MARIA TORBELA, represented by her heirs, namely: EULOGIO TOSINO, Torbela).
Torbela). Upon the deaths of the spouses Torbela, Lot No. 356-A was
husband and children: CLARO, MAXIMINO, CORNELIO, OLIVIA and CALIXTA, all
surnamed TOSINO, APOLONIA TOSINO VDA. DE RAMIREZ and JULITA TOSINO
DEAN; PEDRO TORBELA, represented by his heirs, namely: JOSE and DIONISIO,
both surnamed TORBELA; EUFROSINA TORBELA ROSARIO, represented by her
heirs, namely: ESTEBAN T. ROSARIO, MANUEL T. ROSARIO, ROMULO T.
ROSARIO and ANDREA ROSARIO-HADUCA; LEONILA TORBELA TAMIN;
FERNANDO TORBELA, represented by his heirs, namely: SERGIO T. TORBELA,
EUTROPIA T. VELASCO, PILAR T. ZULUETA, CANDIDO T. TORBELA, FLORENTINA
T. TORBELA and PANTALEON T. TORBELA; DOLORES TORBELA TABLADA;
LEONORA TORBELA AGUSTIN, represented by her heirs, namely: PATRICIO,
SEGUNDO, CONSUELO and FELIX, all surnamed AGUSTIN; and SEVERINA
TORBELA ILDEFONSO,
Petitioners,
- versus -
SPOUSES ANDRES T. ROSARIO and LENA DUQUE-ROSARIO and BANCO
FILIPINO SAVINGS AND MORTGAGE BANK,
Respondents.
x-----------------------x
LENA DUQUE-ROSARIO, Petitioner,
- versus -
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Respondent.
G.R. No. 140528
FACTS: The controversy began with a parcel of land, with an area of 374
square meters, located in Urdaneta City, Pangasinan. It was originally part of a
larger parcel of land, in the name of Valeriano Semilla (Valeriano), married to
Potenciana Acosta. Under unexplained circumstances, Valeriano gave Lot No.
356-A to his sister Marta Semilla, married to Eugenio Torbela (spouses
1
adjudicated in equal shares among their children, the Torbela siblings.
Torbela siblings executed a Deed of Absolute Quitclaim in favor of Dr.
Rosario. According to the said Deed, the Torbela siblings for and in
consideration of the sum of NINE PESOS transferred and conveyed unto the
said Andres T. Rosario, that undivided portion of that parcel of land. Four days
later, OCT No. 16676 in Valerianos a TCT was issued in Dr. Rosarios name
covering the said property.
Another Deed of Absolute Quitclaim was subsequently executed, this time by
Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A from the
Torbela siblings and was already returning the same to the latter for P1.00.
The aforequoted Deed was notarized, but was not immediately annotated.
Following the issuance of TCT, Dr. Rosario obtained a loan from the
Development Bank of the Philippines (DBP) secured by a mortgage
constituted on Lot No. 356-A. The mortgage was annotated on TCT No. Dr.
Rosario used the proceeds of the loan for the construction of improvements
on Lot No. 356-A.
On May 16, 1967, Cornelio T. Tosino (Cornelio) executed an Affidavit of
Adverse Claim,[16] on behalf of the Torbela siblings.
The Torbela siblings had Cornelios Affidavit of Adverse Claim dated May 16,
1967 and Dr. Rosarios Deed of Absolute Quitclaim dated December 28, 1964
annotated on TCT No. 52751 as Entry Nos. 274471[18] and 274472,[19]
respectively.
The construction of a four-storey building on Lot No. 356-A was eventually
completed. The building was initially used as a hospital, but was later
converted to a commercial building. Part of the building was leased to PT&T;
and the rest to Mrs. Andrea Rosario-Haduca, Dr. Rosarios sister, who
operated the Rose Inn Hotel and Restaurant.

Dr. Rosario was able to fully pay his loan from DBP. In the meantime, Dr.
Rosario acquired another loan from the Philippine National Bank (PNB) The
loan was secured by mortgages constituted on the following properties: (1)
Lot No. 356-A,; (2) Lot located in Dagupan City, Pangasinan,; and (3) Lot
located in Nancayasan, Urdaneta, Pangasinan.
Dr. Rosario and his wife, Duque-Rosario (spouses Rosario), acquired a third
loan in the amount of P1,200,000.00 from Banco Filipino Savings and
Mortgage Bank (Banco Filipino). To secure said loan, the spouses Rosario
again constituted mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-
8-C-2-B-2-A. The mortgage on Lot No. 356-A was annotated on TCT No. 52751
as Entry No. 533283[25] on December 18, 1981. Since the construction of a
two-storey commercial building on Lot No. 5-F-8-C-2-B-2-A was still
incomplete, the loan value thereof as collateral was deducted from the
approved loan amount. Thus, the spouses Rosario could only avail of the
maximum loan amount of P830,064.00 from Banco Filipino.
Because Banco Filipino paid the balance of Dr. Rosarios loan from PNB, the
mortgage on Lot No. 356-A in favor of PNB was cancelled.
The Torbela siblings filed before the Regional Trial Court (RTC) of Urdaneta,
Pangasinan, a Complaint for recovery of ownership and possession of Lot No.
356-A, plus damages, against the spouses Rosario.
The spouses Rosario afterwards failed to pay their loan from Banco Filipino.
Banco Filipino extrajudicially foreclosed the mortgages During the public
auction on Banco Filipino was the lone bidder for the three foreclosed
properties for the price of P1,372,387.04.
The Torbela siblings filed before the RTC their Amended Complaint,
impleading Banco Filipino and praying that the spouses Rosario be ordered to
redeem Lot No. 356-A from Banco Filipino.
2
The spouses Rosario instituted a case for annulment of extrajudicial
foreclosure and damages, with prayer for a writ of preliminary injunction and
temporary restraining order, against Banco Filipino.
Meanwhile, the Torbela siblings tried to redeem Lot No. 356-A from Banco
Filipino, but their efforts were unsuccessful. Upon the expiration of the one-
year redemption period in April 1988, the Certificate of Final Sale and
Affidavit of Consolidation covering all three foreclosed properties were
executed.
On June 7, 1988, new certificates of title were issued in the name of Banco
Filipino, particularly, TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and TCT No.
165813 for Lot No. 356-A .[36]
The Torbela siblings thereafter filed a Complaint for annulment of the
Certificate of Final Sale.
WHEREFORE, judgment is rendered:
1. Declaring the real estate mortgage over Lot 356-A covered by TCT
52751 executed by Spouses Andres Rosario in favor of Banco Filipino, legal
and valid;
The Torbela siblings and Dr. Rosario appealed the foregoing RTC judgment
before the Court of Appeals. Their appeal was docketed as CA-G.R. CV No.
39770. In its Decision dated June 29, 1999, the Court of Appeals decreed:
WHEREFORE, foregoing considered, the appealed decision is hereby
AFFIRMED with modification.
Hence the petition.
Issue: W/N there was an express trust between the Torbela siblings and Dr.
Rosario
HELD: There was an express trust between the Torbela siblings and Dr.
Rosario.

There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A
from their parents, the Torbela spouses, who, in turn, acquired the same from
the first registered owner of Lot No. 356-A, Valeriano.
Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim in which
they transferred and conveyed Lot No. 356-A to Dr. Rosario for the
consideration of P9.00. However, the Torbela siblings explained that they only
executed the Deed as an accommodation so that Dr. Rosario could have Lot
No. 356-A registered in his name and use said property to secure a loan from
DBP, the proceeds of which would be used for building a hospital on Lot No.
356-A a claim supported by testimonial and documentary evidence, and
borne out by the sequence of events immediately following the execution by
the Torbela siblings of said Deed.
On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was already
issued in Dr. Rosarios name. On December 28, 1964, Dr. Rosario executed his
own Deed of Absolute Quitclaim, in which he expressly acknowledged that he
only borrowed Lot No. 356-A and was transferring and conveying the same
back to the Torbela siblings for the consideration of P1.00. On February 21,
1965, Dr. Rosarios loan in the amount of P70,200.00, secured by a mortgage
on Lot No. 356-A, was approved by DBP. Soon thereafter, construction of a
hospital building started on Lot No. 356-A.
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. 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.[61]
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
3
words are required for the creation of an express trust, it being sufficient that
a trust is clearly intended.[62] 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.[63]
In Tamayo v. Callejo,[64] the Court recognized that a trust may have a
constructive or implied nature in the beginning, but the registered owners
subsequent express acknowledgement in a public document of a previous
sale of the property to another party, had the effect of imparting to the
aforementioned trust the nature of an express trust. The same situation exists
in this case. When Dr. Rosario was able to register Lot No. 356-A in his name
under TCT No. 52751 on December 16, 1964, an implied trust was initially
established between him and the Torbela siblings under Article 1451 of the
Civil Code, which provides:
ART. 1451. When land passes by succession to any person and he causes the
legal title to be put in the name of another, a trust is established by
implication of law for the benefit of the true owner.
Dr. Rosarios execution of the Deed of Absolute Quitclaim on December 28,
1964, containing his express admission that he only borrowed Lot No. 356-A
from the Torbela siblings, eventually transformed the nature of the trust to an
express one. The express trust continued despite Dr. Rosario stating in his
Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to
the Torbela siblings as Lot No. 356-A remained registered in Dr. Rosarios
name under TCT No. 52751 and Dr. Rosario kept possession of said property,
together with the improvements thereon.

PHILIPPINE NATIONAL BANK, Petitioner, - versus - MERELO B. AZNAR; MATIAS
B. AZNAR III; JOSE L. AZNAR (deceased), represented by his heirs; RAMON A.
BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represented
by his heirs; and RICARDO GABUYA (deceased), represented by his heirs,
Rural Insurance and Surety Company, Inc. (RISCO)
FACTS: RISCO ceased operation due to business reverses. In plaintiffs desire
to rehabilitate RISCO, they contributed a total amount of P212,720.00 which
was used in the purchase of the three (3) parcels of land situated in Cebu.
After the purchase of the lots, titles were issued in the name of RISCO. The
amount contributed by plaintiffs constituted as liens and encumbrances on
the aforementioned properties as annotated in the titles of said lots. Such
annotation was made pursuant to the Minutes of the Special Meeting of the
Board of Directors of RISCO (hereinafter referred to as the Minutes)
Thereafter, various subsequent annotations were made on the same titles,
including the Notice of Attachment and Writ of Execution both dated August
3, 1962 in favor of herein defendant PNB
As a result, a Certificate of Sale was issued in favor of Philippine National
Bank, being the lone and highest bidder of the three (3) parcels of land known
as Lot Nos. 3597 and 7380, covered by T.C.T. Nos. 8921 and 8922,
respectively, both situated at Talisay, Cebu, and Lot No. 1328-C covered by
T.C.T. No. 24576 situated at Cebu City, for the amount of Thirty-One
Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final Deed of
Sale dated May 27, 1991 in favor of the Philippine National Bank was also
issued and Transfer Certificate of Title No. 24576 for Lot 1328-C (corrected to
1323-C) was cancelled and a new certificate of title, TCT 119848 was issued in
the name of PNB on August 26, 1991.
This prompted plaintiffs-appellees to file the instant complaint seeking the
quieting of their supposed title to the subject properties, declaratory relief,
4
cancellation of TCT and reconveyance with temporary restraining order and
preliminary injunction. Plaintiffs alleged that the subsequent annotations on
the titles are subject to the prior annotation of their liens and encumbrances.
Plaintiffs further contended that the subsequent writs and processes
annotated on the titles are all null and void for want of valid service upon
RISCO and on them, as stockholders. They argued that the Final Deed of Sale
and TCT No. 119848 are null and void as these were issued only after 28 years
and that any right which PNB may have over the properties had long become
stale.
Defendant PNB on the other hand countered that plaintiffs have no right of
action for quieting of title since the order of the court directing the issuance
of titles to PNB had already become final and executory and their validity
cannot be attacked except in a direct proceeding for their annulment.
Defendant further asserted that plaintiffs, as mere stockholders of RISCO do
not have any legal or equitable right over the properties of the corporation.
PNB posited that even if plaintiffs monetary lien had not expired, their only
recourse was to require the reimbursement or refund of their contribution.
Aznar, et al., filed a Manifestation and Motion for Judgment on the
Pleadings[6] on October 5, 1998. Thus, the trial court rendered the November
18, 1998 Decision, which ruled against PNB on the basis that there was an
express trust created over the subject properties whereby RISCO was the
trustee and the stockholders, Aznar, et al., were the beneficiaries or the
cestui que trust.
PNB appealed the adverse ruling to the Court of Appeals which, it set aside
the judgment of the trial court. The appellate court opined that the monetary
contributions made by Aznar, et al., to RISCO can only be characterized as a
loan secured by a lien on the subject lots, rather than an express trust. Thus,
it directed PNB to pay Aznar, et al., the amount of their contributions plus
legal interest from the time of acquisition of the property until finality of
judgment. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the assailed Judgment is hereby SET
ASIDE.
A new judgment is rendered ordering Philippine National Bank to pay
plaintiffs-appellees the amount of their lien based on the Minutes of the
Special Meeting of the Board of Directors duly annotated on the titles, plus
legal interests from the time of appellants acquisition of the subject
properties until the finality of this judgment.
ISSUE: Whether or not there was a trust created between RISCO and Aznar
Aznar, et al.s petition, docketed as G.R. No. 172021, raised the following
issue: THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE
CONTRIBUTIONS MADE BY THE STOCKHOLDERS OF RISCO WERE MERELY A
LOAN SECURED BY THEIR LIEN OVER THE PROPERTIES, SUBJECT TO
REIMBURSEMENT OR REFUND, RATHER THAN AN EXPRESS TRUST.[11]
HELD: At the outset, the Court agrees with the Court of Appeals that the
agreement contained in the Minutes of the Special Meeting of the RISCO
Board of Directors held on March 14, 1961 was a loan by the therein named
stockholders to RISCO.
Careful perusal of the Minutes relied upon by plaintiffs-appellees in their
claim, showed that their contributions shall constitute as lien or interest on
the property if and when said properties are titled in the name of RISCO,
subject to registration of their adverse claim under the Land Registration Act,
until such time their respective contributions are refunded to them
completely.
It is a cardinal rule in the interpretation of contracts that if the terms of a
contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall control. When the language
of the contract is explicit leaving no doubt as to the intention of the drafters
5
thereof, the courts may not read into it any other intention that would
contradict its plain import.
We are not persuaded by the contention of Aznar, et al., that the language of
the subject Minutes created an express trust.
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. 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. An implied trust
comes into being by operation of law.
Express trusts, sometimes referred to as direct trusts, are intentionally
created by the direct and positive acts of the settlor or the trustor - by some
writing, deed, or will or oral declaration. It is created not necessarily by some
written words, but by the direct and positive acts of the parties.[22] This is in
consonance with Article 1444 of the Civil Code, which states that [n]o
particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended.
In other words, the creation of an express trust must be manifested with
reasonable certainty and cannot be inferred from loose and vague
declarations or from ambiguous circumstances susceptible of other
interpretations.[23]
No such reasonable certitude in the creation of an express trust obtains in the
case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the
terms used in the Minutes does not offer any indication that the parties
thereto intended that Aznar, et al., become beneficiaries under an express
trust and that RISCO serve as trustor.
G.R. No. L-48090 February 16, 1950 PETITIONERS: Dolores Pacheco, in her
capacity as guardian of the minors Concepcion, Alicia, and Herminia Yulo
(SUCCESSORS-IN-INTEREST)
RESPONDENTS: Santiago Arro et al.
(CLAIMANTS)
***Jose Yulo y Regalado
(PREDECESSOR IN INTEREST)
FACTS: The CLAIMANTS filed answers in a cadastral case, claiming lots as their
property and began to present evidence before a referee. Dr. Mariano Yulo,
who represented the late PREDECESSOR-IN-INTEREST in the cadastral case,
assured and promised that after the change of the street names from Zamora
and Quennon streets to T. Yulo and G. Regalado streets, the PREDECESSOR-
IN-INTEREST would convey and assign the lots to the claimants. Because of
this, the CLAIMANTS withdrew their claims and the cadastral court confirmed
the title to the lost and decreed their registration in the name of the
PREDECESSOR-IN-INTEREST. The representative of the PREDECESSOR-IN-
INTEREST complied with the promise by executing deeds of donation or
assignment to some of the claimants.
CLAIMANTS filed a complaint was explained there. CFI ordered the
PREDECESSOR-IN-INTEREST to execute deeds of assigned in favour of the
CLAIMANTS for each and every lot claimed by them. The CA affirmed. The
SUCCESSORS-IN-INTEREST contend that since a trustee does not have title to
the property which is the subject of the trust, because title to such property is
vested in the cestui que trust, if the PREDECESSOR-IN-INTEREST of the
SUCCESSORS-IN-INTEREST was a trustee, he or his successors-in-interest could
not and cannot be compelled in an action for specific performance to convey
or assign the property the subject of the trust because in an action for specific
performance the party to be compelled to perform is the owner of has title to
the property sought to be conveyed or assigned.
RULING: YES. Judgment affirmed.
RATIO: The juridical concept of a trust, which in a broad sense involves, arises
from, or is the result of, a fiduciary relation between the trustee and the
cestui que trust as regards certain property real, personal, funds or money, or
choses in action must not be confused with an action for specific
performance. When the claim to the lots in the cadastral case was withdrawn
by the CLAIMANTS relying upon the assurance and promise made in open
court by Dr. Mariano Yulo in behalf of the PREDECESSOR-IN-INTEREST, a trust
or a fiduciary relation between them arose, or resulted therefrom, or was
created thereby. The trustee cannot invoke the statute of limitations to bar
the action and defeat the right of the cestui que trust. If the pretense of
counsel for the SUCCESSORS-IN-INTEREST that the promise above adverted to
cannot prevail over the final decree of the cadastral court holding the
PREDECESSOR-IN-INTEREST of the SUCCESSORS-IN-INTEREST to be the owner
of the lots claimed by the CLAIMANTS were to be sustained and upheld, then
actions to compel a party to assign or convey the undivided share in a parcel
of land registered in his name to his co-owner or co-heir could no longer be
brought and could no longer succeed and prosper.

ISSUE: Whether or not the SUCCESSORS-IN-INTEREST may be compelled in an

action for specific performance to convey or assign the property.

6
ALEJANDRO B. TY, petitioner, vs. SYLVIA S. TY, in her capacity as
Administratrix of the Intestate Estate of Alexander Ty, respondent. G.R. No.
165696 April 30, 2008
FACTS: Alexander Ty died and was succeeded by his wife Sylvia and his
daughter Krizia. A few months after his death, a petition for the settlement of
his intestate estate was filed. Sylvia, as administratrix, was ordered by the
California court to distribute his property in the United States. In the
Philippines, Sylvia submitted to the intestate Court in Quezon City an
inventory of the assets of Alexander’s estate, consisting of shares of stocks
and various properties (EDSA Property, Meridien, and Wack-Wack). She asked
the court to permit her to sell/mortgage the properties of the estate in order
to pay additional estate tax as assessed by the BIR. Apparently, this action did
not sit well with her father-in-law, Alejandro, who later filed a complaint for
recovery of properties with prayer for preliminary injunction and/or
temporary restraining order. In her opposition, Sylvia claimed that plaintiff
Alejandro had no actual or existing right, which entitles him to the writ of
preliminary injunction, for the reason that no express trust concerning an
immovable maybe proved by parole evidence under the law. In addition,
Sylvia Ty argued that the claim is barred by laches, and more than that, that
irreparable injury will be suffered by the estate of Alexander Ty should the
injunction be issued. As to the complaint for recovery of properties, it is
asserted by Alejandro that he owns the three properties mentioned above.
He said he bought all three properties at different times, and registered them
under his son’s name with the understanding that they will be held in trust for
his brothers and sisters in the event of his sudden demise. Plaintiff further
alleged that at the time the properties were purchased, his son was financially
incapable of purchasing said properties. He presented Alexander’s and
Sylvia’s income tax returns to bolster his claim. Alejandro added that
defendant acted in bad faith in including the subject properties in the
inventory of Alexander Ty’s estate, for she was well aware that Alexander was
simply holding the said properties in trust for his siblings.
ISSUE: Whether or not a trust, express or implied, was established by
Alejandro in favor of his late son and name-sake Alexander
7
RULING/RATIO: No, there was neither express nor implied trust created
concerning the subject properties. An express trust over real property cannot
be constituted when nothing in writing was presented to prove it. As for
implied trust, since Alejandro has erected his case upon Art. 1448 of the Civil
Code, a prime example of an implied trust, viz.: that it was he who allegedly
paid for the purchase price of some of the realties subject of this case, legal
title or estate over which he allegedly granted or conveyed unto his son,
Alexander, for the latter to hold these realties in trust for his siblings in case
of his demise, Alejandro is charged with the burden of establishing the
existence of an implied trust by evidence described or categorized as
"sufficiently strong," "clear and satisfactory," or "trustworthy." He has
miserably failed to discharge that burden. If only to emphasize and reiterate
what the Supreme Court has in the past declared about implied trusts, these
case law rulings are worth mentioning
–
As a rule, the burden of 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. While implied trusts may be
proved by oral evidence, the evidence must be trustworthy and received by
the courts with extreme caution and should not be made to rest on loose,
equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated. The EDSA Property Article
1448 of the Civil Code is clear. If the person to whom the title is conveyed is
the child of the one paying the price of the sale, and in this case this is
undisputed, NO TRUST IS IMPLIED BY LAW. The law, instead, disputably
presumes a donation in favor of the child. On the question of whether or not
petitioner intended a donation, the CA found that petitioner failed to prove
the contrary. This is a factual finding which this Court sees no reason the
record to reverse. The net effect of all the foregoing is that Sylvia is obliged to
collate into the mass of the estate of Alejandro, in the event of his death, the
EDSA property as an advance of
PENALBER v CA
FACTS: Lina Penalber is the mother of Leticia and the mother-in-law of
Quirino Ramos, husband of Leticia. The mother claimed that for many years,
she operated a hardware store in a building she owned. However, the lot
upon which the building stood is owned by Maria Mendoza. The mother
allowed the spouses to manage the hardware store. When Mendoza put the
property up for sale, the mother did not have cash to buy the property. She
allegedly entered into a verbal agreement with the spouses wherein the lot
would be bought by the spouses for and in behalf of the mother, and since
the spouses have the better credit standing, they would be made to appear as
the buyers so that the title to be issued in their names could be used by the
spouses to secure a loan with which to build a bigger building and expand the
business of the mother. Pursuant to agreement, the spouses Ramos allegedly
entered into a contract of sale with Mendoza. Later, the spouses returned the
management of the hardware. On the bases of receipts and disbursements,
the mother asserted that the land was fully paid out of the funds of the store
and if the spouses had given any amount for the purchase price of the said
land, they had already sufficiently reimbursed themselves from the funds of
the store. The mother demanded from the spouses the reconveyance of the
title to the land but the spouses refused.
The Mother’sArguments:
The spouses were, in reality, mere trustees of the land, thus, they were under
a moral and legal obligation to reconvey title over the said property to her.
She calls attention to the fact that the spouses could not account for the
P116,946.15 difference in the beginning inventory and the second inventory
of the stocks of the hardware store. As the spouses never denied the
existence of the said amount, the mother contends that they have the burden
of proving where this amount had gone, and their failure to discharge such
burden, the only conclusion would be that they did use the amount to
purchase the property
– writing or deed, or will, or by words either expressly or impliedly evincing an
making such property held merely in trust by the spouses for the mother. The
mother also alleges that based on the verbal agreement between her and the
8
spouses, a valid and enforceable trust agreement was created, and such was
clearly intended by the parties.
The Spouses’Arguments
The spouses contended that they were given not only the management, but
also the full ownership of the hardware store by the the mother, on the
condition that the stocks and merchandise of the store will be inventoried,
and out of the proceeds of the sales, the spouses shall pay the mother’s
outstanding liabilities. According to the spouses, they bought the property
from Mendoza out of their own funds. The spouses also said that given that
the alleged trust concerns an immovable property, it 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.
ISSUE: (1) whether the existence of a trust agreement between her and
respondent spouses Ramos was clearly established. (2) whether such trust
agreement was valid and enforceable.
HELD: (1) No. (2) No.
RATIO:
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. 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. 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. 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. Express trusts are those
which are created by the direct and positive acts of the parties, by some
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.
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. From the allegations of the the
mother, the alleged verbal trust agreement is in the nature of an express trust
as the mother explicitly agreed to allow the spouses to acquire title to the
property in their names, but to hold the same property for the mother’s
benefit.

The mother’s allegations as to the existence of an express trust agreement

with the spouses, supported only by her testimonies, do not hold water. The
resulting difference of P116,946.15 in the beginning inventory of the stocks of
the hardware store (before management was transferred to the spouses) and
the second inventory (after management was returned to the mother), by
itself, is not conclusive proof that the said amount was used to pay the
purchase price of the property, such as would make it the property of the
mother held merely in trust by respondent spouses Ramos. The fact that the
spouses 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 of the mother is not sufficient to discharge the mother’s burden to
prove the existence of the alleged express trust agreement.

9
DBP v COA
FACTS: DBP adopted Resolution No. 794 creating the DBP Gratuity Plan and
authorizing the setting up of a retirement fund to cover the benefits due to
DBP retiring officials and employees under Commonwealth Act No. 186, as
amended. A Trust Indenture was entered into by and between the DBP and
the Board of Trustees of the Gratuity Plan Fund, vesting in the latter the
control and administration of the Fund. The Bank established a Special Loan
Program availed thru the facilities of the DBP Provident Fund and funded by
placements from the Gratuity Plan Fund as “part of the benefit program of
the Bank to provide financial assistance to qualified members to enhance and
protect the value of their gratuity benefits”.
Under it, a prospective retiree is allowed the option to utilize in the form of a
loan a portion of his “outstanding equity” in the gratuity fund and to invest it
in a profitable investment or undertaking. The earnings of the investment
shall then be applied to pay for the interest due on the gratuity loan. The
excess or balance of the interest earnings shall then be distributed to the
investor-members. The payments were disallowed by the Auditor under Audit
Observation Memorandum No. 93-2 on the ground that the distribution of
income of the Gratuity Plan Fund (GPF) to future retirees of DBP is irregular
and constituted the use of public funds for private purposes which is
specifically proscribed under Section 4 of P.D. 1445. Apart from requiring the
recipients to refund their dividends, the Auditor recommended that the DBP
record in its books as miscellaneous income the income of the Gratuity Plan
Fund (“Fund”). The Auditor reasoned that “the Fund is still owned by the
Bank, the Board of Trustees is a mere administrator of the Fund in the same
way that the Trust Services Department where the fund was invested was a
mere investor and neither can the employees, who have still an inchoate
interest [i]n the Fund be considered as rightful owner of the Fund. Former
DBP Chairman Alfredo C. Antonio requested then COA Chairman Celso D.
Gangan to reconsider AOM No. 93-2. It was denied by the COA. Hence, this
petition.
ISSUE: Whether or not the trustees of the Fund are merely
administrators./Whether or not the fund is the subject of a trust.
10
HELD: The DBP counters that the Fund is the subject of a trust, and that the
Agreement transferred legal title over the Fund to the trustees. The income of
the Fund does not accrue to DBP. Thus, such income should not be recorded
in DBP’s books of account. 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 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.
In the present case, the DBP Board of Governors’ (now Board ofDirectors)
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. It
is a separate taxable entity. Employees’ trusts are also exempted from certain
taxes under Section 60 (B) of the National Internal Revenue Code, as
amended. established for the exclusive benefit of the employees. Resolution
No. 794 shows that DBP intended to establish a trust fund to cover the
retirement benefits of certain employees under Republic Act No. 1616. The
principal and income of the Fund would be separate and distinct from the
funds of DBP. 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. A person who
establishes a trust is the trustor. One in whom confidence is reposed as
regards property for the benefit of another is the trustee. The person for
whose benefit the trust is created is the beneficiary. 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 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. The Agreement states that the principal and income must be
used to satisfy all of the liabilities to the beneficiary officials and employees
under the Gratuity Plan. Also 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.

11
CANEZO v ROJAS
SOLEDAD CAÑEZO, substituted by WILLIAM CAÑEZO and VICTORIANO
CAÑEZO Petitioners, vs CONCEPCION ROJAS, Respondent. GR No. 148788
November 23, 2007
FACTS: On January 29, 1997, petitioner Soledad Caezo filed a Complaint[2] for
the recovery of real property plus damages with the Municipal Trial Court
(MTC) of Naval, Biliran, against her fathers second wife, respondent
Concepcion Rojas. The subject property is an unregistered land with an area
of 4,169 square meters, situated at Higatangan, Naval, Biliran.
Soledad Cañezo (Cañezo) claims that she bought a parcel of land in 1939 from
Crisogono Limpiado (Limpiado) but the transaction was not reduced into
writing. She immediately took possession of the property. When she and her
husband left for Mindanao in 1948, she entrusted the land to her father,
Cripulo Rojas (Crispulo), who took possession of and cultivated the land.
However, in 1980, she discovered that her stepmother, Concepcion Rojas
(Rojas), took possession of the land and that the tax declaration was already
transferred in Crispulo’s name. Thus, Cañezo filed a complaint for the
recovery of the land plus damages against Rojas. Rojas, on the other hand,
asserted that, contrary to the petitioners claim, it was her husband, Crispulo
Rojas, who bought the property from Crisogono Limpiado in 1948, which
accounts for the tax declaration being in Crispulos name. From then on, until
his death in 1978, Crispulo possessed and cultivated the property. Upon his
death, the property was included in his estate, which was administered by a
special administrator, Bienvenido Ricafort. The petitioner, as heir, even
received her share in the produce of the estate. The respondent further
contended that the petitioner ought to have impleaded all of the heirs as
defendants. She also argued that the fact that petitioner filed the complaint
only in 1997 means that she had already abandoned her right over the
property.
The MTC rendered a Decision in favor of the petitioner.
The respondent appealed the case to the Regional Trial Court (RTC) of Naval,
Biliran. On October 12, 1998, the RTC reversed the MTC decision on the
ground that the action had already prescribed and acquisitive prescription
12
had set in.However, acting on petitioners motion for reconsideration, the RTC
amended its original decision on December 14, 1998.[10] This time, it 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.
Hence the petition. The petitioner posits that prescription and laches are
unavailing because there was an express trust relationship between the
petitioner and Crispulo Rojas and his heirs, and express trusts do not
prescribe. Even assuming that it was not an express trust, there was a
resulting trust which generally does not prescribe unless there is repudiation
by the trustee.
ISSUE: WON a trust, express or implied, was constituted between Cañezo and
Crispulo
RULING: 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. As a rule, however, the burden of 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: (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 Cañezo to prove the existence of the trust relationship, but she failed to
discharge that burden. 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 the petitioner and her father was the self-
serving testimony of the petitioner. Bare allegations do not constitute
evidence adequate to support a conclusion. They are not equivalent to proof
under the Rules of Court. Although no particular words are required for the
creation of an express trust, a clear intention to create a trust must be shown;
and the proof of fiduciary relationship must be clear and convincing. The
creation of an express trust must be manifested with reasonable certainty
and cannot be inferred from loose and vague declarations or from ambiguous
circumstances susceptible of other interpretations. In the case at bench, an
intention to create a trust cannot be inferred from Cañezo’s testimony and
the attendant facts and circumstances.
Neither can it be deduced from the circumstances of the case that a resulting
trust was created. A 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. 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.
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.
trustee cannot, by prescription, acquire ownership over property entrusted to
him until and unless he repudiates the trust, applies to express trusts and
resulting implied trusts. 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, unlike an express
trust, does not emanate from, or generate a fiduciary relation. While in an
express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any
fiduciary relation to speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the beneficiary. The relation of
trustee and cestui que trust does not in fact exist, and the holding of a
constructive trust is for the trustee himself, and therefore, at all times
adverse.

Hence, after Crispulo’s death, Rojas 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. 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. As previously stated, the rule that a
13
HEIRS OF TRANQUILINO LABISTE v HEIRS OF JOSE LABISTE
587 SCRA 417 (2009)
DOCTRINE
If a trust relationship has been created between the parties whether
expressly or impliedly, prescription does not run until the said trust is
repudiated.
FACTS: The case involved a parcel of Friar Land with an area of 13,308 square
meters known at Cebu City which was purchased from the Bureau of Lands
way back on 1919 by Emilio in his own behalf and on behalf of his brothers
and sisters who were the heirs of Jose. (Collectively known as Heirs of Jose)
The money that was used to purchase the land came from both Emilio and
their Uncle Lino so after full payment of the purchase price but prior to the
issuance of the deed of conveyance by the Bureau of Lands, Emilio executed
an Affidavit in Spanish dated on 1923 affirming that he, as one of the heirs of
Jose and his Uncle Lino then co-owned the lot. Thereafter or on 1924 the
Bureau of Lands executed the Deed of Conveyance in favor of Emilio and his
siblings, or the heirs of Jose by virtue of which a TCT was issued by the
Register of Deeds. On 1928, the lot was subdivided by Deputy Land Surveyor,
Engineer Bunag into two (2) equal parts with an area of 6,664 square meters
for Lino and an area of 6,664 square meters for Emilio and the other heirs of
Jose. This was approved by the Director of Lands on 1928. On 1939, the heirs
of Lino purchased the share of the lot of the heirs of Jose as evidenced by the
Calig-onan sa Panagpalit executed by the parties in Visayan dialect. So the
heirs of Lino immediately took possession of the entire 13,308 sqm lot.When
World War II broke out however, Lino’s heirs fled the city. When they came
back after the war, they found their homes and possessions and the records
in the government offices burned and destroyed with squatters occupying
their entire property. Lino’s heirs subsequently learned that one of the heirs
of Jose filed a petition for reconstitution of title over the Lot on September
17, 1993. So in October 1993 they opposed the said petition but later on
withdrew the same on the basis of a compromise agreement they entered
with the heirs of Jose to expedite the reconstitution of title. So on December
14, 1994, the Register of Deed issued the reconstituted Title in the names of
14
the heirs of Jose. The heirs of Jose however did not honor the compromise
agreement. So on January 13, 1995, the heirs of Lino filed a complaint for
annulment of title, re-conveyance of property with damages. Jose’s heirs
however said that the action of Lino’s heirs had long prescribed or barred by
laches.
ISSUE: a) WON Lino’s heirs had long prescribed or barred by laches.
b) How Express Trusts are created.
HELD / RATIO
a)No. The rules on prescription and the principle of laches cannot be applied
here because of the existence of a trust relationship.
b) Trust is the right to the beneficial enjoyment of property, the legal title to
which is vested in another. It may either be express or implied. An express
trust is created by direct and positive acts of the parties, by some writing or
deed or will. No particular words are required for the creation of an express
trust it being sufficient that a trust is clearly intended (Article 144, Civil Code).
An implied trust comes into being by operation of law. The Affidavit of Emilio
which is genuine and authentic beyond cavil is in the nature of an express
trust. In said affidavit, Emilio confirmed that Lot 1054 bought in his name was
co-owned by him as one of the heirs of Jose, and his uncle Lino. And by
agreement, each of them has been in possession of half of the property as
corroborated by the subdivision plan prepared by Engineer Bunag and
approved by the Bureau of Lands. As such prescription and laches will run
only if it is shown that: (a) the trustee has performed unequivocal acts of
repudiation amounting to an ouster of the beneficiary; (b) such positive acts
of repudiation have been made known to the beneficiary, and (c) the
evidence thereon is clear and conclusive.
Jose’s heirs cannot rely on the fact that the Torrens title was issued in
their names. Trustees who obtain a Torrens title over a property held in trust
by them for another cannot repudiate the trust by relying on the registration.
The only act that can be construed as repudiation was when one of Jose’s
heirs filed the petition for reconstitution in October 1993. And since Lino’s
heirs filed their complaint in January 1995 their cause of action has not yet
prescribed. Neither can laches be attributed to them. Laches cannot be used
to defeat justice or perpetuate fraud and injustice. Neither should it be
applied to prevent rightful owners of a property from recovering what has
been fraudulently registered in the name of another. However with respect to
the other half covered by the private Calig-onan sa Pagpapalit, the heirs of
Lino should have filed an action to compel Jose’s heirs to execute a public
deed of sale. Since this document was executed on October 18, 1939, such
action has already prescribed because actions upon written contract must be
filed within 10 years only. So only one-half can be recovered by Lino’s heirs or
6,664 sqm shall be retained by Jose’s heirs.

15
RAMOS v RAMOS
FACTS: Spouses Martin Ramos and Candida Tanate died and were survived by
their three legitimate children named Jose, Agustin and Granada. Martin
Ramos was also survived by his seven natural children named Atanacia,
Timoteo, Modesto, Manuel, Emiliano, Maria and Federico. Martin Ramos left
considerable real estate, the most valuable of which were the Hacienda
Calaza and Hacienda Ylaya, both located in Himamaylay, Negros Occidental.
Hacienda Calaza consists of sugar land, palay land and nipa groves with an
area of 400 hectares and with a sugar quota allotment of 10,000 piculs, more
or less, and having as its present actual value P500,000 more or less. All the
children of Martin Ramos, whether legitimate or acknowledged natural, lived
together in Hacienda Ylaya during his lifetime and were under his care. All
said children continued to live in said house of their father for years even
after his death. Upon their father's death, his properties were left under the
administration of Rafael Ramos, the younger brother of their father and their
uncle, Rafael Ramos continued to administer those properties of their father,
giving plaintiffs money as their shares of the produce of said properties but
plaintiffs not receiving any property or piece of land however, until 1913
when Rafael Ramos gathered all the heirs, including plaintiffs, in the house of
their father, saying he would return the administration of the properties. He
turned over Hacienda Ylaya to Agustin Ramos and Hacienda Calaza to Jose
Ramos.
All said children, defendants and plaintiffs alike, continued to live in the same
house of their father in Hacienda Ylaya, now under the support of Agustin
Ramos. Agustin Ramos supported plaintiffs, getting the money from the
produce of Hacienda Ylaya, the only source of income of Agustin coming from
said hacienda. Plaintiffs asked money from Agustin pertaining to their share in
the produce of Hacienda Ylaya and received varied amounts, sometimes
around P50 at a time, getting more when needed, and receiving P90 or P100
more or less a year. Jose Ramos gave plaintiffs also money as their shares
from the products of Hacienda Calaza. Upon the death of Jose Ramos his
widow Gregoria Ramos, herself, his first cousin, their father and mother,
respectively being brother and sister, continued to give plaintiffs money
16
pertaining to their shares in the products of Hacienda Calaza. She however
stopped doing so in 1951, telling them that the lessee Estanislao Lacson was
not able to pay the lease rental. There was never any accounting made to
plaintiffs by Jose Ramos, plaintiffs reposing confidence in their elder brother,
nor was any accounting made by his widow, defendant Gregoria Ramos, upon
his death, plaintiff Manuel Ramos moreover having confidence in her. Before
the survey of these properties by the Cadastral Court, plaintiff Modesto
Ramos was informed by the Surveying Department that they were going to
survey these properties. Plaintiffs then went to see their elder brother Jose to
inform him that there was a card issued to them regarding the survey and
gave him 'a free hand to do something as an administrator'. They therefore
did not intervene in the said cadastral proceedings because they were
promised that they (defendants Jose and Agustin) would 'be the ones
responsible to have it registered in the names of the heirs'. Plaintiffs did not
file and cadastral answer because defendants Jose and Agustin told them 'not
to worry about it as they have to answer for all the heirs'. Plaintiffs were
'assured' by defendants brothers. Plaintiffs did not know that intestate
proceedings were instituted for the distribution of the estate of their father.
Neither did plaintiffs Modesto, Manuel, Emiliano and Maria know that
Timoteo Zayco, their uncle and brother-in-law of defendant widow Gregoria
was appointed their guardian. They never received any sum of money in cash
—
the alleged insignificant sum of P1,785.35 each
—
from said alleged guardian as their supposed share in the estate of their
father under any alleged project of partition. Neither did Atanacia Ramos nor
her husband, Nestor Olmedo, sign any project of partition or any receipt of
share inthe inheritance of Martin Ramos in cash. Nestor Olmedo did not sign
any receipt allegedly containing the signatures of Atanacia assisted by himself
as husband, Timoteo Ramos, and Timoteo Zayco as guardian ad-litem of the
minors Modesto, Manual, Federico, Emiliano and Maria. As a matter of fact,
plaintiffs Modesto and Manuel were in 1913 no longer minors at the time of
the alleged project of partition of the estate being approved, both being of
age at that time. No guardian could in law act on their behalf. Plaintiffs only
discovered later on that the property administered by their elder brother Jose Olmedo, the husband of plaintiff Atanacia Ramos. Bonin and Olmedo in 1935
had a Torrens Title in the name of his widow, Gregoria, and daughter, sold their lease rights over Hacienda Calaza to Jesus S. Consing.
Candida, when plaintiff Modesto's children insisted and inquired from the
Register of Deeds sometime in 1956 or 1957. Plaintiffs did not intervene in
the intestate proceedings for the settlement of the estate of their brother
Jose as they did not know of it. Plaintiffs were thus constrained to bring the
present suit before the Court of First Instance of Negros Occidental seeking
for the reconveyance in their favor by defendants Gregoria and daughter
Candida and husband Jose Bayot of their corresponding participations in said
parcels of land in accordance with article 840 of the old Civil Code.

ISSUE: W/N plaintiffs' shares were held in trust by the defendants.

HELD: NO. The plaintiffs did not prove any express trust in this case. The
expediente of the intestate proceeding, particularly the project of partition,
the decision and the manifestation as to the receipt of negatives the
existence of an express trust. Those public documents prove that the estate
of Martin Ramos was settled in that proceeding and that adjudications were
made to his seven natural children. A trust must be proven by clear,
satisfactory, and convincing evidence. It cannot rest on vague and uncertain
evidence or on loose, equivocal or indefinite declarations (De Leon vs.
Peckson, 62 O. G. 994). As already noted, an express trust cannot be proven
by parol evidence(Pascual vs. Meneses, L-18838, May 25, 1967, 20 SCRA 219,
228; Cuaycong vs. Cuaycong, L-21616, December 11, 1967, 21 SCRA 1192).
Neither have the plaintiffs specified the kind of implied trust contemplated in
their action. We have stated that whether it is a resulting or constructive
trust, its enforcement may be barred by laches. In the cadastral proceedings,
which supervened after the closure of the intestate proceeding, the eight lots
involved herein were claimed by the spouses Jose Ramos and Gregoria T.
Ramos to the exclusion of the plaintiffs. After the death of Jose Ramos, the
said lots were adjudicated to his widow and daughter. In 1932 Gregoria T.
Ramos and Candida Ramos leased the said lots to Felix Yulo. Yulo in 1934
transferred his lease rights over Hacienda Calazato Juan S. Bonin and Nestor

17
LOPEZ v CA
574 SCRA 26 (2008)
FACTS: The decedent, Juliana, was married to Jose (Jose). Their union did not
bear any children. Juliana was the owner of several properties, which are the
subject of this dispute. On 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 Jose. If her husband were
to die or renounce the obligation, her nephew, Enrique Lopez (Petioner's
father), was to become administrator and executor of the Fideicomiso.
Note: Fideicomiso- Arrangement by which the testator left his estate or part
of it to the good faith of someone so that, in certain case and time, transmit it
to another person or invest it in the way that was pointed out by the testator.
Paraphernal properties- Exclusive properties of the wife.
Jose died on 1980, leaving a holographic will disposing of the disputed
properties to respondents. The will was allowed probate on 1983. Pursuant to
Jose’s will, the RTC ordered 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. Enrique Lopez, also assumed the trusteeship of Juliana’s estate.
On 1984, the RTC appointed petitioner Richard Lopez as trustee of Juliana’s
estate.
Thereafter, petitioner instituted an action for reconveyance of parcels of land
with sum of money before the RTC against respondents. The complaint
essentially alleged that Jose (the husband) 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 ofJose’s estate when in fact Jose was holding them only in trust for the
trust estate of Juliana. The RTC rendered a summary judgment, dismissing the
action on the ground of prescription of action. The Court of Appeals rendered
the assailed decision denying the appeals filed by both petitioner and
18
respondents. In addition, the CA held that the petitioner's action for
reconveyance has prescribed and that the fiduciary relation assumed by the
late Jose was an Implied Trust.
ISSUE
:a) WON an implied trust was constituted over the disputed properties when
Jose, the trustee, registered them in his name.
b) WON petitioner’s action for reconveyance has prescribed.
HELD
The disputed properties were the paraphernal properties of Juliana which
should have been included in the Fideicomiso, their registration in the name
of Jose was erroneous and Jose’s possession is 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 Court differentiated two kinds of implied trusts. Implied trusts are either
resulting or constructive trusts. These two are differentiated from each other
as follows:
DOCTRINE: 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 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.
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.

However, the right to seek reconveyance based on an implied or constructive

trust is not absolute. It is subject to extinctive prescription. 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. 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. Jose had
indicated that the disputed properties were conjugal in nature and, thus,
excluded from Juliana’s Fideicomiso.
This act is clearly tantamount to repudiating the trust, at which point the
period for prescription is reckoned. b) The petitioner's action for
reconveyance has clearly already prescribed when he filed said actions on
1984 or fifteen (15) years later. Petition denied.

19
SALAO v SALAO
FACTS: Manuel Salao and Valentina Ignacio has four children; Patricio,
Alejandra, Juan and Ambrosia. Manuel Salao and Patricio died. No
documentary evidence as to what properties formed part of Manuel Salao’s
estate. Valentina also died and her estate was administered by Ambrosia.
Patricio died and being represented by Valentin (his son). Therefore, the
estate will be divided to Valentin, Alejandra, Juan and Ambrosia. Valentina
left a lot of properties and the distributive share of each was P8,135 but
Valentin got more than the said amount so he was forced to pay his coheirs
the difference. Before Valentina died, Juan and Ambrosia secured a torrens
title in their name 47ha of fishpond in Calunaran, Pampanga which is also
known as Lot 540 of Hermosa cadastre and exercised dominical rights over it
to the exclusion of Valentin. It was contended that Juan and Ambrosia used
the commond fund to buy the said fishpond but was denied by the other
party. The said fishpond was sold under pacto de retro sale to two persons
but was redeemed in due time. Juan and Ambrosia also bought a swampland
in Lewa, Pampanga and registered it under their names, it became cadastral
lot no. 544 of Hermosa Cadastre it adjoins the Calunuran fishpond.
Juan and valentin died. Valentin has two daughters, Benita and Victorina.
Valentin’s estate consisted of 2 fishponds inherited from Valentina. Ambrosia
donated to Benita 3 lots and a deed of donation was signed. It was only after
Abrosia’s death benita filed an action for reconveyance of the caluran
fishpond which was allegedly held in trust and which had become the sole
property of Juani (son of juan).
Before ambrosia’s death, she donated ½ share of the fishpond to Juani. Benita
and children of victorina contends that they had a 1/3 share in the 2
fishponds that Juani took possession. Juani refused to give Benita and
children their respective shares. Juani then contends that the fishponds were
only owned by Juan and ambrosia - Valentin has no interest on the said
fishpond. Benita and children filed for an annulment of the donation to Juani
and reconveyance to them. But as a defense of juani, he pleaded the
indefeasibility of the Torrens title secured by Juan and ambrosia and
20
prescription and laches. Juani died and substituted by his wife (pascual) and
children. The court ruled that there was no co-ownership and the said
fishpond was properly donated to Juani. In addition, the parties involved in
the alleged trust were dead.
ISSUE: W/N the fishfpond was held in trust for Valentin by Juan and Ambrosia
and W/N their action for reconveyance had already prescribed.
HELD: No! And if ever there was a trust, action has already prescribed. RATIO:
Trust is the right enforceable solely in equity, to the beneficial enjoymnet of
the property indicate duties, relations, and responsibilities. It can be either
express or implied. No express trust concerning an immovable or any interest
therin may be proven by parol evidence. It is created by writing or deed or
will. Resulting trust is created by the act or construction of law. Constructive
trust arise by operation of law. Trust must be proven by clear, satisfactory and
convincing evidence. No documentary evidence was presented by benita and
children to prove that there was an express trust over the calunuran fishpond
in favor of valentin. Purely parol evidence was offered. There was also no
resulting trust because there were never was any intention on the part of
Juan, ambrosia and valentin to create any trust. No constructive trust because
the consent of juan and ambrosia wan not vitiated by fraud or mistake. And
assuming there is implied trust, it was already barred by prescription (10 yrs
supposedly but filed after 40 yrs from the date of registration) and laches. The
court said that there was no community of property during the lifetime of
valentina (great grandmother) is substantiated by benita and children’s
documentary evidence. The fact that Valentin never bothered for 40 years to
procure any documentary evidence to establish his supposed interest in the 2
fishponds is very suggestive of the absence of such interest. Torrens title is
generally a conclusive evidence of the ownership of the land and in order to
maintain an action for reconveyance, proof as to the fiduciary relation of the
parties must be clear and convincing. In addition, benita cannot represent
valentin because in the collateral line, representation takes place only in favor
of the children of brothers and sisters whether full or half blood and this
excludes grand niece like Benita.
PARUNGIT v BAJIT
SPS. FELIPE and JOSEFA PARINGIT, Petitioner, vs. MARCIANA PARINGIT
BAJIT, ADOLIO PARINGIT and ROSARIO PARINGIT ORDOÑO, Respondents.
G.R. No. 181844 September 29, 2010
FACTS: During their lifetime, spouses Paringit leased a lot in Sampaloc, Manila
from Terocel Realty. They built their home there and raised five children. For
having occupied the lot for years, Terocel Realty offered to sell it to Julian but
he did not have enough money at that time to meet the payment deadline.
Julian sought the help of his children so he can buy the property but only his
son Felipe and wife Josefa had the financial resources he needed at that time.
To bring about the purchase, Julian executed a deed of assignment of
leasehold right in favor of Felipe and his wife that would enable them to
acquire the lot. The latter then bought the same from Terocel Realty and a
TCT was subsequently issued in favor of spouses Felipe and Josefa. Later on,
due to issues among Julian’s children regarding the ownership of the lot,
Julian executed an affidavit clarifying the nature of Felipe and his wife’s
purchase of the lot. He claimed that it was bought for the benefit of all his
children. Despite the title being under their name, the spouses moved to
another house on the same street in 1988. Marciana, et al, on the other hand,
continued to occupy the lot with their families without paying rent. This was
the situation when their father died in 1994. A year later, Felipe and his wife
sent a demand letter to his siblings who occupy the lot, asking them to pay
rental arrearages for occupying the property. They refused to pay or reply to
the letter, believing that they had the right to occupy the house and lot, it
being their inheritance from their parents. Because of this, Felipe and his wife
filed an ejectment suit against them. The suit prospered, resulting in the
ejectment of Marciana, et al and their families from the property.
To vindicate what they regarded as their right to the lot and the house, the
other children filed the present action against Felipe and his wife for
annulment of title and reconveyance of property.
ISSUE: Whether or not Felipe and his wife purchased the subject lot under an
implied trust for the benefit of all the children of Julian;
RULING/RATIO:
21
Yes, the Court ruled that the case at bar falls under the rubric of the implied
trust provided in Article 1450 of the Civil Code.Implied trust under Article
1450 presupposes a situation where a person, using his own funds, buys
property on behalf of another, who in the meantime may not have the funds
to purchase it. Title to the property is for the time being placed in the name of
the trustee, the person who pays for it, until he is reimbursed by the
beneficiary, the person for whom the trustee bought the land. It is only after
the beneficiary reimburses the trustee of the purchase price that the former
can compel conveyance of the property from the latter. The circumstances of
this case are actually what implied trust is about. Although no express
agreement covered Felipe and his wife’s purchase of the lot for the siblings
and their father, it came about by operation of law and is protected by it. The
nature of the transaction established the implied trust and this in turn gave
rise to the rights and obligations provided by law. Implied trust is a rule of
equity, independent of the particular intention of the parties. Here, the
evidence shows that Felipe and his wife bought the lot for the benefit of
Julian and his children, rather than for themselves. There is no question that
the house originally belonged to Julian and Aurelia who built it. First, if Julian
really intended to sell the entire house and assign the right to
acquire the lot to Felipe and his wife, he would have arranged for Felipe’s
other siblings to give their conformity as co-owners to such sale. Second,
Julian said in his affidavit that Felipe and his wife bought the lot from Terocel
Realty on his behalf and on behalf of his other children. Felipe and his wife
advanced the payment because Julian and his other children did not then
have the money needed to meet the realty company’s deadline for the
purchase. Notably, Felipe, acting through his wife, countersigned Julian’s
affidavit the way his siblings did. Third, if Felipe and his wife really believed
that they were the absolute owners of the lot, then their moving out of the
house in 1988 and letting Marciana, et al continue to occupy the house did
not make sense. Fourth, Felipe and his wife demanded rent from Marciana, et
al only a year following Julian’s death. This shows that for over 10 years,
Felipe and his wife respected the right of the siblings to reside on the
property. This is incompatible with their claim that they bought the house and
lot for themselves back in 1984. Until they filed the suit, they did nothing to
assert their supposed ownership of the house and lot.
SING JUCO AND SING BENGCO v SUNYANTONG
FACTS: Sing Juco and Sing Bengco obtained from Maria Gay a written option
to purchase an estate known as "San Antonio Estate". The term of the option
expired, but Sing Juco and Sing Bengco had it extended verbally. Sunyantong
was an employee of Sing Juco and Sing Bengco, and the evidence shows that
they reposed confidence in him and did not mind disclosing to him their plans
of purchasing the San Antonio estate and the status of their negotiations with
Gay. In one of the meetings held by Sing Juco and Sing Bengco, Sunyantong
was present. At that time, Sunyantong remarked that it would be advisable to
let some days elapse before accepting the terms of the transfer as proposed
by Maria Gay, in order that the Gay might not think that they were desperate
for the said property. On the day that Sing Juco and Sing Bengco’s option to
purchase was to expire, Sunyantong called at the house of Gay and offered to
buy the estate on the terms she proposed, which were not yet accepted by
Sing Juco and Sing Bengco. Sunyantong offered to buy not for the benefit of
Sing Juco and Sing Bengco, but for the benefit of his own wife. Maria Gay
informed the broker of Sing Juco and Sing Bengco that there was another
interested buyer and that she would like to know immediately Sing Juco and
Sing Bengco’s decision.Sing Bengco instructed Sotelo to inform her, "siya ang
bahala". Interpreting the phrase to mean that Sing Juco and Sing Bengco
waived their option to buy, Maria Gay closed the sale of the estate in favor of
Sunyantong. Sing Bengco and Sing Juco then filed a case against Sunyantong.
The lower court ordering the Sunyantong to execute a deed of conveyance to
Sing Bengco and Sing Juco of the San Antonio Estate for the same price and
with the same conditions as those of the purchase thereof from Maria Gay
ISSUE:W/N Sunyantong must be held liable
HELD:Yes. Even supposing that Sing Bengco intended to waive all claims to
the option when he said “bahala ka”, the action of the Sunyantong in
intervening in the negotiations does not make him innocent of infidelity in
22
view of the fact that he was an employee of the plaintiffs to whom he owed
loyalty and faithfulnes. Despite the fact that when Sunyantong closed the
contract of sale with Maria Gay, Sing Juco and Sing Bengco option had expire
d, it can’t be denied that he was the cause of the option having precipitously
come to such an end. His disloyalty to his employers was responsible for
Maria Gay not accepting the terms proposed by Sing Juco and Sing Bengco,
because of being certain of another less exigent buyer. Without such
intervention on the part of the Sunyantong it is presumed, taking into account
all the circumstances of the case, that the sale of the estate in question would
have been consummated between Maria Gay and Sing Juco and Sing Bengco,
perhaps with such advantages to Sing Juco and Sing Bengco, as they expected
to obtain by prolonging negotiations. Such an act of infidelity committed by a
trusted employee calculated to redound to his own benefit and to the
detriment of his employers cannot pass without legal sanction. He shall be
liable for the damage caused.
DISSENTING OPINION BY VILLAMOR, J:
Sunyantong is held civilly liable for having purchased the land in question in
behalf of his wife, Vicenta Llorente, with knowledge of the fact that Sing
Bengco and Sing Juco, by whom he was employed, were negotiating with the
owner of the land for the purchase of the same. The liability of Sunyantong
should consist in the reparation of the damage caused to the Sing Bengco and
Sing Juco. Has any damage been proven to have arisen from the culpable act
of the defendant Sunyantong? I do not think that it has, and indeed no
damage could have been caused to the Sing Bengco. There is also no proof of
Sunyantong having acquired the land in question in the name or in behalf of
Sing Bengco and Sing Juco, or at the request of the latter, or with funds
furnished by them. Said defendants had legal capacity to buy (art. 1457, Civil
Code) and are not within any of the cases prohibited by article 1459 of the
same Code.
ESCOBAR v LOCSIN
G.R. No. L-48309 January 30, 1943
EUSEBIA ESCOBAR, plaintiff-appellant, RAMON LOCSIN, in his capacity as
special administrator of the intestate estate of Juana Ringor,defendant-
appellee.
FACTS: The complaint alleges that the plaintiff is the owner of the subject lot;
and that in the course of the cadastral proceedings, plaintiff being illiterate,
asked Sumangil to claim the same for her (plaintiff) but Sumangil committed a
breach of trust by claiming the lot for himself, so it was adjudicated in favor of
Sumangil. The defendant is the special administrator of the estate of Juana
Ringor, to whom the parcel of land in question was assigned by partition in
the intestate estate of Sumangil and Duque. The CFI found that the plaintiff is
the real owner of the lot which she had acquired in 1914 by donation propter
nuptias from Pablo Ringor; that plaintiff had since that year been in
possession of the land; and that the same had been decreed in the cadastral
proceedings in favor of Domingo Sumangil. The trial court, while recognizing
that the plaintiff had the equitable title and the defendant the legal title,
nevertheless dismissed the complaint because the period of one year
provided for in section 38 of the Land Registration Act for the review of a
decree had elapsed, and the plaintiff had not availed herself of this remedy.
ISSUE: Does the possession of legal title preclude the operation of a trust
agreement?
HELD No
RATIO: The trial court plainly erred. The complaint did not seek the review of
the decree or the reopening of the cadastral case, but the enforcement of a
trust. Hence, section 38 of Act No. 496 does not apply. The estate of Juana
Ringor as the successor in interest of the trustee, Domingo Sumangil, is in
equity bound to execute a deed of conveyance of this lot to the plaintiff-
appellant. The remedy herein prayed for has been upheld by this Court in
previous cases, one of which is Severino vs. Severino (44 Phil., 343, year
1923). There is no indication there of an intention to cut off, through the
23
issuance of a decree of registration, equitable rights or remedies such as
those here in question. On the contrary, section 70 of the Act provides:
Registered lands and ownership therein, shall in all respects be subject to the
same burdens and incidents attached by law to unregistered land. Nothing
contained in this Act shall in any way be construed to relieve registered land
or the owners thereof from any rights incident to the relation of husband and
wife, or from liability to attachment on mesne process or levy on execution,
or from liability to any lien of any description established by law on land and
the buildings thereon, or the interest of the owner in such land or buildings,
or to change the laws of descent, or the rights of partition between
coparceners, joint tenants and other cotenants, or the right to take the same
by eminent domain, or to relieve such land from liability to be appropriated in
any lawful manner for the payment of debts, or to change or affect in any
other way any other rights or liabilities created by law and applicable to
unregistered land, except as otherwise expressly provided in this Act or in the
amendments hereof.
A trust such as that which was created between the plaintiff and Domingo
Sumangil is sacred and inviolable. The Courts have therefore shielded
fiduciary relations against every manner of chicanery or detestable design
cloaked by legal technicalities. The Torrens system was never calculated to
foment betrayal in the performance of a trust. The judgment appealed from is
hereby reverse, and the defendant is ordered to convey that lot in question to
the plaintiff within fifteen days from the entry of final judgment herein; and
upon his failure or refusal to do so, this judgment shall constitute sufficient
authorization for the Register of Deeds of Nueva Ecija, in lieu of a deed of
conveyance, to transfer the certificate of title for said lot No. 692 to the
plaintiff Eusebia Escobar. The defendant shall pay the costs of both instances.
PNB v JUMANOY
FACTS: On December 27, 1989, the RTC, Branch 19, of Digos City, Davao del
Sur, rendered a Decision5 in Civil Case No. 2514 (a case for Reconveyance and
Damages), ordering the exclusion of 2.5002 hectares from Lot 13521. The trial
court found that said 2.5002 hectares which is part of Lot 13521, a 13,752-
square meter parcel of land covered by Original Certificate of Title (OCT) No.
P-49526 registered in the name of Antonio Go Pace (Antonio) on July 19, 1971
actually pertains to Sesinando Jumamoy (Sesinando), Ciriaco’s predecessor
-in-interest. The RTC found that said 2.5002-hectare lot was erroneously
included in Antonio’s free patent application which became the basis for the
issuance of his OCT. It then ordered the heirs of Antonio (the Paces
[represented by Rosalia Pace (Rosalia)]) to reconvey said portion to Ciriaco. In
so ruling, the RTC acknowledged Ciriaco’s actual and exclusive possession,
cultivation, and claim of ownership over the subject lot which he acquired
from his father Sesinando, who occupied and improved the lot way back in
the early 1950s.7 The December 27, 1989 ruling then became final but could
not be annotated since the OCT was already cancelld. Apparently, Antonio
and his wife Rosalia mortgaged Lot 13521 to PNB as security for a series of
loans which Antonio defaulted and PNB foreclosed the mortgage on July 14,
198610 and the title was transferred to PNB. Thus, in February 1996, Ciriaco
filed the instant complaint against PNB and the Paces for Declaration of
Nullity of Mortgage, Foreclosure Sale, Reconveyance and Damages,11
docketed as Civil Case No. 3313 and raffled to Branch 18 of RTC, Digos City,
Davao del Sur. In his complaint, Ciriaco averred that Antonio could not validly
mortgage the entire Lot 13521 to PNB as a portion thereof consisting of
2.5002 hectares belongs to him (Ciriaco), as already held in Civil Case No.
2514. He claimed that PNB is not an innocent mortgagee/purchaser for value
because prior to the execution and registration of PNB’s deed of sale with the
Register of Deeds, the bank had prior notice that the disputed lot is subject of
a litigation. It would appear that during the pendency of Civil Case No. 2514, a
notice of lis pendens was annotated at the back of OCT No. P-4952 as Entry
No. 16554712 on November 28, 1988. The RTC and CA ruled that Ciriaco is
correct and that PNB must reconvey the land to Ciriaco. Thus PNB filed this
case to question the ruling of the RTC and CA.
24
ISSUE:Whether or not PNB must reconvey the land to Ciriaco?
HELD: Yes. PNB is not an innocent purchaser/ mortgagee for value. PNB In this
case is considered a trustee in a constructive trust holding the land in trust for
Ciriaco. Also, since Ciriaco is in possession of the land, the action based on
constructive trust is imprecriptible. Undoubtedly, our land registration statute
extends its protection to an innocent purchaser for value, defined as "one
who buys the property of another, without notice that some other person has
a right or interest in such property and pays the full price for the same, at the
time of such purchase or before he has notice of the claims or interest of
some other person in the property."25 An "innocent purchaser for value"
includes an innocent lessee, mortgagee, or other encumbrancer for value .26
Here, we agree with the disposition of the RTC and the CA that PNB is not an
innocent purchaser for value. As we have already declared: A banking
institution is expected to exercise due diligence before entering into a
mortgage contract. The ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and indispensable part
of its operations.27 (Emphasis ours.)
PNB’s contention that Ciriaco failed to allege in his complaint that PNBfailed
to take the necessary precautions before accepting the mortgage is of no
moment. It is undisputed that the 2.5002-hectare portion of the mortgaged
property has been adjudged in favor of Ciriaco’s predecessor-in-interest in
Civil Case No. 2514. Hence, PNB has the burden of evidence that it acted in
good faith from the time the land was offered as collateral. However, PNB
miserably failed to overcome this burden. There was no showing at all that it
conducted an investigation; that it observed due diligence and prudence by
checking for flaws in the title; that it verified the identity of the true owner
and possessor of the land; and, that it visited subject premises to determine
its actual condition before accepting the same as collateral. Both the CA and
the trial court correctly observed that PNB could not validly raise the defense
that it relied on Antonio’s clean title. The land, when it was first mortgaged,
was then unregistered under our Torrens system. The first mortgage was on
February 25, 197128 while OCT No. P-4952 was issued on July 19, 1971. Since
the Paces offered as collateral an unregistered land, with more reason PNB
should have proven before the RTC that it had verified the status of the
property by conducting an ocular inspection before granting Antonio his first
loan. Good faith which is a question of fact could have been proven in the
proceedings before the RTC, but PNB dispensed with the trial proper and let
its opportunity to dispute factual allegations pass. Had PNB really taken the
necessary precautions, it would have discovered that a large portion of Lot
13521 is occupied by Ciriaco.

Ciriaco’s action for reconveyance is imprescriptible. If a person claiming to be

the owner thereof is in actual possession of the property, as the defendants
are in the instant case, the right to seek reconveyance, which in effect seeks
to quiet title to the property, does not prescribe. The reason for this is that
one who is in actual possession of a piece of land claiming to be the owner
thereof may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right, the reason for the rule being, that
his undisturbed possession gives him a continuing right to seek the aid of a
court of equity to ascertain and determine the nature of the adverse claim of
a third party and its effect on his own title, which right can be claimed only by
one who is in possession.34
In Ciriaco’s case, as it has been judicially established that he is in actual
possession of the property he claims as his and that he has a better right to
the disputed portion, his suit for reconveyance is in effect an action for
quieting of title. Hence, petitioner’s defense of prescription against Ciriaco
does

25
ESTATE OF MARGARITA v LAIGO
FACTS: Margarita Cabacungan owned three parcels of unregistered land
covered by tax declaration all in her name in Bauang, La Union. In 1968,
Margarita's son, Roberto Laigo, Jr., applied for a non-immigrant visa to the
United States, and to support his application, he allegedly asked Margarita to
transfer the tax declarations of the properties in his name. Margarita,
unknown to her other children, executed an Affidavit of Transfer of Real
Property whereby the subject properties were transferred by donation to
Roberto and his visa was issued and able to travel to the U.S. as a tourist and
returned in due time. Roberto adopted respondents Pedro Laigo and Marilou
Laigo and married respondent Estella Balagot.
Roberto sold one of the property to spouses Mario and Julia Campos, then he
sold the other one to Marilou and to Pedro not known to Margarita and her
other children. It was only in Roberto's wake, that Margarita came to know of
the sales as told by Pedro himself. In 1996, Margarita, represented by her
daughter, Luz, instituted the complaint for the annulment of said sales and for
the recovery of ownership and possession of the subject properties as well as
for the cancellation of Ricardo's tax declarations. The Spouses Campos,
Marilou and Pedro advanced that they were innocent purchasers for value
and in good faith, the cause of action was nevertheless barred by
prescription. Margarita and the Spouses Campos entered into a settlement
whereby they waived their respective claims against each other. Margarita
died two days later and was forthwith substituted by her estate, the trial
court rendered a decision approving the compromise agreement and
dismissing the complaint against the Spouses Campos. Forthwith, trial on the
merits ensued with respect to Pedro and Marilou. The trial court dismissed.
Appeal was made. The Court of Appeals dismissed petitioner's claim that
Roberto was merely a trustee of the subject properties as there was no
evidence on record supportive of the allegation that Roberto merely
borrowed the properties from Margarita upon his promise to return the same
on his arrival from the United States. Further, it hypothesized that granting
the existence of an implied trust, still Margarita's action thereunder had
already been circumscribed by laches.
26
ISSUE
a) Whether the complaint is barred by laches and/or prescription. b) WON
Roberto held the property in trust only for Margarita.
HELD
a) NO. Laches, being rooted in equity, is not always to be applied strictly in a
way that would obliterate an otherwise valid claim especially between blood
relatives. The existence of a confidential relationship based upon
consanguinity is an important circumstance for consideration; hence, the
doctrine is not to be applied mechanically as between near relatives. The
relationship between the parties therein, who were a family, was sufficient to
explain and excuse what would otherwise have been a long delay in enforcing
the claim and the delay in such situation should not be as strictly construed as
where the parties are complete strangers to another. It is clear that an action
for reconveyance under a constructive implied trust in accordance with
Article 1456 does not prescribe unless and until the land is registered or the
instrument affecting the same is inscribed in accordance with law, inasmuch
as it is what binds the land and operates constructive notice to the world. In
the present case, however, the lands involved are concededly unregistered
lands; hence, there is no way by which Margarita, during her lifetime, could
be notified of the furtive and fraudulent sales made in 1992 by Roberto in
favor of respondents, except by actual notice from Pedro himself in August
1995. Hence, it is from that date that prescription began to toll. The filing of
the complaint in February 1996 is well within the prescriptive period. Finally,
such delay of only six (6) months in instituting the present action hardly
suffices to justify a finding of inexcusable delay or to create an inference that
Margarita has allowed her claim to stale by laches. Prescription and laches, in
respect of this resulting trust relation, hardly can impair petitioner's cause of
action.
In this case, it was the 1992 sale of the properties to respondents that
comprised the act of repudiation which, however, was made known to
Margarita only in 1995 but nevertheless impelled her to institute the action in
1996 - still well within the prescriptive period. It is settled that an action for
reconveyance based on a constructive implied trust prescribes in 10 years
likewise in accordance with Article 1144 of the Civil Code. Yet not like in the
case of a resulting implied trust and an express trust, prescription supervenes
in a constructive implied trust even if the trustee does not repudiate the
relationship. In other words, repudiation of said trust is not a condition
precedent to the running of the prescriptive period.
b) Petitioners before the trial court, had actually adduced evidence to prove
the intention of Margarita to transfer to Roberto only the legal title to the
properties in question, with attendant expectation that Roberto would return
the same to her on accomplishment of that specific purpose for which the
transaction was entered into. The evidence of course is not documentary, but
rather testimonial. It is deducible from the foregoing that the inscription of
Roberto's name in the Affidavit of Transfer as Margarita's transferee is not for
the purpose of transferring ownership to him but only to enable him to hold
the property in trust for Margarita. The circumstances from which could be
derived the unwritten understanding between Roberto and Margarita that by
their act, no absolute transfer of ownership would be effected. Besides, it
would be highly unlikely for Margarita to institute the instant complaint if it
were indeed her intention to vest in Roberto, by virtue of the Affidavit of
Transfer, absolute ownership over the covered properties. Finally, petitioner
states that whether a buyer is in good or bad faith is a matter that attains
relevance in sales of registered land, as corollary to the rule that a purchaser
of unregistered land uninformed of the seller's defective title acquires no
better right than such seller. Wherefore, the Petition is granted and judgment
of the Regional Trial Court, is reversed and set aside and a new one is entered
(a) directing the cancellation of the tax declarations covering the subject
properties in the name of Roberto D. Laigo and his transferees; (b) nullifying
the deeds of sale executed by Roberto D. Laigo in favor of respondents Pedro
Roy Laigo and Marilou Laigo; and (c) directing said respondents to execute
reconveyance in favor of petitioner.

27