16. Transocean sent demand letter for interest on dollar balance to
Rizal & Prudential, which neither replied nor complied with.
a. Transocean filed RTC for collection of unearned interest.
17. RTC: Trust relationship existed between Rizal (trustee) &
Transocean + Repacom (beneficiaries). Rizal to pay interest at 6%.
a. Both appealed CA affirmed.
18. Rizal Insurance appealed to SC: LSR unconditionally &
absolutely released it from all its liabilities under marine hull
policies.
Issues: WON Rizal insurance was a trustee? - YES
Held: Petition Denied
Ratio: Parties intended entire dollar insurance proceeds be held
in trust by RIZAL for the benefit of Transocean & Repacom.
1. Facts sufficiently manifest intention between Transocean &
Repacom on one hand and Rizal, on the other, to create a trust.
2. Trust relationship existed. Intention to create trust relation
can be inferred from surrounding factual circumstances.
 3. A trust is right, enforceable solely in equity, to beneficial
enjoyment of property, legal title to which is vested in another. It
is a fiduciary relationship concerning property which obliges a
person holding it (trustee) to deal with property for another’s
benefit (beneficiary).
Art. 1441. Trusts are either express or implied. Express trusts are
created by the intention of the trustor or of the parties. x x x.
Art. 1444. No particular words are required for the creation of an express
trust, it being sufficient that a trust is clearly intended. Express trusts
are created by parties’ direct & positive acts, by some writing/deed/will, or
words (expressly/impliedly) evincing intention to create a trust.
4. Evidence is clear that Rizal held on to dollar balance because
a. Transocean & Repacom requested it to do so as they had
not yet agreed on amount of their respective claims, and
b. they hadn’t, prior to 1/31/1977, signed LSR in favor of
petitioner.
5. As Rizal continued holding on to deposit for Transocean &
Repacom’s benefit, Rizal obviously recognized its fiduciary
relationship with said parties. This is the essence of the trust
flowing from the actions & communications of Rizal.
a. Requirements before an express trust will be recognized.
i. a competent trustor and trustee
ii. an ascertainable trust res, and
iii. sufficiently certain beneficiaries.
6. There must be a present & complete disposition of trust property,
notwithstanding that enjoyment in beneficiary will be in the
future. It is essential that purpose be an active one to prevent
trust from being executed into a legal estate/interest, & one that
isn’t in contravention of some prohibition of statute or rule of
public policy.
7. There must be some power of administration other than a mere
duty to perform a contract although contract is for a third-party
beneficiary.
b. Declaration of terms is essential, and these must be
stated with reasonable certainty in order that trustee
may administer, and that the court, if called upon so to
do, may enforce, the trust.
8. All the elements of trust are present.
9. Upon being furnished a copy of PCA, Rizal undoubtedly became
aware that Transocean & Repacom to said agreement considered
it as their trustee in respect of said dollar balance
c. Rizal didn’t manifest objection, but proceeded to accept
role & responsibility as trustee by implementing PCA;
never committed any act amounting to trustee’s
unequivocal repudiation.
LSR didn’t preclude joint insured from claiming accrued interest.
10. Rizal gives undue importance to LSR signed by Transocean &
Repacom in an effort to absolve itself from liability.
11. Transocean & Repacom released Rizal only from liabilities arising
from insurance policies issued, (principal amount) but not to the
accrued interest which stemmed from its refusal to deposit
disputed dollar portion in violation of its duty as a trustee to
deposit the same under the terms most advantageous to
Transocean & Repacom.
12. Rizal was subrogated to rights from insurance contract but not to
those which arise from trust relationship.
13. At most, LSR’s signing was a valid pre-condition before Rizal
could be compelled to turn over whole insurance proceeds to two
insured.
14. Thus, Rizal reiterated offer to pay balance provided Transocean
signs LSR. But this was done only on 10/10/1977.
Rizal Liable for interests on dollar balance
15. Rizal only agreed to receive & deposit proceeds under its name to
Transocean & Repacom’s account in a non-interest bearing
account.
a. As trustee Rizal could’ve easily discharged obligation by
simply transferring & paying dollar balance to
Transocean & Repacom & by so doing, would have
dissolved the trust.
16. When trustors instructed Rizal as trustee to deposit funds in an
interest-bearing account, Rizal ought, as ordinary common sense
and common decency, to have at least informed the insured that it
couldn’t, for whatever reason, carry out said instructions.
17. This is the very least it could have done if indeed it wanted to
repudiate its role as trustee or be relieved of its obligations as
such. Instead of doing thus, petitioner chose to remain silent.
18. After receipt of Transocean & Repacom’s letter requesting to
remit dollar balance to an interest-bearing acct., Rizal merely
tendered payment of said dollar balance in exchange for signed
LSR.
b. This falls short of requirement to inform trustor-
beneficiaries of Rizal’s refusal/inability to comply with
said request/instruction.
 c. Such silence & inaction in the face of specific written
instructions from trustors-beneficiaries couldn’t but have
misled latter into thinking that trustee was amenable to
and was carrying out their instructions, there being no
reason for them to think otherwise.
d. This prevented trustors-beneficiaries from early on taking
action to discharge unwilling trustee & appointing a new
one, or effect transfer of deposit into an interest-bearing
account.
e. The result was that the trustors-beneficiaries, Transocean
& Repacom, suffered loss of interest income on the dollar
balance.
i. Such could have been prevented had Rizal acted
promptly & in good faith by communicating real
intentions to trustors.
19. Leaving enormous Dollar amount (insurance balance) in a non-
interest bearing bank account for an extended period (1yr. 9mos)
would undoubtedly prejudice owners of funds, & would have
resulted to immense benefit of Prudential Bank (Rizal’s sister
company), which beyond shadow of a doubt must have earned
income thereon by utilizing & relending it without paying any
interest.
f. Grossly unfair for anyone to earn income on another’s
money & still refuse to share part of that income with the
latter.
g. Whether Rizal benefitted directly/indirectly by enabling
its sister company to earn income on the dollar balance, is
immaterial.
h. Rizal’s violation of its duty as trustee was at Transocean’s
expense & for the ultimate benefit of Rizal or its
stockholders.
 GOVERNMENT v. ABADILLA (Dannah, C2020)
10 December 1924 | Ostrand, J. | Testementary Trust
PETITIONER: The Government of the Philippine Islands
RESPONDENTS: Anastaasia Abadilla et al., Municipality of Tayabas et
al., Maria Palad et al.
SUMMARY: Luis Palad, a landowner executed a will in Spanish and
Tagalog. He died after 4 years, and was succeeded by no other heirs
except his wife, Dorotea. In the will it contained conditions that Dorotea
may use the lot left until she marries, and that he donates the land to
the province of Tayabas. Said land should be delivered by his wife to the
Ayuntamiento of the town, or the civil governor.
Dorotea remarried after a few years which prompted Luis’ collateral heirs
to file an action against Dorotea for the partition of the land in question
on the ground that she, by her second marriage, lost the right to her
exclusive use and possession. In the same action the municipality of
Tayabas intervened. The 3 parties (collateral heirs, Dorotea and
municipality) entered into a compromise agreement. However, the heirs
instituted another action.
The issue in this case is WoN the Government of Tayabas may act as the
trustee in the case at hand. The Court ruled that it may, because an
ayuntamiento or a municipal corporation, and although there is no more
Gobernador Civil, the present day governors are predecessors of the civil
governors. Moreover, the Court ruled that in regard to private trust it is
not always necessary that the cestui que trust should be named, or even
be in esse at the time the trust is created in his favor.
DOCTRINE: As trusts has been much more frequently applied in
England and in the United States than in Spain, we may draw freely
upon American precedents in determining the effect of the testamentary
trust under consideration, especially so as the trusts known to American
and English equity jurisprudence are derived from the fidei-commissa of
Roman law and are based entirely upon Civil Law principles
FACTS:
1. The lands in question were originally owned by Luis Palad, a
teacher, who obtained title to the land by compsicion gratuita in
1894.
2. On January 1892, Luis executed a holographic will partly in
ISSUE/s:
Spanish and Tagalog.
3. He died on December 1896, without descendants, but leaving a
widow, appellant Dorotea Lopez. They have been married since
October 1885.
4. On July 1987, the CFI of Tayabas ordered the protocolization of
the will over the opposition of Leopoldo and Policarpio Palad,
collateral heirs of Luis and of whom the collateral heirs are
descendants.
5. The will contained a clause in Tagalog, which reads:
a. That the coconut land… which I put under cultivation, be
used by my wife after my death during her life or until
she marries.. But from this coconut land shall be taken
what is to be lent to the persons who are to plant said
trees, that which is to be paid to them as their share of
the crop if any should remain.. And that she try to earn
with the product of these trees, and if the times
aforementioned should arrive, I prepare and donate it to
secondary college to be erected in the capital of Tayabas..
This will be delivered by my wife and the executors to the
Ayuntamiento of this town, should there be, and if not, to
the civil governor of this province in order to cause the
manager thereof to comply with my wishes for the good of
many and the welfare of the town
6. After Luis’ death, his widow Dorotea remained in possession of
the land. She married on Calixto Dolendo in 1900.
7. On April 1903, the collateral heirs of Luis brought an action
against Dorotea for the partition of the land in question on the
ground that she, by her second marriage, lost the right to her
exclusive use and possession.
8. In the same action the municipality of Tayabas intervened
claiming the land under the clause of Luis (FACT 5).
9. An agreement was arrived at by the parties under which the land
which constitutes Lots 1 & 2 were turned over to the municipality
as its share of the inheritance of the will, and the remaining
portion of the land which forms Lot 3 was left in Dorotea’s
possession.
10. The action was dismissed upon motion by the municipality and
concurred in by all the parties, reserving to the collateral heirs
the right to bring another action.
11. In regards lots 1 & 2 claimed by the parties, the case presents
several problems no covered by Spanish or local precedents.
Hence the Court resorts to underlying principles of law on the
subject.
1. WoN the Governor of Tayabas may act as a trustee in the case at
hand – YES

RULING: Judgment appealed from is affirmed with regard to Lots 1 & 2
and reversed as to Lot 3. It is ordered that Lot 3 be registered in
Dorotea’s name.
RATIO:
1. It is a well-known rule that testamentary dispositions must be
liberally construed so as to give effect to the intention of the
testator as revealed by the will itself.
2. Applying this rule of construction it seems evident that by the
clause in question the testator proposed to create a trust for the
benefit of a secondary school to be established in the town of
Tayabas, naming as trustee the ayuntamiento of the town or if
there be no ayuntamiento, then the civil governor of the Province
of Tayabas.
3. In order that a trust may become effective there must, of course,
be a trustee and a cestui que trust, and counsel for the appellants
Palad argues that we here have neither; that there is no
ayuntamiento, no Gobernador Civil of the province, and no
secondary school in the town of Tayabas.
4. An ayuntamiento corresponds to what in English is termed a
municipal corporation and it may be conceded that the ordinary
municipal government in these Island falls short of being such a
corporation. But we have provincial governors who like their
predecessors, the civil governors, are the chief executives of their
respective provinces.
5. It might be contended that when under the present regime the
title of the chief executive of the Philippine was changed from
Civil Governor to that of Governor-General, the latter was not the
legal successor of the former.
6. There can therefore be but very little doubt that the governor of
the Province of Tayabas, as the successor of the civil governor of
the province under the Spanish regime, may acts as trustee in the
present case.
7. In regard to private trust it is not always necessary that the
cestui que trust should be named, or even be in esse at the time
the trust is created in his favor.
8. Thus a devise to a father in trust for accumulation for his children
lawfully begotten at the time of his death has been held to be good
although the father had no children at the time of the vesting of
the funds in him as trustees. In charitable trust such as the one
here under discussion, the rule is still further relaxed.
9. Art. 788 of the Old Civil Code states:
a. Any disposition which imposes upon an heirs the
obligation of periodically investing specified sums in
charitable works, such as dowries for poor maidens or
scholarships for students, or in favor of the poor, or any
charitable public educational institution, shall be valid
under the following conditions:
b. If the charge is imposed on real property and is temporary,
the heir or heirs may dispose of the encumbered estate,
but the lien shall continue until the record thereof is
canceled.
c. If the charge is perpetual, the heir may capitalize it and
invest the capital at interest, fully secured by first
mortgage.
d. The capitalization and investment of the principal shall
be made with the intervention of the civil governor of the
province after hearing the opinion of the prosecuting
officer.
e. In any case, if the testator should not have laid down any
rules for the management and application of the
charitable legacy, it shall be done by the executive
authorities upon whom this duty devolves by law.
10. Minor distinctions may be drawn between the case at hand and
the provision quoted, but the general principle is the same in both
cases.
11. Here the trustee, who holds the legal title, as distinguished from
the beneficial title resting in the cestui que trust, must be
considered the heirs.
12. The devise under consideration does not in terms require
periodical investments of specified sums, but it is difficult to see
how this can affect the general principle involved, and unless the
devise contravenes some other provision of the Code it must be
upheld.c
13. There is no violation of any rule against perpetuities: the devise
does not prohibit the alienation of the land devised. It does not
violate article 670 of the Code: the making of the will and the
continuance or quantity of the estate of the heir are not left in the
discretion of the third party.
14. The counsel argues that assuming all this to be true the collateral
heirs of the deceased would nevertheless be entitled to the income
of the land until the cestui que trust is actually in esse.
15. The Court does not agree. If the trustee holds the legal title and
the devise is valid, the natural heirs of the deceased have no
remaining interest in the land except their right to the reversion
in the event the devise for some reason should fail, an event
which has not as yet taken place.
16. From a reading of the testamentary clause under discussion it
seems quite evident that the intention of the testator was to have
income of the property accumulate for the benefit of the proposed
school until the same should be established.
17. From what has been said it follows that judgment appealed from
must be affirmed in regard to Lots 1 & 2.
18. As to Lot 3, it may be noted that though the Statute of Limitation
does not run as between trustee and cestui que trust as long as
the trust relations subsist, it may run as between the trust and
third persons.
19. Contending that the land was community property of Dorotea’s
marriage with Luis and that Lot 1 represented her share, Dorotea
has held in possession the lot since 1904 and has now acquired
title by prescription.
 DBP v. COA (Cyria, C2020) 3. DBP established a Special Loan Program availed thru the
February 11, 2004 | Carpio J. | The Corpus, Res, or Trust Estate facilities of the DBP Provident Fund and funded by placements
PETITIONER: Development Bank of the Philippines from the Gratuity Plan Fund. This Special Loan Program was
RESPONDENTS: Commission on Audit adopted as part of the benefit program of the Bank to provide
financial assistance to qualified members to enhance and protect
SUMMARY: DBP Board of Governors adopted Resolution No. 794 the value of their gratuity. (didn’t include all facts about this
creating DBP Gratuity Plan for the benefits due to DBP retiring officials since the issue related to agency is the Gratuity Plan Fund only)
and employees under CA 186. The control and administration of the 4. Pursuant to the investment scheme, DBP-TSD paid to the
Gratuity Plan Fund was vested to the Board of Trustees. DBP then investor-members a total of P11,626,414.25.The payments were
established Special Loan Progam and paid investor-members. But these disallowed by the Auditor under Audit Observation Memorandum
payments were disallowed by COA. COA ordered that DBP record in its No. 93-2.
books as miscellaneous income the income of the Fund. DBP counters 5. Apart from requiring the recipients of the P11,626,414.25 to
that the Fund is the subject of a trust and the income does not accrue to refund their dividends, the Auditor recommended that the DBP
DBP so such income sbould not be recorded in DBPs books of account. record in its books as miscellaneous income the income of the
The issue is WoN the income of the Fund is income of DBP – NO. Gratuity Plan Fund (Fund). The Fund is still owned by the
Resolution No. 794 shows that DBP intended to establish a trust fund to Bank, the Board of Trustees is a mere administrator of the
cover the retirement benefits of certain employees under RA 1616. The Fund in the same way that the Trust Services Department
principal and income of the Fund would be separate and distinct from the where the fund was invested was a mere investor and
funds of DBP. The income of the Fund does not form part of the revenues neither can the employees, who have still an inchoate
or profits of DBP, and DBP may not use such income for its own interest [i]n the Fund be considered as rightful owner of
benefit. The principal and income of the Fund together constitute the Fund.
the res or subject matter of the trust. The Agreement established the 6. The COA alleges that DBP is the actual owner of the Fund and its
Fund precisely so that it would eventually be sufficient to pay for the income, on the following grounds: (1) DBP made the contributions
retirement benefits of DBP employees under RA 1616 without additional to the Fund; (2) the trustees of the Fund are merely
outlay from DBP. administrators; and (3) DBP employees only have an inchoate
right to the Fund.
DOCTRINE: Where DBP establishes a pension trust for its officers and 7. The DBP counters that the Fund is the subject of a trust, and that
employees and appoints trustees for the fund whereby the trust the Agreement transferred legal title over the Fund to the
agreement transferred legal title over the income and properties of the trustees. The income of the Fund does not accrue to DBP. Thus,
fund, the principal and income of the fund constitute the res or subject such income should not be recorded in DBPs books of account.
matter of the trust.
ISSUE: WoN the income of the Fund is income of DBP – NO
FACTS:
RULING: WHEREFORE, COA Decision No. 98-403 dated 6 October
1. The Development Bank of the Philippines (DBP) Board of
1998 and COA Resolution No. 2000-212 dated 1 August 2000 are
Governors adopted Resolution No. 794 creating the DBP Gratuity
AFFIRMED with MODIFICATION. The income of the Gratuity Plan
Plan and authorizing the setting up of aretirement fund to cover
Fund, held in trust for the benefit of DBP employees eligible to retire
the benefits due to DBP retiring officials and employees under
under RA 1616, should not be recorded in the books of account of DBP as
Commonwealth Act No. 186, as amended.
the income of the latter.
2. A Trust Indenture was entered into by and between the DBP and
the Board of Trustees of the Gratuity Plan Fund, vesting in the
RATIO:
latter the control and administration of the Fund. The trustee,
1. A trust is a fiduciary relationship with respect to property which
subsequently, appointed the DBP Trust Services Department
involves the existence of equitable duties imposed upon the holder
(DBP-TSD) as the investment manager thru an Investment
of the title to the property to deal with it for the benefit of
Management Agreement.
 another. A trust is either express or implied. Express trusts are
those which the direct and positive acts of the parties create, by
some writing or deed, or will, or by words evincing an intention to
create a trust.
2. In the present case, the DBP Board of Governors (now Board of
Directors) Resolution No. 794 and the Agreement executed by
former DBP Chairman Rafael Sison and the trustees of the Plan
created an express trust, specifically, an employees trust. An
employees trust is a trust maintained by an employer to
provide retirement, pension or other benefits to its
employees.
3. Resolution No. 794 1 shows that DBP intended to establish
a trust fund to cover the retirement benefits of certain
employees under Republic Act No. 1616 (RA 1616). The
principal and income of the Fund would be separate and
distinct from the funds of DBP.
4. In a trust, one person has an equitable ownership in the property
while another person owns the legal title to such property, the
equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers
by the latter.
5. In the present case, DBP, as the trustor, vested in the
trustees of the Fund legal title over the Fund as well as
control over the investment of the money and assets of the
Fund. The powers and duties granted to the trustees of the Fund
under the Agreement were plainly more than just administrative.
12. Trust Agreement designed for in-house trustees of three (3) to be appointed by
the Board of Governors and vested with control and administration of the funds
appropriated annually by the Board to be invested in selective investments so
that the income and principal of said contributions would be sufficient to
meet the required payments of benefits as officials and employees of the
Bank retire under the Gratuity Plan; xxx
The proposed funding of the gratuity plan has decided advantages on the part of
the Bank over the present procedure, where the Bank provides payment only
when an employee retires or on pay as you go basis:
1. It is a definite written program, permanent and continuing whereby the Bank
provides contributions to a separate trust fund, which shall be
exclusively used to meet its liabilities to retiring officials and employees;
and
2. Since the gratuity plan will be tax qualified under the National Internal
Revenue Code and RA 4917, the Banks periodic contributions thereto shall be
deductible for tax purposes and the earnings therefrom tax free.
6. Clearly, the trustees received and collected any income and profit
derived from the Fund, and they maintained separate books of
account for this purpose. The principal and income of the Fund
will not revert to DBP even if the trust is subsequently modified
or terminated.
7. The resumption of the SLP did not eliminate the trust or
terminate the transfer of legal title to the Funds trustees. The
records show that the Funds Board of Trustees approved the SLP
upon the request of the DBP Career Officials Association. The
DBP Board of Directors only confirmed the approval of the SLP by
the Funds trustees.
8. The beneficiaries or cestui que trust of the Fund are the DBP
officials and employees who will retire under Commonwealth Act
No. 186 (CA 186), as amended by RA 1616. RA 1616 requires the
employer agency or government instrumentality to pay for the
retirement gratuity of its employees who rendered service for the
required number of years. The Government Service Insurance
System Act of 1997 still allows retirement under RA 1616 for
certain employees.
9. As COA correctly observed, the right of the employees to claim
their gratuities from the Fund is still inchoate. RA 1616 does not
allow employees to receive their gratuities until they
retire. However, this does not invalidate the trust created by DBP
or the concomitant transfer of legal title to the trustees.
10. Government v. Abadilla: it is not always necessary that the cestui
que trust should be named, or even be in esse at the time the trust
is created in his favor. It is enough that the beneficiaries are
sufficiently certain or identifiable.
11. In this case, the GSIS Act of 1997 extended the option to retire
under RA 1616 only to employees who had entered government
service before 1 June 1977. The DBP employees who were in the
service before this date are easily identifiable. As of the time DBP
filed the instant petition, DBP estimated that 530 of its employees
could still retire under RA 1616. At least 60 DBP employees had
already received their gratuities under the Fund.
12. The Agreement indisputably transferred legal title over the
income and properties of the Fund to the Funds trustees. Thus,
COAs directive to record the income of the Fund in DBPs books of
account as the miscellaneous income of DBP constitutes grave
abuse of discretion. The income of the Fund does not form
part of the revenues or profits of DBP, and DBP may not
use such income for its own benefit. The principal and
income of the Fund together constitute the res or subject
matter of the trust. The Agreement established the Fund
precisely so that it would eventually be sufficient to pay
for the retirement benefits of DBP employees under RA
1616 without additional outlay from DBP. COA itself
acknowledged the authority of DBP to set up the Fund. However,
COAs subsequent directive would divest the Fund of income, and
defeat the purpose for the Funds creation.
 MINDANAO DEV’T AUTHORITY v. CA, FRANCISCO ANG
BANSING (Bianca Kit, FEU 2021)
April 5, 1982 || Concepcion, Jr., J. || G.R. No. L-49087
PETITIONER: MINDANAO DEV’T AUTHORITY
RESPONDENTS: CA, FRANCISCO ANG BANSING
SUMMARY:
On February 25, 1939, Ang Bansing, owner of a large tract of land in
Davao City, sold portion thereof to Cruz. Their contract stipulated that
Ang Bansing would work for the titling of the entire area of his land at
hit expense, while the vendee would spend for the titling of the portion
sold to him. After the cadastral survey, where the portion sold to Cruz
was designated as Lot 1846-C and the portion remaining with Ang
Bansing was designated as Lots 1846-A, 1846-B, 1846-D, and 1846-E,
Cruz sold Lot 1846-C to the Commonwealth of the Philippines.
Thereafter, pursuant to a decree of registration, Original Certificate of
Title No. 26, covering the entire area, including the lot sold to Cruz, was
issued on March 7, 1941 in the names of the original claimants in the
cadastral proceedings. This OCT was however canceled on March 31,
1941 per Deed of Adjudication in favor of Ang Bansing for which he was
issued a transfer certificate of title. Later, on various dates, Ang Bansing
also sold Lot 1846-A, portions of Lot 1846-B, and Lot 1846-D to Cruz and
the Transfer Certificate of Title corresponding to the said lots in the
name of Ang Bansing were canceled and new ones issued in the name of
Cruz. Transfer Certificate of Title No. 2601 was issued in the name of
Ang Bansing for the remaining lots, including Lot 1846-C. On February
25, 1965, pursuant to Presidential Proclamation 459, government
ownership of certain parcels of land in Davao City were transferred to the
Mindanao Development Authority (MDA), among which was Lot 1846-C.
MDA accordingly requested Ang Bansing to surrender his owner's
duplicate of TCT 2601 for registration of the government's ownership over
Lot 1846-C, but he refused. MDA thus filed a suit for reconveyance on
April 11, 1969, claiming that Ang Bansing acted as trustee for Cruz when
he worked for the titling of the entire tract of land as per their contract.
The trial court found the existence of an express trust and ordered the
reconveyance of the subject lot to MDA. On appeal, however, the Court of
Appeals found no express trust and dismissed the complaint.
On petition for review, the Supreme Court held that failure on the part of
Ang Bansing to definitely describe the subject-matter of the supposed
trust or the beneficiaries or object thereof is strong evidence that he
intended no trust; and that only an implied trust or constructive trust
may have been impressed upon the title of Ang Bansing over Lot 1846-C
but such constructive trust has already prescribed and has been barred
by laches. Petition denied.
DOCTRINE:
It is fundamental in the law of trusts that certain requirements must
exist before an express trust will be recognized. Basically, these elements
include a competent trustor and trustee, an ascertainable trust res. and
sufficiently certain beneficiaries. Stilted formalities are unnecessary, but
nevertheless each of the above elements is required to be established,
and, if anyone of them is missing, it is fatal to the trusts. Furthermore,
there must be a present and complete disposition of the trust property,
notwithstanding that the enjoyment in the beneficiary will take place in
the future. It is essential, too, that the purpose be an active one to
prevent trust from being executed into a legal estate or interest, and one
that is not in contravention of some prohibition of statute or rule of public
policy. There must also be some power of administration other than a
mere duty to perform a contract although the contract is for a third-party
beneficiary. A declaration of terms is essential, and these must be stated
with reasonable certainty in order that the trustee may administer, and
that the court, if called upon to do so, may enforce, the trust.
An implied trust may have been impressed upon the title of Ang Bansing
over Lot 1846-C of the Davao Cadastre since the land in question was
registered in his name although the land belonged to another. In implied
trust, there is neither promise nor fiduciary relations, the so- called
trustee does not recognize any trust and has no intent to hold the
property for the beneficiary. It does not arise by agreement or intention,
but by operation of law. Thus, if property is acquired through mistake or
fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the property
comes.
Facts:
• Francisco Ang Bansing – land 300K sqm. Barrio Panacan, Davao
a. a. Sold 5 hectares to Juan Cruz Yap Chuy, with the
contract stating that “I agree to work for the titling of the
entire area of my land under my own expenses and the
expenses for titling of the portion sold to me shall be
under the expenses of Juan Cruz”
• Land of Ang Bansing was surveyed as Lot 664-B, and further
divided into 5 lots 

• Portion sold to Juan Cruz was Lot 664B-3, with an area of 61,107
sqm 

• Lot 664B-3 was designated as Lot 1846-C of the Davao Cadastre
during a cadastral survey, which Juan Cruz sold to the
 Commonwealth 
of the PH for P6,347 this ruling, that no express trust had been created
a. On that same day, Juan Cruz executed a surety bond in
favor 
of the vendee to guarantee the vendor’s absolute Issue/s:
title over the 
land sold 
 W/N a trust relationship was established in favor of Juan Cruz and his
b. Tax Declarations over lot was in the name of successors-in-interest – NO
Commonwealth 

c. Ang Bansing never paid taxes for such 
 Ruling:
• Cadastral survey was approved and an OCT was issued in the Petition DISMISSED. CA ruling AFFIRMED.
names of the Ang Bansing’s as claimants of the land
a. Later on a Deed of Adjudication had a TCT issued in the Ratio:
name of Francisco Ang Bansing 
 • The stipulation is but a condition that Ang Bansing shall pay the
b. He sold Lot 1846-A to Juan Cruz and TCT was issued in expenses for the registration of his land and for Juan Cruz to
the name of Juan Cruz 
 shoulder the expenses for the registration of the land sold to him,
c. 1946: After several sales and transfers Lots 1846-C to E does not categorically create an obligation on the part of Ang
were still in the name of Ang Bansing 
 Bansing to hold the property in trust for Juan Cruz.
d. He sold Lot 1846-D to Vedasto Corcuera 
 • Hence, there is no express trust. It is essential to the creation of
• Feb. 1965: Proclamation No. 459 transferred ownership of some an express trust that the settlor presently and unequivocally

parcels of land in Davao City to Mindanao Dev’t Authority, make a disposition of property and make himself the trustee of
included therein was Lot 1846-C 
a. Counsel for MDA wrote Ang the property for the benefit of another.
Bansing requesting him to surrender the owner’s duplicate copy • In case of a declaration of trust, the declaration must be
of that lot so that it could be formally transferred 
 clear and unequivocal that the owner holds property in
• MDA filed a complaint for reconveyance in the CFI of Davao trust for the purposes named.

MDA’s Contentions: 
 • Affidavit executed by Ang Bansing cannot be construed as having
• That in the deed of sale, it was stipulated that Ang Bansing established an express trust. The only purpose of the Affidavit
would work 
to secure title over his entire tract of land, defraying was to clarify that the area of the land sold by Ang Bansing to
the expenses for the same and the expense for the title of the Juan Cruz is not only 5 hectares but 61,107 sqm. or a little over
portion sold to Juan Cruz shall be borne by Juan Cruz 
 six (6) hectares."
• Ang Bansing as vendor and the one who worked to secure title for • That no express trust had been agreed upon is evident
his land acted in the capacity of trustee for any and all parties from the fact that Juan Cruz, the supposed beneficiary of
who become successor in interest to Juan Cruz, and that he was the trust, never made any attempt to enforce the alleged
bound and 
obligated to give, deliver and convey to Juan Cruz trust and require the trustee to transfer the title over Lot
and his successors-in-interest the title pertaining to the portion of 1846-C in his name.
land sold to Juan Cruz • Despite these numerous transfers of portions of the original 30-
hectare parcel of land of Ang Bansing to Juan Cruz and the
Ang Bansing’s Contentions: issuance of certificates of title in the name of Juan Cruz, the
In the process of securing his title neither Juan Cruz nor latter never sought the transfer of the title to Lot 1846-C in his
Commonwealth of the PH assert any right of ownership over the name.
property, which was almost 30 years ago and MDA is barred by laches • • For sure, if the parties had agreed that Ang Bansing shall hold
He was not merely a trustee for Juan Cruz, because never has Juan Cruz the property in trust for Juan Cruz until after the former shall
made any demand to have the title of the property in the last 26 years have obtained a certificate of title to the land, the latter would
until his death because he knew all the time the alleged sale in his favor have asked for the reconveyance of the title to him in view of the
was null and void and he knew that no sale was ever consummated surety bond executed by him in favor of the Commonwealth
CFI: ruled in favor of MDA, that an express trust has been established Government wherein he warrants his title over the property. The
and ordered reconveyance of title of Lot 1846-C to MDA
CA: reversed conduct of Juan Cruz is inconsistent with a trust and may well
 have probative effect against a trust. of Juan Cruz and his successors-in-interest or assignees and that
• Even granting, arguendo, that an express trust had been “no particular words are required for the creation of an express
established, it would appear that the trustee had repudiated the trust, it being sufficient that a trust is clearly intended” (Art.
trust and MDA, the alleged beneficiary to the trust, did not take 1444, CC)
any action therein until after the lapse of 23 years. For sure, the • Right of reversion or reconveyance to the State of lands
period for enforcing the rights of the alleged beneficiary over the fraudulently registered does not prescribe
Gov’t officials
land in question after the repudiation of the trust by the trustee, concerned were negligent in not intervening in the land
had already prescribed. registration proceeding or in not asking Ang Bansing to reconvey
• Only an implied trust may have been impressed upon the title of the lot to Commonwealth, and negligence of public officers does
Ang Bansing over Lot 1846-C since the land in question was not work as estoppel against the State
registered in his name although the land belonged to another. a. Issuance of OCT over Lot 664-B-3/1846-C to Ang Bansing
• Here, the 10-year prescriptive period began on March 31, was result of negligence of gov’t official who did not
1941, upon the issuance of OCT No. 26 in the names of intervene and have it registered in the name of
Victoriana Ang Bansing Orfelina Ang Bansing and Commonwealth
Francisco Ang Banging. From that date up to April 11,
1969, when the complaint for reconveyance was filed, more
than 28 years had passed. Clearly, the action for
reconveyance had prescribed. 

• Besides, the enforcement of the constructive trust that may have
been impressed upon the title of Ang Bansing over Lot 1846-C of
the Davao Cadastre is barred by laches. It appears that the deed
of sale in favor of the Commonwealth Government was
executed by Juan Cruz on December 23, 1939, during the
cadastral proceedings, and even before the cadastral survey plan
was approved by the Director of Lands on July 10, 1940. But, the
vendee therein did not file an answer, much less an opposition to
the answer of Ang Bansing in the said Cadastral proceedings.
The judgment rendered in the said cadastral proceeding,
awarding the lot in question to Ang Bansing is already
final. After an inexcusable delay of more than 28 years and
acquiescence to existing conditions, it is now too late for
MDA to complain. 


Aquino, J. (Dissent):
 Ang Bansing is a trustee in an express trust, which is evidenced
by his aforementioned affidavit which he executed 23 days after
TCT No. 1783 was issued to him for that lot.
a. Swore that he intended to cede and transfer that lot to
Juan Cruz after the survey 

b. Should be considered with stipulation in deed of sale that
Ang Bansing would undertake the titling of the whole lot
and that registration expenses would be borne by Juan
Cruz 

• Said statements created an express trust for Lot 1846-C in favor
 JULIO V. DALANDAN (Mayumi, C2020)
October 30, 1967 | Sanchez, J. | How to Prove Express Trust
PLAINTIFF-APPELLANT: Victoria Julio
DEFENDANTS-APPELLEES: Emiliano Dalandan and Maria
Dalandan
SUMMARY:
There was a 4-hectre Riceland in Las Piñas belonging to Victoriana
Dalandan. She posted the lot as security for an obligation that Clemente
assumed. However, the land was foreclosed because the obligation was
not fulfilled. Clemente stated this in a document. He also held himself
liable to the heir of Victoriana (Victoria) for the foreclosure of the land
and that he would replace the land with another farm of more than 4
hectares. He also stated that his children may not be forced to give up the
harvest of the mentioned farm, and that Julio may not immediately
demand the substitute for the forfeited land. This document was attested
by Julio. When Clemente died, his heirs had possession of the said land
stated in the document. Julio now seeks to have the title of the land as
well as the possession transferred and delivered to her, but the heirs
refused. Moreover, Julio also demanded that they fix a period in which
the heirs must deliver the parcel of land, but this was also refused. Thus,
Julio filed a case in court. The lower court ruled against Julio stating that
the prescription period of 10 years has already lapsed.
The SC ruled that Clemente’s document shows that he transferred naked
ownership to Julio, while the fruits and possession stayed with his heirs.
This is clearly an usufructary. For so long as a period in which the heirs
must deliver the fruits and possession to Julio has not been fixed and has
not elapsed, they hold the property. The heirs may enjoy the fruits of the
land and to hold the same as trustees of Julio. This express trust appears
in the document itself even though no words such as “trust” or “trustee”
were used because such are not essential to constitute a trust. Moreover,
that the prescription period for this action is 30 years not 10 because it
involves an action over an immovable.
DOCTRINE:
Technical or particular forms of words or phrases are not
essential to create or establish a trust; nor would the use of some
such words as “trust” or “trustee” essential to the constitution of a trust;
and conversely, the fact that such terms were employed would not
necessarily prove an intention to create a trust. What is important is
whether trustor manifested an intention to create the kind of relationship
which in law is known as a trust. It is important that the trustor should
know that the relationship “which intents to create is called a trust, and
whether or not he knows the precise characteristics of the relationship
which is called a trust. Here, that trust is effective as against defendants
and in favor of the beneficiary thereof, plaintiff Victoria Julio, who
accepted it in the document itself.
FACTS:
1. Celemente Dalandan subscribed and swore on an affidavit on
September 1950. By the terms of this writing, Clemente
Dalandan (deceased father of defendants) acknowledged that a 4-
hectre piece of riceland in Las Piñas, Rizal belonging to
Victoriana Dalandan was posted as security for an obligation
which Clemente assumed, but failed to fulfill. Thus, Victoriana’s
land was foreclosed.
2. Victoriana’a sole heir is the plaintiff in this case.
3. In the statement it said:
a. That this riceland owned by VICTORIANA DALANDAN
whose sole heir is VICTORIA JULIO was posted as
security for an obligation assumed by me even before the
outbreak of the last war and because I failed to fulfill the
obligation secured by her said farm the same was
foreclosed
b. That because of this, and as agreed upon between us, I
accordingly held myself liable to Victoria Julio for the
foreclosure of her said land, and I promised her that I
would replace her aforesaid land which was foreclosed
because of my obligation with another farm of more than
four (4) hectares, that is, one planted to four cavanes of
seedlings, more or less;
c. That my children (EMILIANO AND MARIA
DALANDAN) may not be forced to give up the harvest of
the farm herein above mentioned
d. That neither may the land, which was exchanged for the
farm with four cavanes of seedlings, be demanded
immediately
4. Victoria Julio joined Clemente in the execution of, and also swore
to, the document that she attests to the truth of, and accepts all
that was stated in the document.
5. When Julio filed a complaint against the heirs of Clemente, she
avered:
a. The land set forth in the document referred to 6 small
parcels with a total area of barely 2 hectares except for 50
saltbeds which were conveyed to Julio’s mother by means
of a pacto de retro sale and a title was vested to the
mother.
b. After the death of Clemente, Julio requests that the heirs
 of Celemente deliver the possession of the parcels of land
to her, but to no avail. The heirs of Clement are saying
that according to the agreement, neither delivery of the
land nor the fruits thereof could immediately be
demanded.
c. When demands to fix a period within which the heirs of
Celemente would deliver to Julio the parcels of land, it
was refused by the heirs.
d. Thus Julio filed this complaint praying that
i. The court adjudge her as the owner of the land in
question
ii. That the court fix a time within which the heirs
should deliver the said land to her as well as the
fruits
iii. That upon the expiration of the said time, the
heirs would convey and deliver to Julio the parcels
of land and the fruits.
6. The lower court ruled that Julio’s suit for specific performance or
fixing a term had already prescribed. The prescription period of
10 years has already lapsed.
7. Hence, this appeal.
ISSUES:
1. WoN a trust was created between Julio and the heirs of Clemente
–YES
RULING: Order reversed.
RATIO:
1. In paragraph 4 of the document made by Clemente, he promised
to Julio a farm for about 4 hectares to replace the land of her
mother. In paragraph 5 it was stated that Clemente’s children
may not be forced to give up the harvest of the farm mentioned in
the deed. In paragraph 6 it states that Julio may not immediately
demand the substitute for the forfeited land.
2. The last 2 statements in the deed express the dominant purpose
of the instrument. They convey the idea that the naked
ownership of the land in substitution was, indeed,
transferred to Victoria Julio.
3. Or else there would have been no sense in adding the paragraph
which states that the fruits and physical possession of the land
could not immediately be demanded by Julio from Clemente’s
children. The right to demand fruits and physical possession of
property has been known to be attributes of ownership.
4. With this document in mind, the question lies, what rights were
transmitted by Clemente to his heirs? Paragraph's 6 and 7 of the
document supply the answer. They are usufructuaries for an
undetermined length of time. For so long as that period has not
been fixed and has not elapsed, they hold the property. Theirs is
to enjoy the fruits of the land and to hold the same as
trustees of Victoria Julio.
5. By the deed, Clemente Dalandan divested himself of the
ownership, qualified solely by withholding enjoyment of the fruits
and physical possession.
6. Thus, Clemente cannot transmit to his heirs, the
defendants, such ownership.
7. The document is a declaration by Clemente Dalandan, now
deceased, against his own proprietary interests. Such document is
binding upon his heirs

8. Defendants aver that recognition of the trust may not be proved
by evidence aliunde. They argue that by the express terms of
Article 1443 of the Civil Code, "no express trusts concerning an
immovable or any interest therein may be proved by parol
evidence.”
9. This argument overlooks the fact that no oral evidence is
necessary.
10. The express trust imposed upon defendants by their predecessor
appears in the document itself. For, while it is true that said deed
did not in definitive words institute defendants as-trustees, a
duty is therein imposed upon them, when the proper time comes,
to turn over both the fruits and the possession of the property to
Victoria Julio.
11. Article 1444 of the Civil Code states that: "No particular words
are required for the creation of an express trust, it being sufficient
that a trust is clearly intended."
12. For, "technical or particular forms of words or phrases are not
essential to the manifestation of intention to create a trust or to
the establishment thereof." Nor would the use of some such words
as "trust" or "trustee" essential to the constitution of a trust.
13. Conversely, the mere fact that the word "trust" or "trustee" was
employed would not necessarily prove an intention to create a
trust.
14. What is important is whether the trustor manifested an intention
to create the kind of relationship which in law is known as a
trust. It is unimportant that the trustor should know that the
relationship "which he intends to create is called a trust, and
whether or not he knows the precise characteristics of the
relationship which is called a trust.
15. Here, that trust is effective as against defendants and in favor of
 the beneficiary thereof, plaintiff Victoria Julio, who accepted it in
the document itself.

16. Plaintiff is not to be handicapped by a lack of a clear statement as
to the actual description of the land referred to in the trust deed.
17. It imperfectly speaks of a "farm of more than four (4) hectares."
But averment in the complaint is not lacking to clear the
uncertainty as to the identity of the land mentioned in that
document.
18. In so far as the identity of land involved in a trust is concerned, it
has also been held that the writings, in being considered for the
purpose of satisfying the statute of frauds, are to be considered in
their setting, and that parol evidence is admissible to make clear
the terms of a trust the existence of which is established by a
writing, 

19. There is sufficient showing in the complaint that there is an
acknowledgment on the part of defendants that they hold the
property not as their own, but in trust.
20. It may not be said that plaintiff's suit is barred by the statute of
limitations. She is protected by Article 1141 of the Civil Code,
which reads: "Real actions over immovables prescribe after thirty
years." We take this view for the obvious reason that defendants'
motion to dismiss on this score is directed at the prescription of
plaintiff's action not on acquisitive prescription.
 CAÑEZO v. ROJAS (Valle, C2020)
23 November 2007 | Nachura, J | Express, Implied, Resulting,
Constructive Trusts
PETITIONER: Soledad Cañezo substituted by William Cañezo and
Victoriano Cañezo
RESPONDENT: Concepcion Rojas
SUMMARY:
This is a dispute over a parcel of land between Soledad Cañezo and her
stepmother, Concepcion Rojas. Soledad claims that she bought the land
from a certain Limpiado but the transaction was not reduced in writing.
She immediately took possession of the property but when she had to
leave for Mindanao in 1948, she entrusted the property to her father,
Crispulo Rojas. Soledad later on found out that her stepmother was in
possession of the property and discovered that the tax declarations of the
property were already in her father’s name. Concepcion, on the other
hand, said that the land was bought by Crispulo from Limpiado. Upon
Crispulo’s death, Concepcion said, that the property was included in his
estate. As heir, Soledad even received her share over the produce of the
estate.
The RTC held that the action has not prescribed because Soledad merely
entrusted the property to her father. Prescription does not run until the
time the trustee repudiates the trust. Soledad argues that there is an
express trust between her and her father and since there is a trust,
acquisition of the property does not prescrive. If there is no express trust,
Soledad claims that there is a resulting trust which also does not
prescribe unless repudiated by trustee.
The issues are whether or not there is an express trust or whatever kind
of trust between Soledad and her father. And if so, has the action
prescribed. The SC said that there is no trust between Soledad and her
father. There is no express, implied or constructive or resulting trust
between her father and Soledad. Soledad was unable to prove the express
trust because there is no evidence apart from her testimony.
DOCTRINE: What distinguishes a trust from other relations is the
separation of the legal title and equitable ownership of the
property. In a trust relation, legal title is vested in the fiduciary
while equitable ownership is bested in a cestui que trust.
FACTS:
1. Soledad alleges that she bought the parcel of land in dispute in
1939 from Crisogno Limpiado. But the transaction was not
reduced in writing. After buying the parcel of land, she
immediately took possession of the property.
2. She and her husband left for Mindanao in 1948 and entrusted the
property to her father Crispulo Rojas. Crispulo took possession of
the land, cultivated it and introduced improvement.
3. In 1980, Soledad found out that her stepmother, Concepcion
Rojas, was in possession of the property and was cultivating the
same. She also discovered that the tax declarations over the
property were already in her father’s name.
4. On the other hand, Concepcion claims that the property was
bought by her husband from Limpiado which is why the tax
declarations were in Crispulo’s name. Crispulo cultivated and
possessed the land until his death. Upon his death, the property
was included in his estate. Concepcion says that as heir, Soledad
even received her share in the produce of the estate. Concepcion
ads that since Soledad filed the complaint in 1997, Soledad had
already abandoned her right over the property.
5. The RTC held that the action had not prescribed since Soledad
merely entrusted the property to her father. The ten-year
prescriptive period for the recovery of a property held in
trust will commence to run only from time the trustee
repudiates the trust. RTC found no evidence that Rojas had
ousted Soledad from the property.
6. Rojas filed a motion to reconsider. RTC denied this.
7. Rojas filed a petition for review to the CA. The CA reversed. CA
held that assuming that there was an implied trust between
Soledad and her father over the property, her right of action to
recover the same would still be barred by prescription. 49 years
had already lapsed since Crispulo adversely possessed the
property.
8. Soledad’s argument: Prescription and laches are unavailing
because there is an express trust relationship between her and
her father. Express trusts do not prescribe. Even if there is no
express trust, there was a resulting trust which generally does
not prescribe unless there is repudiation by the trustee.
ISSUE: W/N a trust relationship exists between Soledad and her father –
None.
W/N Soledad is barred from prescription - YES
RULING: WHEREFORE premises considered, the petition is DENIED.
RATIO:
1. If no trust relationship existed, the possession of the property by
Rojas through her predecessor which dates back in 1948 would
already give rise to acquisitive prescription.
2. A trust is a legal relationship between one person having
equitable ownership of property and another person owning the
legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the
exercise of certain powers by the latter.
3. Trusts are either express or implied.
a. Express trusts are those which are created by the direct
and positive acts of the parties, by some writing or deed,
or will, or by words evincing an intention to create a trust.
b. Implied trusts are those which, without being expressed,
are deducible from the nature of the transaction as
matters of intent or, independently of the particular
intention of the parties as being super induced on the
transaction by operation of law basically by reason of
equity. An implied trust may be resulting trust or
constructive trust.
4. It is true that in express trusts and resulting trusts, a trustee
cannot acquire by prescription the ownership of property
entrusted to him, or that an action to compel a trustee to convey
property registered in his name in trust for the benefit of the
cestui que trust does not prescribe, or that the defense of
prescription cannot be set up in an action to recover property held
by a person in trust for the benefit of another, or that property
held in trust can be recovered by the beneficiary regardless of the
lapse of time. The basis of this rule is that the possession of a
trustee is not adverse. Not being adverse, he doesn’t acquire by
prescription the property held in trust
5. As a rule, however, the burden proving the existence of a trust is
on the party asserting its existence, and such proof must be clear
and satisfactorily show the existence of the trust and its
elements. The presence of the following elements must be proved:
a. trustor or settlor who executes the instrument creating
the trust
b. a trustee who is the person expressly designated to carry
out the trust
c. the trust res, consisting of duly identified and definite real
properties; and
d. the cestui que trust or beneficiaries whose identity must
be clear
6. The existence of express trusts concerning real property may not
be established by parol evidence. It must be proven by some
writing or deed. In this case, the only evidence to support the
claim that an express trust existed between Soledad and her
father was the self-serving testimony of Soledad. Bare allegations
do not constitute evidence adequate to support a conclusion.
7. Although no particular words are required ofr the creation of an
express tryst, a clear intention to create a trust must be shown;
and the proof of fiduciary relationship must be clear and
convincing. In this case, an intention to create a trust cannot be
inferred from Soledad’s testimony and the attendant facts and
circumstances. Soledad testified only to the effect that her
agreement with her father was that she will be given a share in
the produce of the property. This allegation, standing alone as it
does here, is inadequate to establish the existence of a trust
because profit-sharing per se does not necessarily translate to a
trust relation. It can also be present in other relations such as
deposit.
8. What distinguishes a trust from other relations is the
separation of the legal title and equitable ownership of the
property. In a trust relation, legal title is vested in the fiduciary
while equitable ownership is bested in a cestui que trust.
9. Such is not true in this case. Soledad alleged in her complaint
that the tax declaration of the land was transferred to her father’s
name without consent. Had it been her intention to create a trust
and make her father the trustee, she wouldn’t have made an issue
out of this because in a trust agreement, legal title is vested in
the trustee. The trustee would necessarily have the right to
transfer the tax declaration in his name and pay the taxes on the
property. These acts would be treated as beneficial to the cestui
que trust and would not amount to adverse possession.
10. The case is also not a resulting trust. A resulting trust is a
species of an implied trust that is presumed always to have been
contemplated by the parties, the intention as to which can be
found in the nature of their transaction although not expressed in
a deed or instrument of conveyance. A resulting trust is based on
the equitable doctrine that it is the more valuable consideration
than the legal title that determines the equitable interest in
property.
11. The oral evidence to prove the implied trusts must be trustworthy
and received by the courts with extreme caution, and shouldn’t be
made to rest on loose, equivocal or indefinite declarations. The
proof should be as fully convincing as if the acts giving rise to the
trust obligation are proven by an authentic document. In the
present case, there was no evidence of any transaction between
 the petitioner and her father from which it can be inferred that a complaint filed by Soledad sought to recover ownership, not just
resulting trust was intended. possession of the property; thus, the suit is in the nature of an
12. In the absence of a trust relation, the court says that Crispulo’s action for reconveyance. It is axiomatic that owners of property
uninterrupted possession of the property for 49 years, coupled are indispensable parties.
with the performance of acts of ownership, such as payment for
real estate taxes, ripened into ownership. The statutory period of
prescription commences when a person who has neither title nor
good faith secure a tax declaration in his name and may,
therefore, be said to have adversely claimed ownership.
13. But! Assuming that such a relation existed, it terminated upon
Crispulo’s death in 1978. A trust terminates upon the death
of the trustee where the trust is personal to the trustee in
the sense that the trustor intended no other person to
administer it. If Crispulo was indeed appointed as trustee of the
property, it cannot be said that such appointment was intended to
be conveyed to Concepcion or any other of Crispulo’s heirs. Hence,
after Crispulo’s death, Concepcon had no right to retain
possession of the property. At such point, a constructive trust
would be created over the property by operation of law. Where
one mistakenly retains property which rightfully belongs
to another, a constructive trust is the proper remedial
device to correct the situation.
14. A constructive trust is one created not by any word or phrase,
either expressly or impliedly, evincing a direct intention to create
a trust but one which arises in order to satisfy the demands of
justice. It does not come about by agreement or intention but in
the main by operation of law, construed against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal
right to property which he ought not, in equity and good
conscience, to hold.
15. However, in constructive implied trusts, prescription may
supervene even if the trustee does not repudiate the relationship.
Necessarily, repudiation of the said trust is not a condition
precedent to the running of the prescriptive period. A constructive
trust does not emanate from or generate a fiduciary relation. The
relation of trustee and cestui que trust does not in fact exist, and
the holding of a constructive trust is for the trustee himself and at
all times adverse.
16. Soledad is estopped from asserting ownership of the land by her
failure to protest its inclusion in the estate of Crispulo. She is also
barred by laches. It was only in 1997 that she filed the action to
recover the property.
17. But the court ought to have dismissed the complaint for failure to
implead the other heirs who are indispensable parties. The
 PEÑALBER v. RAMOS (Ram, C2020)
Jan. 20, 2009 | Chico-Nazario, J. | Express Trust – Statute of Frauds –
Timely Objection
PETITIONER: Lina Peñalber
RESPONDENTS: Quirino Ramos, Leticia Peñalber and Bartex Inc.
SUMMARY: Petitioner Lina Peñalber (Mother Lina) is the mother of
respondent Leticia and mother-in-law of respondent Quirino, husband of
Leticia (Spouses Ramos). Prior to 1984, Mother Lina operated a hardware
store. She owned the building where the hardware store was, but only
rented the commercial lot (Bonifacio property) from Maria Mendoza
(Mendoza).
MOTHER LINA’S SIDE OF THE STORY:
Mother Lina allowed Spouses Ramos to manage the hardware store.
When it was put up for sale, Mother Lina allegedly entered into a Verbal
Trust Agreement with Spouses Ramos. The verbal trust agreement is in
the nature of an express trust as Mother Lina explicitly agreed to allow
the spouses Ramos to acquire title to the Bonifacio property in their
names, but to hold the same property for her benefit. When Spouses
Ramos returned management of the hardware store to Mother Lina, the
inventory had a difference of Php 116, 946.17. She claims that the
Php116k was used to buy the Bonifacio Property. Mother Lina demanded
that Spouses Ramos convey the title of the Bonifacio property back to her,
but Spouses Ramos refused. Mother Lina contends that Spouses Ramos
are MERE TRUSTEES OF THE BONIFACIO PROPERTY and it is
their moral and legal obligation to reconvey title over the said property
SPOUSES RAMOS’ SIDE OF THE STORY:
Spouses Ramos contended that they were given not only the
management, but also the full ownership of the hardware store, on the
condition that the stocks and merchandise of the store will be
inventoried. Moreover, out of the proceeds of the sales, spouses Ramos
shall pay Mother Lina’s outstanding obligations and liabilities. After
settling and paying the obligations and liabilities of Mother Lina, spouses
Ramos bought the Bonifacio property from Mendoza out of their own
funds. Spouses Ramos contends that the 116k difference in inventory
was used to pay the obligations of Mother Lina to her suppliers, but this
was never proven.
RTC ruled in favor of Mother Lina. Spouses Ramos filed for an MR
stating that the alleged express trust could not be proven by parol
evidence pursuat to Art. 1443. However, the RTC denied the MR stating
that Spouses Ramos failed to interpose timely objections, when
Mother Lina testified on their alleged verbal agreement regarding the
purchase of the Bonifacio property. They were deemed to have waived
such objections. The CA reversed the RTC decision and sided with the
Spouses Ramos.
The issues in this case are WoN existence of a trust agreement between
Mother Lina and spouses Ramos was clearly established and WoN such
trust agreement was valid and enforceable.
The SC held that first and foremost the trust agreement between Mother
Lina and Spouses Ramos was never proven by preponderance of evidence.
In addition, according to Art. 1443 an express trust concerning an
immovable or an interest should be in writing. But, this is merely for
purposes of proof and not for the validity of the trust agreement - making
an express trust in the nature of Stature of Frauds. Oral evidence of the
contract will be excluded upon timely objection, except if waived by the
parties. Spouses Ramos did indeed fail to interpose their
objections regarding the admissibility of the testimonies when the same
were offered to prove the alleged verbal trust agreement between them
and Mother Lina. However, even if the testimonies were admissible,
the Court is still responsible to weigh such testimonies. SC holds
that the testimonies did not prove the alleged verbal trust agreement
between Mother Lina and Spouses Ramos. The fact that respondent
spouses Ramos never denied the P116,946.15 difference, or that they
failed to present proof that they indeed used the said amount to pay the
other obligations and liabilities of petitioner is not sufficient to
discharge Mother Lina’s burden to prove the existence of the
alleged express trust agreement.
DOCTRINE:
Art. 1443 – No express trusts concerning an immovable or any interest
therein may be proved by parol evidence.
In accordance with Art. 1443, when an express trust concerns an
immovable or any interest therein, the same may not be proved by parol
or oral evidence. However, when the oppositor failed to timely object
when the petitioner tried to prove by parol evidence the existence of an
express trust over the immovable is deemed to be a waiver, since Art.
1443 is in the nature of a statute of frauds.
However, although testimonies were admissible, the Court is still
responsible to weigh such testimonies.
FACTS:
1. Petitioner Lina Peñalber (Mother Lina) is the mother of
respondent Leticia and mother-in-law of respondent Quirino,
husband of Leticia (Spouses Ramos). Respondent Bartex, Inc.
(Bartex) is a domestic corporation who bought from spouses
Ramos one of the two properties involved in this case.
2. The two properties in this case are the Ugac properties and the
Bonifacio properties.
3. BONIFACIO PROPERTY (INVOLVES THE ISSUE ON
TRUST)
a. *Important to keep in mind that these facts are being
stated in the perspective of Mother Lina*
b. Prior to 1984 – Mother Lina operated a hardware store in
a building she owned along Bonifacio St., Tuguegarao,
Cagayan.
c. Mother Lina only rented the commercial lot (Bonifacio
property) upon which the building stood on. The lot is
owned by and registered in the name of Maria Mendoza
(Mendoza).
d. March 22, 1982 – Mother Lina allowed Spouses Ramos to
manage the hardware store.
e. 1984 – Mendoza put the Bonifacio property up for sale.
f. Mother Lina did not have available cash, so she allegedly
entered into a VERBAL AGREEMENT with Spouses
Ramos:
i. The lot would be bought Spouses Ramos for and in
behalf of Mother Lina
ii. The consideration of P80,000.00 for said lot would
be paid by Spouses Ramos from the accumulated
earnings of the store;
iii. Since Spouses Ramos have the better credit
standing, they would be made to appear in the
Deed of Sale as the vendees so that the title to be
issued in their names could be used by them to
secure a loan with which to build a bigger building
and expand the business of Mother Lina.
g. September 20, 1984 – Spouses Ramos returned
management of the hardware store to Mother Lina.
h. October 24, 1984 – Spouses Ramos and Mendoza entered
into a Contract of Sale and TCT No. T-62769 was issued
in the names of Spouses Ramos
i. Inventory issue:
i. When Spouses Ramos took over the hardware
store, the inventory then was Php 226, 951.05.
ii. When Mother Lina got back the management of
the store two years after, inventory was only Php
110, 005.88
iii. There is a difference of Php 116, 946.17
iv. Mother Lina claims that the Php116k was used to
buy the Bonifacio Property
v. Mother Lina contends that the Spouses Ramos
have the burden of proving where this amount
had gone, if indeed they did not use the same to
buy the Bonifacio property.
j. Evidenced by receipts and disbursements, Mother Lina
asserted that Bonifacio property was fully paid using the
funds of the store and if ever Spouses Ramos shelled out
any amount, this was already reimbursed from the funds
of the store.
k. Mother Lina demanded that Spouses Ramos convey the
title of the Bonifacio property back to her.
l. Spouses Ramos refused.
m. Mother Lina contends that Spouses Ramos are MERE
TRUSTEES OF THE BONIFACIO PROPERTY and it
is their moral and legal obligation to reconvey title over
the said property to her due to their VERBAL
AGREEMENT.
i. Mother Lina is the trustor and Spouses Ramos
were the trustees
ii. A trust agreement was clearly intended by the
parties when Mother Lina left the management of
the hardware store to respondent spouses Ramos,
with the agreement that the proceeds from the
sales from said store be used to buy the lot upon
which the store stands.
iii. Spouses Ramos’ assumption of the management of
the hardware store and their eventual purchase of
the Bonifacio property indubitably shows that
spouses Ramos honored their obligation under the
verbal agreement.
iv. The verbal trust agreement is in the nature of an
express trust as Mother Lina explicitly agreed to
allow the spouses Ramos to acquire title to the
Bonifacio property in their names, but to hold the
same property for petitioner’s benefit.
n. Mother Lina therefore prayed:
i. She be declared the owner of the Bonifacio
property;
 ii. TCT No. T-62769, in the name of respondent
spouses, be declared null and void;
iii. The Register of Deeds for the Province of Cagayan
be directed to issue another title in her name.
4. Spouses Ramos side of the story: BONIFACIO PROPERTY
a. Spouses Ramos contended that they were given not only
the management, but also the full ownership of the
hardware store by Mother Lina.
b. On the condition that the stocks and merchandise of the
store will be inventoried.
c. Out of the proceeds of the sales, spouses Ramos shall pay
Mother Lina’s outstanding obligations and liabilities.
d. After settling and paying the obligations and liabilities of
Mother Lina, spouses Ramos bought the Bonifacio
property from Mendoza out of their own funds.
e. Failure to arrive at an amicable settlement
i. Spouses Ramos faulted petitioner for failing to
exert efforts to arrive at an amicable settlement of
their dispute.
ii. Spouses Ramos sought, by way of a counterclaim
against petitioner, moral and exemplary damages
and attorney’s fees, for allegedly filing a false,
flimsy and frivolous complaint.
f. Inventory issue:
i. Spouses Ramos contends that it was used to pay
the obligations of Mother Lina to her suppliers,
but was never proven.
5. RTC DECISION:
a. BONIFACIO PROPERTY – Sided with Mother Lina
i. Mother Lina is the owner of the Bonifacio
property
ii. Spouses Ramos should reconvey the property to
Mother Lina.
6. Spouses Ramos filed an MR for the Bonifacio Property with the
RTC – DENIED
a. On the ground that the alleged express trust created
between them and petitioner involving the Bonifacio
property could not be proven by parol evidence. Spouses
Ramos failed to interpose timely objections when
Mother Lina testified on their alleged verbal agreement
regarding the purchase of the Bonifacio property.
b. Spouses Ramos were deemed to have waived such
objections, which cannot be raised anymore in their
Motion for Reconsideration.
c.
Mother Lina’s evidence clearly established her ownership
of the Bonifacio Property
7. CA DECISION: Sided with Spouses Ramos
a. Mother Lina failed to prove her claim with the required
quantum of evidence
b. Difference of Php116,946.15 inventory is not conclusive
proof to show that the said amount was used to pay the
purchase price of the subject lot.
c. Johnson who made the computations testified that it is
not known if the goods representing the difference were
actually sold or not.
d. Verbal trust agreement vs. Deed of Absolute Sale – Deed
must prevail
e. Mother Lina failed to establish with reasonable certainty
her claim that the purchase of the subject lot was
pursuant to a verbal trust agreement with Spouses
Ramos.
ISSUES:
1. WoN existence of a trust agreement between Mother Lina and
spouses Ramos was clearly established
2. WoN such trust agreement was valid and enforceable.
RULING: WHEREFORE, premises considered, the instant Petition for
Review on Certiorari under Rule 45 of the Rules of Court is hereby
DENIED. The assailed Decision of CA is hereby AFFIRMED.
RATIO:
Existence of Trust Agreement
21. Trust defined:
a. Technical legal sense – the right enforceable solely in
equity, to the beneficial enjoyment of property, the legal
title to which is vested in another
b. Common application – the word “trust” is frequently
employed to indicate duties, relations, and responsibilities
which are not strictly technical trusts.30
c. A person who establishes a trust is called the trustor; one
in whom confidence is reposed is known as the trustee;
and the person for whose benefit the trust has been
created is referred to as the beneficiary.
d. There is a fiduciary relation between the trustee and the
beneficiary
22. Manner how trust is created:
a. Trusts are either express or implied.
 b. Express trusts – created by the intention of the trustor
or of the parties. They are those which are created by the
direct and positive acts of the parties, by some writing or
deed, or will, or by words either expressly or impliedly
evincing an intention to create a trust. No particular
words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended.
c. Implied trusts – come into being by operation of law.
23. Mother Lina contends that there was a trust agreement between
her and Spouses Ramos, but was never proven by preponderance
of evidence.
a. Mother Lina has the burden of proving her cause of action
in the case and not just rely on the weakness of the
defense of Spouses Ramos.
b. Preponderance of evidence – “greater weight of the
evidence” or “greater weight of the credible evidence”.
i. One who asserts the affirmative of the issue has
the burden of proof.
ii. For the plaintiff, the burden of proof never parts.
iii. For the defendant, an affirmative defense is one
which is not a denial of an essential ingredient in
the plaintiff’s cause of action, but one which, if
established, will be a good defense
Express Trust Agreement – Immovable – Statute of Frauds – Art. 1443
1. Art. 1443 – No express trusts concerning an immovable or any
interest therein may be proved by parol evidence.
2. However, the requirement in Art. 1443 that an express trust
concerning an immovable or an interest therein be in writing is
merely for purposes of proof, not for the validity of the trust
agreement. Hence, in the nature of Stature of Frauds.
3. In accordance with Art. 1443, when an express trust concerns an
immovable or any interest therein, the same may not be proved
by parol or oral evidence.
4. However, when the oppositor failed to timely object when the
petitioner tried to prove by parol evidence the existence of an
express trust over the immovable is deemed to be a waiver, since
Art. 1443 is in the nature of a statute of frauds.
a. Oral evidence of the contract will be excluded upon timely
objection.
b. But if the parties to the action, during the trial, make no
objection to the admissibility of the oral evidence to
support the contract covered by the statute, and thereby
permit such contract to be proved orally, it will be just as
binding upon the parties as if it had been reduced to
writing.
5. Spouses Ramos did indeed fail to interpose their
objections regarding the admissibility of the testimonies when
the same were offered to prove the alleged verbal trust agreement
between them and Mother Line. Hence, these testimonies were
rendered admissible in evidence.
6. Nevertheless, while admissibility of evidence is an affair of logic
and law, determined as it is by its relevance and competence, the
weight to be given to such evidence, once admitted, still depends
on judicial evaluation.
7. In other words, although the testimonies were admissible,
the Court is still responsible to weigh such testimonies.
8. SC holds that the testimonies did not prove the alleged verbal
trust agreement between Mother Lina and Spouses Ramos.
9. The fact that respondent spouses Ramos never denied the
P116,946.15 difference, or that they failed to present proof that
they indeed used the said amount to pay the other obligations and
liabilities of petitioner is not sufficient to discharge Mother
Lina’s burden to prove the existence of the alleged express
trust agreement.
ADDITIONAL: REGARDING UGAC PROPERTIES (FIRST
PROPERTY ISSUE IN THE CASE DOESN’T INVOLVE TRUST,
BUT JUST IN CASE)
1. UGAC PROPERTIES
a. *Important to keep in mind that these facts are being
stated in the perspective of Mother Lina*
b. Mother Lina alleged in her Complaint that she was the
owner of a parcel of land situated in Ugac Norte,
Tuguegarao, Cagayan, with an area of 1,457 sq.m. with
Transfer Certificate of Title (TCT) No. T-43373
registered under her name.
c. A residential house and a warehouse were constructed on
the said parcel of land, which Mother Lina also claimed
to own.
d. May 13, 1983 - TCT No. T-43373 was cancelled and TCT
No. T-58043 was issued in the name of respondent
spouses Ramos.
e. April 27, 1983 – Cancellation of TCT was done through a
Deed of Donation of the Ugac properties in favor of
Spouses Ramos
f. Mother Lina claims that her signature was forged and did
 not donate the properties to Spouses Ramos.
g. Mother Lina confronted Spouses Ramos about the false
donation and they said they would just pay for the Ugac
properties for Php 1 million.
h. Mother Lina agreed.
i. January 10, 1987 – Mother Lina found out that Spouses
Ramos were selling the Ugac properties to Bartex, Inc.
j. Mother Lina sent her son, Johnson Paredes (Johnson) to
warn Bartex that Spouses Ramos were not the lawful
owners.
k. Mother Lina also told Spouses Ramos not to sell the Ugac
properties or she will file a case against them.
l. Spouses Ramos assured her.
m. January 12, 1987 - However, Spouses Ramos still sold the
properties to Bartex for Php 150,000.
n. January 19. 1987 - Mother Lina without knowledge that
the sale pushed through still executed an Affidavit of
Adverse Claim and annotated such over the Ugac
properties
o. January 20, 1987 - New TCT No. T-68825 was issued in
the name of Bartex.
p. Mother Lina contends that
i. Deed of Absolute Sale did not convey a valid title
to Bartex
ii. Bartex is a buyer in bad faith
iii. Spouses Ramos are not the real owners of the
Ugac properties
iv. Hence, the Deed of Donation, TCT in the name of
Spouses Ramos, Deed of Absolute Sale, and TCT
in the name of Bartex should all be declared null
and void.
2. Spouses Ramos side of the story: UGAC PROPERTIES
a. August 19, 1990 - Mother Lina with Johnson and his wife,
Maria Teresa Paredes, mortgaged the Ugac properties to
the Development Bank of the Philippines (DBP) for the
amount of P150,000.00.
b. Mother Lina failed to pay the mortgage debt and asked
Spouses Ramos to redeem the mortgaged property or pay
her mortgage debt with DBP
c. In return, Mother Lina promised to cede, convey and
transfer full ownership of the Ugac properties to them.
d. April 27, 1983 - Spouses Ramos paid the mortgage debt
and Mother Lina voluntarily transferred the Ugac
properties to the former by way of a Deed of Donation.
(Please also note that I don’t get why the date of the Deed
of Donation was done prior to the date of the supposed
mortgage debt…but yun talaga yung nasa case )
e. After accepting the donation and having the Deed of
Donation registered, TCT No. T- 58043 was issued to
Spouses Ramos and they then took actual and physical
possession of the Ugac properties.
f. Spouses Ramos asserted that Mother Lina had always
been aware of their intention to sell the Ugac properties
as they posted placards thereon stating that the said
properties were for sale.
g. Mother Lina also knew that they finally sold the Ugac
properties to respondent Bartex, Inc. for P150,000.00.
h. Spouses Ramos maintained that Mother Lina is not
entitled to any reimbursement for the Ugac properties.
3. Bartex Inc. side of the story: UGAC PROPERTIES
a. April 27, 1987 – Bartex filed its own Answer to Mother
Lina’s Complaint
b. Bartex claims that he was a buyer in good faith because
he was never aware of any imperfection in the title of
respondent spouses Ramos over the Ugac properties.
c. When a representative of Bartex inquired about the Ugac
properties, Spouses Ramos presented their owner’s
duplicate copy of TCT No. T-58043, together with the tax
declarations covering the parcel of land and the buildings
thereon.
d. Bartex even verified the title and tax declarations
covering the Ugac properties with the Register of Deeds
and the Office of the Municipal Assessor as to any cloud,
encumbrance or lien on the properties, but none were
found
e. Spouses Ramos were then actually occupying the Ugac
properties and they only vacated the same after the
consummation of the sale to Bartex.
f. Bartex, Inc. claimed that the sale of the Ugac properties
by respondent spouses Ramos to the corporation was
already consummated on January 12, 1987 when Mother
Lina caused the annotation of an adverse claim at the
back of TCT No. T-58043 on January 19, 1987.
4. RTC DECISION:
a. UGAC PROPERTIES – Sided with Spouses Ramos
i. Court finds the testimony of Mother Lina denying
her execution of the deed of donation over the
 Ugac property in favor of Spouses Ramos
insufficient.
ii. Mother Lina claims that she did not execute the
deed of donation over the Ugac property in favor
of Spouses Ramos. Such denial, by itself, is not
sufficient to overcome the presumption of
regularity of the notarial deed of donation
and its entitlement to full faith and credit.
iii. Mother Lina never had her signature on the deed
of donation examined by qualified handwriting
experts to prove that she did not execute them.
iv. Dismissed the case due to lack of insufficient
evidence from Mother Lina
 GO v. ESTATE OF BUENAVENTURA (Mark, C2020)
July 22, 2015 | Perlas-Bernabe, J. | Implied and Express trust
PETITIONER: Wilson Go and Peter Go
RESPONDENTS: Estate of the late Felisa Tamio De Buenaventura,
Represented by Resurreccion A. Bihis
SUMMARY: Buenaventura had a land in Quezon City which had a
building. She sold the land to Bella et. al. Bihis lived in the building.
When Buenaventura died, she wrote in her will that half of the property
goes to Bihis. Bella sold the property to petitioners Wilson and Peter Go.
Bihis claims that Bella is not the owner of the property and that she was
only holding it in trust so she can secure a loan from GSIS. Bihis showed
a letter made by Buenaventura reminding Bella that she is only a
trustee. The issue is WoN Bella was a trustee. RTC held that there was
an implied trust between Buenaventura and Bella et al. but since Gos are
buyers in good faith, property cannot go back to estate of Buenaventura.
CA held that there was an implied trust and that Gos were buyers in bad
faith. SC held that there was an express trust and that Gos were in bad
faith.
DOCTRINE: Express trusts are created by direct and positive acts of the
parties, by some writing or deed, or will, or by words either expressly or
impliedly evincing an intention to create a trust.
FACTS:
1. On March 17, 1959, the late Felisa Tamio de Buenaventura
(Felisa) purchased a parcel of land with an area of 533sqm
situated in Quezon City (subject property) and, thus, TCT No.
45951/T-233 was issued in her name.
2. She constructed a three-storey building thereon, called D'Lourds
Building, where she resided until her death on February 19, 1994.
3. On February 10, 1960, Felisa supposedly sold the subject property
to one of her daughters, Bella Guerrero (Bella), the latter's
husband, Delfin Guerrero, Sr. (Delfin, Sr.), and Felimon
Buenaventura, Sr. (Felimon, Sr.), Felisa's common-law husband.
Bella, co-petitioner in G.R. No. 212045, and Delfin, Sr. paid
₱15,000.00 as consideration therefor. Thus, TCT No. 45951/T-233
in the name of Felisa was cancelled and TCT No. 49869 was
issued in the names of Felimon, Sr. and Bella, married to Delfin,
Sr.
4. Sometime in 1968, Resurrecion A. Bihis (Bihis), the other
daughter of Felisa, sister of Bella, began to occupy the second
floor of the D'Lourds Building and stayed therein until her death
in 2007.
5. When Felisa died on February 19, 1994, a disputed last will and
testament, showed that half of the subject property is given to
Bihis and her daughters
6. On April 19, 1994, the Bihis Family caused the annotation of an
adverse claim on TCT No. RT-74910 (49869). Felisa's purported
will likewise declared Bella as the administrator of the subject
property
7. On January 22, 1997, the adverse claim of the Bihis Family was
cancelled. The following day Felimon Buenaventura, Jr. (Felimon,
Jr.) and Teresita Robles, a.k.a. Rosalina Buenaventura Mariano
(Teresita), apparently the heirs of Felimon, Sr. (Heirs of Felimon,
Sr.), executed a purported Extrajudicial Settlement of the Estate
of Felimon Buenaventura, Sr.. TCT No. N-170416 was issued in
the names of the Heirs of Felimon, Sr., Bella, and her co-
petitioners in G.R. No. 212045, Delfin A. Guerrero, Jr. (Delfin, Jr.)
and Lester Alvin A. Guerrero (Lester) (collectively, Bella, et al.).
8. On January 23, 1997, through a Deed of Sale of even date, the
subject property was sold to Wilson and Peter by Bella, et al. for
the amount of ₱4,500,000.00, a transaction completely unknown
to Felisa's other heirs, the Bihis Family. Thus, TCT No. N-170416
was cancelled and, in lieu thereof, TCT No. 170475 was issued in
the names of Wilson and Peter. Thereafter, Wilson and Peter filed
ejectment cases against the occupants and/or lessees of the
subject property.
9. The probate court revoked the appointment of Bella as
administratrix of the Estate of Felisa and eventually, granted
letters of administration to Bihis.
10. The Bihis Family filed a complaint for reconveyance and damages
before the RTC against Bella, et al., Wilson, Peter, and the
Register of Deeds of Quezon City,
11. Bihis alleged that Felisa, during her lifetime, merely entrusted
the subject property to Felimon, Sr., Bella, and Delfin, Sr. for the
purpose of assisting Bella and Delfin, Sr. to obtain a loan and
mortgage from the Government Service Insurance System (GSIS).
12. To facilitate the transaction, Felisa agreed to have the title over
the subject property transferred to Bella and Felimon, Sr.
However, Felisa never divested herself of her ownership over the
subject property, as evidenced by her continuous residence
thereon, as well as her act of leasing several units to various
tenants.
13. In fact, in a letter dated September 21, 1970 addressed to Delfin,
Sr., Felisa reminded Bella, Delfin, Sr., and Felimon, Sr. that the
subject property was merely entrusted to them for Bella and
Delfin, Sr. to procure a loan from the GSIS. At the bottom of
 the letter, Bella's and Delfin, Sr.' s signatures appear beside their
names.
14. Respondents alleged that Wilson and Peter were buyers in bad
faith, because they knew that the building was occupied by
individuals other than the sellers, as in fact, the Bihis Family was
residing therein
15. In their defense, Bella and Felimon, Jr. claimed that the subject
property was owned by Bella and (the late) Felimon, Sr., as
evidenced by TCT No. RT-74910 (49869), which title was issued to
them as early as February 10, 1960. Such title has therefore
subsisted for almost thirty seven (37) years without having been
voided or nullified by a court decree. Moreover, they have
exercised acts of ownership over the subject property, such as
mortgaging the same and leasing the building to third parties.
16. For his part, Wilson claimed that when he and his brother, Peter,
purchased the subject property from Bella, et al. he was not
aware of the judicial settlement of the Estate of Felisa. He
testified that before they acquired the subject property, he
verified the validity of the title covering the same with the
Registry of Deeds, and that a period of two (2) months had lapsed
before the sale was consummated because his lawyer advised him
to request Bella to cancel the encumbrance annotated on the title
over the subject property.
17. He asserted that his lawyer merely advised him to ask for the
cancellation of the annotation but he was not aware of the details
surrounding the same. Eventually, the annotation was cancelled
and that he only knew that the subject property was included in
the Estate of Felisa when herein respondents' complaint before
the RTC was filed. As such, he maintained that he and Peter were
purchasers in good faith.
18. The RTC found that there was an implied trust between Felisa,
on the one hand, and Bella and Felimon, Sr., on the other, created
by operation of law. The RTC concluded that it was the intention
of the late Felisa to merely entrust to Bella and Felimon, Sr. the
subject property for the sole purpose of using the same as
collateral to secure a loan with the GSIS. As such, while it is true
that a title was issued in the names of Bella, Delfin, Sr., and
Felimon, Sr. by virtue of the sale of the subject property to them,
it was clear that Felisa never intended to relinquish her
ownership over the subject property.
19. The RTC held that reconveyance can no longer be effected since
the subject property had already been transferred to Wilson and
Peter, whom it found to be purchasers in good faith.
20. Bihis appelaed to the CA
21. CA modified the RTC Decision, and thereby ordered: (a) the
nullification of the Deed of Sale in favor of Wilson and Peter; ( b)
the reconveyance of the disputed property to the Estate of Felisa;
and (c) issuance of a new title in the name of the Estate of Felisa
by the Register of Deeds
22. Moreover, the CA ruled that the issuance of TCT in the names of
Bella, Delfin, Sr., and Felimon, Sr. did not operate to vest
ownership of the subject property upon them, as a certificate of
title is not equivalent to title. Hence, the presentation of TCT No.
49869 does not conclusively prove their claim of ownership over
the subject property
ISSUES:
1. WoN there was an implied trust created between Felisa, on one
hand, and Bella, Delfin, Sr., and Felimon, Sr., on the other – No,
there is EXPRESS trust.
2. WoN the action for reconveyance had prescribed - NO
3. WoN Wilson and Peter are purchasers in good faith- NO
RULING:
WHEREFORE, the petitions are DENIED. The Decision of the Court of
Appeals is hereby AFFIRMED.
RATIO:
Issue on trust
1. Trust is the right to the beneficial enjoyment of property, the
legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for
the benefit of the beneficiary.1âwphi1 Trust relations between
parties may either be express or implied. An express trust is
created by the intention of the trustor or of the parties, while an
implied trust comes into being by operation of law.
2. Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to
create a trust. Under Article 1444 of the Civil Code, "[n]o
particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended." It is possible to
create a trust without using the word "trust" or "trustee."
Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in
each case is whether the trustor manifested an intention to create
the kind of relationship which to lawyers is known as trust. It is
immaterial whether or not he knows that the relationship which
 he intends to create is called a trust, and whether or not he knows
the precise characteristics of the relationship which is called a
trust.
3. Further, in the case of Tamayo v. Callejo the Court recognized
that a trust may have a constructive or implied nature in the
beginning, but the registered owner's subsequent express
acknowledgement in a public document of a previous sale of the
property to another party effectively converted the same into an
express trust
4. In the present case, both the RTC and the CA found that an
implied trust was established, heavily giving credence, among
others, to the September 21, 1970 letter executed by Felisa during
her lifetime
5. The words of Felisa in the letter unequivocally and absolutely
declared her intention of transferring the title over the subject
property to Bella, Delfin, Sr., and Felimon, Sr. in order to merely
accommodate them in securing a loan from the GSIS. She
likewise stated clearly that she was retaining her
ownership over the subject property and articulated her
wish to have her heirs share equally therein.
6. As correctly ruled by the CA, citing Lee Tek Sheng v. CA, the
"mere issuance of the certificate of title in the name of any person
does not foreclose the possibility that the real property may be
under co-ownership with persons not named in the certificate or
that the registrant may only be a trustee or that other parties
may have acquired interest subsequent to the issuance of the
certificate of title," as in this case. Registration does not vest title;
it is merely the evidence of such title.
Issue of prescription
7. The Court finds that the action for reconveyance instituted by
respondents has not yet prescribed, following the jurisprudential
rule that express trusts prescribe in ten (10) years from the time
the trust is repudiated
8. In this case, there was a repudiation of the express trust when
Bella, as the remaining trustee, sold the subject property to
Wilson and Peter on January 23, 1997.
9. The complaint for reconveyance and damages was filed by
respondents on October 17, 1997 or only a few months after the
sale it cannot be said that the same has prescribed.
Issue on good faith
10. The Court concurs with the CA' s finding that petitioners are not
in good faith.
11. In his testimony before the RTC, Wilson claimed to have verified
the validity of the title covering the subject property before the
Registry of Deeds. However, he also admitted that two (2) months
had lapsed before the sale could be consummated because his
lawyer advised him to request Bella, one of the sellers, to cancel
the encumbrance annotated on the title of the subject property.
He also claimed that he had no knowledge about the details of
such annotation, and that he was aware that individuals other
than the sellers were in possession of the subject property.
12. Such knowledge of the existence of an annotation on the title
covering the subject property and of the occupation thereof by
individuals other than the sellers negates any presumption of
good faith on the part of Wilson and Peter when they purchased
the subject property. A person who deliberately ignores a
significant fact which would create suspicion in an otherwise
reasonable man is not an innocent purchaser for value.
Copy of the letter:
Dear Delfin,
Ipinaaabot ko sa iyo ang sulat kong ito upang malaman mo ang aking
nagiging damdamin. Hinihiling ko sa iyo at ipinakikiusap sa iyo tungkol
doon sa late at building ng D 'lourds.
Hindi naman kaila sa ivo kung papaano ko ito naisalin sa inyong
pangalan nina Filemon C. Buenaventura Sr., Bella Alvarez Guerrero at
Delfin Guerrero Sr. Ang dahilan nito ay dahil sa pag-utang sa GSIS.
Kaya gusto kong malaman mo na ito ay nagpapatotoo na ito ay sarili
kong pag-aari at walang sinumang nagbigay o tumulong sa akin sa
lupang ito. At maski si Ka Fe ling mo ay walang naibigay na pera dito.
Kaya hinihiling ko ang gusto kong mangyari sa ngayon ay maging
kaparehong-kapareho ang paghahati ng bawat isa sa anumang aking
kabuhayan.
Kaya hinihiling ko sa iyo Delfin na kung maaari lamang ay ang lahat ng
nakatala dito ay pirmahan ninyo.