1. Morales v.

CA and Ranulfo and Erlinda Ortiz

G.R. No. 117228
June 19, 1997
Art. 1440: Definition and Essential Characteristic of Trust
Aira Marie M. Andal

FACTS:

The land (318 square meters, located at corner Umbria St. and Rosales Blvd. Brgy. Central,
Calbayog City) and the two-storey building in question are originally owned by spouses Rosendo
Avelino and Juana Ricaforte. Through their son, Celso Avelino, and through an Escritura de
Venta, the spouses bought the premises from the Mendiolas on July 8, 1948 and occupied it as
owners until they died. There is now a dispute on who rightfully owns the premises, as Morales
and Ortiz each gave their own version of what occurred.

Ranulfo and Erlinda Ortiz claim that they are the absolute and exclusive owners of the
premises in question through their purchase of the said property from Celso Avelino and stated
the following:
The property was purchased by Celso Avelino (the Ortiz's predecessor in interest) when
he was still a bachelor and a city fiscal of Calbayog city from Alejandra Mendiola and
Celita Bartolome through an "Escritura de Venta."
After the purchase, he caused the transfer of the title as well as the tax declarations in his
name. He faithfully paid the taxes and kept the receipts thereof. He also caused a survey
of the premises in question with the Bureau of Lands and built a residential house
thereon.
He took his parents Rosendo Avelino and Juana Ricaforte and his sister Aurea to live in
his property until their death.
Celso Avelino then became an Immigration Officer and later a Judge of the Court of First
Instance in Cebu so he left his property under the care of his sister, Aurea.
Without his knowledge, his nephew Rodolfo Morales (a son of his other sister, Priscila)
constructed a beauty shop on the premises in question.
Celso thereafter sold the property to Ranulfo and Erlinda Ortiz (Celso's neighbors), they
paid the purchase price and a deed of absolute sale was executed.
Rodolfo Morales, however, refused to vacate the premises unless he is reimbursed
P35,000. He also occupied the residential building on the property, took in paying
boarders and even claimed ownership of the premises in question.

On the other hand, Rodolfo Morales contends that his grandparents Rosendo Avelino and
Juana Ricaforte originally owned the premises in question. Rosendo owned the money for the
purchase of the property and he requested Celso to buy the property allegedly in trust for
Rosendo. The land was bought and named under Celso because he is the only son. Rosendo
supposedly informed his other children about this arrangement. Thus, Celso is a mere trustee
under an implied trust. When Rosendo and Juana died, their children: Trinidad A. Cruz,
Concepcion A. Peralta, Priscila A. Morales, and Aurea Avelino (who died single) succeeded as
owners thereof; except Celso Avelino who did not reside in the premises because he was out of
Calbayog for more than 30 years until his death in Cebu City. Thus, the heirs of Rosendes other
children are the rightful co-owners of the land.

Ortiz filed an action for recovery of possession of land and damages with a prayer for a writ
of preliminary mandatory injunction against Morales. Ortiz prayed that he be declared the rightful
owner, that Morales be ordered to remove all improvements he constructed thereon and vacate the
premises, and that Morales pay actual and moral damages, litigation expenses, attorneys fees,
and costs of the suit. The RTC ruled in favor of Ortiz. It held that: (1) Celsos ownership was not
contested by the other heirs; (2) Priscilas claim that Celso is a mere trustee is untenable because
for implied trust to exist there must be evidence of an equitable obligation of the trustee to
convey, which circumstance or requisite is absent in this case; (3) What is clear from the evidence
is Celso Avelinos absolute ownership of the disputed property, both as to the land and the
residential house which was sold to the Ortiz spouses; and (4) Moraless self-serving and
unconvincing testimony of co- ownership is not supported by any piece of credible documentary
evidence.

The CA affirmed the RTCs decision. Thus, this petition.

ISSUES:
1. W/N Celso Avelino acquired the property as a mere trustee

HELD/RATIO:
1. NO, Celso Avelino is the absolute and exclusive owner of the land.
(Sorry, so many doctrines. This case is CLVs favorite I think because he mentioned this multiple times in the book. In
my considered opinion, this is one of the most important cases we have to read because it lays down the general
characteristics of trusts!!!)

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: (1) it is a relationship; (2) it is a relationship of fiduciary
character; (3) it is a relationship with respect to property, not one involving merely personal
duties; (4) 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 (5) 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. 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.
Implied trusts are either resulting or constructive trusts. Constructive trusts are created by the
construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title
determines the equitable title or interest and are presumed always to have been contemplated by
the parties. They arise from the nature of circumstances of the consideration involved in a
transaction whereby one person becomes invested with legal title but is obligated in equity to
hold his legal title for the benefit of another.
A resulting trust is exemplified by Article 1448 of the Civil Code: "There is an implied trust
when property is sold, and the legal estate is granted to one party but the price is paid by another
having the beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom title is conveyed is a child, legitimate or illegitimate,
of the one paying the price of the sale, no trust is implied by law, it being disputable presumed
that there is gift in favor of a child.
The last sentence of Article 1448 gives one of the recognized exceptions to the establishment
of an implied resulting trust. (The other two would be: when actual contrary intention is proved
and when purchase is made in violation of an existing statute and in evasion of its express
provision.) The burden of proving the existence of trust is on the party asserting its existence, and
such proof must be clear and satisfactorily show the existence of trust. While implied trusts may
be proved by oral evidence, evidence must be trustworthy and received by the courts with
extreme caution.
In the present case, Moraless theory is that Rosendo Avelino owned the money for the
purchase of the property and he requested Celso, his only son, to buy the property allegedly in
trust for Rosendo. The fact remains, however, that title to the property was conveyed to Celso.
Accordingly, the situation is governed or falls within the exception under the third sentence of
Art. 1448. On this basis alone, Rodolfo and Priscila Morales' claim must fail. Rodolfo and
Priscila relied merely on testimonial evidences which are self-serving. The theory of implied trust
with Celso Avelino as the trustor and his parents Rosendo Avelino and Juan Ricaforte as trustees
is not even alleged, expressly or impliedly, in the verified Answer of Rodolfo Morales, nor in the
Answer in Intervention of Priscila A. Morales.
On the other hand, proof of Ranulfo and Erlinda Ortiz's lawful acquisition of the property
through Celso Avelinos ownership was supported by documentary evidences such as the deed of
absolute sale and tax declarations. Even testimonies of Celso's other sisters prove that they
believe that he is the true owner of the property. The fact that the other siblings did not intervene
in this case to protect their right and that upon the death of their parents no extra-judicial partition
occurred further strengthens Celso's ownership. Neither is there any evidence that during his
lifetime Rosendo demanded from Celso that the latter convey the land to the former, which
Rosendo could have done after Juanas death. This omission was mute and eloquent proof of
Rosendos recognition that Celso was the real buyer of the property in 1948 and the absolute and
exclusive owner thereof.
Moreover, assuming their claim that Celso was a mere trustee is true, it still falls under the
exemption under the last sentence of Article 1448 which states that if the person to whom the title
conveyed is a child, there is a presumption that it is a gift in favor of the child.

WHEREFORE, except as to the award of moral damages, attorneys fees and litigation expenses
which are DELETED, the judgment of the respondent Court of Appeals is AFFIRMED.