Goyanko v UCPB - Avillon
was never given any power of administration over the investment.
Petitioners: ​Joseph Goyanko Jr. as administrator of the Estate of Joseph
Goyanko Sr.
Respondents: ​United Coconut Planters Bank (UCPB)
DOCTRINE: ​A trust can be created without using the word “trust” or “trustee”,
but the mere use of these words does not automatically reveal an intention to
create a trust.
FACTS
● Joseph Goyanko ​Sr. invested Php2M in Philippine Asia Lending
Investors, Inc (Philippine Asia)
● The family of Goyanko Sr., represented by petitioner Joseph Goyanko
Jr​. (JOSEPH) and the illegitimate family presented conflicting claims to
Philippine Asia for the release of the investment.
● Pending the resolution of the claims, Philippine Asia deposited the
proceeds of the investment (Php1,509,318.76) with UCPB under the
name “​Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko
Sr.​ ” (ACCOUNT)
● UCPB allowed Philippine Asia to withdraw Php1.5M.
● JOSEPH demanded UCPB to restore the amount withdraw. UCPB
refused.
● JOSEPH filed a complaint against UCBP in the RTC, arguing that:
○ By opening the ACCOUNT, Philippine Asia established a trust
where the heirs are the beneficiaries, UCPB is the trustee, and
Philippine Asia is the trustor
○ UCPB was negligent and in bad faith when it allowed
Philippine Asia to withdraw the amount.
● UCPB argues that:
○ The ACCOUNT involves an ordinary deposit contract with
Philippine Asia which created a debtor-creditor relationship
obligating UCPB to return the proceeds to Philippine Asia on
demand.
● Lower courts found that UCPB is not liable and there is no express trust.
ISSUE
W/N UCPB is liable for the amount withdrawn - NO
RATIO
● There is no express trust in this case, and the relationship between
Philippine Asia and UCPB is a mere deposit contract.
● Requisites of an express trust
○ Competent trustor and trustee (X)
○ Ascertainable trust res (investment)
○ Sufficiently certain beneficiaries (the heirs)
● The first requisite is lacking since UCPB was never under any duty or
Instead of being a trustee, UCPB was only a depositary.
● In a letter by Philippine Asia, it begged JOSEPH to trust it with the
safekeeping of the investment proceeds and documents. If Philippine
Asia had the intention of creating a trust in favor of the heirs, it would
have relinquished any right or claim over the proceeds in UCPB’s favor
as the trustee, but Philippine Asia never did.
● Also, the words ​“ITF (In Trust For) The Heirs” may have created the
impression that a trust account was created. However, as UCPB
explained, the words were only added to distinguish this particular
account with Philippine Asia’s other accounts.
● By reason of the fiduciary nature of the bank’s relationship with its
depositors, this fiduciary relationship does not "convert the contract
between the bank and its depositors from a simple loan to a trust
agreement, whether express or implied.
● A trust can be created without using the word “trust” or “trustee”, but the
mere use of these words does not automatically reveal an intention to
create a trust.
● When UCPB allowed Philippine Asia to withdraw from the ACCOUNT, it
was merely performing its contractual obligation.
● Also, third persons who may have a right to the money deposited,
cannot hold the bank responsible UNLESS there is a court order or
garnishment.
● JOSEPH had the burden of proving the trust, which he failed to do.
DISPOSITION ​WHEREFORE, in view of these considerations, we hereby DENY
the petition and AFFIRM the decision dated February 20, 2007 and the resolution
dated July 31, 2007 of the Court of Appeals in CA-G.R. CV. No. 00257. Costs
against the petitioner.
1
CRISTOBAL v GOMEZ- BALAGTAS
Petitioners: ​Paulina Cristobal, et al.
Respondents: ​Marcelino Gomez
DOCTRINE: ​A trust constituted between two contracting parties for the benefit
of a third person is ​not subject to the rules governing donations of real
property.
FACTS:
1) Epifanio Gomez sold the property under contract of sale with pacto de
retro (right to repurchase) to Luis R. Yangco.
a) Redeemable in five years, for the sum of P2,500.
2) Epifanio remained in possession in the character of a lessee.
3) The period expressed in this agreement passed without redemption.
a) The property consolidated in Yangco, who, nevertheless, many
years later conceded to the vendor the privilege of
repurchasing.
4) Epifanio was without means to effect the repurchase of the property
himself, and he therefore found it necessary to apply to a kinsman,
Bibiano Bañas, for assistance.
a) Bañas hesitated to lend Epifanio the money upon his own sole
credit;
i) But told him that he would let him have the money;
ii) If his brother Marcelino Gomez and his sister
Telesfora Gomez would make themselves
responsible for the loan.
5) An agreement was reached:
a) That Bibiano Bañas should advance the sum of P7,000, upon
the personal credit of Marcelino and Telesfora Gomez.
b) And that this money should be used to repurchase the property
in the names of Marcelino Gomez and Telesfora Gomez,
i) Who should hold and administer the property until the
capital advanced by Bañas should be paid off,
ii) After which the property would be returned to Epifanio
Gomez or his children.
c) So ‘private partnership in participation’ was created between
Marcelino and Telesfora
i) And they agreed that the capital of the partnership
should consist of P7000
(1) Of which Marcelino was to supply the
amount of P1500
(2) And Telesora the sum of P5500.
6) Epifanio then died,
a) Leaving Paulina Cristobal (widow) and their 4 children
(co-petitioners).
7) Marcelino meanwhile entered into possession of the property.
8) During this period of about twenty years Marcelino improved the larger
parcel (extended the salt beds and converting it from Filipino to Chinese
style).
a) and parcels of property quintupled in value, being now worth
about P50,000.
b) According to the estimate made by Marcelino Gomez himself.
9) A year after Epifanio’s death, Telesfora wanted to free herself from the
responsibility which she had assumed to Bañas:
a) And conveyed to Marcelino her interest and share in the three
properties previously redeemed from Yangco.
b) And both (Telesfora and Marcelino) declared dissolved the
partnership they created.
10) With Marcelino as the sole debtor, Bañas required him to execute a
contract of sale of the three parcels with pacto de retro for the purpose
of securing the indebtedness.
a) Marcelino later on paid the sum in full satisfaction of the entire
claim and received from Bañas a reconveyance of the three
parcels.
11) The widow, Paulina Cristobal, and the children of Epifanio Gomez
instituted an action for the recovery of the three parcels of land from
Marcelino Gomez.
12) Marcelino answered with a general denial and claimed to be the owner
in his own right of the property.
a) He further claimed that the trust agreement was kept secret
from Epifanio Gomez, and that, having no knowledge of it, he
could not have accepted it before the stipulation was revoked.
b) And that he has the benefit of prescription in his favor, having
been in possession of more than 10 years under the deed
which he acquired the sole right from his sister.
13) The RTC ruled in favor of Cristobal and found that the property in
question belongs to the Cristobal and her children, as co-owners, and
ordered Marcelino to surrender the property to them and execute an
appropriate deed of transfer as well as to pay the cost of the
proceeding.
ISSUES:
1. W/N the dissolution of partnership between Marcelino and Telesfora
destroyed the beneficial right of Epifanio Gomez in the property.
2
 2. W/N the partnership agreement of Marcelino and Telesfora was a DISPOSITION: ​The appealed judgment will therefore be modified by
donation in favor of Epifanio. incorporating therein a declaration of ownership in favor of the plaintiffs and by
eliminating the requirement for the specific execution of a conveyance. In other
respects the judgment is affirmed. So ordered, with costs against the appellant.
3. W/N Marcelino Gomez acquired the property through prescription.

RATIO:

1. No!
a. The fact that one of the two individuals who have constituted
themselves trustees for the purpose above indicated conveys
his interest in the property to his co-trustee does not relieve the
latter from the obligation to comply with the trust.
2. No!
a. A trust constituted between two contracting parties for the
benefit of a third person is not subject to the rules governing
donations of real property.
b. The beneficiary of the trust may demand performance of the
obligation without having formally accepted the benefit of the
trust in a public document, upon mere acquiescence in the
formation of the trusts and acceptance under the second par.
of article 1257 of the CC.
c. Much energy has been expanded by the attorneys for
Marcelino in attempting to demonstrate that, if Epifanio at any
time had any right in the property by virtue of the partnership
agreement between Marcelino and Telesfora such right could
be derived as a donation and that, inasmuch as the donation
was never accepted by Epifanio in a public document, his
supposed interest therein is unenforceable.
d. The partnership should not be viewed in light of an intended
donation, but as an express trust.

3. No!
a. As against the beneficiary, prescription is not effective in favor
of a person who is acting as a trustee of a continuing and
subsisting trust.
b. Therefore, Marcelino cannot acquire ownership over the
property through prescription.

3
RODOLFO MORALES v. COURT OF APPEALS - MEDEL
Petitioners: ​RODOLFO MORALES, represented by his heirs, and PRISCILA
MORALES
Respondents: ​COURT OF APPEALS RANULFO ORTIZ, JR., and ERLINDA
ORTIZ
FACTS:
1. Spouses Ortiz claim that they are the absolute and exclusive owners of
the premises in question (a parcel of land and a two-storey residential
house). Spouses Ortiz claim that they purchased the property from
Celso Avelino.
2. The property was purchased by Celso Avelino when he was still a
bachelor and a city fiscal of Calbayog City. It was shown that he
purchased the same from Mendiola and Bartolome through an
"Escritura de Venta."
3. After the purchase, Celso Avelino caused the following: (1) transfer of
the property’s title in his name; (2) transfer of tax declarations in his
name; (3) a survey of the premises with the Bureau of Lands; and (4)
built a residential house thereon.
4. Celso Avelino took his parents, Rosendo Avelino and Juana Ricaforte,
and his sister, Aurea, to live in his property until their parents’ deaths.
5. Celso Avelino then became an Immigration Officer and later a Judge of
the Court of First Instance in Cebu. Consequently, he left his property
under the care of his sister, Aurea.
6. Without his knowledge, his nephew Rodolfo Morales (a son of his other
sister, Priscilla) constructed a beauty shop on the premises in question.
7. Celso Avelino thereafter sold the property to his neighbors, the Spouses
Ortiz. The Spouses Ortiz were encouraged by Celso Avelino to buy the
property from him rather than to go to somebody else that they do not
now. Celso Avelino also promised that he will vacate the premises as
soon as his uncle does so.
8. Hence, Spouses Ortiz and Celso Avelino executed a deed of absolute
sale.
9. Rodolfo Morales (nephew), however, refused to vacate or demolish his
beauty shop, unless he is reimbursed for P35,000. Morales also
occupied the residential building on the property, by taking in paying
boarders.
10. Rodolfo Morales contends that his grandparents Rosendo Avelino
and Juana Ricaforte (parents of Celso Avelino) originally owned
the premises in question. He further claims that Rosendo
(grandfather of Rodolofo; father of Celso Avelino) merely entrusted
Celso Avelino with the money to purchase the property as he was
their only son. Hence, Rodolfo Morales and his mother, Priscila
Morales, based their contention on an implied trust theory.
ISSUE:
A. Whether or not Celso Avelino holds the property as a mere trustee. NO.
B. Whether or not Rodolfo Morales was a builder in good faith. NO.
RATIO:
AS TO THE ISSUE ON WHETHER CELSO AVELINO HOLDS THE
PROPERTY AS A MERE TRUSTEE
1. Trusts are either express or implied.
a. Express trusts are created by the intention of the trustor or of
the parties.
b. Implied trusts come into being by operation of law, either
through implication of an intention to create a trust as a
matter of law or through the imposition of the trust
irrespective of and even contrary to, any such intention.
2. Implied trusts are either resulting or constructive trusts. Constructive
trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. Resulting trusts are
based on the equitable doctrine that valuable consideration and not
legal title determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise from the
nature of circumstances of the consideration involved in a transaction
whereby one person becomes invested with legal title but is obligated in
equity to hold his legal title for the benefit of another.
3. A resulting trust in exemplified by Article 1448 of the Civil Code: "There
is an implied trust when property is sold, and the legal estate is granted
to one party but the price is paid by another having the beneficial
interest of the property. The former is the trustee, while the latter is the
beneficiary. ​However, if the person to whom title is conveyed is a
child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputable presumed that
there is gift in favor of a child.”
4. The last sentence of Article 1448 (sometimes referred to as a
purchase money resulting trust) gives one of the recognized
exceptions to the establishment of an implied resulting trust. ​(The
other two would be: when actual contrary intention is proved & when
purchase is made in violation of an existing statute and in evasion of its
express provision.)
5. As a rule the burden of proving the existence of trust is on the
party asserting its existence, and such proof must be clear and
satisfactorily show the existence of trust. ​While implied trusts may
be proved by oral evidence, evidence must be trustworthy and received
by the courts with extreme caution.
6. On this basis alone, Rodolfo and Priscilla Morales' claim must fail.
Rodolfo and Priscilla relied merely on testimonial evidences which are
self-serving. Proof of the Spouses Ortiz's lawful acquisition of the
property through Celso Avelino’s ownership on the other hand was
4
 supported by documentary evidences such as: the deed of absolute
sale and tax declarations. Even testimonies of Celso's other sisters
prove that they believe that he is the true owner of the property. The fact
that the other siblings did not intervene in this case to protect their right
and that upon the death of their parents no extra-judicial partition
occurred further strengthens Celso's ownership. ​Moreover, assuming
that their claim that Celso was a mere trustee is true, it still falls
under the exemption under the last sentence of Article 1448 which
states that if the person to whom the title conveyed is a child, there
is a presumption that it is a gift in favor of the child.
7. Another crucial evidence considered by the Court was the sworn
Confirmation of one of the sisters of Celso Avelino, Concepcion
Peraltas. In her affidavit, she explcitly stated that: “That my aforenamed
brother [Celso Avelino], during the time when he was City Fiscal of
Calbayog City and still a bachelor, out of his own money, bought the
parcels of land x x x Likewise, out of his own money, he constructed a
residential building on the lot which building is made of strong
materials.”
8. Rodolfo Morales (nephew) failed to discharge the burden to prove the
existence of an implied trust.

AS TO THE ISSUE WHETHER RODOLFO MORALES WAS A BUILDER IN

GOOD FAITH.

1. The Court ruled in the negative. Article 448 applies only when the
builder, planter or sower believes he has the right to so build, plant or
sow because he thinks he owns the land or believes himself to have a
claim of title.
2. In the instant case Rodolfo Morales knew from the very beginning that
he was not the owner of the land. He alleged in his Answer that the land
was acquired by his grandparents Rosendo Avelino and Juana
Ricaforte and he constructed the shop building in 1979 upon due
permission and financial assistance from his mother, Priscila A. Morales
and from his aunts: Trinidad A. Cruz and Concepcion A. Peralta, and
with the knowledge and consent of his uncle Celso Avelino.

DISPOSITION: WHEREFORE, premises considered, except as to the award of

moral damages, attorneys fees and litigation expenses which are hereby
DELETED, the judgment of the respondent Court of Appeals is AFFIRMED.

5
Ramos v Ramos
G.R. No. L-19872
December 3, 1974
Petitioner :EMILIANO B. RAMOS, ET AL.,
Respondents: GREGORIA T. RAMOS, ET AL.
DOCTRINE:
Trust defined.​—In its technical 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
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
Implied trust defined.​—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
Resulting trust defined​.—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 always 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
Constructive trust defined.—A constructive trust is a trust “raised by construction of
law, or arising by operation of law”.
Acquisitive prescription does not run in favor of a trustee in an express trust.​—There
is a rule that a trustee cannot acquire by prescription the ownership of property
entrusted to him
FACTS
1. Martin Ramos died leaving a considerable real estate which includes
Hacienda Calaza and Hacienda Ylaya both located in Himamaylay,
Negros Occidental. Hacienda Calaza consists of sugar land, palay land
and nipa groves with an area of 400 hecatares.
2. All the children of Martin Ramos, Legitimate and Natural, lived in
Hacienda Ylaya.
3. Upon the death of Martin Ramos, the properties were left under the
administration of his brother, Rafael Ramos.
4. He turned over Hacienda Ylaya to Agustin Ramos and Hacienda Calaza
to Jose Ramos.
5. All the children continued to live in Hacienda Ylaya. All their expenses
were supported by the proceeds of the two haciendas.
6. Without the knowledge of other heirs, a partition was submitted to the
CFI for the settlement of the intestate estate of Martin Ramos and his
wife. – P74,985
7. Timoteo Zayco was appointed as the guardian of the five minor heirs.
8. ½ will be shared by the legitimate children and 1/3 by the natural
children
9. Plaintiffs aver that they did not know of any partition proceeding, denied
receiving any amount from the partition.
10. Plaintiffs only discovered later on that the property administered by their
elder brother Jose had a Torrens Title in the name of his widow,
Gregoria, and daughter, Candida
11. Plaintiffs filed with the CFI to secure the participation of them in the
partition of Hacienda Calaza. The defendants denied the existence of a
trust and interposed prescription as a defense because the partition was
approved in 1939 and the present petition was only filed 1956.
· CFI dismissed the complaint
ISSUE
WON there exist a trust between the wife of Jose Ramos who is named in the
title and the other natural children of Martin Ramos?--NO
Held:
Different rules on trust
1) A trustee cannot acquire by prescription the ownership of property
entrusted to him
2) An action to compel a trustee to convey property registered in his name
in trust for the benefit of the cestui qui trust does not prescribed
3) the defense of prescription cannot be set up in an action to recover
property held by a person in trust for the benefit of another
4) property held in trust can be recovered by the beneficiary regardless of
the lapse of time
5) possession of a trustee is not adverse. Not being adverse, he does not
acquire by prescription the property held in trust.
6) The rule of imprescriptibility of the action to recover property held in
trust may possibly apply to resulting trusts as long as the trustee has not
repudiated the trust
6
 7) Acquisitive prescription may bar the action of the beneficiary against
the trustee in an express trust for
● the recovery of the property held in trust where
● the trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui qui trust;
● such positive acts of repudiation have been made known to
the cestui qui trust and
● the evidence thereon is clear and conclusive
8) The plaintiffs did not prove any express trust in this case. The
expediente of the intestate proceedings, particularly the project of
partition, the decision and the manifestation as to the receipt of shares
negates the existence of an express trust.
9) public documents prove that the estate of Martin Ramos was settled in
that proceeding and that adjudications were made to his seven natural
children.
10) the eight lots involved were claimed by the spouses Jose Ramos to the
exclusion of the plaintiffs.
11) After the death of Jose Ramos, the said lots were adjudicated to his
widow and daughter. In 1932 Gregoria T. Ramos and Candida Ramos
leased the said lots to Felix Yulo.
12) Yulo in 1934 transferred his lease rights over Hacienda Calaza to Juan
S. Bonin and Nestor Olmedo, the husband of plaintiff Atanacia Ramos
13) Bonin and Olmedo in 1935 sold their lease rights over Hacienda Calaza
to Jesus S. Consing
14) ​Those transactions prove that the heirs of Jose Ramos had
repudiated any trust which was supposedly constituted over
Hacienda Calaza in favor of the plaintiffs. Statute of limitations
applies in this case.

Dispositive Portion :
WHEREFORE, the trial court's judgment is affirmed with the clarification that
defendants' counterclaim is dismissed. No costs.

7
PACHECO v ARRO ET AL. - SAN DIEGO
Petitioners: ​DOLORES PACHECO, IN HER CAPACITY AS GUARDIAN OF
THE MINORS CONCEPCION, ALICIA, AND HERMINIA YULO
Respondents: ​SANTIAGO ARRO ET AL., RESPONDENTS. DEMETRIA
FIRMEZA, ACCOMPANIED BY HER HUSBAND, BASILIO RIVERA
DOCTRINE: ​When the claim to the lots in the cadastral case was withdrawn,
relying upon the promise by landowner to convey the lands made in open
court, a trust or a fiduciary relation was created between the one who withdrew
the claim and the one who made the promise.
*Some parts were in Spanish. I’m not sure if I missed some material facts :(
● The juridical concept of a trust involves a fiduciary relation between the
trustee and the cestui que trust as regards certain property—real,
personal, funds or money, or choses in action. This must not be
confused with an action for specific performance.
● When the claim to the lots in the cadastral case was withdrawn by Arro
et al., relying upon the promise Regalado made in open court, a trust or
a fiduciary relation between Regalado and Arro et al. was created.
● The trustee cannot invoke the statute of limitations to bar the action and
defeat the right of the cestuis que trust (beneficiary).
● Therefore Arro et al. are entitled to the lands promised by Regalado.
DISPOSITION: ​The judgment under review is affirmed, with costs against the
petitioners.

FACTS:
14) Arro et al. and Regalado were parties to a cadastral case. They each
have a claim over a parcel of land
15) but Regalado, promised in open court that after the change of Zamora
and Quennon streets into T. Yulo and G. Regalado streets, Regalado
would convey and assign the lots to Arro et al.
16) Because of this promise, Arro et al. withdrew their claims
17) The cadastral court then decreed the registration of the land in the
name of Regalado.
18) Regalado eventually complied with his promise by executing deeds of
donation or assignment
19) In the present case, minors Concepcion, Alicia and Herminia Yulo
(represented by Pacheco) are daughters of Regalado. They are praying
to execute the deeds of assignment in favor of them.
20) Pacheo argues that the promise cannot prevail over the final decree of
the cadastral court holding Regalado to be the owner of the lots
21) On the other hand, Arro et al. argues that a trust was created between
them and Regalado. They are the beneficiaries, while Regalado was the
trustee.
22) Arro et al. asserts that a trustee does not have title to the property which
is the subject of the trust, because title to such property is vested in the
cestui que trust (beneficiary).
23) If Regalado was a trustee, he or his successors-in-interest could not
and cannot be compelled in an action for specific performance to
convey or assign the property—the subject of the trust. (labo neto)
24) This is because in an action for specific performance, the party to be
compelled to perform is the owner of property sought to be conveyed.
ISSUE:
W/N the heirs of Regalado should convey the lands of Regalado to Arro et al. -
YES

RATIO:

8
MINDANAO DEV’T AUTHORITY v CA - SIQUIAN
Petitioners: ​Mindanao Development Authority (now the Southern Philippines
Development Administration)
Respondents: ​Court of Appeals and Francisco Ang Bansing
DOCTRINE:
FACTS:
● It is not disputed that 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.
● 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.
● After the sale, the land of Ang Bansing was surveyed and designated as
Lot 664-B, Psd-1638. Lot 664-B was further subdivided into five (5) lots
● 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.
● 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.
● December 23, 1939, Juan Cruz sold ​Lot 1846-C to the Commonwealth
of the Philippines for the amount of P6,347.50. 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.
● Cadastral survey plan was approved by the Director of Lands on July
10, 1940.
● 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 TCTNo. 1783 was
issued in the name of Francisco Ang Bansing.
● 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.
● 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.
● Consequently, on April 11, 1969, the MDA filed a complaint against
Francisco Ang Bansing before the CFI of Davao City, for the
reconveyance of the title over Lot 1846-C, alleging, among others, the
following:
ISSUE:
1. WON Francisco Ang Bansing 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.
2. WON Ang Bansing 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 and his affidavit.
RATIO:
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."
It is fundamental in the law of trusts that certain requirements must exist before
an express trust will be recognized. Basically, these elements include:
1. Competent trustor and trustee,
2. 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.
3. Present and complete disposition of the trust property, notwithstanding
that the enjoyment in the beneficiary will take place in the future.
4. 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.
5. Some power of administration other than a mere duty to perform a
contract although the contract is for a third-party beneficiary.
9
 6. Declaration of terms which 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.
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
​ r beneficiary:
and Juan Cruz as the ​cestui que trust o
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.
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.
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.
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.
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​,
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 Bansing on April 23, 1941, ​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."
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.
Despite 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.
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."
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.
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.
There is also a constructive trust if a person sells a parcel of land and thereafter
obtains title to it through fraudulent misrepresentation.
S​uch a constructive trust is not a trust in the technical sense and is prescriptible; it
prescribes in 10 years. 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.
DISPOSITION: ​WHEREFORE, the petition should be, as it is hereby, DENIED. No costs.
10
TANSENGUAN and CO. v. PHILTRUST--TORIO
Petitioners: ​TAN SENGUAN & CO., INC
Respondents: ​PHILIPPINE TRUST COMPANY
DOCTRINE: When the transaction at hand could have been entered into
by a trustee either as such or in his individual capacity, then it must be
clearly indicated that the liabilities arising therefrom shall be chargeable
to the trust estate, otherwise, they are due from the trustee in his
personal capacity.
FACTS
1. In a deed of trust, Mindoro Sugar Company and PhilTrust entered into a trust
agreement where PhilTrust (trustee) will hold in trust the real estate, franchises,
and personal property of Mindoro Sugar Company(trustor). The trust was
created to protect protect certain bonds to be issued by the Mindoro Sugar
Company and to be purchased by the Philippine Trust Company.
2. Later, TanSenguan & Co. secured a judgment against the Mindoro Sugar
Company; and sold, transferred, and assigned that judgment to PhilTrust.
properties of the Mindoro Sugar Company to protect the bond holders. So far as
the Philippine Trust Company was concerned, it was not authorized to manage
the affairs of the Mindoro Sugar Company or to enter into contracts in its behalf.
2. Even if the contract had been authorized by the trust indenture, the Philippine
Trust Company in its individual capacity would still be responsible for the contract
as there was no express stipulation that the true estate and not the true trustee
should be held liable on the contract in question.
3. Not only is there no express stipulation that the trustee should not be held
responsible but in the "Wherefore" clause of the contract, the judgment was
expressly assigned in favor of the Philippine Trust Company, not the Philippine
Trust Company, trustee. TanSenguan can go after PhilTrust on its contract and
has no claim against either the Mindoro Sugar Company or the trust estate.
RULING:The judgment of the Court of First Instance is therefore reverse​d,
and a judgment will be entered in favor of plaintiff- appellant and against
defendant-appellee in the sum of P10,000, with legal interest from the 8th of
October, 1931, until paid, and with costs in both instances against
defendant-appellee. So ordered

3. In the contract between TanSenguan and PhilTrust, PhilTrust was referred to

as 'trustee' (of Mindoro Sugar Company). One of the stipulations in the contract
states: "xxx 2. The Philippine Trust Company, Trustee, agrees that should the
Mindoro Sugar Co., be sold, assigned or its ownership transferred in any manner
whatsoever to any person or entity including the Philippine Trust Company,
Trustee, itself, it shall pay to Tan Sen Guan & Co., an additional sum of ten
thousand (10,000) pesos, said amount to be paid immediately upon the
perfection of said sale or transfer and irrespective to the amount which might be
paid for it."

4. The properties of Mindoro Sugar Co. were sold at an auction to the Roman
Catholic Archbishop of Manila so TanSenguan is claiming its Php10K, which was
stated in their agreement. PhilTrust refused to pay. TanSenguan sued PhilTrust
to collect the Php10K.

5. CFI ruled in favor of PhilTrust and absolved it from paying the Php10. CFI said
that in the contract PhilTrust was bound only as a trustee and not as an
individual. TanSenguan appealed the CFI decision, hence the case at bar.

ISSUE: ​Is PhilTrust personally liable for the Php10K?-- YES

RATIO:

1. While in the contract in question the Philippine Trust Company was usually
referred to as trustee, nowhere in the deed of trust between Mindoro Sugar Co
and PhilTrust was PhilTrust given any authority to enter into a contract such as is
here presented. The Philippine Trust Company held the legal title to the

11
RIZAL SURETY & INSURANCE vs. CA
Petitioner: ​Rizal Surety & Insurance Company (Rizal Insurance)
Respondent: ​CA & Transocean Transport Corporation (Transocean)
Doctrine: ​Express trusts are created by direct and positive acts of the parties,
by some writing or deed, or will, or by words either expressly or impliedly
evincing an intention to create a trust.
Facts:
● 1961 - Reparations Commission (Repacom) sold to Transocean vessel “M/V
Transocean Shipper” for 20 annual installments.
● 1974, vessel was insured with Rizal insurance for $3.5M (P23M) under 2
Marine Hule Policies. Repacom was named as insured.
○ Rizal insurance RE-insured vessel with foreign insurance firm.
● 1975, vessel lost in Mediterranean sea, Repacom filed claims.
○ Partial compromise agreement (PCA1) entered between Repacom and
Transocean for the insurance proceeds
● Anticipating insurance proceeds, Transocean requested Central Bank (CB)
to allow it to retain dollar insurance proceeds for 3mos., to enable it to
complete its study & decide how to utilize such.
○ CB granted with condition: Proceeds deposited with local bank in
special dollar account until 6/31/1975
● Transocean & Repacom requested Rizal Insurance to pay proceeds in their
joint names, despite problems with amount of each claim.
○ CB authorized Rizal to receive foreign currency proceeds from English
reinsurance firm & deposit it with local bank in a non -interest bearing
acct. jointly in Transocean & repacom’s name.
● CB authorized Rizal to receive & deposit $ proceeds in a non-interest
bearing acct. in Rizal Insurance’s name for insured’s joint account.
● 1976, Rizal informed Transocean & Repacom entire insurance:
○ P2,614,150.00 from local insurance companies
○ $3,083,850.00 from Rizal Insurance’s London insurance broker,
deposited in non-interest bearing account as authorized by CB
■ Both deposited with Prudential Bank Manila.
● Transocean & Repacom entered into a PCA2 to distribute proceeds
Repacom $434,618., & Transocean $1,931,153, leaving balance kept in
bank in trust for future settlement via court or compromise.
● CB authorized Transocean & Repacom to transfer insurance balance
($718,078.2) into interest-bearing dollar account with local bank.
○ Repacom & Transocean requested Rizal to remit balance to PNB
● Rizal would effect request if both unconditionally & absolutely release it from
all liabilities by executing Loss & Subrogation Receipt (LSR).
● Parties submitted revised LSR to OSG, who demanded Rizal as funds
trustee, with obligation to deposit to an interest bearing acct., to pay interest
on dollar balance, as authorized by CB in a letter.
● Rizal rejected OSG’s demand asserting:
(1) No trust relationship, express/implied, involved in the transaction;
(2) No obligation to transfer dollar deposit into interest bearing account
because CB authorization given to repacom & not them
○ Transocean & Repacom sent Rizal duly executed LSR.
● Final Compromise agreement entered by Transocean & Repacom, who
transferred to Transocean all its proceeds rights in consideration of P1M.
Dollar balance remitted to PNB to Transocean’s acct.
● Transocean sent demand letter for interest on dollar balance to Rizal &
Prudential, which neither replied nor complied with.
○ Transocean filed RTC for collection of unearned interest.
● RTC: ​Trust relationship existed between Rizal (trustee) & Transocean +
Repacom (beneficiaries). Rizal to pay interest at 6%.
○ Both appealed ​CA affirmed.
● Rizal Insurance appealed to SC: ​LSR unconditionally & absolutely
released it from all its liabilities under marine hull policies.
Issues:​ WON Rizal insurance was a trustee? - YES
Held: ​Petition Denied
Ratio: ​Parties intended entire dollar insurance proceeds be held in trust by
RIZAL for the benefit of Transocean & Repacom.
● Facts sufficiently manifest intention between Transocean & Repacom on one
hand and Rizal, on the other, to create a trust.
● Trust relationship existed. ​Intention to create trust relation can be inferred
from surrounding factual circumstances.
● A trust is right, enforceable solely in equity, to beneficial enjoyment of
property, legal title to which is vested in another. It is a fiduciary relationship
concerning property which obliges a person holding it (trustee) to deal with
property for another’s benefit (beneficiary).
Art. 1441. Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties. x x x.
Art. 1444. No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended. Express trusts are created by
parties’ direct & positive acts, by some writing/deed/will, or words
(expressly/impliedly) evincing intention to create a trust.
● Evidence is clear that Rizal held on to dollar balance because
(1) Transocean & Repacom requested it to do so as they had not yet
agreed on amount of their respective claims, and
(2) they hadn’t, prior to 1/31/1977, signed LSR in favor of petitioner.
● As Rizal continued holding on to deposit for Transocean & Repacom’s
benefit, Rizal obviously recognized its fiduciary relationship with said parties.
This is the essence of the trust flowing from the actions & communications of
Rizal.
○ Requirements before an express trust will be recognized.
(1) a competent trustor and trustee
(2) an ascertainable trust ​res​, and
(3) sufficiently certain beneficiaries.
● There must be a present & complete disposition of trust property,
notwithstanding that enjoyment in beneficiary will be in the future. It is
12
 essential that purpose be an active one to prevent trust from being executed ○ Such silence & inaction in the face of specific written instructions from
into a legal estate/interest, & one that isn’t in contravention of some trustors-beneficiaries couldn’t but have misled latter into thinking that
prohibition of statute or rule of public policy. trustee was amenable to and was carrying out their instructions, there
● There must be some power of administration other than a mere duty to being no reason for them to think otherwise.
perform a contract although contract is for a third-party beneficiary. ○ This prevented trustors-beneficiaries from early on taking action to
○ Declaration of terms is essential, and these must be stated with discharge unwilling trustee & appointing a new one, or effect transfer of
reasonable certainty in order that trustee may administer, and that the deposit into an interest-bearing account.
court, if called upon so to do, may enforce, the trust. ○ The result was that the trustors-beneficiaries, Transocean & Repacom,
● All the elements of trust are present. suffered loss of interest income on the dollar balance.
● Upon being furnished a copy of PCA, Rizal undoubtedly became aware that ■ Such could have been prevented had Rizal acted promptly & in
Transocean & Repacom to said agreement considered it as their trustee in good faith by communicating real intentions to trustors.
respect of said dollar balance ● Leaving enormous Dollar amount (insurance balance) in a non-interest
○ Rizal didn’t manifest objection, but proceeded to accept role & bearing bank account for an extended period (1yr. 9mos) would undoubtedly
responsibility as trustee by implementing PCA; never committed any act prejudice owners of funds, & would have resulted to immense benefit of
amounting to trustee’s unequivocal repudiation. Prudential Bank (Rizal’s sister company), which beyond shadow of a doubt
LSR didn’t preclude joint insured from claiming accrued interest. must have earned income thereon by utilizing & relending it without paying
● Rizal gives undue importance to LSR signed by Transocean & Repacom in any interest.
an effort to absolve itself from liability. ○ Grossly unfair for anyone to earn income on another’s money & still
● Transocean & Repacom released Rizal only from liabilities arising from refuse to share part of that income with the latter.
insurance policies issued, (principal amount) but ​not to the accrued interest ○ Whether Rizal benefitted directly/indirectly by enabling its sister
which stemmed from its refusal to deposit disputed dollar portion in violation company to earn income on the dollar balance, is immaterial.
of its duty as a trustee to deposit the same under the terms most ○ Rizal’s violation of its duty as trustee was at Transocean’s expense &
advantageous to Transocean & Repacom. for the ultimate benefit of Rizal or its stockholders.
● Rizal was subrogated to rights from insurance contract but not to those
which arise from trust relationship.
● At most, LSR’s signing was a valid pre-condition before Rizal could be
compelled to turn over whole insurance proceeds to two insured.
● Thus, Rizal reiterated offer to pay balance provided Transocean signs LSR.
But this was done only on 10/10/1977.
Rizal Liable for interests on dollar balance
● Rizal only agreed to receive & deposit proceeds under its name to
Transocean & Repacom’s account in a non-interest bearing account.
○ As trustee Rizal could’ve easily discharged obligation ​by simply
transferring & paying dollar balance to Transocean & Repacom & by so
doing, would have dissolved the trust.
● When ​trustors instructed Rizal as trustee to deposit funds in an
interest-bearing account, Rizal ought, as ordinary common sense and
common decency, to have at ​least informed the insured that it couldn’t​, for
whatever reason, carry out said instructions.
● This is the very least it could have done if indeed it wanted to repudiate its
role as trustee or be relieved of its obligations as such. Instead of doing thus,
petitioner chose to remain silent.
● After receipt of Transocean & Repacom’s letter requesting to remit dollar
balance to an interest-bearing acct., Rizal merely tendered payment of said
dollar balance in exchange for signed LSR.
○ This falls short of requirement to inform trustor-beneficiaries of Rizal’s
refusal/inability to comply with said request/instruction.

13
GOVERNMENT v ABADILLA - VILLAMOR ● It is clear that the testator proposed to create a trust for the benefit of
the secondary school to be established in the town of Tayabas, naming
Petitioners: ​Government of the Philippine Islands as trustee the ayuntamiento or if there be no such, the civil governor of
Respondents: ​Anastacia Abadilla et. al., Municipality of Tayabas et. al., Maria the province.
Palad et. al. ● The Governor of Tayabas, as the successor of the Civil Governor under
the Spanish period, is the trustee in the case at bar.
DOCTRINE: ​In order that a trust may become effective there must, of course, ● In private trusts, it is not always necessary that the ​cestui que trust
be a trustee and a ​cestui que trust.​ In regard to private trusts it is not always be named or even be in esse2 at the time the trust is created in his
necessary the ​cestui que trust ​should be named, or even be ​in esse (in actual favor. In charitable trusts, the rule is further relaxed.
existence) ​at the time the trust is created in his favor. In charitable trusts such ● If the trustee holds the legal title and the devise is valid, the natural heirs
as the one here under discussion, the rule is still further relaxed. of the deceased have no remaining interest in the land except their right
FACTS: to The reversion in case the devise for some reason should fail, an
25) In 1982, A holographic will by executed by Luis Palad where he granted event which has not yet taken place.
his wife, Dorotea Lopez, the right to use and possess a coconut land up ● It seems quite evident that the intention of Palad was to have the
until the day she dies or remarries. Upon his wife’s death or remarriage, income of the property accumulate for the benefit of the proposed
the land shall be donated to a secondary school in Tayabas. It is school until it is established.
stipulated in the will that in the event that his wife remarries or dies, the
will shall be delivered to the ​Ayuntamiento o ​ f Tayabas, should there be DISPOSITION: ​The judgment appealed from is affirmed in regard to lots Nos.
any or to the civil governor of the province in order to cause the 3464 and 3469 and is reversed as to lot No. 3470, and it is ordered that said lot
manager thereof to comply with Palad’s wishes for the good of many No. 3470, be registered in the name of the claimant Dorotea Lopez. No costs will
and the welfare of the town. be allowed. So ordered.
26) After the death of Palad, Dorotea remained in possession of the land. In
1900, Dorotea married Calixto Dolendo. 3 years after, the collateral
heirs of Palad brought an action against Dorotea for the partition of the
lands on the ground that by reason of her second marriage, she had lost
the right to the exclusive use and possession of the lands.
27) During the pendency of the action, an agreement was arrived at
whereby the parties resolved to turn over Lot Nos. 3464 and 3469 to the
municipality as its share and the remaining portion of the land, Lot No.
3470 was left in the possession of Dorotea.
28) The collateral heirs, however, are contending that the trust instituted in
the will was ineffective because in order for a trust to become effective,
there must be a trustee and a cestui que trust1. The heirs are claiming
that there is neither in this case because there is no ayuntamiento,
gobernador civil and no secondary school in Tayabas

ISSUE:
● W/N the trust instituted in the will was effective

RATIO:
● Yes. The court ruled that testamentary dispositions must be liberally
construed as to give effect to the intention of the testators revealed by
the will itself.

1
​He who has a right to a beneficial interest in and out of an estate the
2
legal title to which is vested in another. In actual existence
14

DBP v. CoA
PETITIONER​: Development Bank of the Philippines
RESPONDENTS​: Commission on Audi​t
DOCTRINE: ​The principal ​and income of the fund constitute the subject
matter of the trust where the government establishes a gratuity plan for its
officers and employees and appoints trustees for the fund whereby the trust
agreement transferred legal title over the income and properties of the Gratuity
Plan Fund.
FACTS:
● DBP during this time was a government financial institution. COA is
consti body with mandate to audit all government funds.
● DBP Board of Governors adopted Resolution No. 794 creating the DBP
Gratuity Plan authorizing the setting up of a retirement fund to cover the
benefits due to DBP retiring official and employees under CA 186. The
Gratuity Plan covered all employees of the Bank as of May 31, 1977
under a trust agreement.
● A Trust Indenture was entered into by and between the DBP and the
Board of Trustees of the Gratuity Plan Fund. DBP Invested in the GPF
Board the control and administration of the Fund. GPF Board (trustee)
subsequently appointed DBP Trust Services Department (DBP TSD) as
the investment manager through an Investment Management
Agreement.
● DBP established a Special Loan Program and funded placements from
the GP. The SLP was adopted as part of benefit program of the bank to
basically provide financial assistance to qualified members to enhance
the value of their gratuity.
● DBP TSD paid to the investor-members a total of 11M. The payments
were then disallowed by the Auditor (CoA) under an Audit Observation
Memorandum.
● Apart from requiring the recipients of the 11M to refund their dividends,
the Auditor recommended that the DBP record in its books as
miscellaneous income the income of the Gratuity Plan Fund (Fund).
● Note that: the Fund is still owned by the Bank, the Board of Trustees is
a mere administrator of the Fund in the same way that the Trust
Services Department where the fund was invested was a mere investor
and neither can the employees, who have still an inchoate interest in the
Fund be considered as rightful owner of the Fund.
● The COA alleges that DBP is the actual owner of the Fund and its
income:
(1) DBP made the contributions to the Fund
(2) the trustees of the Fund are merely administrators
(3) DBP employees only have an inchoate right to the Fund
● The DBP counters that the Fund is the subject of a trust, and the
Gratuity Plan transferred legal title over the Fund to the trustees. The
income of the Fund does not accrue to DBP. Therefore, such income
should not be recorded in DBPs books of account.
ISSUE​: W/N the income of the Gratuity Plan Fund is income of DBP? NO.
HELD​:
● The agreement created was an express trust, specifically, an
employees trust. An employees trust is a trust maintained by an
employer to provide retirement, pension or other benefits to its
employees.
● A trust is a fiduciary relationship with respect to property which involves
the existence of equitable duties imposed upon the holder of the title to
the property to deal with it for the benefit of another. A trust is either
express or implied. Express trusts are those which the direct and
positive acts of the parties create, by some writing or deed, or will, or by
words evincing an intention to create a trust.
● In the DBP Resolution, it shows that DBP intended to establish a trust
fund to cover the retirement benefits of certain employees under
Republic Act No. 1616 (RA 1616). The principal and income of the Fund
would be separate and distinct from the funds of DBP.
● DBP, as the trustor, vested in the trustees of the Fund legal title over the
Fund as well as control over the investment of the money and assets of
the Fund. The powers and duties granted to the trustees of the Fund
under the Agreement were plainly more than just administrative.
● The trustees received and collected any income and profit derived from
the Fund, and they maintained separate books of account for this
purpose. The principal and income of the Fund will not revert to DBP
even if the trust is subsequently modified or terminated.
● The resumption of the SLP did not eliminate the trust or terminate the
transfer of legal title to the Funds trustees. The DBP Board only
confirmed the approval of the SLP by the Funds trustees.
● The beneficiaries or cestui que trust of the Fund are the DBP officials
and employees who will retire under Commonwealth Act No. 186 (CA
186), as amended by RA 1616. RA 1616 requires the employer agency
or government instrumentality to pay for the retirement gratuity of its
employees who rendered service for the required number of years. The
Government Service Insurance System Act of 1997 still allows
retirement under RA 1616 for certain employees.
● Furthermore, the right of the employees to claim their gratuities from the
Fund is still inchoate. Law does not allow employees to receive their
gratuities until they retire. However, this does not invalidate the trust
created by DBP or the concomitant transfer of legal title to the trustees.
● The GSIS Act of 1997 extended the option to retire under RA 16163 only
to employees who had entered government service before 1 June 1977.
The DBP employees who were in the service before this date are easily
3
The amended CA 186.
15
 identifiable. As of the time DBP filed the instant petition, DBP estimated
that 530 of its employees could still retire under RA 1616. At least 60
DBP employees had already received their gratuities under the Fund.
● The trust agreement indisputably transferred legal title over the income
and properties of the Fund to the Funds trustees. COA’s directive to
record the income of the Fund in DBPs books of account as the
miscellaneous income of DBP constitutes grave abuse of discretion.
○ The income of the Fund does not form part of the revenues or
profits of DBP, and DBP may not use such income for its own
benefit.
○ The principal and income of the Fund together constitute the
res or subject matter of the trust. The Agreement established
the Fund precisely so that it would eventually be sufficient to
pay for the retirement benefits of DBP employees under RA
1616 without additional outlay from DBP.
○ COA itself acknowledged the authority of DBP to set up the
Fund. However, COAs subsequent directive would divest the
Fund of income, and defeat the purpose for the Funds
creation.
● Trust, in summary: One person has an equitable ownership in the
property while another person owns the legal title to such property, the
equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter.

16
CHU, JR V CAPARAS - ZABALA
Petitioners: RICARDO CHU, JR. and DY KOKENG​.
Respondents: MELANIA CAPARA.S and SPOUSES RUEL and
HERMENEGILDA
DOCTRINE: ​A trust by operation of law is the right to the beneficial enjoyment
of a property whose legal title is vested in another. A trust presumes the
existence of a conflict involving one and the same property between two
parties, one having the rightful ownership and the other holding the legal title.
There is no trust created when the property owned by one party is separate
and distinct from that which has been registered in another’s name.
Facts:
1. At the root of the case is a parcel of land with an area of 26,151 square meters
(subject property) located in Silang, Cavite, originally owned and registered in the
name of Miguela Reyes.
2. The petitioners’ evidence showed that the subject property was previously part
of the 51k-square meter tract of land owned by Miguela. Miguela sold to Caparas
half of the said land, specifically the ​eastern portion thereof​. Miguela retained
for herself the western part.
● The sale was evidenced by a “Kasulatan ng Tuluyang Bilihan ng Lupa"
3. More than 14 years later, Caparas caused the preparation of a consolidated
survey plan under her name for several parcels of land located at
Silang-Carmona, Cavite.
● Under the Caparas survey plan, the parcel of land supposedly retained
by Miguela (the western part) was erroneously transferred to the
eastern portion of the original 51k-square meter tract of land.
● As a result of the error, the subject property was included in the
consolidated parcels of land owned by Caparas. The petitioners
asserted that Caparas admitted the wrongful inclusion of the subject
property owned a "Sinumpaang Salaysay ng Pagpapatotoo."
4. Thereafter, Caparas sold to the spouses Perez the consolidated parcels of
land in a deed entitled "Kasulatan ng Bilihang Tuluyan", allegedly including the
erroneously included land of Miguela.
5. Miguela then sold the subject property to the petitioners for which they secured
a tax declaration.
● Considering the alleged error in the Caparas survey plan, the petitioners
demanded the reconveyance of the subject property from Caparas and
the spouses Perez, who refused to reconvey the subject property.
6. The RTC ruled initially ruled in petitioners’ favor but refused to approve, for
lack of authority, the new survey plan for the subject property that the petitioners
submitted. However, on motion of the Sps Perez, it set aside its earlier decision
and dismissed the complaint.
● ​The RTC found that Chu, one of the petitioners, admitted during
cross-examination that the parcel of land sold to them was different from
the subject property.
7. The dismissal was affirmed by the CA.
8. In the instant case, the petitioners assert that the CA disregarded the
evidence of Caparas’ "Sinumpaang Salaysay ng Pagpapatotoo"on Miguela’s
ownership of the subject property and Caparas’ admission that she was merely a
trustee thereof. The petitioners also assert that the CA should have also
considered that the spouses Perez, as Caparas’ successors-in-interest, are also
trustees in the subject property.
Issues:
1. whether the parcel of land sold to the petitioners is the subject property
included in the consolidated parcels of land sold to the spouses Perez.
2. whether or not Caparas held the western part of Miguela’s land in trust
Held: NO (for both)
1. ​There was no enroachment​ for the ff reasons:
First, the records undoubtedly established that the subject property was not the
parcel of land that the petitioners purchased from Miguela.
● We note that the Caparas survey plan was used in identifying the
property purchased by the petitioners from Miguela. The deed of sale
between them showed what the petitioners purchased from Miguela
referred to another parcel of land designated as Lot No. 3 in the
Caparas survey plan, while the subject property (western part) was
designated as Lot No. 1 of the same plan.
Significantly, Chu also admitted that the parcel of land they purchased from
Miguela was different from the subject property.
The following pieces of evidence adduced by the petitioners also support the
above conclusion:
1. Deed of Absolute Sale between Miguela and the petitioners which
described the parcel of land sold by Miguela to the petitioners as Lot
No. 3
2. The tax declaration under Miguela’s name for the year 1996
involving Lot No. 3
3. The tax declaration under the petitioners’ name for the year 1996
likewise covering Lot No.
In contrast with these pieces of evidence, the spouses Perez’s Original
Certificate of Title covering the subject property and their actual occupation of
this property since 1991 duly established their ownership of this property. Clearly
then, there was no encroachment by the spouses Perez since they were the
owners of the subject property.
2. We also see no trust, express or implied, created between the petitioners
and the spouses Perez over the subject property.
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 ​A trust by operation of law is the right to the beneficial enjoyment of a property
whose legal title is vested in another. A trust presumes the existence of a conflict
involving one and the same property between two parties, one having the rightful
ownership and the other holding the legal title.
· ​There is no trust created when the property owned by one party is
separate and distinct from that which has been registered in another’s
name.

In this case, the Caparas survey plan and the deed of sale between the
petitioners and Miguela showed that the parcel of land sold to the petitioners is
distinct from the consolidated parcels of land sold by Caparas to the spouses
Perez.

Although we are aware of an apparent discrepancy between the boundary

description of the parcel of land described in the 2"Kasulatan ng Tuluyang Bilihan
ng Lupa" executed between the several parties, on the one hand, and the
boundary description of the consolidated parcels of land stated in the Caparas
survey plan and the spouses Perez’s title on the other hand, we find the
discrepancy more imagined than real.
· ​This perceived discrepancy does not help the petitioners’ cause in
light of the evidence that the deed of sale between the petitioners and
Miguela used the Caparas survey plan that clearly identified the parcel
of land sold to them was different from the subject property.

Another perspective, too, that must be considered is Miguela’s act in selling to

the petitioners Lot No. 3 using the Caparas survey plan, which can be regarded
as a ratification of any perceived error under the circumstances.

WHEREFORE, in view of these considerations, we hereby DENY the

petition and accordingly AFFIRM the decision dated August 7, 2006 and the
resolution dated November 8, 2006 of the Court of Appeals in CA-G.R. CV
No. 67243.Costs against the petitioners.

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