Trust Cases

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-26699 March 16, 1976
BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO

ALCURIZA, ARTURO ALCURIZA, OSCAR ALCURIZA and ANITA ALCURIZA, the
latter two being minors are represented by guardian ad litem, ARTURO
ALCURIZA, plaintiffs-appellants,
vs.
JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the
Intestate of JUAN S. SALAO; now MERCEDES P. VDA. DE SALAO, ROBERTO P.
SALAO, MARIA SALAO VDA. DE SANTOS, LUCIANA P. SALAO, ISABEL SALAO
DE SANTOS, and PABLO P. SALAO, as successors-in-interest of the late JUAN S.
SALAO, together with PABLO P. SALAO, Administrator, defendants-appellants.
Eusebio V. Navarro for plaintiffs-appellants.
Nicolas Belmonte & Benjamin T. de Peralta for defendants-appellants.
AQUINO, J.:
This litigation regarding a forty-seven-hectare fishpond located at Sitio Calunuran,

Hermosa, Bataan involves the law of trusts and prescription. The facts are as follows:
The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal
begot four children named Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel
Salao died in 1885. His eldest son, Patricio, died in 1886 survived by his only child.
Valentin Salao.
There is no documentary evidence as to what, properties formed part of Manuel Salao's

estate, if any. His widow died on May 28, 1914. After her death, her estate was
administered by her daughter Ambrosia.
It was partitioned extrajudicially in a deed dated December 29, 1918 but notarized on
May 22, 1919 (Exh. 21). The deed was signed by her four legal heirs, namely, her three
children, Alejandra, Juan and Ambrosia, and her grandson, Valentin Salao, in
representation of his deceased father, Patricio.
The lands left by Valentina Ignacio, all located at Barrio Dampalit were as follows:
Nature of Land
Area ins
(1) One-half interest in a fishpond which she had inherited from her parents, Feliciano
Ignacio and Damiana Mendoza, and the other half of which was owned by her co-
owner, Josefa Sta. Ana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700
(2) Fishpond inherited from her parents . . . . . . . . . . . . 7,418
(3) Fishpond inherited from her parents . . . . . . . . . . . . . 6,989

(4) Fishpond with a bodega for salt . . . . . . . . . . . . . . . . 50,469
(5) Fishpond with an area of one hectare, 12 ares and 5 centares purchased from
Bernabe and Honorata Ignacio by Valentina Ignacio on November 9, 1895 with a
bodega for salt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,205
(6) Fishpond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
(7) One-half interest in a fishpond with a total area of 10,424 square meters, the other
half was owned by A. Aguinaldo . . . . . . . . . . . . . . . . . . . . . . . 5,217
(8) Riceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,454
(9) Riceland purchased by Valentina Ignacio from Eduardo Salao on January 27, 1890
with a house and two camarins thereon . . . . . . . . . . . . . . . . . . 8,065
(10) Riceland in the name of Ambrosia Salao, with an area of 11,678 square meters, of
which 2,173 square meters were sold to Justa Yongco . . . . . . . . . .9,505
TOTAL . . . . . . . . . . . . .. 179,022 square
ms
To each of the legal heirs of Valentina Ignacio was adjudicated a distributive share
valued at P8,135.25. In satisfaction of his distributive share, Valentin Salao (who was
then already forty-eight years old) was given the biggest fishpond with an area of
50,469 square meters, a smaller fishpond with an area of 6,989 square meters and the
riceland with a net area of 9,905 square meters. Those parcels of land had an
aggregate appraised value of P13,501 which exceeded Valentin's distributive share. So
in the deed of partition he was directed to pay to his co-heirs the sum of P5,365.75.
That arrangement, which was obviously intended to avoid the fragmentation of the
lands, was beneficial to Valentin.
In that deed of partition (Exh. 21) it was noted that "desde la muerte de Valentina
Ignacio y Mendoza, ha venido administrando sus bienes la referida Ambrosia Salao"
"cuya administracion lo ha sido a satisfaccion de todos los herederos y por designacion
los mismos". It was expressly stipulated that Ambrosia Salao was not obligated to
render any accounting of her administration "en consideracion al resultado satisfactorio
de sus gestiones, mejoradas los bienes y pagodas por ella las contribusiones (pages 2
and 11, Exh. 21).
By virtue of the partition the heirs became "dueños absolutos de sus respectivas
propiedadas, y podran inmediatamente tomar posesion de sus bienes, en la forma
como se han distribuido y llevado a cabo las adjudicaciones" (page 20, Exh. 21).
The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio
her two children, Juan Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, OCT
No. 185 of the Registry of Deeds of Pampanga, in their names for a forty-seven-hectare
fishpond located at Sitio Calunuran, Lubao, Pampanga (Exh. 14). It is also known as Lot
No. 540 of the Hermosa cadastre because that part of Lubao later became a part of
Bataan.
The Calunuran fishpond is the bone of contention in this case.
Plaintiffs' theory is that Juan Y. Salao, Sr. and his sister Ambrosia had engaged in the
fishpond business. Where they obtained the capital is not shown in any documentary
evidence. Plaintiffs' version is that Valentin Salao and Alejandra Salao were included in
that joint venture, that the funds used were the earnings of the properties supposedly
inherited from Manuel Salao, and that those earnings were used in the acquisition of the
Calunuran fishpond. There is no documentary evidence to support that theory.
On the other hand, the defendants contend that the Calunuran fishpond consisted of
lands purchased by Juan Y. Salao, Sr. and Ambrosia Salao in 1905, 1906, 1907 and
1908 as, shown in their Exhibits 8, 9, 10 and 13. But this point is disputed by the
plaintiffs.
However, there can be no controversy as to the fact that after Juan Y. Salao, Sr. and
Ambrosia Salao secured a Torrens title for the Calunuran fishpond in 1911 they
exercised dominical rights over it to the exclusion of their nephew, Valentin Salao.
Thus, on December 1, 1911 Ambrosia Salao sold under pacto de retro for P800 the
Calunuran fishpond to Vicente Villongco. The period of redemption was one year. In the
deed of sale (Exh19) Ambrosia confirmed that she and her brother Juan were
the dueños proindivisos of the said pesqueria. On December 7, 1911 Villongco, the
vendee a retro, conveyed the same fishpond to Ambrosia by way of lease for an anual
canon of P128 (Exh. 19-a).
After the fishpond was redeemed from Villongco or on June 8, 1914 Ambrosia and Juan
sold it under pacto de retro to Eligio Naval for the sum of P3,360. The period of
redemption was also one year (Exh. 20). The fishpond was later redeemed and Naval
reconveyed it to the vendors a retro in a document dated October 5, 1916 (Exh. 20-a).
The 1930 survey shown in the computation sheets of the Bureau of Lands reveals that
the Calunuran fishpond has an area of 479,205 square meters and that it was claimed
by Juan Salao and Ambrosia Salao, while the Pinanganacan fishpond (subsequently
acquired by Juan and Ambrosia) has an area of 975,952 square meters (Exh. 22).
Likewise, there is no controversy as to the fact that on May 27, 1911 Ambrosia Salao
bought for four thousand pesos from the heirs of Engracio Santiago a parcel of
swampland planted to bacawan and nipa with an area of 96 hectares, 57 ares and 73
centares located at Sitio Lewa, Barrio Pinanganacan, Lubao, Pampanga (Exh. 17-d).
The record of Civil Case No. 136, General Land Registration Office Record No. 12144,
Court of First Instance of Pampanga shows that Ambrosia Salao and Juan Salao filed
an application for the registration of that land in their names on January 15, 1916. They
alleged in their petition that "han adquirido dicho terreno por partes iguales y por la
compra a los herederos del finado, Don Engracio Santiago" (Exh. 17-a).
At the hearing on October 26, 1916 before Judge Percy M. Moir, Ambrosia testified for
the applicants. On that same day Judge Moir rendered a decision, stating, inter alia, that
the heirs of Engracio Santiago had sold the land to Ambrosia Salao and Juan Salao.
Judge Moir "ordena la adjudicacion y registro del terreno solicitado a nombre de Juan
Salao, mayor de edad y de estado casado y de su esposa Diega Santiago y Ambrosia
Salao, de estado soltera y mayor de edad, en participaciones iguales" (Exh. 17-e).
On November 28, 1916 Judge Moir ordered the issuance of a decree for the said land.
The decree was issued on February 21, 1917. On March 12, 1917 Original Certificate of
Title No. 472 of the Registry of Deeds of Pampanga was issued in the names of Juan
Salao and Ambrosia Salao.
That Pinanganacan or Lewa fishpond later became Cadastral Lot No. 544 of the
Hermosa cadastre (Exh. 23). It adjoins the Calunuran fishpond (See sketch, Exh. 1).
Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years (Exh. C). His
nephew, Valentin Salao, died on February 9, 1933 at the age of sixty years according to
the death certificate (Exh. A. However, if according to Exhibit 21, he was forty-eight
years old in 1918, he would be sixty-three years old in 1933).
The intestate estate of Valentin Salao was partitioned extrajudicially on December 28,
1934 between his two daughters, Benita Salao-Marcelo and Victorina Salao-Alcuriza
(Exh. 32). His estate consisted of the two fishponds which he had inherited in 1918 from
his grandmother, Valentina Ignacio.
If it were true that he had a one-third interest in the Calunuran and Lewa fishponds with
a total area of 145 hectares registered in 1911 and 1917 in the names of his aunt and
uncle, Ambrosia Salao and Juan Y. Salao, Sr., respectively, it is strange that no mention
of such interest was made in the extrajudicial partition of his estate in 1934.
It is relevant to mention that on April 8, 1940 Ambrosia Salao donated to her

grandniece, plaintiff Benita Salao, three lots located at Barrio Dampalit with a total area
of 5,832 square meters (Exit. L). As donee Benita Salao signed the deed of donation.
On that occasion she could have asked Ambrosia Salao to deliver to her and to the
children of her sister, Victorina, the Calunuran fishpond if it were true that it was held in
trust by Ambrosia as the share of Benita's father in the alleged joint venture.
But she did not make any such demand. It was only after Ambrosia Salao's death that
she thought of filing an action for the reconveyance of the Calunuran fishpond which
was allegedly held in trust and which had become the sole property of Juan Salao y
Santiago (Juani).
On September 30, 1944 or during the Japanese occupation and about a year before
Ambrosia Salao's death on September 14, 1945 due to senility (she was allegedly
eighty-five years old when she died), she donated her one-half proindiviso share in the
two fishponds in question to her nephew, Juan S. Salao, Jr. (Juani) At that time she was
living with Juani's family. He was already the owner of the the other half of the said
fishponds, having inherited it from his father, Juan Y. Salao, Sr. (Banli) The deed of
denotion included other pieces of real property owned by Ambrosia. She reserved for
herself the usufruct over the said properties during her lifetime (Exh. 2 or M).
The said deed of donation was registered only on April 5, 1950 (page 39, Defendants'
Record on Appeal).
The lawyer of Benita Salao and the Children of Victorina Salao in a letter dated January
26, 1951 informed Juan S. Salao, Jr. that his clients had a one-third share in the two
fishponds and that when Juani took possession thereof in 1945, he refused to give
Benita and Victorina's children their one-third share of the net fruits which allegedly
amounted to P200,000 (Exh. K).
Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated that
Valentin Salao did not have any interest in the two fishponds and that the sole owners
thereof his father Banli and his aunt Ambrosia, as shown in the Torrens titles issued in
1911 and 1917, and that he Juani was the donee of Ambrosia's one-half share (Exh. K-
1).
Benita Salao and her nephews and niece filed their original complaint against Juan S.
Salao, Jr. on January 9, 1952 in the Court of First Instance of Bataan (Exh. 36). They
amended their complaint on January 28, 1955. They asked for the annulment of the
donation to Juan S. Salao, Jr. and for the reconveyance to them of the Calunuran
fishpond as Valentin Salao's supposed one-third share in the 145 hectares of fishpond
registered in the names of Juan Y. Salao, Sr. and Ambrosia Salao.
Juan S. Salao, Jr. in his answer pleaded as a defense the indefeasibility of the Torrens
title secured by his father and aunt. He also invoked the Statute of Frauds, prescription
and laches. As counter-claims, he asked for moral damages amounting to P200,000,
attorney's fees and litigation expenses of not less than P22,000 and reimbursement of
the premiums which he has been paying on his bond for the lifting of the receivership
Juan S. Salao, Jr. died in 1958 at the age of seventy-one. He was substituted by his
widow, Mercedes Pascual and his six children and by the administrator of his estate.
In the intestate proceedings for the settlement of his estate the two fishponds in
question were adjudicated to his seven legal heirs in equal shares with the condition
that the properties would remain under administration during the pendency of this case
(page 181, Defendants' Record on Appeal).
After trial the trial court in its decision consisting of one hundred ten printed pages
dismissed the amended complaint and the counter-claim. In sixty-seven printed pages it
made a laborious recital of the testimonies of plaintiffs' fourteen witnesses, Gregorio
Marcelo, Norberto Crisostomo, Leonardo Mangali Fidel de la Cruz, Dionisio Manalili,
Ambrosio Manalili, Policarpio Sapno, Elias Manies Basilio Atienza, Benita Salao, Emilio
Cagui Damaso de la Peña, Arturo Alcuriza and Francisco Buensuceso, and the
testimonies of defendants' six witnesses, Marcos Galicia, Juan Galicia, Tiburcio Lingad,
Doctor Wenceslao Pascual, Ciriaco Ramirez and Pablo P. Salao. (Plaintiffs presented
Regino Nicodemus as a fifteenth witness, a rebuttal witness).
The trial court found that there was no community of property among Juan Y. Salao, Sr.,
Ambrosia Salao and Valentin Salao when the Calunuran and Pinanganacan (Lewa)
lands were acquired; that a co-ownership over the real properties of Valentina Ignacio
existed among her heirr after her death in 1914; that the co-ownership was
administered by Ambrosia Salao and that it subsisted up to 1918 when her estate was
partitioned among her three children and her grandson, Valentin Salao.
The trial court surmised that the co-ownership which existed from 1914 to 1918 misled
the plaintiffs and their witnesses and caused them to believe erroneously that there was
a co-ownership in 1905 or thereabouts. The trial court speculated that if valentin had a
hand in the conversion into fishponds of the Calunuran and Lewa lands, he must have
done so on a salary or profit- sharing basis. It conjectured that Valentin's children and
grandchildren were given by Ambrosia Salao a portion of the earnings of the fishponds
as a reward for his services or because of Ambrosia's affection for her grandnieces.
The trial court rationalized that Valentin's omission during his lifetime to assail the
Torrens titles of Juan and Ambrosia signified that "he was not a co-owner" of the
fishponds. It did not give credence to the testimonies of plaintiffs' witnesses because
their memories could not be trusted and because no strong documentary evidence
supported the declarations. Moreover, the parties involved in the alleged trust were
already dead.
It also held that the donation was validly executed and that even if it were void Juan S.
Salao, Jr., the donee, would nevertheless be the sole legal heir of the donor, Ambrosia
Salao, and would inherit the properties donated to him.
Both parties appealed. The plaintiffs appealed because their action for reconveyance
was dismissed. The defendants appealed because their counterclaim for damages was
dismissed.
The appeals, which deal with factual and legal issues, were made to the Court of
Appeals. However, as the amounts involved exceed two hundred thousand pesos, the
Court of Appeals elevated the case to this Court in its resolution of Octoter 3, 1966 (CA-
G.R. No. 30014-R).
Plaintiffs' appeal. — An appellant's brief should contain "a subject index index of the
matter in the brief with a digest of the argument and page references" to the contents of
the brief (Sec. 16 [a], Rule 46, 1964 Rules of Court; Sec. 17, Rule 48, 1940 Rules of
Court).
The plaintiffs in their appellants' brief consisting of 302 pages did not comply with that
requirement. Their statements of the case and the facts do not contain "page references
to the record" as required in section 16[c] and [d] of Rule 46, formerly section 17, Rule
48 of the 1940 Rules of Court.
Lawyers for appellants, when they prepare their briefs, would do well to read and re-
read section 16 of Rule 46. If they comply strictly with the formal requirements
prescribed in section 16, they might make a competent and luminous presentation of
their clients' case and lighten the burden of the Court.
What Justice Fisher said in 1918 is still true now: "The pressure of work upon this Court
is so great that we cannot, in justice to other litigants, undertake to make an
examination of the voluminous transcript of the testimony (1,553 pages in this case,
twenty-one witnesses having testified), unless the attorneys who desire us to make
such examination have themselves taken the trouble to read the record and brief it in
accordance with our rules" (Palara vs. Baguisi 38 Phil. 177, 181). As noted in an old
case, this Court decides hundreds of cases every year and in addition resolves in
minute orders an exceptionally considerable number of petitions, motions and
interlocutory matters (Alzua and Arnalot vs. Johnson, 21 Phil. 308, 395; See In re
Almacen, L-27654, February 18, 1970, 31 SCRA 562, 573).
Plaintiffs' first assignment of error raised a procedural issue. In paragraphs 1 to 14 of

their first cause of action they made certain averments to establish their theory that
Valentin Salao had a one-third interest in the two fishponds which were registrered in
the names of Juan Y. Salao, Sr. (Banli) and Ambrosia Salao.
Juan S. Salao, Jr. (Juani) in his answer "specifically" denied each and all the
allegations" in paragraphs I to 10 and 12 of the first cause of action with the qualification
that Original certificates of Title Nos. 185 and 472 were issued "more than 37 years
ago" in the names of Juan (Banli) and Ambrosia under the circumstances set forth in
Juan S. Salao, Jr.'s "positive defenses" and "not under the circumstances stated in the
in the amended complaint".
The plaintiffs contend that the answer of Juan S. Salao, Jr. was in effect tin admission of
the allegations in their first cause of action that there was a co-ownership among
Ambrosia, Juan, AIejandra and Valentin, all surnamed Salao, regarding the Dampalit
property as early as 1904 or 1905; that the common funds were invested the acquisition
of the two fishponds; that the 47-hectare Calunuran fishpond was verbally adjudicated
to Valentin Salao in the l919 partition and that there was a verbal stipulation to to
register "said lands in the name only of Juan Y. Salao".
That contention is unfounded. Under section 6, Rule 9 of the 1940 of Rules of Court the
answer should "contain either a specific dinial a statement of matters in accordance of
the cause or causes of action asserted in the complaint". Section 7 of the same rule
requires the defendant to "deal specificaly with each material allegation of fact the truth
of wihich he does not admit and, whenever practicable shall set forth the substance of
the matters which he will rely upon to support his denial". "Material averments in the
complaint, other than those as to the amount damage, shall be deemed admitted when
specifically denied" (Sec. 8). "The defendant may set forth set forth by answer as many
affirmative defenses as he may have. All grounds of defenses as would raise issues of
fact not arising upon the preceding pleading must be specifically pleaded" (Sec. 9).
What defendant Juan S. Salao, Jr. did in his answer was to set forth in his "positive
defenses" the matters in avoidance of plaintiffs' first cause of action which which
supported his denials of paragraphs 4 to 10 and 12 of the first cause of action.
Obviously, he did so because he found it impracticable to state pierceneal his own
version as to the acquisition of the two fishponds or to make a tedious and repetitious
recital of the ultimate facts contradicting allegations of the first cause of action.
We hold that in doing so he substantially complied with Rule 9 of the 1940 Rules of
Court. It may be noted that under the present Rules of Court a "negative defense is the
specific denial of t the material fact or facts alleged in the complaint essential to
plaintiff's cause of causes of action". On the other hand, "an affirmative defense is an
allegation of new matter which, while admitting the material allegations of the complaint,
expressly or impliedly, would nevertheless prevent or bar recovery by the plaintiff."
Affirmative defenses include all matters set up "by of confession and avoidance". (Sec.
5, Rule 6, Rules of Court).
The case of El Hogar Filipino vs. Santos Investments, 74 Phil. 79 and similar cases are
distinguishable from the instant case. In the El Hogar case the defendant filed a laconic
answer containing the statement that it denied "generally ans specifically each and
every allegation contained in each and every paragraph of the complaint". It did not set
forth in its answer any matters by way of confession and avoidance. It did not interpose
any matters by way of confession and avoidance. It did not interpose any affirmative
defenses.
Under those circumstances, it was held that defendant's specific denial was really a
general denial which was tantamount to an admission of the allegations of the complaint
and which justified judgment on the pleadings. That is not the situation in this case.
The other nine assignments of error of the plaintiffs may be reduced to the decisive
issue of whether the Calunuran fishpond was held in trust for Valentin Salao by Juan Y.
Salao, Sr. and Ambrosia Salao. That issue is tied up with the question of whether
plaintiffs' action for reconveyance had already prescribed.
The plaintiffs contend that their action is "to enforce a trust which defendant" Juan S.
Salao, Jr. allegedly violated. The existence of a trust was not definitely alleged in
plaintiffs' complaint. They mentioned trust for the first time on page 2 of their appelants'
brief.
To determine if the plaintiffs have a cause of action for the enforcement of a trust, it is
necessary to maek some exegesis on the nature of trusts (fideicomosis). Trusts in
Anglo-American jurisprudence were derived from the fideicommissa of the Roman law
(Government of the Philippine Islands vs. Abadilla, 46 Phil. 642, 646).
"In its technical legal sense, a trust is defined as the right, enforceable solely in equity,
to the beneficial enjoyment of property, the legal title to which is vested in another, but
the word 'trust' is frequently employed to indicate duties, relations, and responsibilities
which are not strictly technical trusts" (89 C.J.S. 712).
A person who establishes a trust is called the trustor; one in whom confidence is
reposed as regards property for the benefit of another person is known as the trustee;
and the person for whose benefit the trust has been created is referred to as the
beneficiary" (Art. 1440, Civil Code). There is a fiduciary relation between the trustee and
the cestui que trust as regards certain property, real, personal, money or choses in
action (Pacheco vs. Arro, 85 Phil. 505).
"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" (Art. 1441,
Civil Code). "No express trusts concerning an immovable or any interest therein may be
proven by parol evidence. An implied trust may be proven by oral evidence" (Ibid, Arts.
1443 and 1457).
"No particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended" (Ibid, Art. 1444; Tuason de Perez vs. Caluag, 96 Phil.
981; Julio vs. Dalandan, L-19012, October 30, 1967, 21 SCRA 543, 546). "Express
trusts are those which are created by the direct and positive acts of the parties, by some
writing or deed, or will, or by words either expressly or impliedly evincing an intention to
create a trust" (89 C.J.S. 72).
"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 matter of equity, independently of the particular intention of the
parties" (89 C.J.S. 724). They are ordinarily subdivided into resulting and constructive
trusts (89 C.J.S. 722).
"A resulting trust. is broadly defined as a trust which is raised or created by the act or
construction of law, but in its more restricted sense it is a trust raised by implication of
law and presumed to have been contemplated by the parties, the intention as to which
is to be found in the nature of their transaction, but not expressed in the deed or
instrument of conveyance (89 C.J.S. 725). Examples of resulting trusts are found in
articles 1448 to 1455 of the Civil Code. (See Padilla vs. Court of Appeals, L-31569,
September 28, 1973, 53 SCRA 168, 179; Martinez vs. Graño 42 Phil. 35).
On the other hand, a constructive trust is -a trust "raised by construction of law, or

arising by operation of law". In a more restricted sense and as contra-distinguished from
a resulting trust, a constructive trust is "a trust not created by any words, either
expressly or impliedly evincing a direct intension to create a trust, but by the
construction of equity in order to satisfy the demands of justice." It does not arise "by
agreement or intention, but by operation of law." (89 C.J.S. 726-727).
Thus, "if property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes" (Art. 1456, Civil Code).
Or "if a person obtains legal title to property by fraud or concealment, courts of equity
will impress upon the title a so-called constructive trust in favor of the defrauded party".
Such a constructive trust is not a trust in the technical sense. (Gayondato vs. Treasurer
of the P. I., 49 Phil. 244).
Not a scintilla of documentary evidence was presented by the plaintiffs to prove that
there was an express trust over the Calunuran fishpond in favor of Valentin Salao.
Purely parol evidence was offered by them to prove the alleged trust. Their claim that in
the oral partition in 1919 of the two fishponds the Calunuran fishpond was assigned to
Valentin Salao is legally untenable.
It is legally indefensible because the terms of article 1443 of the Civil Code (already in
force when the action herein was instituted) are peremptory and unmistakable: parol
evidence cannot be used to prove an express trust concerning realty.
Is plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or

constructive, regarding the two fishponds?
Plaintiffs' pleadings and evidence cannot be relied upon to prove an implied trust. The
trial court's firm conclusion that there was no community of property during the lifetime
of Valentina; Ignacio or before 1914 is substantiated by defendants' documentary
evidence. The existence of the alleged co-ownership over the lands supposedly
inherited from Manuel Salao in 1885 is the basis of plaintiffs' contention that the
Calunuran fishpond was held in trust for Valentin Salao.
But that co-ownership was not proven by any competent evidence. It is quite improbable
because the alleged estate of Manuel Salao was likewise not satisfactorily proven. The
plaintiffs alleged in their original complaint that there was a co-ownership
over two hectares of land left by Manuel Salao. In their amended complaint, they
alleged that the co-ownership was over seven hectares of fishponds located in Barrio
Dampalit, Malabon, Rizal. In their brief they alleged that the fishponds, ricelands and
saltbeds owned in common in Barrio Dampalit had an area of twenty-eight hectares, of
which sixteen hectares pertained to Valentina Ignacio and eleven hectares represented
Manuel Salao's estate.
They theorized that the eleven hectares "were, and necessarily, the nucleus, nay the
very root, of the property now in litigation (page 6, plaintiffs-appellants' brief). But the
eleven hectares were not proven by any trustworthy evidence. Benita Salao's testimony
that in 1918 or 1919 Juan, Ambrosia, Alejandra and Valentin partitioned twenty-eight
hectares of lands located in Barrio Dampalit is not credible. As noted by the
defendants, Manuel Salao was not even mentioned in plaintiffs' complaints.
The 1919 partition of Valentina Ignacio's estate covered about seventeen hectares of

fishponds and ricelands (Exh. 21). If at the time that partition was made there were
eleven hectares of land in Barrio Dampalit belonging to Manuel Salao, who died in
1885, those eleven hectares would have been partitioned in writing as in the case of the
seventeen hectares belonging to Valentina Ignacio's estate.
It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to

Valentin Salao mere by by word of mouth. Incredible because for the partition of
the seventeen hectares of land left by Valentina Ignacio an elaborate "Escritura de
Particion" consisting of twenty-two pages had to be executed by the four Salao heirs.
Surely, for the partition of one hundred forty-five hectares of fishponds among three of
the same Salao heirs an oral adjudication would not have sufficed.
The improbability of the alleged oral partition becomes more evident when it is borne in
mind that the two fishponds were registered land and "the act of registration" is "the
operative act" that conveys and affects the land (Sec. 50, Act No. 496). That means that
any transaction affecting the registered land should be evidenced by a registerable
deed. The fact that Valentin Salao and his successors-in-interest, the plaintiffs, never
bothered for a period of nearly forty years to procure any documentary evidence to
establish his supposed interest ox participation in the two fishponds is very suggestive
of the absence of such interest.
The matter may be viewed from another angle. As already stated, the deed of partition
for Valentina Ignacio's estate wag notarized in 1919 (Exh. 21). The plaintiffs assert that
the two fishponds were verbally partitioned also in 1919 and that the Calunuran
fishpond was assigned to Valentin Salao as his share.
Now in the partition of Valentina Ignacio's estate, Valentin was obligated to pay
P3,355.25 to Ambrosia Salao. If, according to the plaintiffs, Ambrosia administered the
two fishponds and was the custodian of its earnings, then it could have been easily
stipulated in the deed partitioning Valentina Ignacio's estate that the amount due from
Valentin would just be deducted by Ambrosia from his share of the earnings of the two
fishponds. There was no such stipulation. Not a shred of documentary evidence shows
Valentin's participation in the two fishponds.
The plaintiffs utterly failed to measure up to the yardstick that 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. Molo-Peckson,
116 Phil. 1267, 1273).
Trust and trustee; establishment of trust by parol evidence; certainty of

proof. — Where a trust is to be established by oral proof, the testimony
supporting it must be sufficiently strong to prove the right of the alleged
beneficiary with as much certainty as if a document proving the trust were
shown. A trust cannot be established, contrary to the recitals of a Torrens
title, upon vague and inconclusive proof. (Syllabus, Suarez vs. Tirambulo,
59 Phil. 303).
Trusts; evidence needed to establish trust on parol testimony. — In order

to establish a trust in real property by parol evidence, the proof should be
as fully convincing as if the act giving rise to the trust obligation were
proven by an authentic document. Such a trust cannot be established
upon testimony consisting in large part of insecure surmises based on
ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110).
The foregoing rulings are good under article 1457 of the Civil Code which, as already
noted, allows an implied trust to be proven by oral evidence. Trustworthy oral evidence
is required to prove an implied trust because, oral evidence can be easily fabricated.
On the other hand, a Torrens title is generally a conclusive of the ownership of the land
referred to therein (Sec. 47, Act 496). A strong presumption exists. that Torrens titles
were regularly issued and that they are valid. In order to maintain an action for
reconveyance, proof as to the fiduciary relation of the parties must be clear and
convincing (Yumul vs. Rivera and Dizon, 64 Phil. 13, 17-18).
The real purpose of the Torrens system is, to quiet title to land. "Once a title is
registered, the owner may rest secure, without the necessity of waiting in the portals of
the court, or sitting in the mirador de su casa, to avoid the possibility of losing his land"
(Legarda and Prieto vs. Saleeby, 31 Phil. 590, 593).
There was no resulting trust in this case because there never was any intention on the
part of Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There
was no constructive trust because the registration of the two fishponds in the names of
Juan and Ambrosia was not vitiated by fraud or mistake. This is not a case where to
satisfy the demands of justice it is necessary to consider the Calunuran fishpond " being
held in trust by the heirs of Juan Y. Salao, Sr. for the heirs of Valentin Salao.
And even assuming that there was an implied trust, plaintiffs' action is clearly barred by
prescription or laches (Ramos vs. Ramos, L-19872, December 3, 1974, 61 SCRA 284;
Quiniano vs. Court of Appeals, L-23024, May 31, 1971, 39 SCRA 221; Varsity Hills, Inc.
vs. Navarro, 9, February 29, 1972, 43 SCRA 503; Alzona vs. Capunitan and Reyes, 114
Phil. 377).
Under Act No. 190, whose statute of limitation would apply if there were an implied trust
in this case, the longest period of extinctive prescription was only ten year (Sec. 40;
Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266).
The Calunuran fishpond was registered in 1911. The written extrajudicial demand for its
reconveyance was made by the plaintiffs in 1951. Their action was filed in 1952 or after
the lapse of more than forty years from the date of registration. The plaintiffs and their
predecessor-in-interest, Valentin Salao, slept on their rights if they had any rights at
all. Vigilanti prospiciunt jura or the law protects him who is watchful of his rights (92
C.J.S. 1011, citing Esguerra vs. Tecson, 21 Phil. 518, 521).
"Undue delay in the enforcement of a right is strongly persuasive of a lack of merit in the
claim, since it is human nature for a person to assert his rights most strongly when they
are threatened or invaded". "Laches or unreasonable delay on the part of a plaintiff in
seeking to enforce a right is not only persuasive of a want of merit but may, according to
the circumstances, be destructive of the right itself." (Buenaventura vs. David, 37 Phil.
435, 440-441).
Having reached the conclusion that the plaintiffs are not entitled to the reconveyance of
the Calunuran fishpond, it is no longer n to Pass upon the validity of the donation made
by Ambrosia Salao to Juan S. Salao, Jr. of her one-half share in the two fishponds The
plaintiffs have no right and personality to assil that donation.
Even if the donation were declared void, the plaintiffs would not have any successional
rights to Ambrosia's share. The sole legal heir of Ambrosia was her nephew, Juan, Jr.,
her nearest relative within the third degree. Valentin Salao, if living in 1945 when
Ambrosia died, would have been also her legal heir, together with his first cousin, Juan,
Jr. (Juani). Benita Salao, the daughter of Valentin, could not represent him in the
succession to the estate of Ambrosia since in the collateral line, representation takes
place only in favor of the children of brothers or sisters whether they be of the full or half
blood is (Art 972, Civil Code). The nephew excludes a grandniece like Benita Salao or
great-gandnephews like the plaintiffs Alcuriza (Pavia vs. Iturralde 5 Phil. 176).
The trial court did not err in dismissing plaintiffs' complaint.
Defendants' appeal. — The defendants dispute the lower court's finding that the
plaintiffs filed their action in good faith. The defendants contend that they are entitled to
damages because the plaintiffs acted maliciously or in bad faith in suing them. They ask
for P25,000 attorneys fees and litigation expenses and, in addition, moral damages.
We hold that defemdamts' appeal is not meritorious. The record shows that the plaintiffs
presented fifteen witnesses during the protracted trial of this case which lasted from
1954 to 1959. They fought tenaciously. They obviously incurred considerable expenses
in prosecuting their case. Although their causes of action turned out to be unfounded,
yet the pertinacity and vigor with which they pressed their claim indicate their sincerity
and good faith.
There is the further consideration that the parties were descendants of common
ancestors, the spouses Manuel Salao and Valentina Ignacio, and that plaintiffs' action
was based on their honest supposition that the funds used in the acquisition of the lands
in litigation were earnings of the properties allegedly inherited from Manuel Salao.
Considering those circumstances, it cannot be concluded with certitude that plaintiffs'

action was manifestly frivolous or was primarily intended to harass the defendants. An
award for damages to the defendants does not appear to be just and proper.
The worries and anxiety of a defendant in a litigation that was not maliciously instituted
are not the moral damages contemplated in the law (Solis & Yarisantos vs. Salvador, L-
17022, August 14, 1965, 14 SCRA 887; Ramos vs. Ramos, supra). The instant case is
not among the cases mentioned in articles 2219 and 2220 of the Civil Code wherein
moral damages may be recovered. Nor can it be regarded as analogous to any of the
cases mentioned in those articles.
The adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not
have meant to impose a penalty on the right to litigate; such right is so
precious that moral damages may not be charged on those who may
exercise it erroneously. (Barreto vs. Arevalo, 99 Phil. 771. 779).
The defendants invoke article 2208 (4) (11) of the Civil Code which provides that
attorney's fees may be recovered "in case of a clearly unfounded civil action or
proceeding against the plaintiff" (defendant is a plaintiff in his counterclaim) or "in any
other case where the court deems it just and equitable" that attorney's fees should he
awarded.
But once it is conceded that the plaintiffs acted in good faith in filing their action there
would be no basis for adjudging them liable to the defendants for attorney's fees and
litigation expenses (See Rizal Surety & Insurance Co., Inc. vs. Court of Appeals, L-
23729, May 16, 1967, 20 SCRA 61).
It is not sound public policy to set a premium on the right to litigate. An adverse decision
does not ipso facto justify the award of attorney's fees to the winning party (Herrera vs.
Luy Kim Guan, 110 Phil. 1020, 1028; Heirs of Justiva vs. Gustilo, 61 O. G. 6959).
The trial court's judgment is affirmed. No pronouncement as to costs.
SO ORDERED.
Barredo (Chairman), Antonio, Concepcion, Jr. and Martin, JJ., concur.
Fernando (Chairman, Second Division), J., took no part.
Martin, J., was designated to sit in the Second Division.

SUPREME COURT
Manila
EN BANC
G.R. No. L-17809 December 29, 1962
RESURRECCION DE LEON, ET AL., plaintiffs-appellees,

vs.
EMILIANA MOLO-PECKSON, ET AL., respondents-appellants.
Cornelio R. Magsarili for plaintiffs-appellees.

Sycip, Salazar, Luna and Associates for respondents-appellants.
BAUTISTA ANGELO, J.:
Resurreccion De Leon, et al. filed on November 13, 1958 before the Court of First
Instance of Rizal a complaint seeking to compel Emiliana Molo-Peckson, et al. to
convey to the former ten parcel of land located in Pasay City with an area of 1,749 sq.
m. upon payment of P1.00 per parcel upon the plea that said lots were willed or donated
in 1948 to the latter by their foster parents Mariano Molo y Legaspi and Juana Juan with
the understanding that they should sell them to the plaintiffs under the terms above-
stated.
Defendants, in their answer, disclaimed any legal obligation on their part to sell the
above properties to the plaintiffs for the nominal consideration of P1.00 per lot alleging
that if they executed the document on which the complaint is predicated it was on the
mistaken assumption that their foster parents had requested them that they executed on
August 9, 1956 a document revoking said donation which was acknowledged before
Notary Public Leoncio C. Jimenez.
No testimonial evidence was presented by either party. Instead, both agreed to submit
the case upon the presentation of their respective exhibits which were all admitted by
the trial court.
After trial on the merits, the court a quo rendered on September 21, 1960 a decision
wherein it held that, under the facts established by the evidence, trust has been
constituted by the late spouses Mariano Molo and Juana Juan over the ten parcels of
land in question in favor plaintiffs as beneficiaries and, as a consequence concluded:
Considering all the foregoing, the Court orders:
1. The defendants, jointly and severally to free the said ten (10) parcels of land
from the mortgage lien in favor of the Rehabilitation Finance Corporation (now
Development Bank of the Philippines) and Claro Cortez, and thereafter to sign
and execute in favor of the plaintiffs a deed of absolute sale of the said properties
for and in consideration of TEN (P10.00) PESOS already deposited in Court after
all conditions imposed in Exhibit A have been complied with;
2. That in the event the defendants shall refuse to execute and perform the
above, they are ordered, jointly and severally, to pay the plaintiffs the value of
said ten (10) parcels of land in question, the amount to be assessed by the City
of Pasay City as the fair market value of the same, upon orders of the Court to
assess said value;
3. The defendants jointly and severally to pay the plaintiffs' Attorney's fees in the
amount of P3,000.00, as defendants acted in gross and evident bad faith in
refusing to satisfy the plaintiffs' plainly valid, just and demandable claim, under
Article 2208 sub-paragraph 5 of the New Civil Code;
4. The defendants to render an accounting of the fruits of said ten (10) parcels of
land from the time plaintiffs demanded the conveyance of said parcels of land on
August 11, 1956 as per Exhibits B and C, in accordance with the provisions of
Article 1164, New Civil Code which provides that the creditor has a right to the
fruit of the thing from the time the obligation to deliver it arises; and
5. The defendants to pay the costs.
Defendants took the present appeal.
On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he
bequeathed his entire estate to his wife, Juana Juan. This will was probated in the Court
of First Instance of Pasay City, Rizal, which was affirmed by the Supreme Court on
November 26, 1956 (G.R. No. L-8774). On May 11, 1948, Juana Juan in turn executed
a will naming therein many devisees and legatees, one of whom is Guillermo San
Rafael, mother of the plaintiffs and defendant Pilar Perez Nable. On June 7, 1948,
however, Juana Juan executed a donation inter vivos in favor of Emiliana Molo-Peckson
and Pilar Perez Nable of almost all of her entire property leaving only about P16,000.00
worth of property for the devisees mentioned in the will. Among the properties conveyed
to the donees are the ten parcels of land subject of the present action. Juana Juan died
on May 28, 1950.
On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed a

document which they called "MUTUAL AGREEMENT" the pertinent provisions of which
are:
That the above named parties hereby mutually agree by these presents . . . that
the following lots should be sold at ONE (1) PESO each to the following persons
and organization:
x x x x x x x x x
TO — JUSTA DE LEON and RESURRECCION DE LEON, several parcels of

land located at Calle Tolentino (South of Tenorio and Kapitan Magtibay), Pasay
City, share and share alike or half and half of TEN (10) LOTS described in:
Transfer Certificate of Title No. 28157 — and allocated as follows:
(a) To JUSTA DE LEON Five (5) Lots.
(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.
That this agreement is made in conformity with the verbal wish of the late Don
Mariano Molo y Legaspi and the late Dona Juana Francisco Juan y Molo. These
obligations were repeatedly told to Emiliana Molo Peckson, before their death
and that same should be fulfilled after their death.
On August 9, 1956, however, the same defendants, assisted by their husbands,

executed another document in which they revoked the so-called mutual agreement
mentioned above, and another relating to the same subject matter, stating therein that
the parties, "after matured and thorough study, realized that the above-mentioned public
instruments . . . do not represent their true and correct interpretation of the verbal
wishes of the late spouses Don Mariano Molo y Legaspi and Dona Juana Francisco
Juan y Molo." But after the execution of this document, that is, on August 11, 1956, the
beneficiary Resurreccion de Leon and Justa de Leon, thru their counsel demanded the
conveyance to them of the ten parcels of land for the consideration of P1.00 per parcel
as stated in the document of December 5, 1950. And having the defendants refused to
do so, said beneficiaries consigned on July 8, 1957 the amount of P10.00 as the
consideration of the ten parcels of land.lawphil.net
In this appeal, appellants assign the following errors:

I
THE LOWER COURT ERRED IN HOLDING THAT THE SPOUSES, MARIANO

MOLO AND JUANA JUAN, CONSTITUTED A TRUST OVER THE
PROPERTIES IN QUESTION PETITION WITH PLAINTIFFS-APPELLEES AS
BENEFICIARIES.
II
THE LOWER COURT ERRED IN APPLYING ARTICLE 1440, 1441, 1449, 1453
AND 1457 OF THE NEW CIVIL CODE TO THE CASE AT BAR.
III
THE LOWER COURT ERRED IN HOLDING PLAINTIFFS-APPELLEES'

EXHIBIT "A" TO BE A DECLARATION AGAINST INTEREST AND AN
ADMISSION BY DEFENDANTS-APPELLANTS.
IV
THE LOWER COURT ERRED IN HOLDING THAT DEFENDANTS-

APPELLANTS HAD NO RIGHT TO REVOKE EXHIBIT "A".
THE LOWER COURT ERRED, IN ORDERING APPELLANTS TO RENDER AN

ACCOUNTING OF THE FRUIT OF THE PROPERTIES IN QUESTION.
VI
THE LOWER COURT ERRED IN ORDERING APPELLANTS TO FREE THE

PROPERTIES FROM THE MORTGAGE LIENS IN FAVOR OF THE
DEVELOPMENT BANK OF THE PHILIPPINES AND CLARO CORTEZ.
VII
THE LOWER COURT ERRED IN AWARDING ATTORNEY'S FEES TO THE

APPELLEES.
VIII
THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT.
There is no merit in the claim that the document executed on December 5, 1950 does
not represent the true and correct interpretation by appellants of the verbal wish of their
foster parents relative to the conveyance for a nominal consideration to appellees of the
ten parcels of land in question considering the circumstances obtaining in the present
case. To begin with, this document was executed by appellants on December 5, 1950,
or about two years and six months from the time they acquired title to the lands by virtue
of the donation inter vivos executed in their favor by their foster mother Juana Juan and
six months after the death of the donor. There is nobody who could cajole them to
execute it, nor is there any force that could corce them to make the declaration therein
expressed, except the constraining mandat of their conscience to comply with "the
obligations repeatedly told to Emiliana Molo Peckson," one of appellants, before their
death, epitomized inthe "verbal wish of the late Don Mariano Molo y Legaspi and the
late Doña Juana Francisco Juan y Molo" to convey after their death said ten parcelsof
land at P1.00 a parcel to appellees. In fact, the acknowledgement appended to the
document they subscribed states that it was "their own free act andvoluntary
deed."1awphi1.net
Indeed, it is to be supposed that appellants understood and comprehended the legal

import of said documents when they executed it more so when bothof them had studied
in reputable centers of learning, one being a pharmacist and the other a member of the
bar. Moreover, they have more than ample time — the six months intervening betwen
the death of the donor and the execution of the document — to ponder not only wish of
their predecessors-in-interest but also on the propriety of putting in writing the mandate
they have received. It is, therefore, reasonable to presume that that document
represents the real wish of appellants' predecessors-in-interest and that the only thing to
be determinedis its real import and legal implications.
That the document represents a recognition of pre-existing trust or a declaration of an

express trust impressed on the ten parcels of land in question is evident. A declaration
of trust has been defined as an act by which a person acknowledges that the property,
title to which he holds, is held by him for the use of another (Griffith v. Maxfield, 51 S.W.
832, 66Ark. 513, 521). This is precisely the nature of the will of the donor: to convey the
titles of the lands to appellants with the duty to hold them intrust for the appellees.
Appellants oblingly complied with this duty byexecuting the document under
consideration.
True it is that to establish a trust the proof must be clear, satisfactory and convincing. It
cannot rest on vague, uncertain evidence, or on a loose,equivocal or indefinite
declaration (In re Tuttle's Estate, 200 A. 921, 132 Pa. Super 356); but here the
document in question clearly and unequivocallydeclares the existence of the trust even
if the same was executed subsequent to the death of the trustor, Juana Juan, for it has
been held that the right creating or declaring a trust need not be contemporaneous or
inter-parties (Stephenson v. Stephenson, 171 S.W. 2d 265, 351 Mo. 8; In re Corbin's
Trust Orhp., 57 York Leg. Rec. 201). It was even held that an express trust maybe
declared by a writing made after the legal estate has been vested in the trustee (Kurtz v.
Robinson, Tex. Civ. App. 256 S.W. 2d 1003). The contention, therefore, of appellants
that the will and the donation executed by their predecessors-in-interest were absolute
for it did not contain a hint that the lots in question will be held in trust by them does not
merit weight because the fact that an express trust was created by a deed which was
absolute on its face may be shown by a writing separate from the deed itself (Mugan v.
Wheeler, 145 S.W. 462, 241 Mo. 376).
The fact that the beneficiaries were not notified of the existence of the trust or that the
latter have not been given an opportunity to accept it isof no importance, for it is not
essential to the existence of a valid trustand to the right of the beneficiaries to enforce
the same that they had knowledge thereof the time of its creation (Stoehr v. Miller, 296
F. 414).Neither is it necessary that the beneficiary should consent to the creation of the
trust (Wockwire-Spencer Steel Corporation v. United Spring Mfg. Co.,142 N.E. 758, 247
Mass. 565). In fact it has been held that in case of a voluntary trust the assent of the
beneficiary is not necessary to render itvalid because as a general rule acceptance by
the beneficiary is presumed (Article 1446, new Civil Code; Cristobal v. Gomez, 50 Phil.
810).
It is true, as appellants contend, that the alleged declaration of trust was revoked, and
having been revoked it cannot be accepted, but the attempted revocation did not have
any legal effect. The rule is that in the absence of any reservation of the power to
revoke a voluntary trust is irrevocable without the consent of the beneficiary (Allen v.
Safe Deposit and Trust Co.of Baltimore, 7 A. 2d 180, 177 Md. 26). It cannot be revoked
by the creatoralone, nor by the trustee (Fricke v. Weber, C.C.A. Ohio, 145 F. 2d
737;Hughes v. C.I.R., C.C.A. 9, 104 F. 2d 144; Ewing v. Shannahan, 20 S.W. 1065,113
Mo. 188). Here, there is no such reservation.
Appellants contend that the lower court erred in applying the provisions of the new Civil
Code on trust. This is correct. The express trust was constituted during the lifetime of
the predecessor-in-interest of appellants,that is, before the effectivity of the new Civil
Code, although the instrumentrecognizing and declaring such trust was executed on
December 5, 1950, afterthe effectivity of said Code. The Civil Code of 1889 and
previous laws andauthorities on the matter, therefore, should govern the herein trust
under the provisions of Article 2253 of the new Civil code.
But the Civil Code of 1889 contains no specific provisions on trust as doesthe new Civil
Code. Neither does the Code of Civil Procedure of 1901 for thesame merely provides
for the proceeding to be followed relative to trustsand trustees (Chapter XVIII). This
silence, however, does not mean that thejuridical institution of trust was then unknown
in this jurisdiction, for theprinciples relied upon by the Supreme Court before the
effectivity of thenew Civil Code were those embodied in Anglo-American jurisprudence
as derivedfrom the Roman and Civil Law principles (Government v. Abadilla, 46 Phil.
42).And these are the same principles on which we predicate our ruling
heretoforestated and on which we now rely for the validity of trust in question.
The trial court ordered appellants to render an accounting of the fruits of the properties
in question even if appellees did not expressly ask for it intheir prayer for relief. We,
however, believe that this is covered by the general prayer "for such other relief just and
equitable under the premises."What is important is to know from what what date the
accounting should bemade. The trial court ordered that the accounting be made from
the time appellees demanded the conveyance of the ten parcels of land on August 11,
1956, in accordance with Article 1164 of the new Civil Code which provides that the
creditor has a right to the fruit of the thing from thetime the obligation to deliver it arises.
But this cannot be done without first submitting proof that the conditions stated in the
mutual agreement hadbeen complied with. And this only happened when the decision of
the Supreme Court in G.R. No. L-8774 became final and executory. The ruling of the
trialcourt in this respect should therefore be modified in the sense that the accounting
should be made from the date of the finality of the said decision.
We find no error in the directive of the trial court that appellants shouldfree the lands in
question from the encumbrance that was created thereon by them in favor of the
Development Bank of the Philippines and one Claro cortez, for as trustees it is their duty
to deliver the properties to the cestui que trust free from all liens and encumbrances.
To recapitulate, we hold: (1) that the document executed on December 5, 1950 creates
an express trust in favor of appellees; (2) that appellants had no right to revoke it
without the consent of the cestui que trust; (3) that appellants must render an
accounting of the fruits of the lands from the datethe judgement rendered in G.R. No. L-
8774 became final and executory; and (4)that appellants should free said lands from all
liens and encumbrances.
WHEREFORE, with the modification as above indicated with regard to accounting,we

hereby affirm the decision appealed from, without pronouncement as to costs.
Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Padilla and Concepcion, JJ., took no part.

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-20787-8 June 29, 1965
J. ANTONIO ARANETA, plaintiff-appellee,
vs.
ANTONIO PEREZ, defendant-appellant.
Araneta, Mendoza and Papa for plaintiff-appellee.

Alfonso Felix, Jr. for defendant-appellant.
BAUTISTA ANGELO, J.:
On June 16, 1961, Antonio M. Perez executed a promissory note wherein he agreed to
pay J. Antonio Araneta, or order, the sum of P3,700.00 119 days from said date, or on
October 13, 1961, and if it is not paid on the date of maturity, to pay interest at 9% per
annum on the amount of the loan, and P370.00 as attorney's fees in addition to costs
and other disbursements taxable under the Rules of Court.
The note having become due and Antonio M. Perez having failed to pay it despite
demand made upon him to do so, Araneta filed on October 31, 1961 a complaint in the
Municipal Court of Manila to collect its import under the terms therein stipulated (Civil
Case No. 92265).
In his answer, defendant Perez admitted the execution of the promissory note as well as
his failure to pay it despite its maturity and demand, but he averred certain allegations
that were irrelevant to the complaint. Thus, Perez alleged that the proceeds of the note
were applied by him to the payment of the medical treatment of his minor daughter
Angela Perez y Tuason, who is the beneficiary of the trust then administered by Araneta
as trustee in Special Proceeding No. Q-73 of the Court of First Instance of Quezon City,
and that the trust estate is bound to pay the expenses of said treatment because they
were for the benefit of said minor and so the personal fund he borrowed from Araneta
and for which he executed the aforesaid promissory note should be paid by Araneta in
the manner above-stated. In the same answer, Perez set up a counterclaim demanding
several amounts by way of moral damages, exemplary damages, and attorney's fees.
On motion for judgment on the pleadings filed by Araneta, and without any opposition
on the part of defendant Perez, the municipal court rendered a decision on April 1962
ordering Perez to pay the amounts prayed for in the complaint and dismissing his
counterclaim for damages. His motion for reconsideration having been denied, Perez
appealed to the court a quo where the appeal was docketed as Civil Case No. 50707
and where he filed practically the same answer he filed in the municipal court.
In the meantime, or on February 8, 1962, Perez filed a complaint in the Municipal Court
of Manila against Araneta in his capacity as trustee of the minor child Angela Perez y
Tuason in Special Proceeding No. Q-73 of the Court of First Instance of Quezon City
wherein, making reference to Civil Case No. 92265 filed against him by Araneta, he
repeated the same allegations contained in the answer he interposed to the complaint
of Araneta and prayed that Araneta as trustee be required to pay Perez the amount of
P3,700.00 advanced by the latter in order to meet the obligation of the trust estate. And
on the basis of a motion to dismiss filed by Araneta as trustee, and over the opposition
of Perez, the municipal court dismissed the latter's complaint. His motion for
reconsideration having been denied, Perez appealed to the court a quo were his case
was docketed as Civil Case No. 50706 and where he filed an amended complaint
against Araneta.
Considering that the two cases involved the same parties and the same promissory
note, they were ordered consolidated. And on September 7, 1962, the court a
quo issued a joint order wherein it affirmed the judgment on the pleadings rendered by
the municipal court in Civil Case No. 50707, while it affirmed the order of dismissal that
was likewise issued by the same court in Civil Case No. 50706. His motion for
reconsideration filed in the two consolidated cases having been denied, Perez
interposed the present joint appeal.
Appellant contends that (1) the court a quo erred in finding Antonio Perez indebted to
Antonio Araneta in the sum of P3,700.00 requiring him to pay said amount to Araneta
with interest at the rate of 9% per annum from October 13, 1961 until its full payment,
plus P370.00 as attorney's fees, and in failing to find that the true debtor was the trust
estate of the children of Angela I. Tuason; and (2) assuming that the court a
quo correctly ruled in requiring Antonio Perez to pay the above amount to Antonio
Araneta, nevertheless, the court a quo erred in failing to require Araneta in his capacity
as trustee of the aforesaid children to reimburse Antonio Perez that amount upon proof
by the latter of the payment made by him of said amount.
1. The promissory note signed by appellant clearly states that he agreed to pay Araneta
or order the sum of P3,700.00 on October 13, 1961 and if the same is not paid on said
date to pay 9% interest thereon per annum until fully paid, plus the sum of P370.00 as
attorney's fees, in addition to the costs and other disbursements taxable under the
Rules of Court. Under these terms it is clear that appellant bound himself to pay
personally said promissory note which he cannot shift to another without the consent of
the payee. Such is the undertaking of the maker. Indeed, Section 60 of the Negotiable
Instrument, Law provides that "the maker of a negotiable instrument by making it
engages that he will pay it according to its tenor and admits the existence of the payee
and his then capacity to indorse so that appellant cannot now escape liability as maker
by alleging that he spent the money for the medical treatment of his daughter since it is
not the payee's concern to know how said proceeds should be spent. That is the sole
concern of the maker. Payee's interest is merely to see that the note be paid according
to its terms.
Neither can appellant escape liability by resorting to the expedient that appellee, by
moving for judgment on the pleadings, is deemed to have admitted the material
allegations of his answer in Civil Case No. 50707, for the reason that said allegations
are irrelevant and have no bearing whatsoever on appellant's personal liability. In this
connection, it is meet to recall that appellant, after admitting the execution of the
promissory note and his failure to pay it despite demand thereof, made averments
which in substance had the effect of a recoupment of what he had spent against any
share in the trust fund that may come to the minor for whose benefit he claims to have
spent the money.
Thus, he made the following affirmative defenses: That Dña. Angela Tuason died in
1948 leaving estate worth five million pesos 2/9 of which she left in trust for the benefit
of the children of said Angela Tuason under the administration of appellee Araneta; that
the will was prepared by Araneta; that the estate is now worth one million pesos and
despite thereof Araneta professed inability to pay the allowance of P18,000.00 a year
due the beneficiaries; that Araneta sold some income — producing properties of the
trust and speculated with trust funds in the stock market; that appellant had to advance
certain expenses for the minors and secure for them properties worth at least a quarter
of a million pesos; that the two beneficiaries are for unknown reasons short of funds so,
that the appellant had to borrow the sum of P3,700.00 for the medical treatment of
minor Angela Perez y Tuason; that appellant asked the trustee to advance said amount
with the concurrence of the beneficiaries but the trustee refused though he offered to
lend the money out of his own pocket, and so appellant executed the promissory note in
question.
It is clear that insofar as the personal liability of appellant Perez on the promissory note
is concerned, which he admittedly executed for value in favor of appellee Araneta, all
the above recited allegations are irrelevant and immaterial and cannot tender any issue
that will affect his personal liability under the note. And this is so because the allegation
regarding the existence of the trust and its mismanagement on the part of appellee
Araneta as trustee, certainly, has nothing to do with the money lent by him to appellant.
Neither has the allegation that the proceeds of the note were spent by appellant for the
medical treatment of minor Angela anything to do with his personal obligation because
the destination of the proceeds of said note is certainly not the concern of Araneta. We
are, therefore, of the opinion that the court a quo did not err in rendering judgment on
the pleadings in the light of what is averred in appellee's complaint.
2. But even assuming for the sake of argument that what is claimed by appellant as to
how he spent the proceeds of the notes is true, that will not exempt him from his liability
to Araneta but would merely give him some basis to claim for recoupment against the
share of the trust fund belonging to the benefited minor if it is properly shown that there
is fund coming to said minor. Here, no such showing was made. Moreover, the trust
herein created merely provides for delivery to the beneficiaries of the share that may
correspond to them in the net income of the trust fund, but does not impose upon the
trustee the duty to pay any obligation or expenses that may be needed by said
beneficiaries.
Appellant has cited several authorities to support his stand that the medical expenses in
question which were made for the sake of the beneficiary should be borne by the trust
fund, but from an examination thereof one may see that they require that beneficiary be
insolvent in order that the trust estate may be obliged to shoulder the expenses. 1 Here
the beneficiary is not in that situation for, as appellant himself has admitted, said
beneficiary has properties that are worth at least a quarter of a million pesos which are
under the Guardianship Court of Manila. There is, therefore, no room for the application
of the ruling laid down in the cited authorities.
The other authorities cited by appellant to bolster his claim are also inapplicable for they
sanction the applications of the trust fund to medical or other expenses of the
beneficiaries only when there is absolute necessity therefor, or when they themselves
are unable to provide for those expenses. As already stated, the beneficiaries here are
well off or have enough to provide for their necessities if only their guardian should take
steps to attend to them as required by the circumstances. But instead of doing so,
appellant insists on having appellee recoup with trust money what he had allegedly
spent for his daughter's benefit thus giving rise to the present dual litigation.
We take note of the written manifestation or "constancia" submitted to this Court by

appellant dated August 22, 1963 in his capacity as judicial guardian of the beneficiaries
herein, as well as of supplement thereof made on September 20, 1963, inviting attention
of this Court to an order issued by the Juvenile and Domestic Relations Court
authorizing appellant as such guardian to assign the amount of P3,700.00 to appellee
herein for the purpose of reimbursing him for the amount he had advanced and which is
the subject of the promissory note for which reason appellant now claims that this case
is now moot and should be dismissed. But to such manifestation appellee has filed a
rejoinder dated September 2, 1963 stating that the request for dismissal is untenable
since the order appealed from calls not only for the payment of the sum of P3,700.00
but of 9% interest thereon per annum from October 13, 1961 until payment and of the
sum of P370.00 as attorney's fees.
We hold that appellant's claim is not justified considering that appellee was forced to file
the present suit in view of appellant's refusal to honor the note under consideration. The
request, therefore, for dismissal has no legal basis.
WHEREFORE, with the modification that the payment of interest on the note should
start from the date of extrajudicial demand, or October 18, 1961, we hereby affirm the
order appealed from in all other respects, without pronouncement as to costs.
Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal,
Bengzon, J.P., and Zaldivar, JJ., concur.
Barrera, J., is on leave.
Footnotes
1
So where a trust fund is to be applied to the support of the beneficiary, a claim
for medical services rendered on the request of the beneficiary with the
knowledge of the trustee, may be enforced in equity as against the trustee where
the beneficiary is insolvent and it does not appear that the trustee had furnished
him with all that is necessary with respect to medical attendance. (90 C.J.S. p.
113)

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-49087 April 5, 1982
MINDANAO DEVELOPMENT AUTHORITY, now the SOUTHERN PHILIPPINES

DEVELOPMENT ADMINISTRATION, petitioner,
vs.
THE COURT OF APPEALS and FRANCISCO ANG BANSING, respondents.
CONCEPCION JR., J.:
Petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No.
48488-R, entitled: "Mindanao Development Authority, etc., plaintiff-appellee, versus
Francisco Ang Bansing defendant-appellant", which reversed the decision of the Court
of First Instance of Davao and dismissed the complaint filed in Civil Case No. 6480 of
the said court.
It is not disputed that the respondent Francisco Ang Bansing was the owner of a big
tract of land with an area of about 300,000 sq.m., situated in Barrio Panacan Davao
City. On February 25, 1939, Ang Bansing sold a portion thereof, with an area of about 5
hectares to Juan Cruz Yap Chuy The contract provided, among others, the following:
That I hereby agree to work for the titling of the entire area of my land
under my own expenses and the expenses for the titling of the portion sold
to me shall be under the expenses of the said Juan Cruz Yap Chuy. 1
After the sale, the land of Ang Banging was surveyed and designated as Lot 664-B,
Psd-1638. Lot 664-B was further subdivided into five (5) lots and the portion sold to
Juan Cruz Yap Chuy shortened to Juan Cruz, was designated as Lot 664B-3, with an
area of 61.107 square meters, more or less. 2 On June 15-17 and December 15, 1939,
a cadastral survey was made and Lot 664-B-3 was designated as Lot 1846-C of the
Davao Cadastre. On December 23, 1939, Juan Cruz sold Lot 1846-C to the
Commonwealth of the Philippines for the amount of P6,347.50. 3 On that same day,
Juan Cruz, as vendor, and C.B. Cam and Miguel N. Lansona as sureties, executed a
surety bond in favor of the vendee to guarantee the vendor's absolute title over the land
sold. 4
The cadastral survey plan was approved by the Director of Lands on July 10,
1940, 5 and on March 7, 1941, Original Certificate of Title No. 26 was issued in the
means of Victoriana Ang Bansing, Orfelina Ang Bansing and Francisco Ang Bansing as
claimants of the land, pursuant to Decree No. 745358 issued on July 29, 1940. On
March 31, 1941, OCT No. 26 was cancelled pursuant to a Deed of Adjudication and
Transfer Certificate of Title No. 1783 was issued in the name of Francisco Ang
Bansing. 6
On that day, March 31, 1941, Ang Banging sold Lot 1846-A to Juan Cruz and TCT No.
1783 was cancelled. TCT No. 1784 was issued in the name of Juan Cruz, for Lot 1846-
A and TCT No. 1785 was issued in the name of Ang Bansing for the remaining Lots
1846-B, 1846-C, 1846-D, and 1846-E. Later, Ang Bansing sold two subdivision lots of
Lot 1846-B, namely: Lot 1846-B-2-C and Lot 1846-B-1 to Vedasto Corcuera for which
TCT No. 2551 and TCT No. 2552, respectively, were issued in the name of the said
Vedasto Corcuera on August 10, 1946. Thereafter, Lot 1848-A, with an area of 9.6508
hectares, and Lots 1846-B-A and 1848- B-2-D all subdivided portions of Lot 1846-B,
were similarly conveyed to Juan Cruz for which TCT No. 2599 and TCT No. 2600,
respectively, were issued in the name of Juan Cruz on September 26, 1946. TCT No.
2601 was issued in the name of Ang Bansing for the remainder of the property,
including the lot in question. Then, another portion of 1846-B, designated in the
subdivision plan as Lot 1848-B-2-B was sold to Juan Cruz for which TCT No. 184 was
issued in the latter's name. On November 28, 1946, after these conveyances, there
remained in the possession of Ang Bansing under TCT No. 2601, Lot 1846-C, the lot in
question; Lot 1846-D; and Lot 1846-E. However, TCT No. 2601 was again partially
cancelled when Ang Bansing sold Lot 1846-D to Vedasto Corcuera. 7
On February 25, 1965, the President of the Philippines issued Proclamation No. 459,
transferring ownership of certain parcels of land situated in Sasa Davao City, to the
Mindanao Development Authority, now the Southern Philippines Development
Administration, subject to private rights, if any. Lot 1846-C, the disputed parcel of land,
was among the parcels of land transferred to the Mindanao Development Authority in
said proclamation. 8
On March 31, 1969, Atty. Hector L. Bisnar counsel for the Mindanao Development
Authority, wrote Ang Bansing requesting the latter to surrender the Owner's duplicate
copy of TCT No. 2601 so that Lot 1846-C could be formally transferred to his client but
Ang Bansing refused. 9 Consequently, on April 11, 1969, the Mindanao Development
Authority filed a complaint against Francisco Ang Bansing before the Court of First
Instance of Davao City, docketed therein as Civil Case No. 6480, for the reconveyance
of the title over Lot 1846-C, alleging, among others, the following:
xxx xxx xxx
9. That the deed of sale, marked as Annex 'A', it was stipulated by the
parties that the defendant would work to secure title of his entire tract of
land of about 30 hectares defraying the expenses for the same and the
expenses for the title of the portion sold by the defendant to Juan Cruz
Yap Chuy shall be borned by the latter;
10. That the defendant as vendor and the one who worked to secure the
title of his entire tract of land which included the portion sold by him. to
Juan Cruz Yap Chuy acted in the capacity of and/or served as trustee for
any and all parties who become successor-in-interest to Juan Cruz Yap
Chuy and the defendant was bound and obligated to give, deliver and
reconvey to Juan Cruz Yap Chuy and/or his successor-in-interest the title
pertaining to the portion of land sold and conveyed by him to Juan Cruz
Yap Chuy by virtue of the deed of sale marked as Annex 'A' and his
affidavit marked as Annex 'C'. 10
In answer, Ang Bansing replied:
xxx xxx xxx
9. That defendant admits that in Annex'A'of the complaint, it was agreed

and stipulated in paragraph 6 thereof that:
That I hereby agree to work for the titling of the entire area of
my land under my own expense and the expenses for the
titling of the portion sold to me shall be under the expenses
of the said Juan Cruz Yap Chuy.
and defendant in fact secured at his expense his OCT No. 26 for his entire
land; that in the process of defendant's securing his title neither Juan Cruz
Yap Chuy nor the Commonwealth of the Philippines asserted any right to
ownership of the subject property and that was almost 30 years ago until
plaintiff filed its complaint, thus plaintiff is forever barred from claiming any
right over the subject property. There was no real sale made but only the
intention to sell a portion of the land as stated by defendant in Annex 'C' of
the complaint.
10. That defendant denies allegations contained in paragraph 10 of the
complaint that he acted as the trustee of Juan Cruz Yap Chuy Defendant
was never such; matter of fact Juan Cruz Yap Chuy for the last 26 years,
that is until he. died in October, 1965, never made any demand to have
the title of the subject property transferred in his name because he knew
all the time that the alleged sale in his favor was per se null and void he
also knew that no sale was ever consummated. 11
After trial, the Court of First Instance of Davao City found that an express trust had been
established and ordered the reconveyance of the title to Lot 1846-C of the Davao
Cadastre to the plaintiff Mindanao Development Authority. 12
Ang Banging appealed to the Court of Appeals and the said appellate court ruled that
no express trust has been created and, accordingly, reversed the judgment and
dismissed the complaint. 13
Hence, the present recourse.
The petition is without merit. As found by the respondent Court of Appeals, no express
trust had been created between Ang Banging and Juan Cruz over Lot 1846-C of the
Davao Cadastre. "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." 14 It is fundamental in the law of trusts that certain requirements must exist
before an express trust will be recognized. Basically, these elements include a
competent trustor and trustee, an ascertainable trust res, and sufficiently certain
beneficiaries. Stilted formalities are unnecessary, but nevertheless each of the above
elements is required to be established, and, if any one of them is missing, it is fatal to
the trusts. Furthermore, there must be a present and complete disposition of the trust
property, notwithstanding that the enjoyment in the beneficiary will take place in the
future. It is essential, too, that the purpose be an active one to prevent trust from being
executed into a legal estate or interest, and one that is not in contravention of some
prohibition of statute or rule of public policy. There must also be some power of
administration other than a mere duty to perform a contract although the contract is for a
third-party beneficiary. A declaration of terms is essential, and these must be stated with
reasonable certainty in order that the trustee may administer, and that the court, if called
upon so to do, may enforce, the trust." 15
In this case, the herein petitioner relies mainly upon the following stipulation in the deed
of sale executed by Ang Bansing in favor of Juan Cruz to prove that an express trust
had been established with Ang Bansing as the settlor and trustee and Juan Cruz as
the cestui que trust or beneficiary:
That I hereby agree to work for the titling of the entire area of my land
under my own expenses and the expenses for the titling of the portion sold
to me shall be under the expenses of said Juan Cruz Yap Chuy.
The above-quoted stipulation, however, is nothing but a condition that Ang Bansing
shall pay the expenses for the registration of his land and for Juan Cruz to shoulder the
expenses for the registration of the land sold to him. The stipulation does not
categorically create an obligation on the part of Ang Bansing to hold the property in trust
for Juan Cruz. Hence, there is no express trust. It is essential to the creation of an
express trust that the settlor presently and unequivocally make a disposition of property
and make himself the trustee of the property for the benefit of another. 16
In case of a declaration of trust, the declaration must be clear and

unequivocal that the owner holds property in trust for the purposes
named. 17
While Ang Bansing had agreed in the deed of sale that he will work for the titling of "the
entire area of my land under my own expenses," it is not clear therefrom whether said
statement refers to the 30-hectare parcel of land or to that portion left to him after the
sale. A failure on the part of the settlor definitely to describe the subject-matter of the
supposed trust or the beneficiaries or object thereof is strong evidence that he intended
no trust. 18
The intent to create a trust must be definite and particular. It must show a desire to pass
benefits through the medium of a trust, and not through some related or similar
device. 19
Clear and unequivocal language is necessary to create a trust and mere precatory
language and statements of ambiguous nature, are not sufficient to establish a trust. As
the Court stated in the case of De Leon vs. Packson, 20 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. Considering that the trust intent has not
been expressed with such clarity and definiteness, no express trust can be deduced
from the stipulation aforequoted.
Nor will the affidavit executed by Ang Banging on April 23, 1941, 21 be construed as
having established an express trust. As counsel for the herein petitioner has stated, "the
only purpose of the Affidavit was to clarify that the area of the land sold by Ang Bansing
to Juan Cruz Yap Chuy is not only 5 hectares but 61,107 square meters or a little over
six (6) hectares." 22
That no express trust had been agreed upon by Ang Bansing and Juan Cruz is evident
from the fact that Juan Cruz, the supposed beneficiary of the trust, never made any
attempt to enforce the alleged trust and require the trustee to transfer the title over Lot
1846-C in his name. Thus, the records show that the deed of sale, covering Lot 1846-C,
was executed by Ang Bansing in favor of Juan Cruz on February 25, 1939. Two years
later, or on March 31, 1941, Ang Bansing sold Lot 1846-A to the said Juan Cruz for
which TCT No. 1784 was issued in the name of Juan Cruz. Subsequently thereafter, Lot
1848-A, with an area of 9.6508 hectares, and Lots 1846-A and 1848-B-2-D, all
subdivided portions of Lot 1846-B, were similarly conveyed to the said Juan Cruz for
which TCT No. 2599 and TCT No. 2600, respectively, were issued in the name of Juan
Cruz on September 26, 1946. Then, another portion of 'Lot 1¬846-B, designated in the
subdivision plan as Lot 1848-B-2-13, was sold to Juan Cruz for which TCT No. 184 was
issued in his name on November 28, 1948. Despite these numerous transfers of
portions of the original 30-hectare parcel of land of Ang Bansing to Juan Cruz and the
issuance of certificates of title in the name of Juan Cruz, the latter never sought the
transfer of the title to Lot 1846-C in his name. For sure, if the parties had agreed that
Ang Bansing shall hold the property in trust for Juan Cruz until after the former shall
have obtained a certificate of title to the land, the latter would have asked for the
reconveyance of the title to him in view of the surety bond executed by him in favor of
the Commonwealth Government wherein he warrants his title over the property. The
conduct of Juan Cruz is inconsistent with a trust and may well have probative effect
against a trust.
But, even granting, arguendo, that an express trust had been established, as claimed by
the herein petitioner, it would appear that the trustee had repudiated the trust and the
petitioner herein, the alleged beneficiary to the trust, did not take any action therein until
after the lapse of 23 years. Thus, in its Reply to the Defendant's Answer, filed on June
29, 1969, the herein petitioner admitted that "after the last war the City Engineer's Office
of Davao City made repeated demands on the defendants for the delivery and
conveyance to the Commonwealth Government, now the Republic of the Philippines, of
the title of land in question, Lot 1846-C, but the defendant ignored and evaded the
same." 23 Considering that the demand was made in behalf of the Commonwealth
Government, it is obvious that the said demand was made before July 4, 1946, when
the Commonwealth Government was dismantled and the Republic of the Philippines
came into being. From 1946 to 1969, when the action for reconveyance was filed with
the Court, 23 years had passed. For sure, the period for enforcing the rights of the
alleged beneficiary over the land in question after the repudiation of the trust by the
trustee, had already prescribed.
Needless to say, only an implied trust may have been impressed upon the title of Ang
Banging over Lot 1846-C of the Davao Cadastre since the land in question was
registered in his name although the land belonged to another. In implied trusts, there is
neither promise nor fiduciary relations, the so-called trustee does not recognize any
trust and has no intent to hold the property for the beneficiary." 24 It does not arise by
agreement or intention, but by operation of law. Thus, if property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes. 25
If a person obtains legal title to property by fraud or concealment, courts of equity will
impress upon the title a so-called constructive trust in favor of the defrauded party. 26
There is also a constructive trust if a person sells a parcel of land and thereafter obtains
title to it through fraudulent misrepresentation. 27
Such a constructive trust is not a trust in the technical sense and is prescriptible; it
prescribes in 10 years. 28
Here, the 10-year prescriptive period began on March 31, 1941, upon the issuance of
Original Certificate of Title No. 26 in the names of Victoriana Ang Bansing Orfelina Ang
Bansing and Francisco Ang Banging. From that date up to April 11, 1969, when the
complaint for reconveyance was filed, more than 28 years had passed. Clearly, the
action for reconveyance had prescribed.
Besides, the enforcement of the constructive trust that may have been impressed upon
the title of Ang Bansing over Lot 1846-C of the Davao Cadastre is barred by laches. 29 It
appears that the deed of sale in favor of the Commonwealth Government was executed
by Juan Cruz on December 23, 1939, during the cadastral proceedings, and even
before the cadastral survey plan was approved by the Director of Lands on July 10,
1940. But, the vendee therein did not file an answer, much less an opposition to the
answer of Ang Bansing in the said Cadastral proceedings. The judgment rendered in
the said cadastral proceeding, awarding the lot in question to Ang Bansing is already
final. After an inexcusable delay of more than 28 years and acquiescence to existing
conditions, it is now too late for the petitioner to complain.
WHEREFORE, the petition should be, as it is hereby, DENIED. No costs.
SO ORDERED.
De Castro, Ericta and Escolin, JJ., concur.
Barredo, J. (Chairman), I reserve my vote.
Separate Opinions
AQUINO, J., dissenting:
The disputed land should be adjudicated to the government agency known as the
Southern Philippines Development Administration, the successor of the Commonwealth
of the Philippines.
To adjudge Francisco Ang Bansing as the owner of the land is to sanction a brazen
breach of trust or a form of landgrabbing and to perpetrate a gross injustice. The facts
are as follows:
1. Before the war, Francisco Ang Banging was the owner of a tract of unregistered land
with an area of about twenty-nine hectares located at Barrio Panacan (Sasa) Davao
City.
2. On February 25, 1939, he sold to Juan Cruz Yap Chuy for six thousand pesos a
portion of the said land with an area of around five hectares, bounded on the north by
the land of Vedasto Corcuera, on the east by the Davao Gulf, on the south by the land
of Ang Ping and on the west by the remaining portion but separated by the provincial
road. Ang Bansing's wife, Anatalia Cepeda, was one of the two witnesses in the deed of
sale. The sale was registered on March 1, 1939 in the registry of deeds of Davao City.
3. In the deed of sale, Ang Bansing made the following commitment: "That I hereby
agree to work for the titling of the entire area of my land under my own expenses and
the expenses for the titling of the portion sold to (by) me shall be under the expenses of
the said Juan Cruz Yap Chuy It was also stipulated that the buyer could take
possession of the land and its improvements (p. 14, Record on Appeal).
4. After the survey of Ang Bansing's land, the portion sold to Juan Cruz Yap Chuy came
to be known as Lot No, 664B-3, described as follows: "Bounded on the North by Lot No.
664-B-4; on the East by the Davao Gulf; on the South by Lot No. 564 and on the West
by Lot No. 664-B-5; containing an area of sixty-one thousand one hundred seven
(61,107) square meters more or less." By reason of the 1939 cadastral survey, Lot No.
664-B-3 came to be known as Lot No. 1846-C of the Davao cadastre. The survey was
made on June 15-17 and December 15, 1939, and was approved on July 10, 1940.
5. About ten months later, or on December 23, 1939, Juan Cruz Yap Chuy sold to the
Commonwealth of the Philippines the same portion, Identified as Lot No. 664-B-3, with
an area of 61,107 square meters, together with the improvements thereon, for the sum
of P6,347.50 allocated as follows:
6.1107 hectares at P 140 a hectare.......................................... P 855.00

756 coconut trees, all fruit-bearing, at P7 per tree................ 5,292.00
200 coconut trees, not productive, at one peso a

tree......................................................................... 200.00
The sale included a parcel of land Identified as lot No. 664-B-5, with an area of 8,023
square meters, which was a part of the national road and which Cruz donated to the
Commonwealth Government. The sale was registered in the registry of deeds of Davao
City on December 27,1939, meaning that Ang Bansing had constructive notice thereof
6. Simultaneously with that deed of sale, Juan Cruz Yap Chuy as principal, and G.B.
Cam and Miguel N. Lanzona as sureties, executed a bond in the sum of P6,347.50 (the
price of the sale) in favor of the Commonwealth of the Philippines. The bond would
become void if the Commonwealth obtained absolute title to the land.
7. On April 23, 1941, Ang Bansing executed an affidavit wherein he confirmed the
previous sale to Juan Cruz Yap Chuy of the said Lot No. 1846-C. His wife, Anatalia
Cepeda, was a witness in the said affidavit. Ang Bansing clarified that the exact area of
the lot sold is 16,107 square meters and not five hectares only which latter area was
merely his calculation. Ang Bansing further said in the affidavit:
That I hereby certify that I have no objection that the said portion after the
survey be transferred and ceded, as I intended to transfer and cede the
same, to the said Juan Cruz Yap Chuy by virtue of the said Deed of Sale
above-mentioned (referring to the 1939 Deed of Sale).
That affidavit was registered on May 8, 1941.
8. Lot No. 664-B-3 or No. 1846-C was covered by Tax Declarations Nos. 80454, R-
3612, R-5232 and A-12-123 in the name of the Republic of the Philippines (pp. 88-89,
Record on Appeal). On the other hand, Ang Bansing never declared Lot No. 1846-C for
tax purposes and never paid any realty taxes therefor.
9. Ang Bansing obtained Decree No. 745358 for the registration of the 29-hectare land
(including Lot No. 664-B-3 or No. 1846-C). By virtue of that decree, Original Certificate
of Title No. 26 was issued on March 7, 1941 in the names of Victoriana Ang Bansing
Orfelina Ang Banging and Francisco Ang Bansing
10. The issuance of that title implies that the government official (may be the provincial
district engineer at Davao City), who was aware of the purchase of Lot No. 664-B-3
from Ang Bansing was negligent in not intervening in the land registration proceeding so
as to have that lot registered in the name of the Commonwealth of the Philippines.
Another implication is that Ang Banging had already acted fraudulently or in bad faith in
not asking his lawyer to segregate Lot No. 664-B-3 or Lot No. 1846-C from his land and
to see to it that a separate title for that lot was issued in the name of the Commonwealth
of the Philippines.
11. On March 31, 1941, or 24 days after the issuance of OCT No. 26, it was cancelled
because of a "deed of adjudication". Transfer Certificate of Title No. 1783 was issued
for the 19-hectare land in the name of Francisco Ang Bansing alone.
12. Ang Bansing's land, known as Lot No. 1846, was subdivided into five lots, namely:
Lots Nos. 1846-A, 1846-B, 1846-C, 1846-D and 1846-E. On that same date of March
31, 1941, when Ang Bansing obtained TCT No. 1783, he sold Lot No. 1846-A to Juan
Cruz Yap Chuy Because of that sale, TCT No. 1783 was cancelled and TCT No. 1784
was issued to Juan Cruz Yap Chuy while TCT No. 1785 was issued to Ang Banging for
the other four lots which (it should be repeated) included Lot No. 1846-C the disputed
lot sold in 1939 by Ang Bansing to Juan Cruz Yap Chuy and in turn sold by the latter to
the Commonwealth of the Philippines. (The name Juan Cruz Yap Chuy was shortened
to Juan Cruz as shown in Entry No. 8052 dated August 4, 1953, appearing in TCT No.
1784. Cruz died in 1965.)
13. Ang Bansing sold to Vedasto Corcuera Lots Nos. 1846-B-1 and 1846-B-2-C, which
are subdivision lots of Lot No. 1846-B. As a result TCT No. 1785 was cancelled and
TCT Nos. 2551 and 2552 were issued to Corcuera on August 10, 1946. Lot No. 1846- D
was also sold by Ang Bansing to Corcuera.
14. Other portions of Lot No. 1846-B were sold by Ang Bansing to Juan Cruz. Lots Nos.
1846-C and 1846-E, the remaining lots, registered in the name of Ang Bansing as
shown in TCT No. T-2601 (Exh. L), were not alienated by him.
15. On September 25, 1965, President Diosdado Macapagal issued Proclamation No.
459, transferring to the Mindanao 'Development Authority (a corporate body created by
Republic Act No. 3034), "subject to private rights, if any", eight parcels of land forming
part of the Government's private domain. Among those parcels was Parcel 6, Lot No.
1846-C, Psd-16952, the herein disputed lot, with an area of 61,107 square meters,
bounded on the west by the national highway, on the north by Lot No. 1846-D, on the
east by the Gulf of Davao and on the south by Lot No. 564- A. Thus, Lot No. 1846-C
became a part of the Port Area Reservation from Sasa to Panacan Davao City.
16. In a letter dated March 31, 1969, counsel for the Mindanao Development Authority
requested Ang Bansing to surrender the owner's duplicate of TCT No. T-2601 so that
Lot No. 1846-C could be transferred to the said government agency (Exh. K). Ang
Bansing did not heed the demand.
17. On April 11, 1969, the Mindanao Development Authority sued Ang Bansing for the
reconveyance of Lot No. 1846-C. After trial (during which Ang Banging did not testify),
the trial court held that Ang Bansing held Lot No. 1846-C in trust for the State and that
the prescriptive period for recovering the Lot from Ang Bansing started only in 1968
when Ang Banging allegedly repudiated the trust.
18. The trial court cancelled Ang Bansing's title and directed the register of deeds to
issue a new title to the Mindanao Development Authority for Lot No. 1846-C. Ang
Bansing appealed to the Court of Appeals.
19. That Court in its decision dated December 27, 1977, reversing the trial court's
decision, held that Ang Banging was the owner of the disputed lot. It ruled that even if
Ang Bansing held Lot No. 1846-C in express trust, the trust was Innovated" by
subsequent circumstances and that the sale of Lot No. 1846-C to the Commonwealth of
the Philippines was not consummated because Ang Banging sold Lot No. 1846-A and
portions of Lot No. 1846-B to Juan Cruz in Lieu of Lot No. 1846-C.
20. The Appellate Court also held that the Mindanao Development Authority had no
cause of action for reconveyance because it had no privity with Ang Bansing and that
the trust, if any, was an implied or constructive trust and the action based on that kind of
trust was barred by prescription.
21. Presidential Decree No.690,which took effect on April 22, 1975, established the
Southern Philippines Development Administration and abolished the Mindanao
Development Authority. The latter's assets were transferred to the Administration.
I am of the opinion that Ang Banging is a trustee in an express trust covering Lot No.
1846-C. The trust is evidenced by his aforementioned affidavit of April 23, 1941 which
he executed twenty-three days after TCT No. 1783 was issued to him for that lot.
As already noted, Ang Bansing in that affidavit swore that he intended to cede and
transfer that rot to Juan Cruz after the survey (Exh. C). That sworn statement should be
considered in conjunction with the stipulation in the 1939 deed of sale that Ang Bansing
would undertake the titling of the whole Lot No. 1846 and that the registration expenses
corresponding to Lot No. 1846-C would be borne by Juan Cruz, the vendee of that
subdivision lot (Exh. A).
The said statements create an express trust for Lot No. 1846-C in favor of Juan Cruz
and his successors-in-interest or assignees. "No particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended" (Art. 1444,
Civil Code).
It is significant that, while Ang Bansing sold Lots Nos. 1846-A, 1846-B and 1846-D to
Cruz and Corcuera, he did not touch at all Lot No. 1846-C. He did not alienate that lot
because he knew that it was not his property and that it belonged to the State.
Equally significant and credible is the trial court's finding that it was only in 1968 that
Ang Bansing laid claim to Lot No. 1846-C through Rufino Boncayao, a surveyor who
worked in the Davao City engineer's office and who discovered that the title to the lot
had not yet been placed in the name of the Commonwealth of the Philippines.
The trial court found that Boncayao, as the agent of Ang Banging and with the advice
and backing of Vicente C. Garcia, Ang Bansing's lawyer, claimed that Ang Bansing was
the true owner of Lot No. 1846-C. There being an express trust in this case, the
equitable action to compel the trustee to reconvey the land registered in his name in
trust for the benefit of the cestui que trust does not prescribe (Manalang vs. Canlas, 94
Phil. 776; Ramos vs. Ramos, L-19872, December 3,1974, 61 SCRA 284, 299).
The defense of prescription cannot be set up in an action to recover property held in

trust for the benefit of another (Sevilla vs. De los Angeles, 97 Phil. 875).
Property held in trust can be recovered by the beneficiary regardless of the lapse of
time (Marabilles vs. Quito 100 Phil. 64; Bancairen vs. Diones, 98 Phil. 122, 126; Juan
vs. Zuniga 114 Phil. 1163; Vda. de Jacinto vs. Vda. de Jacinto, 115 Phil. 363, 370).
Prescription in the case of express trusts can be invoked only from the time the trust is
repudiated (Tamayo vs. Callejo, 68 O.G. 8661, 46 SCRA 27,32).
And a trustee who takes a Torrens title in his name for the land held in trust cannot
repudiate the trust by relying on the registration. That is one of the limitations upon the
finality of a decree of title Sotto vs. Teves. L-38018, October 31, 1978, 86 SCRA 154,
178; Alvarez vs. Espiritu, 122 Phil. 229, 235).
The rule, that an action for reconveyance prescribes in ten years, applies to an implied
trust, not to an express trust (Carantes vs. Court of Appeals, L-33360, April 25, 1977, 76
SCRA 514).
So, as a general rule a trust estate (in an express trust) is exempt from the operation of
the statute of limitations. The exception is when the trustee repudiates the trust in which
case the trustee may acquire the trust estate by prescription. The repudiation must be
known to the cestui que trust and must be direct, clear, open and equivocal. (Callejon
Salinas vs. Roman Tuason and Moreno Roman, 55 Phil. 729; Palma vs. Cristobal, 77
Phil. 712; Valdez vs. Olorga, L-22571, May 25, 1973, 51 SCRA 71.)
One who acquires a Torrens title in his own name to property which he is
administering for himself and his brothers and sisters as heirs in common
by descent from a common ancestor may be compelled to surrender to
each of his co-heirs his appropriate share". A partition proceeding is an
appropriate remedy to enforce this right. (Castro vs. Castro, 57 Phil. 675).
An equitable action for reconveyance is also a proper remedy (Laguna vs.
Levantino 71 Phil. 566; Sumira vs. Vistan, 74 Phil. 138).
In any event, the real plaintiff in this case is the Republic of the Philippines and
prescription does not run against the State (De la Vina vs. Government of the P.I., 65
Phil. 262, 265; Republic vs. Ruiz, L-23712, April 29, 1968, 23 SCRA 348).
The maxim is nullum tempus occurrit regi or nullum tempus occurrit reipublicae (lapse
of time does not bar the right of the crown or lapse of time does not bar the
commonwealth). The rule is now embodied in article 1108(4) of the Civil Code.
It is a maxim of great antiquity in English law. The best reason for its existence is the
great public policy of preserving public rights and property from damage and loss
through the negligence of public officers. (34 Am Jur. 301; Ballentines's Law Dictionary,
p. 891; U.S. vs. Nashville, Chattanooga & St. Louis Railway Co., 118 U.S. 120,125).
Thus, the right of reversion or reconveyance to the State of lands fraudulently registered
or not susceptible of private appropriation or acquisition does not prescribe (Martines
vs. Court of Appeals, L-31271, April 29, 1974, 56 SCRA 647, 655; Republic vs. Ramos,
117 Phil. 45, 49).
The government officials concerned were negligent in not intervening in the land
registration proceeding or in not promptly asking Ang Banging to reconvey the disputed
lot to the Commonwealth or to the Republic of the Philippines.
Such negligence does not prejudice the State. The negligence or omissions of public
officers as to their public duties will not work an estoppel against the State (10 R.C.L.
705, cited in Bachrach Motor Co. vs. Unson, 50 Phil. 981, 990; Central Azucarera de
Tarlac vs. Collector of Internal Revenue, 104 Phil. 653, 656; People vs. Ventura, 114
Phil. 162, 169).
I vote to reverse and set aside the decision of the Court of Appeals and to affirm the trial
court's decision with the modification that the title should be issued to the Southern
Philippines Development Administration.
Separate Opinions
AQUINO, J., dissenting:
The disputed land should be adjudicated to the government agency known as the
Southern Philippines Development Administration, the successor of the Commonwealth
of the Philippines.
To adjudge Francisco Ang Bansing as the owner of the land is to sanction a brazen
breach of trust or a form of landgrabbing and to perpetrate a gross injustice. The facts
are as follows:
1. Before the war, Francisco Ang Banging was the owner of a tract of unregistered land
with an area of about twenty-nine hectares located at Barrio Panacan (Sasa) Davao
City.
2. On February 25, 1939, he sold to Juan Cruz Yap Chuy for six thousand pesos a
portion of the said land with an area of around five hectares, bounded on the north by
the land of Vedasto Corcuera, on the east by the Davao Gulf, on the south by the land
of Ang Ping and on the west by the remaining portion but separated by the provincial
road. Ang Bansing's wife, Anatalia Cepeda, was one of the two witnesses in the deed of
sale. The sale was registered on March 1, 1939 in the registry of deeds of Davao City.
3. In the deed of sale, Ang Bansing made the following commitment: "That I hereby
agree to work for the titling of the entire area of my land under my own expenses and
the expenses for the titling of the portion sold to (by) me shall be under the expenses of
the said Juan Cruz Yap Chuy It was also stipulated that the buyer could take
possession of the land and its improvements (p. 14, Record on Appeal).
4. After the survey of Ang Bansing's land, the portion sold to Juan Cruz Yap Chuy came
to be known as Lot No, 664B-3, described as follows: "Bounded on the North by Lot No.
664-B-4; on the East by the Davao Gulf; on the South by Lot No. 564 and on the West
by Lot No. 664-B-5; containing an area of sixty-one thousand one hundred seven
(61,107) square meters more or less." By reason of the 1939 cadastral survey, Lot No.
664-B-3 came to be known as Lot No. 1846-C of the Davao cadastre. The survey was
made on June 15-17 and December 15, 1939, and was approved on July 10, 1940.
5. About ten months later, or on December 23, 1939, Juan Cruz Yap Chuy sold to the
Commonwealth of the Philippines the same portion, Identified as Lot No. 664-B-3, with
an area of 61,107 square meters, together with the improvements thereon, for the sum
of P6,347.50 allocated as follows:
6.1107 hectares at P 140 a hectare........................................... P 855.00

756 coconut trees, all fruit-bearing, at P7 per tree................. 5,292.00
200 coconut trees, not productive, at one peso a

tree.......................................................................... 200.00
The sale included a parcel of land Identified as lot No. 664-B-5, with an area of 8,023
square meters, which was a part of the national road and which Cruz donated to the
Commonwealth Government. The sale was registered in the registry of deeds of Davao
City on December 27,1939, meaning that Ang Bansing had constructive notice thereof
6. Simultaneously with that deed of sale, Juan Cruz Yap Chuy as principal, and G.B.
Cam and Miguel N. Lanzona as sureties, executed a bond in the sum of P6,347.50 (the
price of the sale) in favor of the Commonwealth of the Philippines. The bond would
become void if the Commonwealth obtained absolute title to the land.
7. On April 23, 1941, Ang Bansing executed an affidavit wherein he confirmed the
previous sale to Juan Cruz Yap Chuy of the said Lot No. 1846-C. His wife, Anatalia
Cepeda, was a witness in the said affidavit. Ang Bansing clarified that the exact area of
the lot sold is 16,107 square meters and not five hectares only which latter area was
merely his calculation. Ang Bansing further said in the affidavit:
That I hereby certify that I have no objection that the said portion after the
survey be transferred and ceded, as I intended to transfer and cede the
same, to the said Juan Cruz Yap Chuy by virtue of the said Deed of Sale
above-mentioned (referring to the 1939 Deed of Sale).
That affidavit was registered on May 8, 1941.
8. Lot No. 664-B-3 or No. 1846-C was covered by Tax Declarations Nos. 80454, R-
3612, R-5232 and A-12-123 in the name of the Republic of the Philippines (pp. 88-89,
Record on Appeal). On the other hand, Ang Bansing never declared Lot No. 1846-C for
tax purposes and never paid any realty taxes therefor.
9. Ang Bansing obtained Decree No. 745358 for the registration of the 29-hectare land
(including Lot No. 664-B-3 or No. 1846-C). By virtue of that decree, Original Certificate
of Title No. 26 was issued on March 7, 1941 in the names of Victoriana Ang Bansing
Orfelina Ang Banging and Francisco Ang Bansing
10. The issuance of that title implies that the government official (may be the provincial
district engineer at Davao City), who was aware of the purchase of Lot No. 664-B-3
from Ang Bansing was negligent in not intervening in the land registration proceeding so
as to have that lot registered in the name of the Commonwealth of the Philippines.
Another implication is that Ang Banging had already acted fraudulently or in bad faith in
not asking his lawyer to segregate Lot No. 664-B-3 or Lot No. 1846-C from his land and
to see to it that a separate title for that lot was issued in the name of the Commonwealth
of the Philippines.
11. On March 31, 1941, or 24 days after the issuance of OCT No. 26, it was cancelled
because of a "deed of adjudication". Transfer Certificate of Title No. 1783 was issued
for the 19-hectare land in the name of Francisco Ang Bansing alone.
12. Ang Bansing's land, known as Lot No. 1846, was subdivided into five lots, namely:
Lots Nos. 1846-A, 1846-B, 1846-C, 1846-D and 1846-E. On that same date of March
31, 1941, when Ang Bansing obtained TCT No. 1783, he sold Lot No. 1846-A to Juan
Cruz Yap Chuy Because of that sale, TCT No. 1783 was cancelled and TCT No. 1784
was issued to Juan Cruz Yap Chuy while TCT No. 1785 was issued to Ang Banging for
the other four lots which (it should be repeated) included Lot No. 1846-C the disputed
lot sold in 1939 by Ang Bansing to Juan Cruz Yap Chuy and in turn sold by the latter to
the Commonwealth of the Philippines. (The name Juan Cruz Yap Chuy was shortened
to Juan Cruz as shown in Entry No. 8052 dated August 4, 1953, appearing in TCT No.
1784. Cruz died in 1965.)
13. Ang Bansing sold to Vedasto Corcuera Lots Nos. 1846-B-1 and 1846-B-2-C, which
are subdivision lots of Lot No. 1846-B. As a result TCT No. 1785 was cancelled and
TCT Nos. 2551 and 2552 were issued to Corcuera on August 10, 1946. Lot No. 1846- D
was also sold by Ang Bansing to Corcuera.
14. Other portions of Lot No. 1846-B were sold by Ang Bansing to Juan Cruz. Lots Nos.
1846-C and 1846-E, the remaining lots, registered in the name of Ang Bansing as
shown in TCT No. T-2601 (Exh. L), were not alienated by him.
15. On September 25, 1965, President Diosdado Macapagal issued Proclamation No.
459, transferring to the Mindanao 'Development Authority (a corporate body created by
Republic Act No. 3034), "subject to private rights, if any", eight parcels of land forming
part of the Government's private domain. Among those parcels was Parcel 6, Lot No.
1846-C, Psd-16952, the herein disputed lot, with an area of 61,107 square meters,
bounded on the west by the national highway, on the north by Lot No. 1846-D, on the
east by the Gulf of Davao and on the south by Lot No. 564- A. Thus, Lot No. 1846-C
became a part of the Port Area Reservation from Sasa to Panacan Davao City.
16. In a letter dated March 31, 1969, counsel for the Mindanao Development Authority
requested Ang Bansing to surrender the owner's duplicate of TCT No. T-2601 so that
Lot No. 1846-C could be transferred to the said government agency (Exh. K). Ang
Bansing did not heed the demand.
17. On April 11, 1969, the Mindanao Development Authority sued Ang Bansing for the
reconveyance of Lot No. 1846-C. After trial (during which Ang Banging did not testify),
the trial court held that Ang Bansing held Lot No. 1846-C in trust for the State and that
the prescriptive period for recovering the Lot from Ang Bansing started only in 1968
when Ang Banging allegedly repudiated the trust.
18. The trial court cancelled Ang Bansing's title and directed the register of deeds to
issue a new title to the Mindanao Development Authority for Lot No. 1846-C. Ang
Bansing appealed to the Court of Appeals.
19. That Court in its decision dated December 27, 1977, reversing the trial court's
decision, held that Ang Banging was the owner of the disputed lot. It ruled that even if
Ang Bansing held Lot No. 1846-C in express trust, the trust was Innovated" by
subsequent circumstances and that the sale of Lot No. 1846-C to the Commonwealth of
the Philippines was not consummated because Ang Banging sold Lot No. 1846-A and
portions of Lot No. 1846-B to Juan Cruz in Lieu of Lot No. 1846-C.
20. The Appellate Court also held that the Mindanao Development Authority had no
cause of action for reconveyance because it had no privity with Ang Bansing and that
the trust, if any, was an implied or constructive trust and the action based on that kind of
trust was barred by prescription.
21. Presidential Decree No.690,which took effect on April 22, 1975, established the
Southern Philippines Development Administration and abolished the Mindanao
Development Authority. The latter's assets were transferred to the Administration.
I am of the opinion that Ang Banging is a trustee in an express trust covering Lot No.
1846-C. The trust is evidenced by his aforementioned affidavit of April 23, 1941 which
he executed twenty-three days after TCT No. 1783 was issued to him for that lot.
As already noted, Ang Bansing in that affidavit swore that he intended to cede and
transfer that rot to Juan Cruz after the survey (Exh. C). That sworn statement should be
considered in conjunction with the stipulation in the 1939 deed of sale that Ang Bansing
would undertake the titling of the whole Lot No. 1846 and that the registration expenses
corresponding to Lot No. 1846-C would be borne by Juan Cruz, the vendee of that
subdivision lot (Exh. A).
The said statements create an express trust for Lot No. 1846-C in favor of Juan Cruz
and his successors-in-interest or assignees. "No particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended" (Art. 1444,
Civil Code).
It is significant that, while Ang Bansing sold Lots Nos. 1846-A, 1846-B and 1846-D to
Cruz and Corcuera, he did not touch at all Lot No. 1846-C. He did not alienate that lot
because he knew that it was not his property and that it belonged to the State.
Equally significant and credible is the trial court's finding that it was only in 1968 that
Ang Bansing laid claim to Lot No. 1846-C through Rufino Boncayao, a surveyor who
worked in the Davao City engineer's office and who discovered that the title to the lot
had not yet been placed in the name of the Commonwealth of the Philippines.
The trial court found that Boncayao, as the agent of Ang Banging and with the advice
and backing of Vicente C. Garcia, Ang Bansing's lawyer, claimed that Ang Bansing was
the true owner of Lot No. 1846-C. There being an express trust in this case, the
equitable action to compel the trustee to reconvey the land registered in his name in
trust for the benefit of the cestui que trust does not prescribe (Manalang vs. Canlas, 94
Phil. 776; Ramos vs. Ramos, L-19872, December 3,1974, 61 SCRA 284, 299).
The defense of prescription cannot be set up in an action to recover property held in

trust for the benefit of another (Sevilla vs. De los Angeles, 97 Phil. 875).
Property held in trust can be recovered by the beneficiary regardless of the lapse of
time (Marabilles vs. Quito 100 Phil. 64; Bancairen vs. Diones, 98 Phil. 122, 126; Juan
vs. Zuniga 114 Phil. 1163; Vda. de Jacinto vs. Vda. de Jacinto, 115 Phil. 363, 370).
Prescription in the case of express trusts can be invoked only from the time the trust is
repudiated (Tamayo vs. Callejo, 68 O.G. 8661, 46 SCRA 27,32).
And a trustee who takes a Torrens title in his name for the land held in trust cannot
repudiate the trust by relying on the registration. That is one of the limitations upon the
finality of a decree of title Sotto vs. Teves. L-38018, October 31, 1978, 86 SCRA 154,
178; Alvarez vs. Espiritu, 122 Phil. 229, 235).
The rule, that an action for reconveyance prescribes in ten years, applies to an implied
trust, not to an express trust (Carantes vs. Court of Appeals, L-33360, April 25, 1977, 76
SCRA 514).
So, as a general rule a trust estate (in an express trust) is exempt from the operation of
the statute of limitations. The exception is when the trustee repudiates the trust in which
case the trustee may acquire the trust estate by prescription. The repudiation must be
known to the cestui que trust and must be direct, clear, open and equivocal. (Callejon
Salinas vs. Roman Tuason and Moreno Roman, 55 Phil. 729; Palma vs. Cristobal, 77
Phil. 712; Valdez vs. Olorga, L-22571, May 25, 1973, 51 SCRA 71.)
One who acquires a Torrens title in his own name to property which he is
administering for himself and his brothers and sisters as heirs in common
by descent from a common ancestor may be compelled to surrender to
each of his co-heirs his appropriate share". A partition proceeding is an
appropriate remedy to enforce this right. (Castro vs. Castro, 57 Phil. 675).
An equitable action for reconveyance is also a proper remedy (Laguna vs.
Levantino 71 Phil. 566; Sumira vs. Vistan, 74 Phil. 138).
In any event, the real plaintiff in this case is the Republic of the Philippines and
prescription does not run against the State (De la Vina vs. Government of the P.I., 65
Phil. 262, 265; Republic vs. Ruiz, L-23712, April 29, 1968, 23 SCRA 348).
The maxim is nullum tempus occurrit regi or nullum tempus occurrit reipublicae (lapse
of time does not bar the right of the crown or lapse of time does not bar the
commonwealth). The rule is now embodied in article 1108(4) of the Civil Code.
It is a maxim of great antiquity in English law. The best reason for its existence is the
great public policy of preserving public rights and property from damage and loss
through the negligence of public officers. (34 Am Jur. 301; Ballentines's Law Dictionary,
p. 891; U.S. vs. Nashville, Chattanooga & St. Louis Railway Co., 118 U.S. 120,125).
Thus, the right of reversion or reconveyance to the State of lands fraudulently registered
or not susceptible of private appropriation or acquisition does not prescribe (Martines
vs. Court of Appeals, L-31271, April 29, 1974, 56 SCRA 647, 655; Republic vs. Ramos,
117 Phil. 45, 49).
The government officials concerned were negligent in not intervening in the land
registration proceeding or in not promptly asking Ang Banging to reconvey the disputed
lot to the Commonwealth or to the Republic of the Philippines.
Such negligence does not prejudice the State. The negligence or omissions of public
officers as to their public duties will not work an estoppel against the State (10 R.C.L.
705, cited in Bachrach Motor Co. vs. Unson, 50 Phil. 981, 990; Central Azucarera de
Tarlac vs. Collector of Internal Revenue, 104 Phil. 653, 656; People vs. Ventura, 114
Phil. 162, 169).
I vote to reverse and set aside the decision of the Court of Appeals and to affirm the trial
court's decision with the modification that the title should be issued to the Southern
Philippines Development Administration.
Footnotes
1 Record on Appeal, pp. 12-16, 85.
2 Id, pp. 90-91.
3 Id, pp. 17-23,86.
4 Id, pp. 54-57, 86.
5 Id, p. 33.
6 Id, p. 90.
7 Id, pp. 91-92.
8 Id, pp. 26-36, 88.

9 Id, pp. 89-90.
10 Id, pp. 2-12.
11 Id, pp. 37-54.
12 Id, pp. 185-198.
13 Rollo, pp. 44-54.
14 Art. 1441, Civil Code.
15 Sec. 31, Trusts, 76 Am Jr 2d, pp, 278-279.
16 Sec.35,Trusts,76 Am Jur 2d.281.
17 Warner vs. Burlington Fed. Sav. & L. Asso., 168 ALR 1265, 49 A2d 93.
18 Bogert on Trusts and Trustees, Sec. 48.
19 Id, Sec. 46.
20 11 Phil. 1267.
21 Record on Appeal, p. 189.
22 Rollo, p. 35.
23 Record on Appeal, pp. 59-60.
24 Diaz vs. Gorricho 103 Phil. 261.
25 Art. 1456, Civil Code.
26 Gayondato vs. Treasurer of the P.I., 49 Phil. 244.
27 Gonzales vs. Jimenez, 121 Phil. 84.
28 Escay vs. Court of Appeals, L-37504, Dec. 18, 1974, 61 SCRA 369,
and other cases cited therein.
29 Buenaventura vs. David, 37 Phil. 435; Ramos vs. Ramos, L-19872,

Dec. 3, 1974, 61 SCRA 284.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27294 June 28, 1983
ALFREDO ROA, JR., LETICIA ROA DE BORJA, RUBEN ROA, CORNELIO ROA and
ELSIE ROA-CACNIO (as heirs of the late Alfredo Roa, Sr.). petitioners,
vs.
HON. COURT OF APPEALS and the spouses JOAQUIN CASIÑO and CUSTODIA
VALDEHUESA, respondents.
Alberto Cacnio for petitioners.
Melecio Virgilio Law Office for respondents.
GUERRERO, J.:
Appeal by way of certiorari from the Decision of the Court of Appeals 1 in CA-G.R. No.
34746-R entitled "Alfredo Roa, Plaintiff-Appellant, versus Joaquin Casiño et al.,
Defendants-Appellees," and from the Resolution of the said Court 2 denying plaintiff-
appellant's motion for reconsideration of the said Decision.
On September 1, 1955, an action for recovery of possession of a parcel of land was

filed before the Court of First Instance of Misamis Oriental by Alfredo Roa, Sr. (now
deceased and subsequently substituted by his heirs, the herein petitioners) against
respondent spouses, Joaquin Casiño and Custodia Valdehuesa (real name appears to
be Teodosia Valdehuesa), successors-in- interest of one Pablo Valdehuesa, now
deceased.
In his complaint, Alfredo Roa, Sr. alleged that the said land is agricultural; that it is
situated in Bugo, formerly within the municipality of Tagoloan, Misamis Oriental, now
comprised within the limits of the City of Cagayan de Oro; that it is registered in his
name under Original Certificate of Title No. T-21D; that he found the private
respondents occupying said land. He prayed that possession of the same be returned to
him and that he be awarded actual and moral damages in the sum of P10,000.00.
In answer to the complaint, respondent spouses alleged that the land in question
formerly belonged to one Pablo Valdehuesa, father of respondent Custodia (Teodosia)
Valdehuesa and now deceased; that it was however titled in the name of Alfredo Roa,
Sr., Trinidad Reyes Roa, Esperanza Roa de Ongpin, Concepcion Roa and her husband
Zosimo Roa in Land Registration Case No. 12, G.R.L.O. Record No. 10003 of the Court
of First Instance of Misamis Oriental by virtue of an agreement entered into between the
Roas and said Pablo Valdehuesa; that the conditions of the said compromise
agreement were never complied with by the Roas notwithstanding the death of Pablo
Valdehuesa in 1928 and despite repeated demands for compliance thereof; that the
heirs of said Pablo Valdehuesa sold the land in question to them on April 30, 1930, after
rescinding the aforementioned compromise agreement; and that they now enjoy the
privileges of absolute ownership over said land by reason of their continuous and
adverse possession thereof since time immemorial. By way of counterclaim, the
respondents prayed for the reconveyance of the said parcel of land contending that the
compromise agreement created an implied trust between the parties to it, and for
damages in the amount of P10,000.00.
In answer to private respondent's counterclaim, Alfredo Roa, Sr. maintained that the
heirs of Pablo Valdehuesa cannot rescind the compromise agreement by their own act
alone or without going to court; and that the alleged sale of the said heirs to private
respondents was null and void, in view of the fact that respondent spouses knew that
the land was then titled in the name of the Roas under Act 496.
On December 22, 1959, the parties submitted to the Court a quo an agreed Stipulation
of Facts, to wit:
STIPULATION OF FACTS
That parties herein, assisted by their respective attorneys, have agreed on

the following facts:
1. That the plaintiff and the defendants are all of age and with capacity to
sue and be sued.
2. That the plaintiff and his brothers and sisters Trinidad Reyes Roa,
Esperanza Roa de Ongpin, Concepcion Roa and Zosimo Roa, husband of
the latter, were the owners pro-indiviso of a parcel of land located in
Tagoloan, Misamis Oriental, containing an area of several hundred
hectares, and sometime in 1925, and for the purpose of registering their
title to said parcel of land, the said co- owners filed an application with the
Court of First Instance of Misamis Oriental, and said application was
docketed in said Court as Expediente No. 12, G.L.R.O. Record No. 10003.
3. That in the application as well as in the plans accompanying said

application in Expediente No. 12, G.L.R.O. No. 10003, was included a
parcel of land which is now the portion in litigation in this case.
4. That one Pablo Valdehuesa filed an opposition in said Expediente No.

12, G.L.R.O. Record No. 10003. claiming absolute and exclusive
ownership over a portion which is now the property under litigation.
5. That sometime during the year 1925, the co-owners, said Concepcion
Roa, Esperanza Roa de Ongpin and Trinidad Reyes Roa and Zosimo Roa
entered into an agreement with the said Pablo Valdehuesa, and the terms
of their agreement are contained in the document hereto attached, made a
part hereof, and marked as Exhibit "1".
6. That in compliance with his obligation under and by virtue of said

Exhibit " 1" the said Pablo Valdehuesa withdrew the opposition filed by
him in said case Expediente No. 12, G.L.R.O. Record No. 10003, and as
the result of said withdrawal, the plaintiff and his co-owners succeeded in
registering their title to their property, including the portion owned by Pablo
Valdehuesa as claimed in his opposition.
7. That the said Pablo Valdehuesa died in May of 1928, and upon his
death his estate passed to the ownership of his widow and legitimate
children including all his rights under said Exhibit " 1 " to the property in
question.
8. That since then the property in question has been in the possession of
the defendants, and their possession together with the possession of their
predecessors in said property has been open, continuous and
uninterrupted to this date.
9. That sometime after the issuance of title in favor of the plaintiff (Transfer
Certificate of Title No. 21-A) and his aforementioned brothers and sisters
covering the parcel of land subject matter of the application filed by them
in Expediente No. 12, G.L.R.O. Record No. 10003, the said plaintiff and
his brothers and sisters partitioned among themselves said property, and
plaintiff was adjudicated a share in said property, of which the parcel of
land covered by the opposition of Pablo Valdehuesa withdrawn under the
terms of Exhibit " 1" is a part or portion of said charge, and covered by T-
21-D (copy attached as Exh. "A").
10. That the portion in litigation as correctly described in paragraph 3 of

the complaint is covered by the certificate of title referred to above.
11. That in 1955 the plaintiff had a surveyor relocate the corners and
boundaries of his land as described in his title and that the portion of about
2 hectares on the eastern end of the land is in the possession and is
actually occupied by the defendant. This is the portion in litigation
described in par. 3 of the complaint .
12. That Expediente No. 12, G.L.R.O. Record No. 10003 have been totally
destroyed during the last World War, and the parties reserve the right to
present additional evidence during the hearing of this case.
Cagayan de Oro City, December 22, 1959.
(Sgd.)
ALFR
EDO
ROA
Plaintif
f
(Sgd.)
HERN
ANDO
PINE
DA
(Attor
ney
for
Plainti
ff)
(Sgd.) JOAQUIN
CASIÑO
(Sgd.)
CUST
ODIA
VALD
EHUE
SA
(Defe
ndant
s)
(Sgd.) MANUEL C.
FERNANDEZ
(Sgd.)
CONC
ORDI
O C.
DIEL
(Attor
ney
for
defen
dants"
)
The aforesaid compromise agreement mentioned in paragraph 5 of the agreed

Stipulation of Facts was thereafter ratified on May 11, 1927 as shown in Exhibit " 1" as
follows:
SEPAN TODOS LOS QUE LA PRESENTE VIEREN :
Que nosotros, los abajo firmantes, mayores de edad hacemos constar:
1. Que somos los dueños mancomunados de la propiedad conocida por

Terrenos de Bugu, en el municipio de Tagoloan, provincia de Misamis.
2. Que en la tramitacion del Exp. No.12,G.L.R.O.,Record No. 10003, para

el registro de dicha propiedad, el Sr. Pablo Valdehuesa del municipio de
Tagoloan, que era uno de los opositores, consintio en retirar su oposicion
contra nuestra citada solicitud de registro a condicion de que le
reconozcamos su dominio y propiedad sobre una parcela de terreno
dentro de la comprension de Bugu que el ocupaba, o se le compre, y de
otro modo se le compense al reintegrarnos dicha parcela en tiempo
oportuno. La descripcion del terreno referido cuya extension es de una
hectares, cuarenta y nueve areas y cincuenta y nueve centiareas,
aparece en el escrito de oposicion que obra en el referido Exp. 12, y que
luego fue retirado por convenio de partes.
3. Por tanto, en complimiento de dicho convenio y como consecuencia del

mismo, ratificamos lo que tenemos prometido, para lo cual autorizamos al
Sr. Zosimo Roa a que busque y adquiera otro pedazo de terreno fuera de
la comprension de Bugu, de una hectarea, cuarenta y nueve areas y
cincuenta y nueve centiareas, poco mas o menos, y que sea acceptable
para el Sr. Pablo Valdehuesa, como canje or permuta con la parcela que
el ocupa; en la inteligencia de que el valor de compra no exceda de
P400.00 en su defecto, si no se encuentra un terreno que sea
satisfactorio para el Sr. Pablo Valdehuesa, se le compensara el reintegro
arriba citado en la mencionada cantidad de P400.00.
4. Por su parte, el Sr. Pablo Valdehuesa, acepta todo lo establecido en

este documento, obligandose a respetarlo y acatarlo.
En testimonio de todo lo cual, firmamos el presente documento en

Cagayan de Misamis, hoy, 11 de Mayo de 1927.
(Sgd.) Trinidad Roa de Reyes (Sgd.) Esperanza Roa de Ongpin
(Sgd.) Concepcion Roa (Sgd.) Zosimo Roa
__________________________
Alfredo Roa
___________________________
Pablo Valdehuesa
Pursuant to said Exhibit "1", Concepcion, Esperanza, Trinidad and Zosimo, all
surnamed Roa, agreed to replace the land of Pablo Valdehuesa with another parcel of
land with an area of 1.4959 hectares to be given to Pablo Valdehuesa in exchange for
the land occupied by him, or if said land was not acceptable to him, to pay him the
amount of P400.00. Neither of these undertakings was complied with by the Roas and
Pablo Valdehuesa continued in possession of the land occupied by him until the same
was sold by the heirs of Pablo Valdehuesa to the respondent spouses on April 30,
1930.
On March 6, 1964, the lower court rendered the decision ordering the plaintiff Alfredo
Roa to reconvey the land in dispute to the defendants, now the respondent spouses, on
the ground that same could not have been registered in the name of the plaintiff and his
brother and sisters if not for the compromise agreement aforestated and further to pay
said defendants the amount of P1,000.00 as attorney's fees plus costs.
On appeal taken by Alfredo Roa, the appellate court affirmed the decision of the lower
court and declared that (a) the compromise agreement created an express trust
between the Roa brothers and sisters, including Alfredo, Sr., (b) that the respondent
spouses' action for reconveyance was imprescriptible on the authority of Mirabiles, et al.
v. Quito, et al., L- 14008, October 18, 1956; and (c) that Alfredo Roa cannot invoke the
indefeasibility and imprescriptibility of the Torrens title issued in his name for the land in
dispute since the said title was secured by him in breach of an express trust, and thus,
the Court ordered the reconveyance of the property within fifteen (15) days from the
finality of the decision.
Alfredo Roa, now substituted by his heirs, the herein petitioners Alfredo Roa, Jr., Leticia
Roa de Borja, Ruben Roa, Cornelio Roa and Elsie Roa-Cacnio, moved to reconsider
the adverse decision. Acting on this motion for reconsideration, the Court of Appeals in
a majority resolution denied the said motion, and while conceding that "the creation of
an express trust leaves room for doubt," the said Court ruled that the compromise
agreement, at the least gave rise to an implied trust under Art. 1456 of the New Civil
Code. Hence, petitioners filed this present petition on the following assignment of errors:
I. The respondent Court of Appeals erred when it ruled that Alfredo Roa,
the petitioners' predecessor-in-interest, was bound by the compromise
agreement (Exh. "I") in the execution of which, according to the Stipulation
of Facts, said Alfredo Roa neither participated nor signed.
II. On the assumption that the aforementioned compromise agreement

was binding upon Alfredo Roa, the respondent Court of Appeals erred
when it held the said agreement, which stipulated the conveyance of the
property in dispute for a consideration, as having established a trust
relationship between the parties to it.
III. The respondent Court of Appeals erred when it held that the ruling in
the case of Gerona, et al. va. De Guzman, G.R. No. L-19060, May 29,
1964, is inapplicable to the case at bar.
On the first assigned error, We reject the contention of the petitioners that Alfredo Roa,
Sr. was not bound by the compromise agreement for not being a participant or signatory
thereto. It may be true that Alfredo Roa, Sr. did not sign the compromise agreement,
Exh. " 1 ", for he was then in Manila working as a newspaperman but he certainly
benefited from the effects of the compromise agreement which obliged Pablo
Valdehuesa to withdraw, as he did withdraw his opposition to the registration of the Roa
property under the Torrens system. The Roa property was subsequently registered
without opposition and title was issued thereto in the name of Alfredo Roa, his brother
Zosimo and his sisters Trinidad, Esperanza and Concepcion, all surnamed Roa as co-
owners thereof. Certainly, the Roas may not escape compliance from their obligation
under the compromise agreement by partitioning the property and assigning the
property in dispute as part of the share of the petitioners. Moreover, it will be a pure and
simple case of unjust enrichment for petitioners to acquire and own the property of
Pablo Valdehuesa, without paying the value thereof or exchanging the land with another
with an equal area as originally agreed.
With respect to the second assignment of error, We do not agree with the holding of the
respondent appellate court that an express trust was created between the parties by
reason of the compromise agreement entered into between them. Express trusts are
created by the intention of the trustor or one of the parties (Article 1441, New Civil
Code). While no particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended (Article 1444, New Civil Code), in the case
at bar, We find no direct and positive intent to create a trust relationship between the
parties to the compromise agreement under which Pablo Valdehuesa agreed to
withdraw his opposition to the application for registration upon the commitment of the
Roas to give Valdehuesa another piece of land of equal area or pay its price of P
400.00. It seems clear to Us that the Roas under the compromise agreement did not
commit themselves to hold the lot claimed by Pablo Valdehuesa for Pablo Valdehuesa
and in Pablo Valdehuesa's name.
If the compromise agreement did not result to an express trust relationship, did it,
however, give rise to an implied trust? Private respondents claim that under the terms of
the compromise agreement, the land claimed by Pablo Valdehuesa should be deemed
held in trust by the Roas when the latter failed to relocate him or pay the price therefor.
The respondent appellate court took private respondents' position, and opined, 3 thus —
It could thus be gleaned that had it not been for the promise of the Roas
contained in Exhibit 1, Valdehuesa would not have been induced to
withdraw his opposition in the land registration case. When, therefore, the
Roas turned their back to a solemn agreement entered in a court
proceedings, they were guilty of fraud.
Fraud is every kind of deception, whether in the form of

insidious machinations, manipulations, concealments or
misrepresentations, for the purpose of leading another party
into error and then execute a particular act. It must have a
determining influence on the consent of the victim." (4
Tolentino, Civil Code, p. 462)
It results from the foregoing that although the creation of an express trust
leaves room for doubt, by operation of law, an implied trust is created,
Art. 1456. If property is acquired through mistake or fraud,

the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from
whom the property comes. (N.C.C)".
We cannot sustain the holding of the respondent appellate court in its Resolution
denying petitioners' motion for reconsideration that by operation of law an implied trust
was created under the terms of the compromise agreement in the light of Article 1456 of
the New Civil Code cited above. We rule that Art. 1456 is not applicable because it is
quite clear that the property of Pablo Valdehuesa was acquired by the Roas not through
mistake or fraud but by reason of the voluntary agreement of Valdehuesa to withdraw
his opposition to the registration of the land under the Torrens system.
There is incontrovertible evidence that the Roas intended to abide by the compromise
agreement at the time of the execution of the same. The private respondents
themselves introduced additional evidence which showed that on May 11, 1927,
Trinidad Roa, Esperanza Roa de Ongpin, Concepcion Roa and Zosimo Roa confirmed
in writing the terms and conditions of the agreement they had entered into with Pablo
Valdehuesa in the land registration proceedings. Even the respondent appellate court
expressly determined the aforesaid failure of the Roas to comply with the terms of the
compromise agreement to be an afterthought; thus,
The change of mind of the plaintiff-appellant later is of no moment in the

case at bar. 4
While it is Our ruling that the compromise agreement between the parties did not create
an express trust nor an implied trust under Art. 1456 of the New Civil Code, We may,
however, make recourse to the principles of the general law of trusts, insofar as they
are not in conflict with the New Civil Code, Code of Commerce, the Rules of Court and
special laws which under Art. 1442 of the New Civil Code are adopted. While Articles
1448 to 1456 of the New Civil Code enumerates cases of implied trust, Art. 1447
specifically stipulates that the enumeration of the cases of implied trust does not
exclude others established by the general law of trusts, but the limitations laid down in
Art 1442 shag be applicable.
In American law and jurisprudence, We find the following general principles:
A constructive trust, otherwise known as a trust ex maleficio, a trust ex

delicto, a trust de son tort, an involuntary trust, or an implied trust, is a
trust by operation of law which arises contrary to intention and in invitum,
against one who, by fraud, actual or constructive, by duress or abuse of
confidence, by commission of wrong, or by any form of unconscionable
conduct, artifice, concealment, or questionable means, or who in any way
against equity and good conscience, either has obtained or holds the legal
right to property which he ought not, in equity and good conscience, hold
and enjoy. It is raised by equity to satisfy the demands of justice.
However, a constructive trust does not arise on every moral wrong in
acquiring or holding property or on every abuse of confidence in business
or other affairs; ordinarily such a trust arises and will be declared only on
wrongful acquisitions or retentions of property of which equity, in
accordance with its fundamental principles and the traditional exercise of
its jurisdiction or in accordance with statutory provision, takes cognizance.
It has been broadly ruled that a breach of confidence, although in
business or social relations, rendering an acquisition or retention of
property by one person unconscionable against another, raises a
constructive trust. (76 Am. Jur. 2d, Sec. 221, pp. 446-447).
And specifically applicable to the case at bar is the doctrine that "A constructive trust is
substantially an appropriate remedy against unjust enrichment. It is raised by equity in
respect of property, which has been acquired by fraud, or where, although acquired
originally without fraud, it is against equity that it should be retained by the person
holding it." (76 Am. Jur. 2d, Sec. 222, p. 447).
The above principle is not in conflict with the New Civil Code, Code of Commerce,
Rules of Court and special laws. And since We are a court of law and of equity, the
case at bar must be resolved on the general principles of law on constructive trust which
basically rest on equitable considerations in order to satisfy the demands of justice,
morality, conscience and fair dealing and thus protect the innocent against fraud. As the
respondent court said, "It behooves upon the courts to shield fiduciary relations against
every manner of chickanery or detestable design cloaked by legal technicalities."
The next point to resolve is whether the counterclaim of private respondents for the
reconveyance of the property in dispute has already prescribed in the light of
established jurisprudence that the right to enforce an implied trust prescribes in ten
years.
Admittedly, Pablo Valdehuesa and his heirs remained in possession of the property in
question in 1925 when by reason of the compromise agreement Valdehuesa withdrew
his opposition to the registration applied for by the Roas for which reason the latter were
able to obtain a Torrens title to the property in their name. However, Valdehuesa and
his heirs continued their possession of the land until he sold the property in question to
private respondents herein on April 30, 1930 and the latter remained in possession and
were never disturbed in their occupancy until the filing of the original complaint for
recovery of possession on Sept. 1, 1955 after demand was made upon them when a
relocation survey initiated by petitioners established that private respondents were
actually occupying about 2 hectares on the eastern end of the property. Upon these
facts, the prescriptive period may only be counted from the time petitioners repudiated
the trust relation in 1955 upon the filing of the complaint for recovery of possession
against private respondents so that the counterclaim of the private respondents
contained in their amended answer of June 12, 1956 wherein they asserted absolute
ownership of the disputed realty by reason of their continuous and adverse possession
of the same is well within the ten-year prescriptive period.
Finally, the case at bar is quite similar to the case of Dolores Pacheco vs. Santiago
Arro, 85 Phil. 505, wherein the claim to the lots in the cadastral case was withdrawn by
the respondents relying upon the assurance and promise made in open court by Dr. M.
Y. in behalf of J. Y. y R., the predecessor-in-interest of the petitioners and the Court
held that a trust or a fiduciary relation between them arose, or resulted therefrom, or
was created thereby and the trustee cannot invoke the statute of limitations to bar the
action and defeat the right of the cestuis que trustent. (Cited in Tolentino, Civil Code of
the Philippines, Vol. IV, p. 627).
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby

AFFIRMED.
SO ORDERED.
Concepcion, Jr., De Castro and Escolin, JJ., concur.
A quino J., concurs in the result
Makasiar (Chairman) and Abad Santos, JJ., took no part.
Footnotes
1 Third Division: Yatco, J., ponente; Capistrano, J. and Cañizares, J.,

concurring.
2 Special Division of Five: Yatco, J., ponente; Canizares J., concurring;

Gatmaitan, J., concurs in a separate opinion; Capistrano, J., and Alvendia,
J., dissenting.
3 Rollo, p. 77.
4 Decision, CA., p. 7.

SUPREME COURT
Manila
EN BANC
G.R. No. L-16708 October 31, 1962
TRUSTEESHIP OF THE MINORS BENIGNO, ANGELA and ANTONIO all surnamed

PEREZ Y TUASON, PHILIPPINE NATIONAL BANK, Judicial Guardian of BENIGNO
PEREZ, ANTONIO M. PEREZ, judicial guardian-appellant,
vs.
J. ANTONIO ARANETA, trustee-appellee.
Alfonso Felix, Jr. for judicial guardian-appellant.

Araneta and Araneta for trustee-appellee.
CONCEPCION, J.:
This is an appeal by writ of error from an order of the Court of First Instance of Rizal
denying a motion of appellant, Antonio M. Perez, as judicial guardian of his children, the
minors Benigno, Angela, and Antonio, all surnamed Perez y Tuason.
In pursuance of the provisions of the will of the late Angela S. Tuason — which was
probated in Special Proceedings No. 585 of said Court — appellee J. Antonio Araneta
was on March 24, 1950, appointed, in Special Proceedings No. Q-73 of the same Court,
as trustee of property bequeathed by the deceased to some of her heirs, including her
grandchildren, the aforementioned minors. On October 4, 1950, appellee moved for the
approval of accounts and the fixing of his compensation as such trustee. Appellant's
wife, Angela I. Tuason, hereafter referred to as Mrs. Perez, as well as the mother and
guardian at the time, of said minors, objected thereto and urged the court to remove
appellee as trustee and appoint the Philippine Trust in his place and to revoke, not only
certain sale made by him, but, also, an order of the court dated March 24, 1950,
granting him the power to sell trust properties without special judicial authorization
therefor. Subsequently, appellant joined his wife in seeking this relief. After appropriate
proceedings, said Court issued on December 23, 1950, an order approving said
accounts, deferring action on the compensation of the trustee, modifying in part said
order of March 24, 1950, and denying the motion of Mrs. Perez. The pertinent part of
the aforementioned order of December 23, 1950, reads as follows:
It being established that the trust was expressly created by the deceased, we
shall now examine whether the trustee comes under the active supervision of the
Court and whether our order of March 24, 1950, granting to said trustee authority
to sell the trust res without the need of judicial authorization erroneous or not.
The Court accepts in view urged by the trustee that only when the testator "has
omitted in his will to appoint a trustee" may the Court appoint one. This is in a
accordance with Section 2, Rule 99, of the Rules of Court. When an express trust
has been created, the powers of the trust shall be determined by the trust
instrument itself. In this particular case, the trustee J. Antonio Araneta was given
"amplios poderes de vender los mismos". The testatrix emphasizes her desire
that the trustee shall have ample powers when in another part of her will she
states that the powers of said trustee shall be "los poderes mas amplios
permitidos por la ley". There is nothing against the law for a trustor to grant to the
trustee ample powers, and when the deceased Angela S. Tuason granted said
powers to the trustee, she emphasized her intention that in the exercise of said
powers by the trustee, there should be no court supervision.
"By the terms of trust, it may be left to the discretion of the trustee whether
or not to exercise a power, or where he is directed to exercise the power,
the time and manner of its exercise may be left to his discretion. To the
extent to which the trustee has discretion, the Court will not control his
exercise as long as he do not exceed the limits of the discretion conferred
upon him. The court will not substitute its own judgment for his . . . . The
cases are numerous in which it has been held that where discretion is
conferred upon the trustee with respect to the exercise of a power, the
court will not interfere with him in his exercise or failure to exercise the
power so long as he is not guilty of an abuse of discretion. (Scott on
Trusts, Vol. 2, Sec. 187)"
Such being the case, there is no reason for the court to intervene in the
execution by the trustee of the powers granted to him by the trustor. We
conclude, therefore, that our order of March 24, 1950 granting authority to the
trustee J. Antonio Araneta to sell the trust res without judicial authority is correct.
For the purpose, however, of safeguarding the interests of the beneficiaries of

this trust, said order is hereby amended as follows:
(a) That the bond of the trustee is hereby increased from P10,000.00 to
P30,000.00 and the premium for the bond (P30,000.00) shall be for the account
of the trust;
(b) That the Trustee may sell, encumber or otherwise dispose of any of the trust
res without the need of judicial authorization; provided, that if the amount
involved exceeds P30,000.00, the trustee shall notify the natural guardians or the
judicial guardian in case there be one appointed by the Court of the beneficiaries
ten (10) days before the proposed sale or encumbrance is executed, and in case
the amount involved be P30,000.00 or less, the trustee shall advise said
guardians within ten (10) days after executing a deed of sale or encumbrance.
WHEREFORE, (1) the accounts filed by the trustee as per Annexes A, B, and C
attached to his motion of October 5, 1950 are hereby approved; (2) the petition of
trustee to fix his compensation is hereby deferred until such time as he shall
present it again; (3) the petition filed by the parents of the minors for the removal
of the trustee J. Antonio Araneta is hereby denied. Likewise, their petition that the
Philippine Trust Co. or Atty. Frank W. Brady be appointed co-trustee denied; 4)
the petition that the sale of the bed in favor of Antonio Tuason, Jr. be revoked is
hereby denied; and (5) the petition that the order of this court, dated March 24,
1950, giving the trustee power to sell without the need of judicial authorization be
revoked is also hereby denied.
A reconsideration of this order having been denied, & Mrs. Perez filed with the Supreme
Court a petition G.R. No. L-6182 thereof — for certiorari, with preliminary injunction, to
annul said orders of March 24 and December 23, 1950. A writ of preliminary injunction
was issued this by Court soon thereafter. In a decision promulgated April 13, 1955, we
denied said petition and dissolved said writ of preliminary injunction.
In pursuance of the aforementioned orders of March 24 and December 23, 1950,

appellee wrote on June 23, 1959, to appellant, as the then judicial guardian of said
minor a letter informing him of a proposed sale to Ortigas & Co., Ltd., of several lots
under trusteeship, located in Marikina, Rizal, and aggregating 42.6091 hectares, at the
rate of P2.93 a square meter. We quote from said communicable petition:
Pursuant to the order of the Court of First Instance of Quezon City in trusteeship
proceeding No. Q-73, I with to advise you that ten (10) days after your receipt of
this letter, I, in my capacity as trustee in said proceedings, shall execute deed of
sale with mortgage in favor of Ortigas & Company Limited Partnership, the
following lots located at Marikina which form part of the trust estate:
T.C.T. Area
No. Lote No. Psd. (Sq m.)
(Rizal)
22395 49-C-3-A-3-C-1-A-2 29965 249
" 49-C-3-A-3-C-2-A-2-B " 138,682
" 49-C-3-A-3-C-1-A-1 " 273
" 49-C-3-A-3-C-2-A-2-A " 159,054
" 49-C-3-A-3-C-2-A-7 18247 21,089
22396 49-C-3-A-3-C-3-A-3-1-4 29965 24,040
" 49-C-3-A-3-C-3-A-3-A- " 7,968

4-A-1
" 49-C-3-A-3-C-3-A-3-A- " 74,736

4-A-3
The price is P1,250,000.00 payable under the following conditions:

1. Upon acceptance of the proposal, the sum of P20,000.00.
2. Upon signing the deed of sale with mortgage, the sum of P300,000.00.
3. The balance shall be paid within a period of one and a half-years, with interest
at 6% per annum.
4. The property must be sold from all liens and encumbrances, particularly a
guarantee that there are no squatters.
5. Broker's commission shall be for buyer's account.
Three (3) days later, appellant informed appellee by letter (Exhibit C) of his (appellant's)
objections to the proposed sale. Moreover, on July 1, 1959 appellant filed, in the
trusteeship proceedings, a motion praying for a writ of preliminary injunction to restrain
appellee from proceeding with the sale. Subsequently, the Philippine National Bank, as
guardian of the estate of Benigno Perez y Tuason, one of the heirs of Angela I. Tuason,
deceased, adopted said motion of appellant herein as its own. At the instance of
appellant, a notice of lis pendens was, on July 29, 1959, annotated on the original
certificates of title to the property in question.
After due hearing, the lower court issued an order, dated October 15, 1959, denying
appellant's motion and petition for a writ of preliminary injunction. Hence, this appeal by
Antonio M. Perez. The Philippine National Bank has not joined him in the appeal.
Subsequently, appellee effected the sale aforementioned to Ortigas & Co., Ltd.
The main issues are: (1) whether or not the sum of P2.93 per square meter agreed
upon with Ortigas & Co., Ltd., is the fair market value of the property aforementioned;
and (2) whether the sale thereof would be injurious to the interest of the beneficiaries
or cestui que trust.
With respect to the first issue, appellant maintains that the fair market value of the
property above referred to is P5.00 a square meter, as stated in the report (Exhibit E) of
his realty estate expert, Mr. A. Varias. It appears from this report that the conclusion
therein reached by Mr. A. Varias is based upon (a) some offers to sell properties located
in the vicinity of the one involved in this case; and (b) certain sales of real estate
specified in the report.
However, offers to sell are not competent evidence of the fair market value of a
property. Said offers to sell are no better than offers to buy, which have been held be
inadmissible as proof of said value. (City of Manila Estrada, 25 Phil. 208; Manila
Railroad Co. vs. Aguila 35 Phil. 118; City of Davao vs. Dacudao L-3741, May 2, 1952.)
Indeed,
. . . To imagine a sale without a buyer would be absurd, for if there is no buyer

the commodity would bring nothing . . . .
In discussing the term "market value" the author of a well-known treaties on the
subject of damages observes that to make a market there must be both buying
and selling; and the "market value" says he, is that reasonable sum which the
property would bring on a fair sale by a man willing but not obliged to sell to a
man willing but not obliged to buy. (Sedgewick on Damages, sec. 245; cited in
Compagnie Franco-Indo Chinoise vs. Deutsch-Australiache, 39 Phil. 474.)
The aforementioned report relies, also, upon the sale a lot of 9,679 square meters at
P5.70 a square meter and two (2) sales each of lot of 20,000 square meters and a sale
of a lot of 281,452 square meters, at P4.00 square meter. These transactions can not
serve as basis for the determination of the value of the property in dispute for the lands
involved in the former are much smaller than the latter, the area of which is 426,091
square meters, and it is a matter of common knowledge that the price becomes lesser
as the size of the property sold becomes bigger. Moreover, the lands covered by said
transactions do not appear to be in the vicinity of the property in litigation. What is more,
no effort has been made to prove that the nature and condition of the former are
analogous, or at least, comparable to those of the latter. In Manila Railroad Co. vs.
Mitchell (49 Phil. 801), this Court held:
. . . The exhibits were clearly inadmissible in evidence and properly rejected by

the (lower) court. In order that such evidence may be admitted, it is necessary
that the properties sold be in the immediate neighborhood or within the zone of
the commercial activity with which the condemned property is identified.
(Emphasis supplied.)
Upon the other hand, it appears that in 1955 the Universal Textile Mills bought a lot of
110,004 square meters near the trust properties in question at P2.50 a square meter,
whereas a land of 213,458 square meters, situated in the same neighborhood, was, in
1956, acquired by the Manila Bay Spinning Mill, at P1.50 a square meter. Again, prior to
the sale of said trust properties to Ortigas & Co., Ltd. offers to purchase the same
neighborhood were made by United Laboratories, Inc. and one Mr. Philipps at P2.50
and P2.70, respectively, a square meter. It would thus appear that the price of P2.93 a
square meter agreed upon with Ortigas & Co., Ltd. is fairly representative of the market
value of said land, and this is borne out by the testimony of Arturo Ruis and Lauro
Marquez, the real estate brokers who took the witness stand for herein appellee.
It is next urged that the sale of the property in question is not only unnecessary, but also
injurious to the minors represented by appellant herein, by reason of possible
devaluation, and high income taxes. This pretense is predicated, however, upon sheer
speculation. Furthermore, the last will and testament of Angela S. Tuason, in pursuance
of which the trust was established, provides that:
Cuarta. — Instituyo como mis unicos herederos a mis mencionados tres hijos a
razon de una novena parte del caudal hereditario que dejare para cada uno de
rellos. Lego a mi hijo Antonio otra porcion equivalente a dos novenas partes del
caudal hereditario. Lego asi mismo a mis nietos que fueren hijos de mi hija
Nieves, otra porcion equivalents a dos novenas partes del caudal hereditario. Y
finalmeinte lego a mis nietos que fueren hijos de mi hija Angela otra porcion
equivalente a dos novenas partes del caudal hereditario. Dichos tres legados, sin
embargo, estansuietos a la manda que se menciona en el parrafo siguiente Los
dos legados a favor de mis mencionados nietos seran administrados por mi
Albacea J. Antonio Araneta (y en defecto de este, su hermano, Salvador
Araneta), con amplios poderes de Nender los mismos, y con su producto adquirir
otros bienes, y con derecho a cobrar por su administracion, honorarios
razonables Los poderes de dicho administrador seran los de un trustee con los
poderes mas amplias permitidos por la ley Debera sin embargo, rendir trimestral
mente cuenta de su administracion a los legatarios que fueren mayores de edad
y a los tutores de los que fueren menores de edad Y asimismo debera hacerles
entrega de la participacion que a cada legatario corresponda en las rentas netas
de la administracion. La administracion sobre un grupo cesara cuando todos mis
nietos de dicho grupo llegaren a su mayoria de edad, y una mayoria de los
mismos acordaren la terminacion de la administracion. Por nietos debe
entenderse so nolamente a los nietos varones sino tambien a los nietos mujeres.
Referring to this provision of said will, we had occasion to say in G.R. No. L-6182:
. . . throughout clause 4 of the will, one can see that the testatrix placed implicit
confidence and trust in Araneta whom she designated as trustee, and for him to
continue for a long time, not only until the minor children of Angela S. Tuason
including those yet unborn, attained the age of majority but only when a majority
of them decided to end the trust.
In short, the trustor had such faith and confidence appellee that she relied fully upon his
judgment and discretion. The exercise thereof by appellees should not be disturbed,
therefore, except upon clear proof of fraud or bad faith, or unless the transaction in
question is manifestly prejudicial to the interest of the minors aforementioned petitioned.
Such is not the situation obtaining in the present case.
WHEREFORE, the orders appealed from are hereby affirmed, with costs against the
appellant. It is so ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.

SUPREME COURT
Manila
EN BANC
G.R. No. L-21616 December 11, 1967
GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants,

vs.
LUIS D. CUAYCONG, ET AL., defendants-appellees.
Benito C. Jalandoni and M. S. Gomez for plaintiffs-appellants.

Hilado and Hilado for defendants-appellees.
BENGZON, J.P., J.:
Eduardo Cuaycong, married to Clotilde de Leon, died on June 21, 1936 without issue
but with three brothers and a sister surviving him: Lino, Justo, Meliton and Basilisa.
Upon his death, his properties were distributed to his heirs as he willed except two
haciendas in Victorias, Negros Occidental, devoted to sugar and other crops — the
Haciendas Sta. Cruz and Pusod both known as Hacienda Bacayan. Hacienda Bacayan
is comprised of eight (8) lots — No. 28, covered by T.C.T. No. T-22130; Nos. 8, 17, 18
& 135, covered by T.C.T. No. T-22131; Nos. 21, 22, 23, covered by T.C.T. No. 22132 —
all of which are titled in the name of Luis D. Cuaycong, son of Justo Cuaycong.
Lino Cuaycong died on May 4, 1937 and was survived by his children Paz, Carolina,
Gertrudes, Carmen, Virgilio, Benjamin, Praxedes and Anastacio. Praxedes Cuaycong,
married to Jose Betia, is already deceased and is survived by her children Jose Jr.,
Jesus, Mildred, Nenita and Nilo, all surnamed Betia. Anastacio Cuaycong, also
deceased, is survived by his children Ester, Armando, Lourdes, Luis T., Eva and Aida,
all surnamed Cuaycong.
Meliton and Basilisa died without any issue.
On October 3, 1961, the surviving children of Lino Cuaycong: Gertrudes, Carmen, Paz,
Carolina, Virgilio; the surviving children of Anastacio: Ester, Armando, Lourdes, Luis T.,
Eva and Aida; as well as Jose, Jr., Jesus, Mildred, Nenita, Nilo, all surnamed Betia,
children of deceased Praxedes Cuaycong Betia, filed as pauper litigants, a suit against
Justo, Luis and Benjamin Cuaycong1 for conveyance of inheritance and accounting,
before the Court of First Instance of Negros Occidental (Civil Case No. 6314), alleging
among others that:
1. Eduardo Cuaycong had on several occasions, made known to his brothers and
sisters that he and his wife Clotilde de Leon (died in 1940) had an understanding and
made arrangements with Luis Cuaycong and his father Justo Cuaycong, that it was their
desire to divide Haciendas Sta. Cruz and Pusod among his brothers and sister and his
wife Clotilde.
2. With the consent of his wife, Eduardo had asked his brothers and sister to pay his
wife P75,000 (the haciendas were worth P150,000) and then divide equally the
remaining one-half share of Eduardo.
3. The brothers and sister failed to pay the 1/2 share of Clotilde over the two haciendas
which were later acquired by Luis Cuaycong thru clever strategy, fraud,
misrepresentation and in disregard of Eduardo's wishes by causing the issuance in his
name of certificates of title covering said properties.
4. As the two haciendas were the subject of transactions between the spouses and
Justo and Luis Cuaycong, Eduardo told Justo and Luis, and the two agreed, to hold in
trust what might belong to his brothers and sister as a result of the arrangements and
deliver to them their share when the proper time comes.
5. That as far back as 1936 Lino demanded from Justo and Luis his share and
especially after Eduardo's and Clotilde's death, the plaintiffs demanded their shares.
6. That their demands had been refused and in 1960 during the estate proceedings of
Praxedes Escalon, deceased wife of Luis D. Cuaycong, the latter fraudulently made it
appear that the plaintiffs had nothing to do with the land; that Luis Cuaycong had
possessed the lands since June 21, 1936 from which time he should be made to
account for the plaintiffs' share; and that P1,500 attorney's fees should be paid in their
favor.
Luis D. Cuaycong on October 20, 1961 moved to dismiss the complaint on the grounds
of unenforceability of the claim under the statute of frauds, no cause of action (Rule 8,
Sec. 1 [f] of the Rules of Court), and bar of causes of action by the statute of limitations
(Rule 8, Sec. 1[e]). Subsequently, opposition thereto, answer and reply were filed; the
plaintiffs also sought to have Benjamin Cuaycong declared in default for his failure to
answer.
On December 16, 1961, the Court of First Instance ruled that the trust alleged,
particularly in paragraph 8 of the complaint, refers to an immovable which under Article
1443 of the Civil Code may not be proved by parole evidence. Plaintiffs were given 10
days to file an amended complaint mentioning or alleging therein the written evidence of
the alleged trust, otherwise the case would be dismissed.
Later, on December 23, 1961, the court decreed that since there was no amended
complaint filed, thus, no enforceable claim, it was useless to declare Benjamin
Cuaycong in default.
Plaintiff thereafter manifested that the claim is based on an implied trust as shown by
paragraph 8 of the complaint. They added that there being no written instrument of trust,
they could not amend the complaint to include such instrument.
On January 13, 1962, the court dismissed the case for failure to amend the complaint; it
further refused to reconsider its order denying the motion to declare Benjamin
Cuaycong in default, stating that such a default declaration would be of no purpose.
Failing in their efforts to have the dismissal reconsidered, plaintiffs appealed to Us. The
resolution of the appeal hinges on whether the trust is express or implied.
Paragraph 8 of the complaint state:
That as the said two haciendas were then the subject of certain transactions
between the spouses Eduardo Cuaycong and Clotilde de Leon on one hand, and
Justo and Luis D. Cuaycong on the other, Eduardo Cuaycong told his brother
Justo and his nephew, defendant Luis D. Cuaycong, to hold in trust what might
belong to his brothers and sister as a result of the arrangements and to deliver to
them their shares when the proper time comes, to which Justo and Luis D.
Cuaycong agreed.
The plaintiffs claim that an inplied trust is referred to in the complaint which, under
Article 1457 of the Civil Code, may be proved by parole evidence.
Our Civil Code defines an express trust as one created by the intention of the trustor or
of the parties, and an implied trust as one that comes into being by operation of
law.2 Express trusts are those created by the direct and positive acts of the parties, by
some writing or deed or will or by words evidencing an intention to create a trust. On the
other hand, implied trusts are those which, without being expressed, are deducible from
the nature of the transaction by operation of law as matters of equity, in dependently of
the particular intention of the parties. 3 Thus, if the intention to establish a trust is clear,
the trust is express; if the intent to establish a trust is to be taken from circumstances or
other matters indicative of such intent, then the trust is implied. From these and from the
provisions of paragraph 8 of the complaint itself, We find it clear that the plaintiffs
alleged an express trust over an immovable, especially since it is alleged that
the trustor expressly told the defendants of his intention to establish the
trust.lawphil Such a situation definitely falls under Article 1443 of the Civil Code.
Appellants point out that not only paragraph 8 should be considered but the whole
complaint, in which case they argue that an implied trust should be construed to exist.
Article 1453, one of the cases of implied trust, is also cited: "When property is conveyed
to a person in reliance upon his declared intentions to hold it for or transfer it to another
or the grantor, there is an implied trust in favor of the person whose benefit is
contemplated." Said arguments are untenable, even considering the whole complaint.
The intention of the trustor to establish the alleged trust may be seen in paragraphs 5
and 6.4 Article 1453 would apply if the person conveying the property did not expressly
state that he was establishing the trust, unlike the case at bar where he was alleged to
have expressed such intent. Consequently, the lower court did not err in dismissing the
complaint.
Besides, even assuming the alleged trust to be an implied one, the right alleged by
plaintiffs Would have already prescribed since starting in 1936 When the trustor died,
plaintiffs had already been allegedly refused by the aforesaid defendants in their
demands over the land, and the complaint was filed only in 1961 — more than the 10-
year period of prescription for the enforcement of such rights under the trust.lawphil It is
settled that the right to enforce an implied trust in one's favor prescribes in ten (10)
years.5 And even under the Code of Civil Procedure, action to recover real property
such as lands prescribes in ten years (Sec. 40, Act 190).
And for the above reasons, We agree that it was pointless to declare Benjamin
Cuaycong in default, considering that without a written instrument as evidence of the
alleged trust, the case for the plaintiffs must be dismissed.
WHEREFORE, the order of dismissal of the lower court appealed from is hereby
affirmed, without costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles
and Fernando, JJ., concur.
Footnotes
1
Benjamin Cuaycong was made a defendant because her refused to sue as a
plaintiff.
2
Article 1441.
3
89 C.J.S. 722, 724.
4
"(5) — That on several occasions during the later years of Eduardo and Lino
Cuaycong, the former made known to the latter and to their brothers and sister,
that he and his wife, Clotilde de Leon, who died in 1941, had an understanding
and made arrangements with defendant Luis D. Cuaycong and his father, Justo
Cuaycong, that it was their (Eduardo's and Clotilde's) wish and desire, that Hdas.
"Sta. Cruz," and "Pusod" above-referred to, should be divided between the
brothers and sister of Eduardo Cuaycong, namely, Justo, Meliton, Lino and
Basilisa, all surnamed Cuaycong, and his wife, Clotilde de Leon;
"(6) — That pursuant to such wish and desire and arrangements, the said
Eduardo Cuaycong, with the knowledge and consent of his wife, Clotilde de
Leon, and as an agreement with the latter to effectuate their wish and desire had
directed his brothers and sister to pay his wife the sum of P75,000.00, the value
of the two haciendas above-mentioned being P150,000.00, and then divide the
same among themselves share and share alike; or, at all events, should his
brothers and sister fail to do just that, they should divide only the one-half (1/2)
portions proindiviso thereof appertaining to him (Eduardo) in the conjugal
properties;
5
Gonzales v. Jimenez, L-19073, Jan. 30, 1965.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-59879 May 13, 1985
PATRICIO SINAON and MARIA, FRANCISCA and JOSE, all surnamed

SINAON, petitioners,
vs.
ANDRES SOROÑGON, ANASTACIA PARREÑO, SOLEDAD PARREÑO, ANA
PARREÑO, MARCELINA, CLARITA, RUFINO and MANUEL, all surnamed
ARELLANO, SIMPLICIO SOMBLINGO and BRIGIDA SOMBLINGO and COURT OF
APPEALS, respondents.
Neil D. Hechanova for petitioners.
Benjamin P. Sorongon for respondents.
AQUINO, J.:
The issue in this case is whether an action for reconveyance of a registered five-hectare
land, based on implied trust, would lie after the supposed trustees had held the land
for more than forty years.
According to the documentary evidence consisting of public documents and tax records,
Judge (later Justice) Carlos A. Imperial in a decree dated March 4, 1916 adjudicated to
Canuta Soblingo (Somblingo), a widow, Lot No. 4781 of the Sta. Barbara, Iloilo cadastre
with an area of 5.5 hectares. OCT No. 6178-A was issued in 1917 to Canuta (Exh. 6
and 7 or B).
In 1923 Canuta sold the lot to the spouses Patricio Sinaon and Julia Sualibio for P2,000
(Exh. 8). TCT No. 2542 was issued to the Sinaon spouses (Exh. 9 or C). It is still
existing and uncancelled up to this time, Julia was the granddaughter of Canuta.
The lot was declared for tax purposes in Sinaon's name (Exh. 3). The Sinaon spouses
and their children paid the realty taxes due thereon (Exh. 1 to 5-C). They have
possessed the land as owners from 1923 up to this time or for more than half a century.
Canuta was one of the five children of Domingo Somblingo, the alleged original owner
of the lot when it was not yet registered. His other four children were Felipe, Juan,
Esteban and Santiago. The theory of respondents Soroñgon, et al.,
which they adopted in their 1968 second amended complaint (they filed the action in

1964) is that Canuta and the Sinaons were trustees of the lot and that the heirs of
Domingo's four children are entitled to a 4/5 share thereof.
That theory was sustained by the trial court and the Appellate Court. The trial court
ordered the Sinaons to convey 4/5 of Lot No. 4781 to respondents Soroñgon, et al. It
decreed partition of the lot in five equal parts. The Sinaons appealed to this Court. The
respondents did not file any brief.
We hold that after the Sinaons had appeared to be the registered owners of the lot for
more than forty years and had possessed it during that period, their title had become
indefeasible and their possession could not be disturbed. Any pretension as to the
existence of an implied trust should not be countenanced.
The trustors. who created the alleged trust, died a long time ago. An attempt to prove
the trust was made by unreliable oral evidence. The title and possession of the Sinaons
cannot be defeated by oral evidence which can be easily fabricated and contradicted.
The contradictory oral evidence leaves the court sometimes bothered and bewildered.
There was no express trust in this case. Express trusts concerning real property cannot
be proven by parol evidence (Art. 1443, Civil Code). An implied trust "cannot be
established, contrary to the recitals of a Torrens title, upon vague and inconclusive
proof" (Suarez vs. Tirambulo, 59 Phil. 303; Salao vs. Salao, L-26699, March 16,1976,
70 SCRA 65, 83).
Even assuming that there was an implied trust, plaintiffs' action was clearly barred by
prescription (Salao vs. Salao, supra, p. 84).
Prescription is rightly regarded as a statute of repose whose object is to suppress

fraudulent and stale claims from springing up at great distances of time and surprising
the parties or their representatives when the facts have become obscure from the lapse
of time or the defective memory or death or removal of witnesses (53 C.J.S. 903).
See Teves Vda. de Bacong vs. Teves and CA, G.R. No. 50143, October 24, 1983, 125
SCRA 137; Ramos vs. Ramos, L-19872, December 3, 1974, 61 SCRA 284; Gallanosa
vs. Arcangel, L-29300, June 21, 1978, 83 SCRA 676 and Sinco vs. Longa 51 Phil. 507.
It was not necessary for the Sinaons to plead prescription as a defense because there
is no dispute as to the dates. There was no factual issue as to prescription (Chua
Lamko vs. Dioso, 97 Phil. 821, 824; Ferrer vs. Ericta, L-41767, August 23, 1978, 84
SCRA 705).
At any rate, the Sinaons invoked in the lower court the ruling laid down in Gerona vs.
De Guzman, 120 Phil. 149, 153 that an action for reconveyance of realty, based upon a
constructive or implied trust resulting from fraud, may be barred by prescription. The
prescriptive period is reckoned from the issuance of the title which operates as a
constructive notice (Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266-267; J.M. Tuason
& Co., Inc. vs. Magdangal, 114 Phil. 42, 46-47; Lopez vs. Gonzaga, 119 Phil. 424, 437).
The supposed trust in this case, which is neither an express nor a resulting trust, is a
constructive trust arising by operation of law (Art. 1456, Civil Code). It is not a trust in
the technical sense (Gayondato vs. Treasurer of the P.I., 49 Phil. 244). *
WHEREFORE, the judgment of the Court of Appeals is reversed and the complaint is
dismissed. The receivership is terminated. The receiver is directed to wind up his
accounts. No costs.
SO ORDERED.
Makasiar (Chairman), Abad Santos, Escolin and Cuevas, JJ., concur.
Justice Concepcion, Jr., took no part.
Footnotes
* It was only in 1964 that plaintiffs, now respondents Soroñgon et al., woke
up. They had to amend their complaint twice because they were not sure
of the facts. They were not able to state with certainty Domingo's surviving
descendants. Teodulfo Somblingo, their first witness, and his four
brothers, alleged grandchildren of Santiago, Domingo's son, were not
joined as plaintiffs (29 tsn, July 29, 1969).
Respondents Soroñgon, et al. alleged in paragraph 5 of their complaint

that Canuta Somblingo was made a trustee because she "was educated".
This is false because she was illiterate as shown in the deed of sale,
Exhibit 8. They at first alleged that Canuta died without issue. They later
discovered that Canuta was survived by the Sinaon petitioners who were
her great-grandchildren.
According to Francisca Sinaon, a college graduate, Teodulfo Somblingo,

who testified that he was a co-owner of the land, was a hired laborer, one
of 15 laborers, who used Patricio Sinaon's carabao in plowing the land
(111,130-2, 135 tsn Feb. 15, 1971). Even after the case was filed,
Teodulfo continued to work as a thresher (136). Simplicio Somblingo, the
husband of plaintiffs' witness, Cornelia Somblingo, was also a hired
laborer (112).
The trial court observed that the Sinaons did not present any evidence to
dispute the oral testimony that the lot came from Domingo Somblingo.
What the court overlooked is that the plaintiffs did not present trustworthy
and convincing evidence that Domingo originally owned the lot at all.
Canuta Somblingo-Umadhay the registered owner, had four children
named Presentacion, Rufina, Elena and Fructuoso. As already noted, the
land was purchased by Canuta's grand daughter, Julia, and her husband,
Patricio Sinaon. The trial court denied Sinaon's motion for new trial which
was designed to give him a chance to prove that he and the Umadhays
had sufficient means to acquire the disputed lot (108-109, Record on
Appeal).

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 58010. March 31, 1993.
EMILIA O'LACO and HUCO LUNA, petitioners, vs. VALENTIN CO CHO CHIT, O LAY
KIA and COURT OF APPEALS, respondents.
Sergio L. Guadiz for petitioners.
Norberto J . Quisumbing & Associates for private respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; CONDITION PRECEDENT TO

FILING OF SUIT BETWEEN MEMBERS OF THE SAME FAMILY; EFFECT OF
FAILURE TO COMPLY WITH CONDITION. — Admittedly, the present action is
between members of the same family since petitioner Emilia O'Laco and respondent O
Lay Kia are half-sisters. Consequently, there should be an averment in the compliant
that earnest efforts toward a compromise have been made, pursuant to Art. 222 of the
New Civil Code, or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule
16 of the Rules of Court. For, it is well-settled that the attempt to compromise as well as
the inability to succeed is a condition precedent to the filing of a suit between members
of the same family. Hence, the defect in the complaint is assailable at any stage of the
proceedings, even on appeal, for lack of cause of action.
2. ID.; ID.; AMENDMENT TO COMPLAINT; WHEN PROPER; AMENDMENT TO

CONFORM TO EVIDENCE. — Plaintiff may be allowed to amend his complaint to
correct the defect if the amendment does not actually confer jurisdiction on the court in
which the action is filed, i.e., if the cause of action was originally within that court's
jurisdiction. In such case, the amendment is only to cure the perceived defect in the
complaint, thus may be allowed. In the case before Us, while respondent-spouses did
not formally amend their complaint, they were nonetheless allowed to introduce
evidence purporting to show that earnest efforts toward a compromise had been made,
that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for the transfer
of the title of the Oroquieta property in the name of spouses O Lay Kia and Valentin Co
Cho Chit, just before Emilia's marriage to Hugo Luna. But, instead of transferring the
title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila.
This testimony was not objected to by petitioner-spouses. Hence, the complaint was
deemed accordingly amended to conform to the evidence, pursuant to Sec. 5, Rule 10
of the Rules of Court which reads — "Sec. 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated in all respects, as if they
had been raised in the pleadings . . ." Indeed, if the defendant permits evidence to be
introduced without objection and which supplies the necessary allegations of a defective
complaint, then the evidence is deemed to have the effect of curing the defects of the
complaint. The insufficiency of the allegations in the complaint is deemed ipso facto
rectified.
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS TRUST;

DEFINED; IMPLIED TRUST; DEFINED. — By definition, trust relations between parties
may either be express or implied. Express trusts are those which are created by the
direct and positive acts of the parties, by some writing or deed, or will, or by words
evincing an intention to create a trust. Implied trusts are those which, without being
express, 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.
4. ID.; ID.; ID.; IMPLIED TRUSTS; RESULTING TRUST; BASIS THEREOF;

CONSTRUCTIVE TRUST; BASIS THEREOF. — Implied trust may either be resulting or
constructive trusts, both coming into being by operation of law. Resulting trusts are
based on the equitable doctrine that valuable consideration and not legal title
determines the equitable title or interest and are presumed always to have been
contemplated by the parties. They arise from the nature or circumstances of the
consideration involved in a transaction whereby one person thereby becomes invested
with legal title but is obligated in equity to hold his legal title for the benefit of another.
On the other hand, constructive trusts are created by the construction of equity in order
to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to
intention against one who, by fraud, duress or abuse of confidence, obtains or holds the
legal right to property which he ought not, in equity and good conscience, to hold.
5. ID.; ID.; ID.; EXPRESS TRUSTS CONCERNING IMMOVABLES NOT PROVED BY

PAROL EVIDENCE; IMPLIED TRUST IN REAL PROPERTY ESTABLISHED BY
PAROL EVIDENCE; PROOF REQUIRED; CASE AT BAR. — Unlike express trusts
concerning immovables or any interest therein which cannot be proved by parol
evidence, implied trusts may be established by oral evidence. However, in order to
establish an implied trust in real property by parol evidence, the proof should be as fully
convincing as if the acts giving rise to the trust obligation were proven by an authentic
document. It cannot be established upon vague and inconclusive proof. After a thorough
review of the evidence on record, We hold that a resulting trust was indeed intended by
the parties under Art. 1448 of the New Civil Code which states — "Art. 1448. There is
an implied trust when property is sold, and the legal estate is granted to one party but
the price is paid by another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the beneficiary . . ." As stipulated
by the parties, the document of sale, the owner's duplicate copy of the certificate of title,
insurance policies, receipt of initial premium of insurance coverage and real estate tax
receipts were all in the possession of respondent-spouses which they offered in
evidence. As emphatically asserted by respondent O Lay Kia, the reason why these
documents of ownership remained with her is that the land in question belonged to her.
Indeed, there can be no persuasive rationalization for the possession of these
documents of ownership by respondent-spouses for seventeen (17) years after the
Oroquieta property was purchased in 1943 than that of precluding its possible sale,
alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This
continued possession of the documents, together with other corroborating evidence
spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta
property in trust for respondent-spouses.
6. ID.; ID.; ID.; CONSTRUCTIVE TRUST SUBJECT TO PRESCRIPTION; RESULTING

TRUST IMPRESCRIPTIBLE; RESULTING TRUST CONVERTED TO CONSTRUCTIVE
TRUST BY REPUDIATION; REQUISITES; PRESCRIPTIVE PERIOD FOR ACTION
FOR RECONVEYANCE BASED ON CONSTRUCTIVE TRUST. — As differentiated
from constructive trusts, where the settled rule is that prescription may supervene, in
resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not
repudiated the trust. Once the resulting trust is repudiated, however, it is converted into
a constructive trust and is subject to prescription. A resulting trust is repudiated if the
following requisites concur: (a) the trustee has performed unequivocal acts of
repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of
repudiation have been made known to the cestui qui trust; and, (c) the evidence thereon
is clear and convincing. In Tale v. Court of Appeals the Court categorically ruled that an
action for reconveyance based on an implied or constructive trust must perforce
prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions
holding that the prescriptive period was four (4) years. So long as the trustee recognizes
the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault
for omitting to bring an action to enforce his rights. There is no running of the
prescriptive period if the trustee expressly recognizes the resulting trust. Since the
complaint for breach of trust was filed by respondent-spouses two (2) months after
acquiring knowledge of the sale, the action therefore has not yet prescribed.
DECISION
BELLOSILLO, J p:
History is replete with cases of erstwhile close family relations put asunder by property
disputes. This is one of them. It involves half-sisters each claiming ownership over a
parcel of land. While petitioner Emilia O'Laco asserts that she merely left the certificate
of title covering the property with private respondent O Lay Kia for safekeeping, the
latter who is the former's older sister insists that the title was in her possession because
she and her husband bought the property from their conjugal funds. To be resolved
therefore is the issue of whether a resulting trust was intended by them in the
acquisition of the property. The trial court declared that there was no trust relation of any
sort between the sisters. 1 The Court of Appeals ruled otherwise. 2 Hence, the instant
petition for review on certiorari of the decision of the appellate court together with its
resolution denying reconsideration. 3
It appears that on 31 May 1943, the Philippine Sugar Estate Development Company,
Ltd., sold a parcel of land, Lot No. 5, Block No. 10, Plan Psu-10038, situated at
Oroquieta St., Sta. Cruz, Manila, with the Deed of Absolute Sale naming Emilia O'Laco
as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued in her name.
On 17 May 1960, private respondent-spouses Valentin Co Cho Chit and O Lay Wa

learned from the newspapers that Emilia O'Laco sold the same property to the Roman
Catholic Archbishop of Manila for P230,000.00, with assumption of the real estate
mortgage constituted thereon. 4
On 22 June 1960, respondent-spouses Valentin Co Cho Chit and O Lay Kia sued
petitioner-spouses Emilia O'Laco and Hugo Luna to recover the purchase price of the
land before the then Court of First Instance of Rizal, respondent-spouses asserting that
petitioner Emilia O'Laco knew that they were the real vendees of the Oroquieta property
sold in 1943 by Philippine Sugar Estate Development Company, Ltd., and that the legal
title thereto was merely placed in her name. They contend that Emilia O'Laco breached
the trust when she sold the land to the Roman Catholic Archbishop of Manila.
Meanwhile, they asked the trial court to garnish all the amounts still due and payable to
petitioner-spouses arising from the sale, which was granted on 30 June 1960. 5
Petitioner-spouses deny the existence of any form of trust relation. They aver that
Emilia O'Laco actually bought the property with her own money; that she left the Deed
of Absolute Sale and the corresponding title with respondent-spouses merely for
safekeeping; that when she asked for the return of the documents evidencing her
ownership, respondent-spouses told her that these were misplaced or lost; and, that in
view of the loss, she filed a petition for issuance of a new title, and on 18 August 1944
the then Court of First Instance of Manila granted her petition.
On 20 September 1976, finding no trust relation between the parties, the trial court
dismissed the complaint together with the counterclaim. Petitioners and respondents
appealed.
On 9 April 1981, the Court of Appeals set aside the decision of the trial court thus —
". . . We set aside the decision of the lower court dated September 20, 1976 and the
order of January 5, 1977 and another one is hereby entered ordering the defendants-
appellees to pay plaintiffs-appellants jointly and severally the sum of P230,000.00
representing the value of the property subject of the sale with assumption of mortgage
to the Roman Catholic Archbishop of Manila with legal interest from the filing of the
complaint until fully paid, the sum of P10,000.00 as attorney's fees, plus costs."
On 7 August 1981, the Court of Appeals denied reconsideration of its decision,

prompting petitioners to come to this Court for relief.
Petitioners contend that the present action should have been dismissed. They argue
that the complaint fails to allege that earnest efforts toward a compromise were exerted
considering that the suit is between members of the same family, and no trust relation
exists between them. Even assuming ex argumenti that there is such a relation,
petitioners further argue, respondents are already barred by laches.
We are not persuaded. Admittedly, the present action is between members of the same
family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters.
Consequently, there should be an averment in the complaint that earnest efforts toward
a compromise have been made, pursuant to Art. 222 of the New Civil Code, 6 or a
motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16, of the Rules of
Court. 7 For, it is well-settled that the attempt to compromise as well as the inability to
succeed is a condition precedent to the filing of a suit between members of the same
family. 8 Hence, the defect in the complaint is assailable at any stage of the
proceedings, even on appeal, for lack of cause of action. 9
But, plaintiff may be allowed to amend his complaint to correct the defect if the
amendment does not actually confer jurisdiction on the court in which the action is filed,
i.e., if the cause of action was originally within that court's jurisdiction. 10 In such case,
the amendment is only to cure the perceived defect in the complaint, thus may be
allowed.
In the case before Us, while respondent-spouses did not formally amend their
complaint, they were nonetheless allowed to introduce evidence purporting to show that
earnest efforts toward a compromise had been made, that is, respondent O Lay Kia
importuned Emilia O'Laco and pressed her for the transfer of the title of the Oroquieta
property in the name of spouses O Lay Kia and Valentin Co Cho Chit, just before
Emilia's marriage to Hugo Luna. 11 But, instead of transferring the title as requested,
Emilia sold the property to the Roman Catholic Archbishop of Manila. This testimony
was not objected to by petitioner-spouses. Hence, the complaint was deemed
accordingly amended to conform to the evidence, 12 pursuant to Sec. 5, Rule 10 of the
Rules of Court which reads —
"SECTION 5. Amendment to conform to or authorize presentation of evidence. — When

issues not raised by the pleadings are tried by express or implied consent of the parties,
they shall be treated in all respects, as, if they had been raised in the pleadings . . ."
(emphasis supplied).
Indeed, if the defendant permits evidence to be introduced without objection and which
supplies the necessary allegations of a defective complaint, then the evidence is
deemed to have the effect of curing the defects of the complaint. 13 The insufficiency of
the allegations in the complaint is deemed ipso facto rectified. 14
But the more crucial issue before Us is whether there is a trust relation between the
parties in contemplation of law.
We find that there is. By definition, trust relations between parties may either be express
or implied. 15 Express trusts are those which are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by words evincing an intention to
create a trust. 16 Implied trusts are those which, without being express, 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.17 Implied trusts may either be resulting or constructive trusts,
both coming into being by operation of law. 18
Resulting trusts are based on the equitable doctrine that valuable consideration and not
legal title determines the equitable title or interest 19 and are presumed always to have
been contemplated by the parties. They arise from the nature or circumstances of the
consideration involved in a transaction whereby one person thereby becomes invested
with legal title but is obligated in equity to hold his legal title for the benefit of another. 20
On the other hand, constructive trusts are created by the construction of equity in order
to satisfy the demands of justice 21 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. 22
Specific examples of resulting trusts may be found in the Civil Code, particularly Arts.
1448, 1449, 1451,1452 and 1453, 23 while constructive trusts are illustrated in Arts.
1450, 1454, 1455 and 1456. 24
Unlike express trusts concerning immovables or any interest therein which cannot be
proved by parol evidence, 25 implied trusts may be established by oral evidence. 26
However, in order to establish an implied trust in real property by parol evidence, the
proof should be as fully convincing as if the acts giving rise to the trust obligation were
proven by an authentic document. 27 It cannot be established upon vague and
inconclusive proof. 28
After a thorough review of the evidence on record, We hold that a resulting trust was
indeed intended by the parties under Art. 1448 of the New Civil Code which states —
"ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is
granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary . . ." (emphasis supplied).
First. As stipulated by the parties, the document of sale, the owner's duplicate copy of
the certificate of title, insurance policies, receipt of initial premium of insurance coverage
and real estate tax receipts ware all in the possession of respondent spouses which
they offered in evidence. As emphatically asserted by respondent O Lay Kia, the reason
why these documents of ownership remained with her is that the land in question
belonged to her. 29
Indeed, there can be no persuasive rationalization for the possession of these

documents of ownership by respondent-spouses for seventeen (17) years after the
Oroquieta property was purchased in 1943 than that of precluding its possible sale,
alienation or conveyance by Emilia O'Laco, absent any machination or fraud. This
continued possession of the documents, together with other corroborating evidence
spread on record, strongly suggests that Emilia O'Laco merely held the Oroquieta
property in trust for respondent-spouses.
Second. It may be worth to mention that before buying the Oroquieta property,
respondent-spouses purchased another property situated in Kusang-Loob, Sta. Cruz,
Manila, where the certificate of title was placed in the name of Ambrosio O'Laco, older
brother of Emilia, under similar or identical circumstances. The testimony of former
counsel for respondent-spouses, then Associate Justice Antonio G. Lucero of the Court
of Appeals, is enlightening —
"Q In the same conversation he told you how he would buy the property (referring to the
Oroquieta property), he and his wife?
"A Yes, Sir, he did.
"Q What did he say?
xxx xxx xxx
"A He said he and his wife has (sic) already acquired by purchase a certain property
located at Kusang-Loob, Sta. Cruz, Manila. He told me he would like to place the
Oroquieta Maternity Hospital in case the negotiation materialize(s) in the name of a
sister of his wife (O'Laco)" (emphasis supplied). 30
On the part of respondent-spouses, they explained that the reason why they did not
place these Oroquieta and Kusang-Loob properties in their name was that being
Chinese nationals at the time of the purchase they did not want to execute the required
affidavit to the effect that they were allies of the Japanese. 31 Since O Lay Kia took care
of Emilia who was still young when her mother died, 32 respondent-spouses did not
hesitate to place the title of the Oroquieta property in Emilia's name.
Quite significantly, respondent-spouses also instituted an action for reconveyance

against Ambrosio O'Laco when the latter claimed the Kusang-Loob property as his own.
A similar stipulation of facts was likewise entered, i.e., respondent-spouses had in their
possession documents showing ownership of the Kusang-Loob property which they
offered in evidence. In that case, the decision of the trial court, now final and executory,
declared respondent-spouses as owners of the Kusang-Loob property and ordered
Ambrosio O'Laco to reconvey it to them. 33
Incidentally, Ambrosio O'Laco thus charged respondent spouses Valentin Co Cho Cit
and O Lay Kia before the Anti-Dummy Board, docketed as Case No. 2424, for their
acquisition of the Kusang-Loob and Oroquieta properties. 34 He claimed that
respondent-spouses utilized his name in buying the Kusang-Loob property while that of
petitioner O'Laco was used in the purchase of the Oroquieta property. In effect, there
was an implied admission by Ambrosio that his sister Emilia, like him, was merely used
as a dummy. However, the Anti-Dummy Board exonerated respondent-spouses since
the purchases were made in 1943, or during World War II, when the Anti-Dummy Law
was not enforceable.
Third. The circumstances by which Emilia O'Laco obtained a new title by reason of the
alleged loss of the old title then in the possession of respondent-spouses cast serious
doubt on the veracity of her ownership. The petitions respectively filed by Emilia O'Laco
and Ambrosio O'Laco for the Oroquieta and the Kusang-Loob properties were both
granted on the same day, 18 August 1944, by the then Court of First Instance of Manila.
These orders were recorded in the Primary Entry Book of the Register of Deeds of
Manila at the same time, 2:35 o'clock in the afternoon of 1 September 1944, in
consecutive entries, Entries Nos. 246117-18. 35 This coincidence lends credence to the
position of respondent-spouses that there was in fact a conspiracy between the siblings
Ambrosio and Emilia to defraud and deprive respondents of their title to the Oroquieta
and Kusang-Loob properties.
Fourth. Until the sale of the Oroquieta property to the Roman Catholic Archbishop of
Manila, petitioner Emilia O'Laco actually recognized the trust. Specifically, when
respondent spouses learned that Emilia was getting married to Hugo, O Lay Kia asked
her to have the title to the property already transferred to her and her husband Valentin,
and Emilia assured her that "would be arranged (maaayos na)" after her wedding. 36
Her answer was an express recognition of the trust, otherwise, she would have refused
the request outright. Petitioners never objected to this evidence; nor did they attempt to
controvert it.
Fifth. The trial court itself determined that "Valentin Co Cho Chit and O Lay Kia had
some money with which they could buy the property." 37 In fact, Valentin was the Chief
Mechanic of the Paniqui Sugar Mills, was engaged in the buy and sell business,
operated a gasoline station, and owned an auto supply store as well as a ten-door
apartment in Caloocan City. 38 In contrast, Emilia O'Laco failed to convince the Court
that she was financially capable of purchasing the Oroquieta property. In fact, she
opened a bank account only in 1946 and likewise began filing income tax returns that
same year, 39 while the property in question was bought in 1943. Respondent-spouses
even helped Emilia and her brothers in their expenses and livelihood. Emilia could only
give a vague account on how she raised the money for the purchase of the property.
Her narration of the transaction of sale abounds with "I don't know" and "I don't
remember." 40
Having established a resulting trust between the parties, the next question is whether
prescription has set in.
As differentiated from constructive trusts, where the settled rule is that prescription may
supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the
trustee has not repudiated the trust. 41 Once the resulting trust is repudiated, however,
it is converted into a constructive trust and is subject to prescription.
A resulting trust is repudiated if the following requisites concur: (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust;
(b) such positive acts of repudiation have been made known to the cestui qui trust; and,
(c) the evidence thereon is clear and convincing. 42
In Tale v. Court of Appeals 43 the Court categorically ruled that an action for
reconveyance based on an implied or constructive trust must perforce prescribe in ten
(10) years, and not otherwise, thereby modifying previous decisions holding that the
prescriptive period was four (4) years.
Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco
nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of
the original may be made the basis for the commencement of the prescriptive period.
For, the issuance of the Torrens title in the name of Emilia O'Laco could not be
considered adverse, much less fraudulent. Precisely, although the property was bought
by respondent-spouses, the legal title was placed in the name of Emilia O'Laco. The
transfer of the Torrens title in her name was only in consonance with the deed of sale in
her favor. Consequently, there was no cause for any alarm on the part of respondent-
spouses. As late as 1959, or just before she got married, Emilia continued to recognize
the ownership of respondent-spouses over the Oroquieta property. Thus, until that
point, respondent-spouses were not aware of any act of Emilia which would convey to
them the idea that she was repudiating the resulting trust. The second requisite is
therefore absent. Hence, prescription did not begin to run until the sale of the Oroquieta
property, which was clearly an act of repudiation.
But immediately after Emilia sold the Oroquieta property which is obviously a disavowal
of the resulting trust, respondent-spouses instituted the present suit for breach of trust.
Correspondingly, laches cannot lie against them.
After all, so long as the trustee recognizes the trust, the beneficiary may rely upon the
recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his
rights. 44 There is no running of the prescriptive period if the trustee expressly
recognizes the resulting trust. 45 Since the complaint for breach of trust was filed by
respondent-spouses two (2) months after acquiring knowledge of the sale, the action
therefore has not yet prescribed.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the
Court of Appeals of 9 April 1981, which reversed the trial court, is AFFIRMED. Costs
against petitioners.
SO ORDERED.
Cruz , Griño-Aquino and Quiason, JJ ., concur.
Footnotes
1. Penned by Judge Guardson R. Lood, Court of First Instance of Rizal, Br. VI,
stationed in Pasig.
2. Penned by Justice Mariano A. Zosa, concurred in by Justices Venicio Escolin and

Edgardo L. Paras; Annex "A", Petition; Rollo, pp. 53-72.
3. Annex "B", Petition; Rollo, pp. 73-75.
4. Record on Appeal of Defendant-Appellee, p. 15.
5. Id., pp. 12-18.
6. Art. 222. No suit shall be filed or maintained between members of the same family
unless it should appear that earnest efforts toward a compromise have been made, but
that the same have failed, subject to the limitations in article 2035.
7. The Family Code took effect on 4 August 1988 and does not apply to the present
petition. Nonetheless, Art. 151 of the Family Code provides that suits between members
of the same family must be dismissal if it is not shown that earnest efforts toward a
compromise have been made.
8. Mendoza v. Court of Appeals, No. L-23102, 24 April 1967, 19 SCRA 756.
9. Id., p. 759.
10. Versoza v. Versoza, No. L-25609, 27 November 1968, 26 SCRA 78.
11. TSN, 15 January 1968, pp. 12-14.
12. Metropolitan Waterworks and Sewerage System v. Court of Appeals, No. L-54526,
26 August 1986, 143 SCRA 623.
13. Pascua v. Court of Appeals, G.R. No. 76851,19 March 1990,
14. See City of Manila v. Bucay, Nos. L-19358-60, 31 March 1964, 10 SCRA 629.
15. Art. 1441, New Civil Code.
16. Ramos v. Ramos, No. L-19872, 3 December 1974, 61 SCRA 284 citing 89 C.J.S.
722.
17. 89 C.J.S. 724.
18. Salao v. Salao, No. L-26699, 16 March 1976, 70 SCRA 65.
19. Tolle v. Sawtelle, Civ. App., 246 S.W. 2d 916.
20. 76 Am Jar 2d 429.
21. 89 C.J.S. 726-27.
22. 76 Am Jur 2d 446.
23. Art. 1448. There is an implied trust when property is sold, and the legal estate is
granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
Art. 1449. There is also an implied trust when a donation is made to a person but it
appears that although the legal estate is transmitted to the donee, he nevertheless is
either to have no beneficial interest or only a part thereof.
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.
Art. 1452. If two or more persons agree to purchase property and by common consent
the legal title is taken in the name of one of them for the benefit of all, a trust is created
by force of law in favor of the others in proportion to the interest of each.
Art. 1453. When property is conveyed to a person in reliance upon his declared
intention to hold it for, or transfer it to another or the grantor, there is an implied trust in
favor of the person whose benefit is contemplated.
24. Art. 1450. If the price of a sale of property is loaned or paid by one person for the
benefit of another and the conveyance is made to the lender or payor to secure the
payment of the debt, a trust arises by operation of law in favor of the person to whom
the money is loaned or for whom it is paid. The latter may redeem the property and
compel a conveyance thereof to him.
Art. 1454. If an absolute conveyance of property is made in order to secure the

performance of an obligation of the grantor toward the grantee, a trust by virtue of law is
established. If the fulfillment of the obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property to him.
Art. 1455. When any trustee, guardian or other person holding a fiduciary relationship
uses trust funds for the purchase of property and causes the conveyance to be made to
him or to a third person, a trust is established by operation of law in favor of the person
to whom the funds belong.
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes.
25. Art. 1443, New Civil Code.
26. Art. 1457, id.
27. Santa Juana v. Del Rosario, 50 Phil. 110 (1927).
28. Suarez v. Tirambulo, 59 Phil. 303 (1933).
29. Motion for New Trial, p.4, citing TSN. 29 June 1967, pp. 22-25.
30. TSN, 23 April 1971, pp. 12-13.
31. TSN, 15 January 1968, pp. 4-8.
32. Motion for New Trial, p. 20, citing TSN, 29 June 1967, pp. 7-9.
33. Exhibit "S", Memorandum of Exhibits for Plaintiff.
34. Exhibit "R", id.
35. Exhibit "L", id.
36. See Note 11.
37. Decision, Court of First Instance of Pasig, p. 9; Record on Appeal, p. 270.
38. TSN, 29 September 1970, p. 50; TSN, 29 April 1975, pp. 13-15.
39. Exhibits "13" and "15", Memorandum of Exhibits for Defendants.
40. TSN, 13 October 1971, pp. 71-82.
41. Heirs of Candelaria v. Romero, 109 Phil. 500 (1960).
42. Ramos v. Ramos, supra.
43. G.R. No. 101028, 23 April 1992, 208 SCRA 266.

44. Crawley v. Crawley, 72 N.H. 241; Lufkin v. Jakeman, 188 Mass 528, 74 N.E. 933.
45. Miller v. Saxton, 75 S.C. 237, 55 S.E. 310; Kohl v. Noble, 63 Tex 432; Segura v.
Segura, No. L-29320, 19 September 1988, 165 SCRA 369.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-44100 April 28, 1983
SPECIAL SERVICES CORPORATION, petitioner,

vs.
CENTRO LA PAZ (SAMAHANG ESPIRITISTA SA LUNDUYANG LA PAZ), A
CHAPTER OF UNION ESPIRITISTA CRISTIANA DE FILIPINAS, INC., respondents.
MELENCIO-HERRERA, J.:
This is a Petition for Review on certiorari of the Decision promulgated on May 11, 1976
by respondent Court of Appeals 1 in CA-G.R. No. 56582-R, entitled "Centro La Paz
(Samahang Espiritista sa Lunduyang La Paz) a Chapter of Union Espiritista Cristiana de
Filipinas, Inc. vs. The Sheriff of Manila and the Special Services Corporation." The
Union Espiritista Cristiana de Filipinas, Inc., is a semi-religious and charitable
organization. 2
The antecedental facts follow:
On October 10, 1972, judgment was rendered in favor of petitioner Special Services
Corporation by the Court of First Instance, Branch IV, Manila, against one Alejandro
Estudillo in the amount of P94,727.52, more or less, in an action for Replevin with Sum
of Money (Civil Case No. 85819). A writ of execution was thereafter issued but which
has remained unsatisfied.
By virtue of an alias writ of execution issued on December 15, 1972, the Sheriff of
Manila caused the annotation of a notice of levy on Transfer Certificate of Title No.
51837, in respect of the rights, interest and participation of said Alejandro Estudillo, one
of the registered owners indicated in said title. That title covers two parcels of land
situated in Sampaloc, Manila, consisting of three hundred forty eight (348) square
meters and registered in the names of Alejandro Estudillo, married to Primitiva Victoria;
Joaquina de la Rosa, widow; Pedro Paguio, married to Amor Jose and Maximo Victoria,
married to Juliana Roberto, all Chapter members.
The public auction sale of Estudillo's rights and interests in said properties was
scheduled on July 23, 1973.
On June 27, 1973, Alejandro Estudillo filed a "Motion to Dissolve and/or Cancel the
Notice of Levy" alleging that he and the other registered owners indicated on the title
merely held in trust the properties and improvements thereon in favor of respondent
Centro La Paz (Samahang Espiritista Sa Lunduyang La Paz) a Chapter of Union
Espiritista Cristiana de Filipinas, Inc. (hereinafter referred to as CENTRO, for brevity),
as evidenced by "Acknowledgments" executed by them on October 20, 1961 and
October 2, 1971. Estudillo further alleged that CENTRO's ownership was also
evidenced by letters dated February 15, 1963, November 29, 1963 and August 8, 1966
sent to the City Assessor by him and Crispulo Romero, President of CENTRO, long
before the filing of the replevin case on December 28, 1971 praying for the revocation of
tax assessments on said properties as the same, were used for religious purposes. 3
On July 21, 1973, CENTRO submitted a third party claim to the Sheriff of Manila
likewise averring exclusive ownership of the properties in question . 4
On July 23, 1973, "Centro La Paz (Samahang Espiritista sa Lunduyang La Paz) a

Chapter of Union Espiritista Cristiana de Filipinas, Inc.," as plaintiff, instituted Civil Case
No. 91412 for Damages and Preliminary Injunction against herein petitioner and the
Sheriff of Manila with the Court of First Instance, Branch IV, Manila, the same Court
which rendered judgment in the replevin case. CENTRO reiterated ownership of the
properties in question and emphasized that the registered owners thereof had publicly
acknowledged their possession of said properties in the concept of trustees. 5
In its "Opposition to Petition for Preliminary Injunction and Answer," petitioner averred
that a Torrens Title issued in favor of an owner is conclusive of all matters stated therein
and that the "Acknowledgments" of the registered owners not being annotated on
Transfer Certificates of Title No. 51837 could not bind anyone. 6
On August 27, 1973, a writ of preliminary injunction was issued by the lower Court
enjoining the public auction sale of Estudillo's interest in the properties in
question, 7 conditioned upon CENTRO's posting a bond of P30,000.00.
In a judgment rendered on August 30, 1974, the Court a quo decreed in the dispositive
portion:
IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered in favor of the plaintiff, against the defendants, enjoining the
latter from proceeding with the public auction sale of the real property,
pursuant to the notice of sale on execution of real property, with costs
against the defendant.
The writ of preliminary injunction issued in connection with this case is, as
it is hereby made permanent.
Defendant's counterclaim is, as it is hereby ordered dismissed for lack of

merit.
SO ORDERED. 8
The lower Court held that by a preponderance of evidence CENTRO had established
that it was "really and true and lawful owner of the property in dispute, and that the
persons registered therein as its owners are merely trustees of the plaintiff," thus:
The evidence on hand clearly preponderates in favor of the plaintiff. The

series of documents executed even as early as 1957, long before the
issue of whether Alejandro Estudillo really has an interest and/or
participation in the property in dispute, attest to plaintiff's ownership of the
property in question. The Deed of Donation dated March 13, 1957 (Exh.
A), Deed of Absolute Sale (Exh. E) executed by Joaquina dela Rosa in
favor of Alejandro Estudillo, Pedro Paguio and Maximo Victoria of the
same property covered by the Deed of Donation, Exhibit A; Deed of Sale
(Exh. F) of two parcels in dispute described under T.C.T. No. 51837
executed by Sta. Mesa Realty, Inc. in favor of Alejandro Estudillo,
Joaquina dela Rosa, Pedro Q. Paguio and Maximo Victoria, Deed of
Acknowledgment dated October 30, 1961 (Exh. G) also executed by the
same Estudillo de la Rosa and Victoria acknowledging that the property
described under the aforementioned T.C.T. No. 51837, together with the
improvements thereon are being possessed by them only as trustees;
another Deed of Acknowledgment executed on October 22, 1971, jointly
by Amor Jose, widow of Paguio and the latter's daughters, Sumilang
Paguio and Filipina Paguio (co-registered owner of Estudillo) likewise
declaring that their possession of the said property is merely that of
trustees and not as owners; the petitions for revocation of tax
assessments Nos. 3187 and 3188 (Exhs. I and J); the petition to exempt
said parcels from taxation, being owned by a religious organization (Exh.
K) and the follow-up letters addressed to the City Assessor of Manila,
dated February 15, 1963 (Exh. L), December 29,1963 (Exh. M) and May
29, 1962 (Exh N) respectively, plus the Deed of Sale (Exh. 0) executed by
Estudillo, heirs of dela Rosa and Paguio of the two parcels in favor of
Centro La Paz, indubitably point to one and inescapable conclusion that
the plaintiff is really the true and lawful owner of the property in dispute
and that persons registered therein as its owners, are merely trustees of
the plaintiff.
While it may be true that the declaration of Estudillo subsequent to the

levy upon his interest in the aforesaid property may be self-serving, which
could be for the purpose of avoiding liability, his declaration and that of his
co-owners, however, taking place years before the instant controversy,
could hardly be said to have been motivated by a similar purpose (to
evade responsibility) since at that time, none as yet exist in favor of the
defendant nor anybody elm against the Estudillo. (Record on Appeal, pp.
54-55) 9
Faced with that adverse judgment, petitioner appealed to respondent Appellate Court,
which affirmed the Court a quo's Decision on May 11, 1976, and subsequently denied
reconsideration.
Petitioner then availed of the instant Petition, raising the following issues:
l) Whether or not Centro La Paz which is merely a Chapter of Union

Espiritista de Filipinas, Inc. has a juridical personality of its own in
accordance with the provisions of our laws;
2) Whether or not Centro La Paz, as claimed by it and the respondent

Court of Appeals, can validly be conferred upon ownership of Transfer
Certificate of Title No. 51837 by virtue of documents executed allegedly in
its favor.
We affirm the judgment appealed from.
For one thing, the issues now raised were not directly litigated in the Court below. For
another, it is evident from the Complaint that the plaintiff was the mother organization,
thus:
Centro La Paz (Samahang Espiritista sa Lunduyang La Paz), A Chapter of

Union Espiritista Cristiana de Filipinas, Inc., Plaintiff.
Paragraph 1 of the Complaint likewise reads:
1. That the plaintiff is a juridical person duly organized and existing under
and by virtue of the laws of the Republic of the Philippines, a semi-
religious and charitable organization, with a right to sue and be sued, ...
In the Offer of Evidence filed before the Trial Court, the purpose of presenting Exhibit
"A", the Deed of Donation dated March 13, 1957, was "to establish or prove the
following":
(a) That the plaintiff "CENTRO LA PAZ" as a chapter of the association of

spiritista commonly known as 'UNION ESPIRITISTA CRISTIANA DE
FILIPINAS, INC., 'which is a duly registered corporation or entity with the
Office of the Securities and Exchange Commission, is a Juridical Person
with the right to sue and be sued;
xxx xxx xxx 10
In the Memorandum of CENTRO before the Trial Court, the following allegation also
appears:
That the plaintiff is a Chapter of the UNION ESPIRITISTA CRISTIANA DE

FlLIPINAS, INC., a semi-religious and charitable organization duly
registered with the Securities and Exchange Commission as per
Certificate of Registration No. 15147, dated March 19, 1959, ... 11
And in the Decision of the Trial Court, it found:
The evidence for the plaintiff disclosed that it is a chapter of the Union
Espiritista Christiana de Filipinas, Inc., a semi-religious and charitable
organization duly registered with the Securities and Exchange
Commission per Certificate of Registration No. 15147 dated March 19,
1959.
xxx xxx xxx 12
Evident from all the foregoing is that although it was CENTRO that was actively
prosecuting the case, in substance, it was representing the mother organization, the
Union Espiritista Cristiana de Filipinas, Inc., which is the real party in interest and is
itself named in the Complaint. It is an organization that is duly registered with the
Securities and Exchange Commission, and thus possessed of a juridical personality to
sue and be sued. 13
As found by both the Trial Court and respondent Appellate Court, the evidence
sufficiently establishes that the registered owners of the parcels of land covered by TCT
51837, all of whom are members of CENTRO, hold the properties in trust for CENTRO
by virtue of the indubitable documents executed even before the institution of suit. In the
same manner that the real property, registered solely in the name of a husband, can be
proven to be conjugal property with his wife, the fact of registration in the name of
Alejandro Estudillo and others does not bar evidence to show that the registered owners
hold the properties in trust for CENTRO. 14
Admittedly, the trust was not registered in accordance with section 65 of Act 496 (the
former Land Registration Law). The absence of said registration, however, cannot be
taken against CENTRO inasmuch as, if the public auction sale had actually been held,
with petitioner as the successful buyer, petitioner could not have been considered a
purchaser for value and in good faith at said sale since it had knowledge of CENTRO's
claim, particularly when the latter had filed a third-party-claim with the Sheriff of Manila
before the scheduled auction sale, which knowledge was equivalent to registration of
the several "Acknowledgments" in the Registry of Deeds. 15
The conclusion follows that inasmuch as Estudillo has no interest in the properties in
question, there is nothing that petitioner can levy upon. The power of a Court in the
execution of its judgment extends only over properties unquestionably belonging to the
judgment debtor. 16
WHEREFORE, the judgment of respondent Court of Appeals (now Intermediate

Appellate Court) affirming that of the Trial Court, which enjoined petitioner "from
proceeding with the public auction sale of the properties in question, pursuant to the
notice of sale on execution of real property" and made the writ of preliminary injunction
permanent, is hereby affirmed.
SO ORDERED.
Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Footnotes
1 Justice Ramon C. Fernandez, ponente, concurred in by Justice Ricardo

C. Puno and Delfin Fl. Batacan.
2 Complaint, p. 1, Record on Appeal.
3 Exhibit "P", pp. 24-26, Folder of Exhibits.
4 Exhibit "R", pp. 29-31, Ibid.
5 pp. 1-4, Record on Appeal.
6 pp. 7-10, Ibid.
7 p. 15, Ibid.
8 p. 55, Ibid.
9 pp. 23-24, Rollo.
10 p. 18, Ibid.
11 p. 38, Ibid.
12 p. 53, Ibid.
13 see Alonso vs. Villamor, 16 Phil. 315 (1910).
14 Bucoy vs. Paulino, 23 SCRA 248 (1968).
15 Parsons Hardware Co., Inc. vs. Court of Appeals, 69 Phil. 411 (1940).
16 Bayer, Phil., Inc. vs. Hon. Agana, 63 SCRA 355 (1975); Sampaguita
Pictures, Inc. vs.Jalwindor Manufacturers, Inc., 93 SCRA 420 (1979).

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 106251 November 19, 1993
CHIAO LIONG TAN, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, HON MANUEL T. MURO, Presiding
Judge, RTC of Manila, Branch 54 and TAN BAN YONG, respondents.
Joaquin M. Arao for petitioner.
Macavinta & Sta. Ana Law Offices for private respondent.

NOCON, J.:
Petitioner seeks in this petition the reversal of the Court of Appeals' decision dated May
15, 1992 in CA-G.R. CV No. 29982 affirming the unfavorable decision of the trial
court 1 in his suit for replevin and damages.
Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle, particularly
described as Isuzu Elf van, 1976 Model with Motor No. 44999-2 and Chassis No.
9646780 which he purchased in March, 1987. As owner thereof, petitioner says he has
been in possession, enjoyment and utilization of the said motor vehicle until it was taken
from him by his older brother, Tan Ban Yong, the private respondent herein.
Petitioner relies principally on the fact that the Isuzu Elf van is registered in his name
under Certificate of Registration No. 1501909. He claims in his testimony before the trial
court that the said vehicle was purchased from Balintawak Isuzu Motor Center for a
price of over P100,000.00; that he sent his brother to pay for the van and the receipt for
payment was placed in his (petitioner's) name because it was his money that was used
to pay for the vehicle; that he allowed his brother to use the van because the latter was
working for his company, the CLT Industries; and that his brother later refused to return
the van to him and appropriated the same for himself.
On the other hand, private respondent testified that CLT Industries is a family business
that was placed in petitioner's name because at that time he was then leaving for the
United States and petitioner is the remaining Filipino in the family residing in the
Philippines. When the family business needed a vehicle in 1987 for use in the delivery
of machinery to its customers, he asked petitioner to look for a vehicle and gave him the
amount of P5,000.00 to be deposited as down payment for an Isuzu Elf Van which
would be available in about a month. After a month, he himself paid the whole price out
of a loan of P140,000.00 which he obtained from his friend Tan Pit Sin. Inasmuch as the
receipt for the downpayment was placed in the name of petitioner and since he was still
on good terms with him, private respondent allowed the registration of the vehicle in
petitioner's name. It was also their understanding that he would keep the van for himself
because CLT Industries was not in a position to pay him. Hence, from the time of the
purchase, he had been in possession of the vehicle including the original registration
papers thereof, but allowing petitioner from time to time to use the van for deliveries of
machinery.
Tan Pit Sin who had known private respondent since 1968, not only because they were
classmates but also because of their business dealings with each other, confirmed that
private respondent borrowed from him P140,000.00 in March, 1987 to buy an Isuzu Elf
van. In fact, he had borrowed said vehicle for a few times.
Gina Lu, an employee of the Balintawak Isuzu Motors, testified that private respondent
paid the balance of the purchase price of the Isuzu Elf van in the amount of
P133,000.00 but the receipt was issued in the name of Chiao Liong Tan to make the
records consistent because it was the latter who made the deposit of P5,000.00.
Thereafter, the Isuzu Elf van was released to him.
After hearing, the trial court found for private respondent. The dispositive portion of the
decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring defendant Tan Ban

Yong to be the owner of and entitled to the possession of the vehicle
described in par. 2 of the Complaint, and the plaintiff is hereby ordered to
deliver possession thereof to the said defendant or in the alternative if
such delivery cannot be made, to the sum of P138,000.00 as the value of
the vehicle taking into account the depreciation of the vehicle but offset by
the inflation rate; in either alternative, plaintiff is also ordered to pay to said
defendant consequential damages of P20,000.00 for the latter having
been deprived of the possession and use of the vehicle and to pay the
costs. All amounts adjudged herein, except costs, shall bear interest at the
legal rate from the date of this decision, until delivery of the vehicle or the
alternative payment of the value thereof as well as payment of
consequential damages is paid; the interest applies to the value of the
vehicle if return thereof is delayed. No cost. 2
Finding no merit in the appeal, the respondent Court of Appeals affirmed the decision of
the trial court. Undaunted by his successive failures, petitioner comes to us and raised
the following error allegedly committed by the respondent Court of Appeals, to wit:
1. . . . in finding the testimonies of private respondent's witnesses credible;
2. . . . in disregarding the Certificate of Registration of the subject motor

vehicle as proof of ownership by the petitioner-appellant. 3
Since the Court of Appeals merely affirmed the trial court's assessment of the credibility
of the witnesses that testified before it, petitioner is in effect questioning the factual
findings of said court and its appraisal of their testimony which this Court cannot review,
its jurisdiction being limited to questions of law. The considerable weight given to the
findings of the trial court is not without any reason. It had the opportunity to observe the
demeanor of witnesses which is usually not reflected in the transcript of records. The
profundity of the conclusions thus reached is just the result of such observance. When
the Court of Appeals affirmed said findings, it goes to show that no misapprehension of
facts was committed as said Court has the power to scrutinize said factual findings
under existing rules of procedure.
In concluding that the testimonies of Tan Ban Yong, Tan Pit Sin and Gina Lu cast doubt
on the petitioner's ownership of the motor vehicle in question, both the trial court and the
Court of Appeals attached significance to their respective interlocking accounts on how
the motor vehicle was acquired, complete with the financing source and mode of
repayment. Respondent Tan Ban Yong's declaration that he borrowed P140,000.00
from Tan Pit Sin and paid the balance of the purchase price of the motor vehicle himself
to Gina Lu of the Balintawak Isuzu Motors, is corroborated by the above-mentioned
persons themselves. Tan Pit Sin not only confirmed the loan but also stated that the
same was paid in three (3) months; P50,000.00 on the first payment; another
P50,000.00 on the second payment and P40,000.00 on the last payment. 4 Gina Lu,
who testified at the instance of petitioner, declared that the downpayment of P5,000.00
was paid by petitioner and so the receipt for the same was issued in his name but the
balance of P133,000.00 was paid by private respondent and to make the record
consistent, she issued the receipt in the name of petitioner again.
In contrast to the clear and categorical averments of private respondent and the
witnesses in this case negating petitioner's ownership of the motor vehicle in question,
petitioner's averments before the trial court and this Court are not only disparate but
conflicting. In his testimony below, petitioner averred that he used his own money to
purchase the motor vehicle by paying the sum of P100,000.00, 5 which testimony is
negated by his admission on page 5 of his petition 6 before this Court that private
respondent borrowed money from Tan Pit Sin with which to purchase the subject motor
vehicle. Then, in his pleading before the court below, particularly in his reply to the
answer of private respondent, petitioner alleged that the motor vehicle was intended for
his exclusive use and not to service the family business. 7 And yet , in his petition before
this Court, he claimed that the subject motor vehicle was purchased for CLT Industries,
which he solely owned and accordingly, registered in the latter's name. 8 On top of these
entangled averments, petitioner did not have in his possession the Certificate of
Registration of the motor vehicle and the official receipt of payment for the same,
thereby lending credence to the claim of private respondent who has possession
thereof, that he owns the subject motor vehicle.
A certificate of registration of a motor vehicle in one's name indeed creates a strong
presumption of ownership. For all practical purposes, the person in whose favor it has
been issued is virtually the owner thereof unless proved otherwise. In other words, such
presumption is rebuttable by competent proof.
The New Civil Code recognizes cases of implied trust other than those enumerated
therein.9 Thus, although no specific provision could be cited to apply to the parties
herein, it is undeniable that an implied trust was created when the certificate of
registration of the motor vehicle was placed in the name of the petitioner although the
price thereof was not paid by him but by private respondent. The principle that a trustee
who puts a certificate of registration in his name cannot repudiate the trust by relying on
the registration is one of the well-known limitations upon a title. A trust, which derives its
strength from the confidence one reposes on another especially between brothers, does
not lose that character simply because of what appears in a legal document.
Even under the Torrens System of land registration, this Court in some instances did
away with the irrevocability or indefeasibility of a certificate of title to prevent injustice
against the rightful owner of the property. 10
It is true that the judgment 11 in a replevin suit must only resolve in whom is the right of
possession. Primarily, the action of replevin is possessory in character and determined
nothing more than the right of possession. However, when the title to the property is
distinctly put in issue by the defendant's plea and by reason of the policy to settle in one
action all the conflicting claims of the parties to the possession of the property in
controversy, the question of ownership may be resolved in the same proceeding.
Procedure-wise, the Court observes that the action by petitioner as plaintiff in the trial
court was only one for Replevin and Damages. Since replevin is only a provisional
remedy where the replevin plaintiff claims immediate delivery of personal property
pending the judgment of the trial court in a principal case, 12 the petitioner should have
filed in the trial court as a main case an action to recover possession of the Isuzu Elf
van which was in the possession of the private respondent. Logically, the basis of
petitioner's cause of action should have been his ownership of said van.In the State of
California, from whose Code of Procedure 13 we copied our rule on replevin, their old
replevin rule which allowed the immediate delivery of the chattel at the commencement
of the action upon application with bond by the replevin plaintiff had already been struck
down as early as July 1, 1971 in the case of Blair v. Pitchess. 14 As in fact, on June 12,
1972 when the United States Supreme Court struck down as unconstitutional the
Florida and Pennsylvania replevin statutes in Fuentes v. Shevin, 15 most of the states,
on their own, changed their replevin statutes to include a mandatory preliminary hearing
before the writ could be issued, similar to our mandatory preliminary hearing before the
writ of preliminary injunction can be issued. 16
If that had been the case in this jurisdiction, then the trial judge would have discovered
right away at the preliminary hearing that private respondent should have immediately
staked his claim of ownership and that would have created serious doubts about
petitioner's claim of ownership. Most likely, the writ would not have been issued and the
complaint would have been dismissed motu proprio by the trial court upon the discovery
that the petitioner did not have a principal case therein. As it is, the complaint
proceeded its course to the detriment of private respondent.
Finally, although a "replevin" action is primarily one for the possession of personality,
yet it is sufficiently flexible to authorize a settlement of all equities between the parties,
arising from or growing out of the main controversy. 17 Thus, in an action for replevin
where the defendant is adjudged entitled to possession, he need not go to another
forum to procure relief for the return of the replevied property or secure a judgment for
the value of the property in case the adjudged return thereof could not be had.
Appropriately, the trial court rendered an alternative judgment.
WHEREFORE, the questioned decision being in accordance with the law, the instant
petition for review is hereby DENIED for lack of merit.
SO ORDERED.
Narvasa, C.J., Padilla and Regalado, JJ., concur.
Puno, J., took no part.
# Footnotes
1 Penned by Judge Manuel T. Muro, RTC, Branch 54, Manila.
2 Records, pp. 68-69.
3 Rollo, p. 5.
4 TSN, March 22, 1990, p.5.
5 TSN, November 16, 1989, pp. 30-31.
6 Rollo, p. 6.
7 Records, p. 22.
8 Rollo, p. 6.
9 Art. 1447, New Civil Code.
10 Bornales, IAC, G.R. No. 75336, 166 SCRA 524 (1988); Amerol vs.
Bagumbayan, G.R. No. L-33261, 154 SCRA 403 (1987); Cardiente v. IAC,
G.R. No. 73651, 155 SCRA 689 (1987).
11 Sec. 9, Rule 60, Rules of Court.
12 Section 1, Rule 60, Rules of Court; Calo v. Roldan, 76 Phil. 445;

Regalado, Florenz D., Remedial Law Compendium; Vol. 1, pp. 436-437
and Francisco, Vicente, Jr., The Revised Rules of Court in the Philippines,
Annotated and Commented, Vol. IV-A, pp. 386-387.
13 Enacted in 1872.
14 45 ALR 3d 1206.
15 407 U.S. 67, 32 L. Ed. 2d 556, 92 S. Ct. 1983.
16 Section 5, Rule 58, Rules of Court, as amended by BP 224.
17 Hales-Mullay, Inc. v. Cannon, 119 P 2d 46, 48, 189 Okl. 613, cited in
Words and Phrases, Replevin, Vol. 37, permanent ed.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32749 January 22, 1988
SABAS H. HOMENA and ILUMINADA JUANEZA, plaintiffs-appellants,

vs.
DIMAS CASA AND MARIA CASTOR and the REGISTER OF DEEDS FOR THE
PROVINCE OF COTABATO, defendants-appellees.
YAP, J.:
This is an appeal from the order of the Court of Flint Instance of Cotabato dated
January 4,1968 dismissing plaintiffs-appellants' complaint and from its order dated May
8,1968, denying their motion for reconsideration.
The complaint, filed by plaintiffs-appellants against the spouses Dimas Casa and Maria
Castor, the defendants-appellees herein, was for alleged unlawful acts of dispossession
disturbing plaintiffs peaceful, continuous, open, uninterrupted adverse and public
possession of the property in question. In their complaint, plaintiffs also sought to annull
the original certificate of title issued by the Register of Deeds for the province of
Cotabato in favor of defendant spouses pursuant to a Homestead Patent on the ground
that said patent was obtained by defendant spouses through fraud and
misrepresentation by stating, among others, in their application, that the lot was not
claimed and occupied by another person. Plaintiffs alleged that on June 15, 1967, they
purchased from the defendants two (2) hectares of the aforementioned parcel of land, it
being agreed in the deed of sale that the said portion would be reconveyed to plaintiffs
after the five-year prohibitory period, as provided for in the Homestead Patent Law, shall
have elapsed, and that defendants failed to abide by said agreement.
The defendants moved to dismiss the complaint, based on the following grounds: (1)
the complaint is barred by prescription, since thirteen years had elapsed from the
issuance of the homestead patent before the action was filed; (2) plaintiff has no cause
of action, since the deed of sale executed on June 15, 1952 or prior to the approval of
the application and issuance of the homestead patent was null and void and inoperative
to convey the land in question, which was at that time still public land; and (3) plaintiff is
not the proper party to institute the action to annul the homestead patent.
In their opposition to the motion to dismiss, plaintiffs averred that they were not assailing
the validity of the patent as a whole, but only with respect to that portion of two (2)
hectares owned by them which defendants, through fraud, were able to register in their
name. Because of such fraud, the action of the plaintiffs cannot be deemed to have
prescribed, since such action can be brought within four (4) years from discovery of the
fraud. Moreover, the defense of prescription can not be set up in an action to recover
property held in trust by a person for another. On January 4, 1968, the court a quo
issued the questioned order dismissing the complaint. The plaintiffs appealed the case
to the Court of Appeals, assigning the following errors:
1. The lower court erred in holding that the allegations in the complaint do
not conform with the terms and conditions of the contract as to amount to
a justifiable cause of action.
2. The lower court erred in holding that the plaintiffs-appellants have no

personality to bring the present action as they do not seek the land for
themselves but for the government.
3. The lower court erred in holding that the present action based on fraud
is barred by the statute of limitations.
4. Finally, the lower court erred in holding that the deed of sale is not
lawful as the same was made to circumvent the provisions of the Public
Land Act.
The Court of Appeals certified the case to this Court as it involved only questions of law.
We find no merit in the petition. The lower court committed no reversible error in
dismissing the complaint.
Basically, the plaintiffs' supposed cause of action rests upon the deed of sale executed
by defendants in their favor on June 15, 1962 wherein the latter sold a two-hectare
portion of the homestead which they were applying for to the plaintiffs on the
understanding that the actual conveyance of the said portion to plaintiffs would be made
only after the lapse of the five-year period during which, under the Public Land Act, the
homestead owner was prohibited from transferring his rights. The agreement is clearly
illegal and void ab initio; it is intended to circumvent and violate the law. As parties to a
void contract, the plaintiffs have no rights which they can enforce and the court can not
lend itself to its enforcement. Plaintiffs can neither invoke the doctrine of implied trust
based on an illegal contract. The issue of prescription or laches becomes irrelevant in a
case such as this, where plaintiffs clearly have no cause of action.
WHEREFORE, the petition is hereby DENIED and the orders appealed from are
AFFIRMED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

SUPREME COURT
Manila
EN BANC
G.R. No. L-12149 September 30, 1960
HEIRS OF EMILIO CANDELARIA, ETC., plaintiff-appellant,

vs.
LUISA ROMERO, ET AL., defendants-appellees.
Vicente P. Fernando for appellants.

P.L. Meer for appellees.
GUTIERREZ DAVID, J.:
This is an appeal from an order dismissing plaintiff's complaint for reconveyance of real
property with damages. The dismissal was ordered on a mere motion to dismiss before
answer was filed.
The complaint, which was filed on December 20, 1956 by Ester Candelaria in her own
behalf and in representation of the other alleged heirs of Emilio Candelaria, alleges in
substance that sometime prior to 1917 the latter and his brother Lucas Candelaria
bought each a lot in the Solokan Subdivision on the installment basis; that Lucas paid
the first two installments corresponding to his lot, but faced with the inability of meeting
the subsequent installments because of sickness which caused him to be bedridden, he
sold his interest therein to his brother Emilio, who then reimbursed him the amount he
had already paid, and thereafter continued payment of the remaining installments until
the whole purchase price had been fully satisfied; "that although Lucas Candelaria had
no more interest over the lot, the subsequent payments made by Emilio Candelaria until
fully paid were made in the name of Lucas Candelaria, with the understanding that the
necessary documents of transfer will be made later, the reason that the transaction
being from brother to brother"; that in 1918 a transfer certificate of title for said lot was
issued by the register of deeds of Manila in the name of "Lucas Candelaria married to
Luisa Romero"; that Lucas held the title to said lot merely in trust for Emilio and that this
fact was acknowledged not only by him but also by the defendants (his heirs) on several
occasions; that Lucas' possession of the lot was merely tolerated by Emilio and his
heirs; that from the time Emilio bought the lot from his brother, Lucas had been
collecting all its rents for his own use as financial aid to him as a brother in view of the
fact that he was bedridden without any means of livelihood and with several children to
support, although from 1926, when Emilio was confined at the Culion Leper Colony up
to his death on February 5, 1936, Lucas had been giving part of the rents to Fortunata
Bautista, the second wife of Emilio, in accordance with the latter's wishes; that Lucas
died in August, 1942, survived by the present defendants, who are his spouse Luisa
Romero and several children; and that said defendants are still in possession of the lot,
having refused to reconvey it to plaintiff despite repeated demands.
Instead of answering the complaint, the defendants filed a motion to dismiss, alleging,
among other things, that plaintiff's cause of action is unenforceable under the new Civil
Code and that the action has already prescribed. And the court having upheld the
motion, plaintiff took this appeal.1awphîl.nèt
In the order granting the motion to dismiss, the lower court held that an express and not
an implied trust was created as may be gleaned from the facts alleged in the complaint,
which is unenforceable without any writing, and that since Transfer Certificate of Title
No. 9584 covering the land in question had been issued to Lucas Candelaria way-back
in 1918 or 38 years before the filing of the complaint, the action has already prescribed.
The trust alleged to have been created, in our opinion, is an implied trust. As held, in
effect, by this Court in the case of Martinez vs. Graño (42 Phil., 35), where property is
taken by a person under an agreement to hold it for, or convey it to another or the
grantor, a resulting or implied trust arises in favor of the person for whose benefit the
property was intended. This rule, which has been incorporated in the new Civil Code in
Art. 1453 thereof, is founded upon equity. The rule is the same in the United States,
particularly where, on the faith of the agreement or the understanding, the grantee is
enabled to gain an advantage in the purchase of the property or where the
consideration or part thereof has been furnished by or for such other. Thus, it has been
held that where the grantee takes the property under an agreement to convey another
on certain conditions, a trust results for the benefit of such other or his heirs, which
equity will enforce according to the agreement. (89 C.J.S. 960.) It is also the rule there
that an implied trust arises where a person purchases land with his own money and
takes a conveyance thereof in the name of another. In such a case, the property is held
on a resulting trust in favor of the one furnishing the consideration for the transfer,
unless a different intention or understanding appears. The trust which results under
such circumstances does not arise from contract or agreement of the parties, but from
the facts and circumstances, that is to say, it results because of equity and arises by
implication or operation of law. (See 89 C.J.S. 964-968.)
In the present case, the complaint expressly alleges that "although Lucas Candelaria
had no more interest over the lot, the subsequent payments made by Emilio Candelaria
until fully paid were made in the name of Lucas Candelaria, with the understanding that
the necessary documents of transfer will be made later, the reason that the transaction
being brother to brother." From this allegation, it is apparent that Emilio Candelaria who
furnished the consideration intended to obtain a beneficial interest in the property in
question. Having supplied the purchase money, it may naturally be presumed that he
intended the purchase for his own benefit. Indeed, it is evident from the above-quoted
allegation in the complaint that the property in question was acquired by Lucas
Candelaria under circumstances which show it was conveyed to him on the faith of his
intention to hold it for, or convey it to the grantor, the plaintiff's predecessor in interest.
Constructive or implied trusts may, of course, be barred by lapse of time. The rule in
such trusts is that laches constitutes a bar to actions to enforce the trust, and
repudiation is not required, unless there is a concealment of the facts giving rise to the
trust. (Diaz, et al. vs. Gorricho, et al., 103 Phil., 261; 54 Off. Gaz. [37] 8429.) Continuous
recognition of a resulting trust, however, precludes any defense of laches in a suit to
declare and enforce the trust. (See 581, 54 Am Jur. pp. 448-450.) The beneficiary of a
resulting trust may, therefore, without prejudice to his right to enforce the trust, prefer
the trust to persist and demand no conveyance from the trustee. It being alleged in the
complaint that Lucas held the title to the lot in question merely in trust for Emilio and that
this fact was acknowledged not only by him but also by his heirs, herein defendants —
which allegation is hypothetically admitted — we are not prepared to rule that plaintiff's
action is already barred by lapse of time. On the contrary, we think the interest of justice
would be better served if she and her alleged co-heirs were to be given an opportunity
to be heard and allowed to present proof in support of their claim.
Wherefore, the order of dismissal appealed from is hereby reversed and the case
remanded to the court a quo for further proceedings. So ordered without costs.
Paras, C.J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes and Dizon, JJ., concur.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 97995 January 21, 1993
PHILIPPINE NATIONAL BANK, petitioner,

vs.
COURT OF APPEALS AND B.P. MATA AND CO., INC., respondents.
Roland A. Niedo for petitioner.
Benjamin C. Santos Law Office for respondent.
ROMERO, J.:
Rarely is this Court confronted with a case calling for the delineation in broad strokes of
the distinctions between such closely allied concepts as the quasi-contract called
"solutio indebiti" under the venerable Spanish Civil Code and the species of implied
trust denominated "constructive trusts," commonly regarded as of Anglo-American
origin. Such a case is the one presented to us now which has highlighted more of the
affinity and less of the dissimilarity between the two concepts as to lead the legal
scholar into the error of interchanging the two. Presented below are the factual
circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-
contract and the Anglo-American trust.
Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in
providing goods and services to shipping companies. Since 1966, it has acted as a
manning or crewing agent for several foreign firms, one of which is Star Kist Foods, Inc.,
USA (Star Kist). As part of their agreement, Mata makes advances for the crew's
medical expenses, National Seaman's Board fees, Seaman's Welfare fund, and standby
fees and for the crew's basic personal needs. Subsequently, Mata sends monthly
billings to its foreign principal Star Kist, which in turn reimburses Mata by sending a
telegraphic transfer through banks for credit to the latter's account.
Against this background, on February 21, 1975, Security Pacific National Bank
(SEPAC) of Los Angeles which had an agency arrangement with Philippine National
Bank (PNB), transmitted a cable message to the International Department of PNB to
pay the amount of US$14,000 to Mata by crediting the latter's account with the Insular
Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt of this cabled
message on February 24, 1975, PNB's International Department noticed an error and
sent a service message to SEPAC Bank. The latter replied with instructions that the
amount of US$14,000 should only be for US$1,400.
On the basis of the cable message dated February 24, 1975 Cashier's Check No.
269522 in the amount of US$1,400 (P9,772.95) representing reimbursement from Star
Kist, was issued by the Star Kist for the account of Mata on February 25, 1975 through
the Insular Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another payment
through Cashier's Check No. 270271 in the amount of US$14,000 (P97,878.60)
purporting to be another transmittal of reimbursement from Star Kist, private
respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of
US$14,000 (P97,878.60) after it discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000
against Mata arguing that based on a constructive trust under Article 1456 of the Civil
Code, it has a right to recover the said amount it erroneously credited to respondent
Mata.1
After trial, the Regional Trial Court of Manila rendered judgment dismissing the
complaint ruling that the instant case falls squarely under Article 2154 on solutio
indebiti and not under Article 1456 on constructive trust. The lower court ruled out
constructive trust, applying strictly the technical definition of a trust as "a right of
property, real or personal, held by one party for the benefit of another; that there is a
fiduciary relation between a trustee and a cestui que trust as regards certain property,
real, personal, money or choses in action." 2
In affirming the lower court, the appellate court added in its opinion that under Article
2154 on solutio indebiti, the person who makes the payment is the one who commits
the mistake vis-a-vis the recipient who is unaware of such a mistake.3 Consequently,
recipient is duty bound to return the amount paid by mistake. But the appellate court
concluded that petitioner's demand for the return of US$14,000 cannot prosper because
its cause of action had already prescribed under Article 1145, paragraph 2 of the Civil
Code which states:
The following actions must be commenced within six years:
xxx xxx xxx
(2) Upon a quasi-contract.
This is because petitioner's complaint was filed only on February 4, 1982, almost
seven years after March 11, 1975 when petitioner mistakenly made payment to
private respondent.
Hence, the instant petition for certiorari proceeding seeking to annul the decision of the
appellate court on the basis that Mata's obligation to return US$14,000 is governed, in
the alternative, by either Article 1456 on constructive trust or Article 2154 of the Civil
Code on quasi-contract.4
Article 1456 of the Civil Code provides:
If property is acquired through mistake or fraud, the person obtaining it is,

by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes.
On the other hand, Article 2154 states:
If something is received when there is no right to demand it, and it was

unduly delivered through mistake, the obligation to return it arises.
Petitioner naturally opts for an interpretation under constructive trust as its action filed
on February 4, 1982 can still prosper, as it is well within the prescriptive period of ten
(10) years as provided by Article 1144, paragraph 2 of the Civil Code. 5
If it is to be construed as a case of payment by mistake or solutio indebiti, then the

prescriptive period for quasi-contracts of six years applies, as provided by Article 1145.
As pointed out by the appellate court, petitioner's cause of action thereunder shall have
prescribed, having been brought almost seven years after the cause of action accrued.
However, even assuming that the instant case constitutes a constructive trust and
prescription has not set in, the present action has already been barred by laches.
To recall, trusts are either express or implied. While express trusts are created by the
intention of the trustor or of the parties, implied trusts come into being by operation of
law.6 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.7
In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A resulting
trust is a trust raised by implication of law and presumed always to have been
contemplated by the parties, the intention of which is found in the nature of the
transaction, but not expressed in the deed or instrument of conveyance. 9 Examples of
resulting trusts are found in Articles 1448 to 1455 of the Civil Code. 10 On the other hand,
a constructive trust is one not created by words either expressly or impliedly, but by
construction of equity in order to satisfy the demands of justice. An example of a
constructive trust is Article 1456 quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense 12 for
in a typical trust, confidence is reposed in one person who is named a trustee for the
benefit of another who is called the cestui que trust, respecting property which is held by
the trustee for the benefit of the cestui que trust.13 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.14
In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had
no intent of holding the same for a supposed beneficiary or cestui que trust, namely
PNB. But under Article 1456, the law construes a trust, namely a constructive trust, for
the benefit of the person from whom the property comes, in this case PNB, for reasons
of justice and equity.
At this juncture, a historical note on the codal provisions on trust and quasi-contracts is
in order.
Originally, under the Spanish Civil Code, there were only two kinds of quasi
contracts: negotiorum gestio and solutio indebiti. But the Code Commission, mindful of
the position of the eminent Spanish jurist, Manresa, that "the number of quasi contracts
may be indefinite," added Section 3 entitled "Other Quasi-Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the
succeeding article provides that: "The provisions for quasi-contracts in this Chapter do
not exclude other quasi-contracts which may come within the purview of the preceding
article."16
Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts
enumerated from Articles 2144 to 2175 but is open to the possibility that, absent a pre-
existing relationship, there being neither crime nor quasi-delict, a quasi-contractual
relation may be forced upon the parties to avoid a case of unjust enrichment. 17 There
being no express consent, in the sense of a meeting of minds between the parties,
there is no contract to speak of. However, in view of the peculiar circumstances or
factual environment, consent is presumed to the end that a recipient of benefits or
favors resulting from lawful, voluntary and unilateral acts of another may not be unjustly
enriched at the expense of another.
Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as
defined in Article 2154 that something (in this case money) has been received when
there was no right to demand it and (2) the same was unduly delivered through mistake.
There is a presumption that there was a mistake in the payment "if something
which had never been due or had already been paid was delivered; but he from whom
the return is claimed may prove that the delivery was made out of liberality or for any
other just cause."18
In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's
Check No. 269522 had already been made by PNB for the account of Mata on February
25, 1975. Strangely, however, fourteen days later, PNB effected another payment
through Cashier's Check No. 270271 in the amount of US$14,000, this time purporting
to be another transmittal of reimbursement from Star Kist, private respondent's foreign
principal.
While the principle of undue enrichment or solutio indebiti, is not new, having been
incorporated in the subject on quasi-contracts in Title XVI of Book IV of the Spanish
Civil Code entitled "Obligations incurred without contract," 19 the chapter on Trusts is
fairly recent, having been introduced by the Code Commission in 1949. Although the
concept of trusts is nowhere to be found in the Spanish Civil Code, the framers of our
present Civil Code incorporated implied trusts, which includes constructive trusts, on top
of quasi-contracts, both of which embody the principle of equity above strict legalism. 20
In analyzing the law on trusts, it would be instructive to refer to Anglo-American

jurisprudence on the subject. Under American Law, a court of equity does not consider
a constructive trustee for all purposes as though he were in reality a trustee; although it
will force him to return the property, it will not impose upon him the numerous fiduciary
obligations ordinarily demanded from a trustee of an express trust. 21 It must be borne in
mind that in an express trust, the trustee has active duties of management while in a
constructive trust, the duty is merely to surrender the property.
Still applying American case law, quasi-contractual obligations give rise to a personal
liability ordinarily enforceable by an action at law, while constructive trusts are
enforceable by a proceeding in equity to compel the defendant to surrender specific
property. To be sure, the distinction is more procedural than substantive. 22
Further reflection on these concepts reveals that a constructive "trust" is as much a

misnomer as a "quasi-contract," so far removed are they from trusts and contracts
proper, respectively. In the case of a constructive trust, as in the case of quasi-contract,
a relationship is "forced" by operation of law upon the parties, not because of any
intention on their part but in order to prevent unjust enrichment, thus giving rise to
certain obligations not within the contemplation of the parties. 23
Although we are not quite in accord with the opinion that "the trusts known to American
and English equity jurisprudence are derived from the fidei commissa of the Roman
Law,"24 it is safe to state that their roots are firmly grounded on such Civil Law principles
are expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari
potest," 25 particularly the concept of constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail of an action to
enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived
of a choice, for prescription has effectively blocked quasi-contract as an alternative,
leaving only constructive trust as the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in semantics by
holding that in Article 1456 the recipient commits the mistake while in Article 2154, the
recipient commits no mistake. 26 On the other hand, private respondent, invoking the
appellate court's reasoning, would impress upon us that under Article 1456, there can
be no mutual mistake. Consequently, private respondent contends that the case at bar
is one of solutio indebiti and not a constructive trust.
We agree with petitioner's stand that under Article 1456, the law does not make any
distinction since mutual mistake is a possibility on either side — on the side of either the
grantor or the grantee.27 Thus, it was error to conclude that in a constructive trust, only
the person obtaining the property commits a mistake. This is because it is also possible
that a grantor, like PNB in the case at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it
erroneously paid private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that under Article 1144, petitioner
is well within the prescriptive period for the enforcement of a constructive or implied
trust, we rule that petitioner's claim cannot prosper since it is already barred by laches.
It is a well-settled rule now that an action to enforce an implied trust, whether resulting
or constructive, may be barred not only by prescription but also by laches. 28
While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay.29 It is amazing that it took petitioner almost seven years before it
discovered that it had erroneously paid private respondent. Petitioner would attribute its
mistake to the heavy volume of international transactions handled by the Cable and
Remittance Division of the International Department of PNB. Such specious reasoning
is not persuasive. It is unbelievable for a bank, and a government bank at that, which
regularly publishes its balanced financial statements annually or more frequently, by the
quarter, to notice its error only seven years later. As a universal bank with worldwide
operations, PNB cannot afford to commit such costly mistakes. Moreover, as between
parties where negligence is imputable to one and not to the other, the former must
perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of
its own negligence.
WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim

against private respondent is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., J., concurs in the result.
# Footnotes
1 Records, p. 122.
2 Salao v. Salao, G.R. No. L-26699, March 16, 1976, 70 SCRA 65.
3 Rollo, p. 41.
4 Rollo, p. 27.
5 Article 1144. The following actions must be brought within ten years
from the time the right of action accrues:
xxx xxx xxx
(2) Upon an obligation created by law;
xxx xxx xxx
6 Article 1441, Civil Code.
7 89 CJS 724.
8 89 CJS 722.
9 89 CJS 725.
10 Aquino, Civil Code, Vol. II. pp. 556-557; Ramos v. Ramos, G.R. No. L-
19872, December 3, 1974, 61 SCRA 284.
11 Salao v. Salao, G.R. No. L-26699, March 16, 1976, 70 SCRA 65.
12 Ramos v. Ramos, G.R. No. L-19872 December 3, 1974, 61 SCRA
284, citing Gayondato v. Treasurer of the Philippine Islands, 49 Phil. 244.
13 State ex Wirt v. Superior Court for Spokane Country, 10 Wash. 2d,

362, 116 P. 2d 752, 755, Article 1440 Civil Code.
14 Diaz v. Goricho, 103 Phil. 261.
15 Report of the Code Commission, p. 60.
17 Report of the Code Commission, pp. 159-160.
19 Lao Chit v. Security and Trust Co. and Consolidated Investment, Inc.,
105 Phil. 490.
20 Report of the Code Commission, p. 26.
21 Scott on Trusts, Volume 3, p. 2315.
22 Ibid, p. 2312.
23 Scott on Trusts, Volume 3, p. 2316.
24 Government v. Abadilla, 46 Phil. 642 and Miguel et al v. Court of

Appeals,
L-20274, October 30, 1969, 29 SCRA 760.
25 Translated as, "No one should be allowed to enrich himself unjustly at

the expense of another." (Jenk Cent. Cas. 4; 10 Barb. [N.Y.] 626, 633,
"Cyclopedic Law Dictionary," 2nd Edition, p. 688).
26 Rollo, p. 32.
27 Tolentino, Civil Code of the Philippines, Vol. IV, p. 685.
28 Villagonzalo v. IAC, G.R. No. 711110, November 22, 1988, 167 SCRA
535; Perez v. Ong Chua, No. L-36850, September 23, 1982, 116 SCRA
732, 90 CJS 887-889 and 54 Am Jur., pp. 449-450.
29 Mapa III v. Guanzon, G.R. No. L-25605, June 20, 1977, 77 SCRA 387.

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Trust Cases

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Republic of the Philippines

G.R. No. L-26699 March 16, 1976

BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO

Eusebio V. Navarro for plaintiffs-appellants.

Nicolas Belmonte & Benjamin T. de Peralta for defendants-appellants.

This litigation regarding a forty-seven-hectare fishpond located at Sitio Calunuran,

There is no documentary evidence as to what, properties formed part of Manuel Salao's

(2) Fishpond inherited from her parents . . . . . . . . . . . . 7,418

(3) Fishpond inherited from her parents . . . . . . . . . . . . . 6,989

(6) Fishpond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

(8) Riceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,454

TOTAL . . . . . . . . . . . . .. 179,022 square

The Calunuran fishpond is the bone of contention in this case.

It is relevant to mention that on April 8, 1940 Ambrosia Salao donated to her

Plaintiffs' first assignment of error raised a procedural issue. In paragraphs 1 to 14 of

On the other hand, a constructive trust is -a trust "raised by construction of law, or

Is plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or

The 1919 partition of Valentina Ignacio's estate covered about seventeen hectares of

It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to

Trust and trustee; establishment of trust by parol evidence; certainty of

Trusts; evidence needed to establish trust on parol testimony. — In order

The trial court did not err in dismissing plaintiffs' complaint.

Considering those circumstances, it cannot be concluded with certitude that plaintiffs'

The trial court's judgment is affirmed. No pronouncement as to costs.

Barredo (Chairman), Antonio, Concepcion, Jr. and Martin, JJ., concur.

Fernando (Chairman, Second Division), J., took no part.

Martin, J., was designated to sit in the Second Division.

Republic of the Philippines

RESURRECCION DE LEON, ET AL., plaintiffs-appellees,

Cornelio R. Magsarili for plaintiffs-appellees.

Considering all the foregoing, the Court orders:

5. The defendants to pay the costs.

Defendants took the present appeal.

On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed a

TO — JUSTA DE LEON and RESURRECCION DE LEON, several parcels of

Transfer Certificate of Title No. 28157 — and allocated as follows:

(a) To JUSTA DE LEON Five (5) Lots.

(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.

On August 9, 1956, however, the same defendants, assisted by their husbands,

In this appeal, appellants assign the following errors:

THE LOWER COURT ERRED IN HOLDING THAT THE SPOUSES, MARIANO

THE LOWER COURT ERRED IN HOLDING PLAINTIFFS-APPELLEES'

THE LOWER COURT ERRED IN HOLDING THAT DEFENDANTS-

THE LOWER COURT ERRED, IN ORDERING APPELLANTS TO RENDER AN

THE LOWER COURT ERRED IN ORDERING APPELLANTS TO FREE THE

THE LOWER COURT ERRED IN AWARDING ATTORNEY'S FEES TO THE

THE LOWER COURT ERRED IN NOT DISMISSING THE COMPLAINT.

Indeed, it is to be supposed that appellants understood and comprehended the legal

That the document represents a recognition of pre-existing trust or a declaration of an

WHEREFORE, with the modification as above indicated with regard to accounting,we

Republic of the Philippines

G.R. Nos. L-20787-8 June 29, 1965

Araneta, Mendoza and Papa for plaintiff-appellee.

We take note of the written manifestation or "constancia" submitted to this Court by

Republic of the Philippines

MINDANAO DEVELOPMENT AUTHORITY, now the SOUTHERN PHILIPPINES

xxx xxx xxx

In answer, Ang Bansing replied:

xxx xxx xxx

9. That defendant admits that in Annex'A'of the complaint, it was agreed

Hence, the present recourse.

In case of a declaration of trust, the declaration must be clear and

WHEREFORE, the petition should be, as it is hereby, DENIED. No costs.