G.R. No.
117228 June 19, 1997 RODOLFO MORALES, represented by same, taking in paying boarders and claiming already ownership of the
his heirs, and PRISCILA MORALES, petitioners, vs. COURT OF
APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and
ERLINDA ORTIZ, respondents.
FACTS:
The evidence adduced by the Plaintiffs discloses that the Plaintiffs are the
absolute and exclusive owners of the premises in question having purchased
the same from Celso Avelino. They later caused the transfer of its tax
declaration in the name of the female plaintiff and paid the realty taxes thereon.
Celso Avelino (Plaintiffs' predecessor in interest) purchased the land in
question consisting of two adjoining parcels while he was still a bachelor and
the City Fiscal of Calbayog City from Alejandra Mendiola and Celita Bartolome,
through a "Escritura de Venta". After the purchase, he caused the transfer of
the tax declarations of the two parcels in his name as well as consolidated into
one the two tax declarations in his name. With the knowledge of the Intervenor
and the defendant, Celso Avelino caused the survey of the premises in
question, in his name, by the Bureau of Lands. He also built his residential
house therein with Marcial Aragon (now dead) as his master carpenter who
was even scolded by him for constructing the ceiling too low. When the two-
storey residential house was finished, he took his parents, Rosendo Avelino
and Juana Ricaforte, and his sister, Aurea, who took care of the couple, to live
there until their deaths. He also declared this residential house in his tax
declaration to the premises in question and paid the corresponding realty
taxes, keeping intact the receipts which he comes to get or Aurea would go to
Cebu to give it to him. After being the City Fiscal of Calbayog, Celso Avelino
became an Immigration Officer and later as Judge of the Court of First Instance
in Cebu with his sister, Aurea, taking care of the premises in question. While
he was already in Cebu, the defendant, without the knowledge and consent of
the former, constructed a small beauty shop in the premises in question.
Inasmuch as the Plaintiffs are the purchasers of the other real properties of
Celso Avelino, one of which is at Acedillo (now Sen. J.D. Avelino) street, after
they were offered by Celso Avelino to buy the premises in question, they
examined the premises in question and talked with the defendant about that
fact, the latter encouraged them to purchase the premises in question rather
than the property going to somebody else they do not know and that he will
vacate the premises as soon as his uncle will notify him to do so. Thus, they
paid the purchase price and Exh. "C" was executed in their favor. However,
despite due notice from his uncle to vacate the premises in question, the
defendant refused to vacate or demolish the beauty shop unless he is
reimbursed P35,000.00 for it although it was valued at less than P5,000.00.
So, the Plaintiffs demanded, orally and in writing to vacate the premises. The
defendant refused. As the plaintiffs were about to undertake urgent repairs on
the dilapidated residential building, the defendant had already occupied the
premises in question, thus they filed this case. Plaintiffs, being the neighbors
of Celso Avelino, of their own knowledge are certain that the premises in
question is indeed owned by their predecessor-in-interest because the male
plaintiff used to play in the premises when he was still in his teens while the
female plaintiff resided with the late Judge Avelino. Besides, their inquiries and
documentary evidence shown to them by Celso Avelino confirm this fact.
Likewise, the defendant and Intervenor did not reside in the premises in
question because they reside respectively in Brgy. Tarobucan and Brgy.
Trinidad (Sabang), both of Calbayog City with their own residential houses
there. Due to the damages they sustained as a result of the filing of this case,
the plaintiffs are claiming P50,000.00 for mental anguish; monthly rental of the
premises in question of P1,500.00 starting from March 1987; litigation
expenses of P5,000.00 and P10,000.00 for Attorney's fees.
ISSUE: Whether or not the property acquired is a trust property?
RULING:
NO. A trust is the legal relationship between one person having an equitable
ownership in 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.
The characteristics of a trust are: It is a relationship; it is a relationship of
fiduciary character; it is a relationship with respect to property, not one
involving merely personal duties; it involves the existence of equitable duties
imposed upon the holder of the title to the property to deal with it for the benefit
of another; and it arises as a result of a manifestation of intention to create the
relationship. Trusts are either express or implied. Express trusts are created
by the intention of the trustor or of the parties, while implied trusts come into
being by operation of law, either through implication of an intention to create a
trust as a matter of law or through the imposition of the trust irrespective of,
and even contrary to, any such intention. In turn, implied trusts are either
resulting or constructive trusts. Resulting trusts are based on the equitable
doctrine that valuable consideration and not legal title determines the equitable
title or interest and are presumed always to have been contemplated by the
parties. They arise from the nature or circumstances of the consideration
involved in a transaction whereby one person thereby becomes invested with
legal title but is obligated in equity to hold his legal title for the benefit of
another. On the other hand, constructive trusts are created by the construction
of equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by fraud, duress
or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold.
 Goyanko vs. UCPB (g.r no 179096) 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
FACTS: interest, and one that is not in contravention of some
In 1995, the late Joseph Goyanko Sr. invested 2 prohibition of statute or rule of public policy. There must
million pesoseosess with Philippine Asia Lending investors also be some power of administration other than a mere
Inc. (PALII). After his death, represented by his son, duty to perform a contract although the contract is for a
Goyanko Jr., filed a claim over his estate and at the same third party beneficiary. A declaration of terms is essential,
time Sr.’s illegitimate family filed a claim as well, over the and these must be stated with reasonable certainty in
investment to PALII. Due to the proceedings, PALII, order that the trustee may administer, and that the court,
deposited the proceeds with UCPB under the name Phil if called upon so to do, may enforce, the trust.
Asia: ATF (in trust for) the heirs of the late investor.
Thereafter, UCPB allowed PALII to withdraw P1.5M under
that account. When the heirs were about to claim the
proceeds of the investment, UCPB refused to restore the
amount to the petitioner. On litigation, the trial court
disregarded the statement (ITF) to charge UCPB with any
trust relationship with PALII and the decedent’s heirs.
On appeal, despite the arguments of the petitioners
that a trust was created, the appellate court found against
the heirs. In their argument, the CA’s iteration was that the
transaction was a mere deposit between UCPB and PALII.
The ITF addition has no effect.

ISSUE:
WON a trust agreement occurred?
HELD:
No. in order for a trust to come into being, Article
1444 of the CC must be satisfied. From the facts at hand,
the high court found insufficiency. In fine, the following
elements must exist:

1. a competent trustor and trustee;

2. an ascertainable trust res; and
3. sufficiently certain beneficiaries.
The lack of one is fatal to the existence of a trust.
Furthermore, there must be a present and complete
disposition of the trust property, notwithstanding that the
 SOLEDAD CAÑEZO vs. CONCEPCION ROJAS
G.R. No. 148788, November 23, 2007
NACHURA, J.
FACTS:
The subject property is an unregistered land situated at Naval, Biliran.
Petitioner Soledad Cañezo is the step daughter of respondent Concepcion
Rojas.
Petitioner Soledad – filed a complaint in 1997 for the recovery of the subject
real property. She alleged that she bought such parcel of land in 1939 from
Crisogono Limpiado, although the sale was not reduced into writing.
Thereafter, she immediately took possession of the property.
In 1948, she and her husband left for Mindanao and entrusted the said land to
her father, Crispulo Rojas, who took possession of, and cultivated the property.
In 1980, she found out that the respondent, Concepcion Rojas, her
stepmother, was in possession of the property and was cultivating the same.
She also discovered that the tax declaration over the property was already in
the name of his father.
Respondent Concepcion - claimed that it was her husband who bought the
property from Limpiado, which accounts for the tax declaration being in
Crispulo’s name.
MTC - rendered a decision in favor of the petitioner Soledad, making her the
real and lawful owner of the land.
RTC - reversed the MTC decision on the ground that the action had already
prescribed and acquisitive prescription had set in.
Motion for reconsideration: the RTC amended its original decision
and held that the action had not yet prescribed considering that the petitioner
merely entrusted the property to her father. The ten-year prescriptive period
for the recovery of a property held in trust would commence to run only from
the time the trustee repudiates the trust. The RTC found no evidence on
record showing that Crispulo Rojas ever ousted the petitioner from the
property.
CA - reversed the amended decision of the RTC.
Hence, this petition for review.
The petitioner insists that her right of action to recover the property
cannot be barred by prescription or laches even with the respondent’s
uninterrupted possession of the property for 49 years because there existed
between her and her father an express trust or a resulting trust.
ISSUE:
Whether or not there is an existence of trust over the property –
express or implied – between the petitioner and her father.
RULING:
NONE.
In ruling the case, the Supreme Court discussed the different kinds of trust
since it is a rule that in express trusts and resulting trusts, a trustee cannot
acquire by prescription a property entrusted to him unless he repudiates the
trust. Further, it is a rule that if no trust relations existed, the possession of the
property by the respondent, through her predecessor, which dates back to
1948, would already have given rise to acquisitive prescription in accordance
with Act No. 190 (Code of Civil Procedure). Under Section 40 of Act No. 190,
an action for recovery of real property, or of an interest therein, can be brought
only within ten years after the cause of action accrues.
A trust is the legal relationship between one person having an equitable
ownership of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter.
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.
- As a rule, however, the burden of proving the existence of a trust is
on the party asserting its existence.
The presence of the following elements must be proved:
(1) a trustor or settlor who executes the instrument creating the trust;
(2) a trustee, who is the person expressly designated to carry out the trust;
(3) the trust res, consisting of duly identified and definite real properties; and
(4) the cestui que trust, or beneficiaries whose identity must be clear.
Accordingly, it was incumbent upon petitioner to prove the existence of the of the subject property for 49 years, coupled with the performance of acts of
trust relationship. It must be proven by some writing or deed. And petitioner ownership, such as payment of real estate taxes, ripened into ownership.
sadly failed to discharge that burden. The petitioner 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

(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 superinduced on the transaction by
operation of law basically by reason of equity.

(1) Resulting trust

- is a species of 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.

- 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 resulting trust was intended.

(2) 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.
- Assuming that there is constructive trust in this case,
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. Thus, the

Thus, the Supreme Court ruled that there was no express trust or implied trust
established between the petitioner and her father. In the absence of a trust
relation, the court can only conclude that Crispulo’s uninterrupted possession
Metropolitan Bank & Trust Company, Inc. vs. Board of Trustees direct and positive acts of the parties create, by some writing
of Riverside Mills Corporation Provident and Retirement Fund or deed, or will, or by words evincing an intention to create a
630 SCRA 350 trust.”
FACTS:
The Riverside Mills Corporation (RMC) established a Plan for
its regular employees. The contributions to the plan shall
form part of the Fund which shall be held, invested and
distributed by the Commercial Bank and Trust Company.
The BOT of the fund entered into an agreement with
Philbank to act as an agent of the BOT and to hold, manage,
invest and reinvest the Fund in Trust Account No. 1797 in
its behalf. When RMC ceased its business operations, the
BOD of Philbank decided to apply the remaining trust assets
held by it in the name of the Fund against part of the RMC’s
outstanding obligations.

When the unpaid employees of RMC learned of the trust

account, they demanded the payment of their share, which
went unheeded. They, together with the members of the
Fund, filed a complaint for accounting against the BOD of
Philbank and its officers. The trial court ruled in favor of the
BOT of RMC and was affirmed on appeal. The BOD on
petition for review on certiorari under Rule 45 of the Rules of
Court contends that without known claimants of the Fund
for eleven (11) years since RMC closed shop, it was justifiable
for petitioner to consider the Fund to have “technically
reverted” to, and formed part of RMC’s assets. Hence, it
could be applied to satisfy RMC’s debts to Philbank.

ISSUE:
Whether the BOD’s contention is correct.

RULING:
No. The Court held that “a trust is a “fiduciary relationship
with respect to property which involves the existence of
equitable duties imposed upon the holder of the title to the
property to deal with it for the benefit of another.” A trust is
either express or implied. Express trusts are those which the
FACTS:
 On 29 Sep 1919, the late Epifanio Labiste, on his own and on behalf of his siblings
who were the heirs of Jose Labiste, purchased from the Bureau of Lands (BOL) Lot
1054 of Banilad Friar Lands Estate
o Area: 13,308 sqm, at Guadalupe, Cebu City for P36.00.
o 9 June 1924: then BOL Dir. Vargas executed Deed of Conveyance 12536 selling
Lot1054 to Epifanio and siblings
 After full payment of purchase price but prior to issuance of deed of conveyance,
Epifanio executed an Affidavit (Affidavit of Epifanio) in Spanish on 10 July 1923
affirming that he, as one of the heirs of Jose, and his uncle and petitioners
predecessor-in-interest, Tranquilino Labiste, then co-owned Lot 1054 because
the money that was paid to the government came from the two of them.
 Tranquilino &heirs of Jose continued to hold the property jointly.
 In 1928, Register of Deeds of Cebu City issued OCT 3878 for Lot 1054. On 2 May
1928, Engineer Bunagan, Deputy Public Land Surveyor, subdivided Lot 1054 into
2 lots (6,664 sqm each):
o Lot 1054-A for Tranquilino and Lot 1054-B for Epifanio.
o subdivision plan prepared by Engr. Bunagan approved by Jose P. Dans, Acting
Director of Lands on 28 Oct 1928.
 On 18 Oct1939, the heirs of Tranquilino purchased the 1/2 interest of the heirs of
Jose over Lot 1054 for P300.00,
o as evidenced by the Calig-onan sa Panagpalit executed by the parties in
the Visayan dialect.
o Tranquilino heirs immediately took possession of entire lot.
 When WWII broke out, heirs of Tranquilino fled Cebu City. When they came back
they found their homes and possessions destroyed.
 Records in Office of Register of Deeds, Office of the City Assessor and other
government offices were also destroyed during the war.
 Squatters have overrun the entire property, such that neither petitioners nor
respondents possess it.
 In Oct 1993, petitioners learned that one of the respondents, Asuncion Labiste,
had filed on 17 Sep 1993 a petition for reconstitution of title over Lot 1054.
o Petitioners opposed the petition at first but by a compromise agreement
on 25 March 1994, they withdrew their opposition to expedite the
reconstitution process.
o Compromise Agreement: petitioners to be given time to file a complaint
so that the issues could be litigated in an ordinary action and the
reconstituted title was to be deposited w/ Clerk of Court for 60 days to
allow petitioners to file an action for reconveyance and to annotate a
notice of lis pendens.
 Register of Deeds of Cebu City issued the reconstituted title, TCT RT-7853, in the
name of Epifanio Labiste, married to Tomasa Mabitad, his siblings, heirs of Jose
Labiste on 14 Dec 1994.
 Respondents did not honor the compromise agreement.
 Petitioners filed a complaint for annulment of title seeking the reconveyance of
property and damages on Jan 1995, docketed as Civil Case CEB-16943, w/ RTC
of Cebu City.
o Respondents claimed that the Affidavit of Epifanio and the Calig-onan sa
Panagpalit were forgeries and that petitioners action had long
prescribed or barred by laches.
 RTC on 23 Aug1999 ruled in favor of petitioners:
o RTC found that documents presented by petitioners are genuine as ancient
documents (valid and enforceable)
o the action had not prescribed as the complaint was filed about a year after the
reconstitution of the title by respondents. The judicial reconstitution was even
opposed by petitioners until a compromise agreement was reached by the parties
and approved by RTC which ordered the reconstitution.
o the reconstituted title did not give any more right to respondents than what their
predecessors-in-interest had as it is limited to the reconstitution of the certificate
as it stood at the time of its loss or destruction.
 On appeal, CA, while affirming petitioners right to the property, reversed RTCs
decision on the ground of prescription and laches.
o Citing, Article 1144 of the Civil Code, it held that petitioners cause of
action had prescribed for the action must be brought within 10 years
from the time the right of action accrues upon the written contract
o the lapse of time to file the action constitutes neglect on petitioners part
so the principle of laches is applicable.
 Hence, the present petition.
ISSUES + RULING:
1. WON petitioners cause of action has prescribed. NO
 The genuineness and authenticity of the Affidavit of Epifanio and the Calig-onan
sa Panagpalit are beyond cavil.
o Findings of fact of RTC affirmed by CA are binding on SC.
 CA erred in applying rules on prescription and laches because what is involved in
the present case is an express trust.
 Trust is the right to the beneficial enjoyment of property, the legal title to which
is vested in another.
o It is a fiduciary relationship that obliges the trustee to deal with the
property for the benefit of the beneficiary.
o Trust relations between parties may be express or implied.
o express trust is created by the intention of the trustor or of the parties.
o implied trust comes into being by operation of law.
 Express trusts are created by direct and positive acts of the parties, by some
writing or deed, or will, or by words either expressly or impliedly evincing an
intention to create a trust.
 Art 1444 CivilCode: "no particular words are required for the creation of an
express trust;sufficient that a trust is intended."
 The Affidavit of Epifanio is in the nature of a trust agreement.
 o Epifanio affirmed that the lot brought in his name was co-owned by him, as one o It is the Old Code of Civil Procedure (Act No. 190) which applies in this
of the heirs of Jose, and his uncle Tranquilino. And by agreement, each of them case since the Calig-onan sa Panagpalit was executed on 18 Oct
has been in possession of half of the property. 1939 while the New Civil Code took effect only on 30 Aug 1950. And sec
o Their arrangement was corroborated by the subdivision plan
43 of Act No. 190, like its counterpart Art1144 of the New Civil Code,
 As such, prescription and laches will run only from the time the express trust is provides that action upon a written contract must be filed within 10
repudiated. years.
 For acquisitive prescription to bar the action of the beneficiary against the trustee in an
PETITIONPARTIALLY GRANTED. CAREVERSED.RTCREINSTATED with MODIFICATION pet
express trust for the recovery of the property held in trust it must be shown that:
o (a) the trustee has performed unequivocal acts of repudiation amounting to an
itioners are DECLARED absolute owners of ½ of Lot 1054 or Lot 1054-A. Register of
ouster of the cestui que trust; Deeds ORDERED to CANCEL TCT RT-7853 in part and issue a new TCT to petitioners,
o (b) such positive acts of repudiation have been made known to the cestui que heirs of Tranquilino Labiste, covering Lot 1054-A.
trust, and
o (c) the evidence thereon is clear and conclusive.
 Respondents cannot rely on the fact that the Torrens title was issued in the name
of Epifanio and the other heirs of Jose.
o A trustee who obtains a Torrens title over property held in trust by him
for another cannot repudiate the trust by relying on the registration.
o The rule requires a clear repudiation of the trust duly communicated to
the beneficiary.
The only act that can be construed as repudiation was when respondents
filed petition for reconstitution in Oct 1993. Since, petitioners filed their
complaint in Jan 1995, their cause of action has not yet prescribed,
laches cannot be attributed to them.
 Laches is a creation of equity.Laches cannot be used to prevent the rightful
owners of a property from recovering what has been fraudulently registered in
the name of another. The remedy of laches is, therefore, unavailing in this case.
2. WON action to compel respondents to execute a public deed of sale has prescribed.
YES
 However, to recover the other half of the property covered by the private Calig-
onan sa Panagpalit and to have it registered on the title of the property,
petitioners should have filed an action to compel respondents, as heirs of the
sellers in the contract, to execute a public deed of sale.
 A conveyance of land made in a private document does not affect its validity. Art
1358,like its forerunner Art 1280 of the Civil Code of Spain, does not require the
accomplishment of the acts or contracts in a public instrument to validate the act
or contract but only to insure its efficacy, so that after the existence of said
contract has been admitted, the party bound may be compelled to execute the
proper document.
 But even assuming that such action was filed by petitioners, the same had already
prescribed.
 Only laws existing at the time of the execution of a contract are applicable thereto
and not later statutes, unless the latter are specifically intended to have
retroactive effect.
 Pealber v. Ramos
Facts:
Petitioner Lina Peaber is the mother of respondent Leticia and the
mother-in-law of respondent Quirino, husband of Leticia. Respondent Bartex,
Inc., on the other hand, is a domestic corporation which bought from
respondent spouses Ramos one of the two properties involved in this case.
Firstly, petitioner alleged in her Complaint that she was the owner of
a parcel of land situated in Ugac Norte, Tuguegarao, Cagayan, registered in
petitioners name. A residential house and a warehouse were constructed on
the said parcel of land which petitioner also claimed to own. Petitioner
averred that in the middle part of 1986, she discovered that her title to the
properties was cancelled and a new one was issued under the name of the
spouses. Allegedly it was because of a fictitious deed of donation that she
executed in favor of the spouses. According to her, she confronted the
spouses Ramos. The spouses being guilty, offered 1 million in as payment,
which petitioner agreed. However, petitioner suddently discovered that the
said property was sold to Baxter Inc. despite her warnings and disagreements
thereto.
As to her Second cause of action, petitioner claimed that she owned
and operated a hardware store, situated in a building owned by her, however,
the land on which such building is situated was rented out from Maria
Mendoza. Petitioner argues that sometime, she offered the management of
the hardware store to the spouses on the agreement that, the spouses shall
facilitate the purchase of the lot being rented, which funds shall come from
the earnings of the hardware. She also agreed that title to the property shall
be placed in the name of the spouses in order for them to secure a loan for
the expansion of the hardware. There was no contract or written agreement
between petitioner and the spouses.
Petitioner prays that the title to the said properties be issued in her
favor, being the true owner thereof.
Trial of the case thereafter ensued. The RTC ruled that petitioner, on her
argument that her signature in the deed of donation was forged, failed to
overcome the presumption of its due execution, the deed being notarized.
As to the second cause of action, the RTC ruled in her favor and
declared that the property and hardware is indeed her own.
On 24 July 2000, respondent spouses Ramos elevated their case to
the Court of Appeals, insofar as the ruling of the RTC on petitioners second
cause of action was concerned.[20] The appeal was docketed as CA-G.R. CV No.
69731.
On 15 December 2006, the Court of Appeals rendered the assailed
Decision in favor of respondent spouses Ramos.
Issue:
(1) whether the existence of a trust agreement between her and
respondent spouses Ramos was clearly established, and (2) whether such
trust agreement was valid and enforceable.
Held:
The petition, is denied.
In its technical legal sense, a trust is defined as the right, enforceable
solely in equity, to the beneficial enjoyment of property, the legal title to
which is vested in another, but the word trust is frequently employed to
indicate duties, relations, and responsibilities which are not strictly technical
trusts.[30] 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.[31] There
is a fiduciary relation between the trustee and the beneficiary (cestui que
trust) as regards certain property, real, personal, money or choses in
action.[32]
 Trusts are either express or implied. Express trusts are created by
the intention of the trustor or of the parties. Implied trusts come into being
by operation of law.[33]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 either expressly or impliedly evincing an intention to create a
trust.[34] No particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended.[35] However, in accordance
with Article 1443 of the Civil Code, when an express trust concerns
an immovable property or any interest therein, the same may not be proved
by parol or oral evidence.[36]
From the allegations of the petitioners Complaint in Civil Case No.
3672, the alleged verbal trust agreement between petitioner and respondent
spouses Ramos is in the nature of an express trust as petitioner explicitly
agreed therein to allow the respondent spouses Ramos to acquire title to the
Bonifacio property in their names, but to hold the same property for
petitioners benefit. Given that the alleged trust concerns an immovable
property, however, respondent spouses Ramos counter that the same is
unenforceable since the agreement was made verbally and no parol evidence
may be admitted to prove the existence of an express trust concerning an
immovable property or any interest therein.
On this score, we subscribe to the ruling of the RTC in its Order dated
17 July 2000 that said spouses were deemed to have waived their objection
to the parol evidence as they failed to timely object when petitioner testified
on the said verbal agreement. The requirement in Article 1443 that the
express trust concerning an immovable or an interest therein be in writing is
merely for purposes of proof, not for the validity of the trust
agreement. Therefore, the said article is in the nature of a statute of
frauds. The term statute of frauds is descriptive of statutes which require
certain classes of contracts to be in writing. The statute does not deprive the
parties of the right to contract with respect to the matters therein involved,
but merely regulates the formalities of the contract necessary to render it
enforceable.[41] The effect of non-compliance is simply that no action can be
proved unless the requirement is complied with. Oral evidence of the
contract will be excluded upon timely objection. But if the parties to the
action, during the trial, make no objection to the admissibility of the oral
evidence to support the contract covered by the statute, and thereby permit
such contract to be proved orally, it will be just as binding upon the parties as
if it had been reduced to writing.[42]
A careful perusal of the records of the case reveals that respondent
spouses Ramos did indeed fail to interpose their objections regarding the
admissibility of the afore-mentioned testimonies when the same were
offered to prove the alleged verbal trust agreement between them and
petitioner. Consequently, these testimonies were rendered admissible in
evidence. Nevertheless, while admissibility of evidence is an affair of logic
and law, determined as it is by its relevance and competence, the weight to
be given to such evidence, once admitted, still depends on judicial
evaluation.[47] Thus, despite the admissibility of the said testimonies, the
Court holds that the same carried little weight in proving the alleged verbal
trust agreement between petitioner and respondent spouses.
Petitioners allegations as to the existence of an express trust
agreement with respondent spouses Ramos, supported only by her own and
her son Johnsons testimonies, do not hold water. As correctly ruled by the
Court of Appeals, a resulting difference of P116,946.15 in the beginning
inventory of the stocks of the hardware store (before management was
transferred to respondent spouses Ramos) and the second inventory thereof
(after management was returned to petitioner), by itself, is not conclusive
proof that the said amount was used to pay the purchase price of the
Bonifacio property, such as would make it the property of petitioner held
merely in trust by respondent spouses Ramos.Such a conclusion adopted by
the RTC is purely speculative and non sequitur. The resulting difference in the
two inventories might have been caused by other factors and the same is
capable of other interpretations (e. g., that the amount thereof may have
been written off as business losses due to a bad economic condition, or that
the stocks of the store might have been damaged or otherwise their purchase
prices have increased dramatically, etc.), the exclusion of which rested upon
the shoulders of petitioner alone who has the burden of proof in the instant
case. This petitioner miserably failed to do. 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
petitioners burden to prove the existence of the alleged express trust
agreement.

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 the Court of Appeals in CA-G.R. CV No. 69731 dated 15
December 2006 is hereby AFFIRMED. Costs against petitioner.

Lopez vs. CA
G.R. No. 157784. December 16, 2008
FACTS: The instant petition stemmed from an action for
reconveyance instituted by petitioner Richard B. Lopez in his
capacity as trustee of the estate of the late Juliana Lopez Manzano
(Juliana) to recover from respondents several large tracts of lands
allegedly belonging to the trust estate of Juliana.
Decedent Juliana, was married to Jose Lopez Manzano (Jose).
Their union did not bear any children. Juliana was the owner of
several properties, among them, the properties subject of this
dispute. The disputed properties totaling more than 1,500 hectares
consist of six parcels of land in Batangas, a parcel of land in Mindoro
and a fractional interest of residential land in Batangas.
On 23 March 1968, Juliana executed a notarial will, whereby she
expressed that she wished to constitute a trust fund for her
paraphernal properties, denominated as Fideicomiso de Juliana
Lopez Manzano (Fideicomiso), to be administered by her husband.
If her husband were to die or renounce the obligation, her nephew,
Enrique Lopez, was to become administrator and executor of the
Fideicomiso. Two-thirds (2/3) of the income from rentals over these
properties were to answer for the education of deserving but needy
honor students, while one-third 1/3 was to shoulder the expenses
and fees of the administrator. As to her conjugal properties, Juliana
bequeathed the portion that she could legally dispose to her
husband, and after his death, said properties were to pass to her
biznietos or great grandchildren.
Juliana initiated the probate of her will five (5) days after its
execution, but she died on 12 August 1968, before the petition for
probate could be heard. The petition was pursued instead in Special
Proceedings (S.P.) No. 706 by her husband. Thereafter, Jose then
submitted an inventory of Juliana's real properties with their
appraised values, which was approved by the probate court.
Jose then proposed a project of partition, claiming that as the only
heir of Juliana, he was entitled to ½ of the paraphernal properties as
his legitime, while the other one-half (1/2) was to be constituted into
the Fideicomiso. He added that he and Juliana had outstanding
debts totaling P816,000.00 excluding interests, and that these debts
were secured by real estate mortgages. He noted that if these debts
were liquidated, the "residuary estate available for distribution
would, value-wise, be very small".
Probate Court thereafter issued an order approving the project of
partition.
Jose died on 22 July 1980, leaving a holographic will disposing of
the disputed properties to respondents. The will was allowed
probate on 20 December 1983 in S.P. No. 2675 before the RTC of
Pasay City. Pursuant to Jose's will, the RTC ordered on 20
December 1983 the transfer of the disputed properties to the
respondents as the heirs of Jose. Consequently, the certificates of
title of the disputed properties were cancelled and new ones issued
in the names of respondents.
Petitioner's father, Enrique Lopez, also assumed the trusteeship of
Juliana's estate. On 30 August 1984, the RTC of Batangas, Branch
9 appointed petitioner as trustee of Juliana's estate in S.P. No. 706.
On 11 December 1984, petitioner instituted an action for
reconveyance of parcels of land with sum of money before the RTC
of Balayan, Batangas against respondents. The complaint
essentially alleged that Jose was able to register in his name the
disputed properties, which were the paraphernal properties of
Juliana, either during their conjugal union or in the course of the
performance of his duties as executor of the testate estate of Juliana
and that upon the death of Jose, the disputed properties were
included in the inventory as if they formed part of Jose's estate when
in fact Jose was holding them only in trust for the trust estate of
Juliana.
Respondents Maria Rolinda Manzano, Maria Rosario Santos, Jose
Manzano, Jr., Narciso Manzano, Maria Cristina Manzano Rubio and
Irene Monzon filed a joint answer with counterclaim for damages.
Respondents Corazon, Fernando and Roberto, all surnamed Lopez,
who were minors at that time and represented by their mother, filed
a motion to dismiss, the resolution of which was deferred until trial
on the merits. The RTC scheduled several pre-trial conferences and
ordered the parties to submit pre-trial briefs and copies of the
exhibits.
On 10 September 1990, the RTC rendered a summary judgment,
dismissing the action on the ground of prescription of action. The
RTC also denied respondents' motion to set date of hearing on the
counterclaim.
Both petitioner and respondents elevated the matter to the Court of
Appeals, who rendered the assailed decision denying the appeals
filed by both petitioner and respondents. CA also denied petitioner's
motion for reconsideration for lack of merit.
ISSUE:
1. Whether or not petitioner's action for reconveyance has
prescribed.
2. Whether or not an implied trust was constituted over the
disputed properties when Jose, the trustee, registered them
in his name.
HELD:
1. YES. The right to seek reconveyance based on an implied or
constructive trust is not absolute. It is subject to extinctive
prescription. 22 An action for reconveyance based on implied or
constructive trust prescribes in 10 years. This period is reckoned
from the date of the issuance of the original certificate of title or
transfer certificate of title. Since such issuance operates as a
constructive notice to the whole world, the discovery of the fraud is
deemed to have taken place at that time.
In the instant case, the ten-year prescriptive period to recover the
disputed property must be counted from its registration in the name
of Jose on 15 September 1969, when petitioner was charged with
constructive notice that Jose adjudicated the disputed properties to
himself as the sole heir of Juana and not as trustee of the
Fideicomiso.
2. NO. Evidently, Juliana's testamentary intent was to constitute an
express trust over her paraphernal properties which was carried out
when the Fideicomiso was established in S.P. No. 706. 5 However,
the disputed properties were expressly excluded from the
Fideicomiso. The probate court adjudicated the disputed properties
to Jose as the sole heir of Juliana. If a mistake was made in
excluding the disputed properties from the Fideicomiso and
adjudicating the same to Jose as sole heir, the mistake was not
rectified as no party appeared to oppose or appeal the exclusion of
the disputed properties from the Fideicomiso. Moreover, the
exclusion of the disputed properties from the Fideicomiso bore the
approval of the probate court. The issuance of the probate court's
order adjudicating the disputed properties to Jose as the sole heir of
Juliana enjoys the presumption of regularity.
On the premise that the disputed properties were the paraphernal
properties of Juliana which should have been included in the
Fideicomiso, their registration in the name of Jose would be
erroneous and Jose's possession would be that of a trustee in an
implied trust. Implied trusts are those which, without being
expressed, are deducible from the nature of the transaction as
matters of intent or which are superinduced on the transaction by
operation of law as matters of equity, independently of the particular
intention of the parties.
The provision on implied trust governing the factual milieu of this
case is provided in Article 1456 of the Civil Code, which states:
ART. 1456.If property is acquired through mistake or
fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit
of the person from whom the property comes.
A resulting trust is presumed to have been contemplated by
the parties, the intention as to which is to be found in the
nature of their transaction but not expressed in the deed
itself.
Specific examples of resulting trusts may be found in the Civil
Code, particularly Arts. 1448, 11 1449, 12 1451, 13 1452 14
and 1453. 15
A constructive trust is created, not by any word evincing a
direct intention to create a trust, but by operation of law in
order to satisfy the demands of justice and to prevent unjust
enrichment. It is raised by equity in respect of property, which
has been acquired by fraud, or where although acquired
originally without fraud, it is against equity that it should be
retained by the person holding it. 17 Constructive trusts are
illustrated in Arts. 1450, 18 1454, 19 1455 20 and 1456. 21

The disputed properties were excluded from the Fideicomiso

at the outset. Jose registered the disputed properties in his
name partly as his conjugal share and partly as his
inheritance from his wife Juliana, which is the complete
reverse of the claim of the petitioner, as the new trustee, that
the properties are intended for the beneficiaries of the
Fideicomiso. Furthermore, the exclusion of the disputed
properties from the Fideicomiso was approved by the
probate court and, subsequently, by the trial court having
jurisdiction over the Fideicomiso. The registration of the
disputed properties in the name of Jose was actually
pursuant to a court order. The apparent mistake in the
adjudication of the disputed properties to Jose created a
mere implied trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso.
Miguel J. Osorio Pension Foundation, Inc. vs. CA and CIR
GR # 162175 June 28, 2010
Facts:
Petitioner is a non-stock and nonprofit corporation – it was
organized for the purpose of holding title to and administering the
employees trust or retirement funds (Employees Trust Fund)
established for the benefit of the employees of Victoria’s Milling
Company Inc. (VMC). Petitioner as trustee claims that the income
earned by the employees Trust Fund is tax exempt under Sec. 53(b)
(now Sec. 60 (b) of the NIRC.
Petitioner as trustee of the employees fund invested part
of said fund to purchase a lot in Madrigal Business Park (MBP)
located in Muntinlupa. Since petitioner needed funds to pay the
retirement and pension benefits of VMC employees and to
reimburse advances made by VMC, petitioner’s board of trustees
authorized the sale of its share in the MBP lot.
VMC eventually sold the MBP lot to Metrobank and as
withholding agent; Metrobank paid the amount of PHP 6, 125,
625.00 as withholding tax on the sale of the real property.
Petitioner claims that it is a co-owner of the MBP lot as
trustee of the Employees Trust Fund. Further, it contends that the
Employees Trust Fund is exempt from income tax. Since petitioner
as trustee purchased 49.59% of the MBP lot using funds of the
Trust Fund, it asserts that their 49.59% share in the income tax
paid amounting to PHP 3, 037, 697.40 rounded off to PHP 3, 037,
500 should be refunded. It maintained that the tax exemption of
the Trust Fund rendered the payment of income tax as illegal or
erroneous – which resulted in filing a claim for tax refund.
As action, the BIR stated that under Sec 26 of the Tax
Code, petitioner is not exempt from tax on its income from the sale
of real property. The BIR asked petitioner to submit documents to
prove its co-ownership of the MBP lot and its exemption from tax.
Petitioner in reply said that the applicable provision granting
its claim for tax exemption is not Sec. 26 but Sec. 53 (b) of the
Tax Code and that its co-ownership of the MBP lot is evidenced by
Board Resolution #s 92-34 and 96-46 and the MOA among
petitioner, VMC and its subsidiaries.
Since the BIR failed to act on petitioner’s claim, it was
elevated to CIR - again no action was taken hence, a petition for
tax refund before the CTA was filed.
The CTA ruled that Sec. 53 (b) of the Tax Code talks about
exemption from income tax on the income or earnings of the
Employees trust Fund. Also, that the petitioner is not the pension
trust itself but is a separate and distinct entity whose function is
to administer the pension plan for some VMC employees.
As to the co-ownership of the lot, the CTA ruled that the
evidences are self-serving and cannot themselves prove the co-
ownership of the petitioner of the MBP lot. Further, petitioner
failed to present any evidence to prove that the money used to
purchase the MBP lot came from the Employees Trust Fund. Thus,
petitioner is estopped from claiming a tax exemption.
When the claim was filed before the CA, the CA agreed that
the pieces of documentary evidence submitted are largely self-
serving and can be contrived easily and that the documents failed
to show that the funds used to purchase the MBP lot came from
the Employees Trust Fund. Hence this petition.
Issue: Since petitioner has proven that the income from the sale
of the MBP lot came from an investment by the Employees Trust
Whether or not petitioner is entitled to claim a refund for
Fund, petitioner as trustee is entitled to claim the tax refund of
the income tax paid on the sale of its co-owned MBP lot in its
PHP 3, 037, 500.00 – which was erroneously paid in the sale of the
capacity as trustee of the Employees Trust Fund.
MBP lot.
Ruling:

The court ruled that, the tax-exempt character of

petitioner’s Employees Trust Fund is not an issue in this case
because the tax-exempt character of the Employees Trust Fund
has long been settled. It is also settled that petitioner exist for
the purpose of holding title to and administering the tax exempt
Employees Trust Fund which was established for the benefit of
VMC’s employees. As such, petitioner has the personality to claim
tax refunds due to the Employees Trust Fund.

As to the proof of co-ownership of the MBP lot, the law

expressly allows a co-owner (1st co-owner) of a parcel of land to
register his proportionate share in the name of his co-owner (2nd
co-owner) in whose name the entire land is registered. The 2nd co-
owner serves as a legal trustee of the 1st co-owner insofar as the
proportionate share of the 1st co-owner is concerned. The 1st co-
owner remains the owner of his proportionate share and not the 2nd
co-owner in whose name the entire land is registered, as provided
in Art. 1452 of the NCC.

The income from the trust fund investments is therefore

exempt from the payment of income tax and consequently from the
payment of the creditable withholding tax on the sale of their real
property.

Thus, the Employees Trust Fund owns 49.59% of the MBP

lot.