]#35

LOPEZ vs CA
G.R. No. 157784
December 16, 2008
Facts:
Juliana Lopez made a notarial will whereby she wanted to create a trust fund (Fideicomiso) for her
paraphernal properties (separate properties) to be administered by her husband Jose. She wanted 2/3
of the income of her separate properties to answer for the education deserving but needy students as
beneficiaries. Juliana died so her husband Jose was the one who pursued the petition, as the designated
executor in the will. Jose then proposed a partition. In the proposal, he included properties which he
alleged were conjugal properties, but this included the 6 disputed paraphernal properties of Juliana in
Batangas. The Court approved the project of partition, so they ordered new certificates be issued in
favor of Jose as trustee of Fideicomiso covering 1/2 of the properties listed under the project partition;
and regarding the other half, to be registered in the name of Jose as heir of Juliana. The properties
which Jose had alleged as registered in his and Juliana’s names, including the disputed lots, were
adjudicated to Jose as heir. These were excluded from the trust Fideicomiso. A complaint for
reconveyance was filed by the current administrator. The complaint essentially alleged that Jose was
able to register in his name the disputed properties, which were paraphernal properties of Juliana. The
disputed properties were included in the inventory as if they formed part of Jose’s estate when in fact,
Jose was holding them only in trust for the trust estate of Juliana.

Issue:
Whether or not there was an implied trust

Ruling:
Yes. The disputed properties were the paraphernal properties of Juliana which should have been
included in the Fideicomiso. Their registration in the name of Jose would be erroneous and Jose’s
possession would be that of a trustee in an implied trust (Art 1456). 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
#36
DBP vs COA
G.R. No. 144516
February 11, 2004
Facts:
The DBP contributed funds into a retirement plan for its officers and employees, and constituted a board
of trustees vesting it with the control and administration of the fund. Augmentation to the retirement
fund were made through loans extended to the qualified officers and employees, which were invested in
shares of stocks and other marketable securities, and the earnings from which were directed to be
distributed to the beneficiaries even before they have retired.
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. 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
Issue:
Whether or not the DBP officials and employees had the right to the fund nor to the income earned until
they retire
Ruling:
Yes. The beneficiaries or cestui que trust of the Fund are the DBP officials and employees who will retire
As COA correctly observed, the right of the employees to claim their gratuities from the Fund is still
inchoate. The law does not allow employees to receive their gratutities until they retire. However, this
does not invalidate the trust created by DBP or the concomitant transfer of legal title to the trustees. It
is enough that the beneficiaries are sufficiently certain or identifiable. The income of the Fund does not
form part of the revenues or profits of DBP, and DBP may not use such income for its own benefit. The
principal and income of the Fund together constitute the res or subject matter of the trust. The
Agreement established the Fund precisely so that it would eventually be sufficient to pay for the
retirement benefits of DBP employees under [the law] without additional outlay from DBP. COA itself
acknowledged the authority of DBP to set up the Fund. However, COA’s subsequent directive would
divest the Fund of income, and defeat the purpose for the Fund’s creation.

#37
Miguel J. Ossorio Pension Foundation vs CA
G.R. No. 162175
 June 28, 2010
Facts:
Petitioner(MJOSPF), a non-stock and non-profit corporation, was organized for the purpose of holding
title to and administering the employees' trust or retirement funds (Employees' Trust Fund) established
for the benefit of the employees of Victorias Milling Company (VMC)
MJOSPF, as trustee, claims that the income earned by the Employees' Trust Fund is tax exempt under
Section 53(b) of the National Internal Revenue Code (Tax Code). They decided to invest part of the
Employees' Trust Fund to purchase a lot[6] in the Madrigal Business Park (MBP lot) in Alabang,
Muntinlupa which they then bought the MBP lot through VMC.
MJOSPF claims that since it needed funds to pay the retirement and pension benefits of VMC employees
and to reimburse advances made by VMC, their Board of Trustees authorized the sale of its share in the
MBP lot.
Petitioner claims that it is a co-owner of the MBP lot as trustee of the Employees' Trust Fund, based on
the notarized Memorandum of Agreement
Petitioner asserts that VMC has confirmed that petitioner, as trustee of the Employees' Trust
CA rendered a decision denying the appeal.
petitioner elevated the case before this Court.
The CTA held that under Section 53(b)[20] [now Section 60(b)] of the Tax Code, it is not petitioner that is
entitled to exemption from income tax but the income or earnings of the Employees' Trust Fund. The
CTA stated that petitioner is not the pension... trust itself but it is a separate and distinct entity whose
function is to administer the pension plan for some VMC employees.
CTA further ruled that petitioner failed to present any evidence to prove that the money used to
purchase the MBP lot came from the Employees' Trust Fund.
CTA concluded that petitioner is estopped from claiming a tax exemption. The CTA pointed out that
VMC has led the government to believe that it is the sole owner of the MBP lot through its execution of
the Deeds of Absolute Sale both during the purchase and subsequent sale... of the MBP lot and through
the registration of the MBP lot in VMC's name.
CA agreed with the CTA that these pieces of documentary evidence submitted by petitioner are largely
self-serving and can be contrived easily. The CA ruled that these documents failed to show that the
funds used to purchase the MBP lot came from the Employees' Trust Fund.
Issues:
Whether or not petitioner is entitled to claim a refund for the income tax paid on the sale of its co-
owned MBP lot in its capacity as trustee of the Employees Trust Fund.
Ruling:
The court ruled that, the tax-exempt character of petitioner’s Employees Trust Fund is not an issue in
this case because the tax-exempt character of the Employees Trust Fund has long been settled. It is also
settled that petitioner exist for the purpose of holding title to and administering the tax exempt
Employees Trust Fund which was established for the benefit of VMC’s employees. As such, petitioner
has the personality to claim tax refunds due to the Employees Trust Fund.
As to the proof of co-ownership of the MBP lot, the law expressly allows a co-owner (1 st co-
owner) of a parcel of land to register his proportionate share in the name of his co-owner (2 nd co-owner)
in whose name the entire land is registered. The 2 nd co-owner serves as a legal trustee of the 1 st co-
owner insofar as the proportionate share of the 1 st co-owner is concerned. The 1st co-owner remains the
owner of his proportionate share and not the 2 nd co-owner in whose name the entire land is registered,
as provided in Art. 1452 of the NCC.
The income from the trust fund investments is therefore exempt from the payment of income tax
and consequently from the payment of the creditable withholding tax on the sale of their real property

#38
Yu v. NLRC
G.R. No. 97212
June 30, 1993

Facts:

Benjamin Yu used to be the Assistant General Manager of Jade Mountain, a partnership engaged in
marble quarrying and export business. The majority of the founding partners sold their interests in said
partnership to Willy Co and Emmanuel Zapanta without Yu’s knowledge. Said new partnership
continued operating under the same name and continued the business’s operations. However, it
transferred its main office from Makati to Mandaluyong. Said new partnership did not anymore availed
of the services of Yu. Thus, he filed a complaint for illegal dismissal, recovery of unpaid wages and
damages.

Issue:
Whether or not the former partnership had been extinguished and replaced by a new partnership

Ruling :

The legal effect of the changes in the membership of the partnership was the dissolution of the old
partnership which had hired Yu in 1984 and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in 1987. The new partnership simply took over the business enterprise owned by the
preceeding partnership, and continued using the old name of Jade Mountain Products Company
Limited, without winding up the business affairs of the old partnership, paying off its debts, liquidating
and distributing its net assets, and then re-assembling the said assets or most of them and opening a
new business enterprise. Not only the retiring partners but also the new partnership itself which
continued the business of the old, dissolved, one, are liable for the debts of the preceding partnership.