TRUST CASE DIGESTS

AGENCY, PARTNERSHIP AND TRUST

AIANNA BIANCA P. BIRAO
Table of Contents
Salao v. Salao, G.R. No. L-26699, [March 16, 1976], 162 PHIL 89-120.........................................................3
De Leon v. Molo-Peckson, G.R. No. L-17809, [December 29, 1962], 116 PHIL 1267-1276..........................5
Araneta v. Perez, G.R. No. L-26117, [July 17, 1980], 187 PHIL 382-389)......................................................6
Mindanao Development Authority v. Court of Appeals, G.R. No. L-49087, [April 5, 1982], 198 PHIL 809-
831...............................................................................................................................................................7
Roa, Jr. v. Court of Appeals, G.R. No. L-27294, [June 28, 1983], 208 PHIL 2-16...........................................9
Perez v. Araneta, G.R. No. L-18414, [July 15, 1968], 133 PHIL 35-43.........................................................12
Policarpio v. Court of Appeals, G.R. No. 94563, [March 5, 1991], 272 PHIL 570-585.................................13
Heirs of Yap v. Court of Appeals, G.R. No. 133047, [August 17, 1999], 371 PHIL 523-533........................15
Muller v. Muller, G.R. No. 149615, [August 29, 2006], 531 PHIL 460-470.................................................16
Heirs of Labanon v. Heirs of Labanon, G.R. No. 160711, [August 14, 2007], 556 PHIL 750-764................17
Soledad Cañezo vs. Concepcion Rojas (G.R. No. 148788, November 23, 2007).........................................19
Estate of Grimm v. Estate of Parsons, G.R. No. 159810, [October 9, 2006], 535 PHIL 68-95.....................21
Goyanko, Jr. v. United Coconut Planters Bank, G.R. No. 179096, [February 6, 2013], 703 PHIL 76-90......22
Morales vs. Court of Appeals, GR No. 117228, June 19, 1997...................................................................24
Cuaycong v. Cuaycong, G.R. No. L-21616, [December 11, 1967], 129 PHIL 439-445.................................26
Sinaon vs. Sorongon, 136 SCRA 407..........................................................................................................27
O'Laco v. Chit, G.R. No. 58010, [March 31, 1993.......................................................................................28
Special Services Corporation vs. Centro La Paz, 121 SCRA 748..................................................................30
Chiao Liong Tan vs. Court of Appeals, 46 SCAD 435, 228 SCRA 75.............................................................32
Homena v. Casa, G.R. No. L-32749, [January 22, 1988], 241 PHIL 240-242...............................................33
Heirs of Candelaria v. Romero, G.R. No. L-12149, [September 30, 1960], 109 PHIL 500-504....................34
Philippine National Bank v. Court of Appeals, G.R. No. 97995, [January 21, 1993], 291 PHIL 356-369.....35
Iglesia Filipina Independiente vs. Heirs of Bernardino Taeza ,G.R. No. 179597, February 03, 2014..........38
Tong vs. Go Tiat Kun 722 SCRA 623...........................................................................................................39
DOLORES CAMPOS v. DOMINADOR ORTEGA, SR. and JAMES SILOS. G.R. No. 171286; June 2, 2014)......41
G.R. No. 182908 August 6, 2014 HEIRS OF FRANCISCO I. NARVASA, SR vs. IMBORNAL............................44
Chu, Jr. vs. Caparas, 696 SCRA 324............................................................................................................46
SIME DARBY PILIPINAS, INC., v. JESUS B. MENDOZA, G.R. NO. 202247, June 19, 2013.............................47
SPOUSES CELSO DICO, SR. AND ANGELES DICO, vs. VIZCAYA MANAGEMENT CORPORATION, G.R. No.
161211, July 17, 2013................................................................................................................................49
SPOUSES JOSE BEJOC and JOVITA CAPUTOL BEJOC vs. PRIMA CALDERON CABREROS and COURT OF
APPEALS, G.R. No. 145849. July 22, 2005..................................................................................................51
Heirs of TranquilinoLabiste, et.al. v. Heirs of Jose Labiste, et.al., G.R. No. 162033; May 8, 2009..............52
LOPEZ v. CA G.R. No. 157784 December 16, 2008December 16, 2008.....................................................54
VDA. DE ESCONDE vs. CA, G.R. No. 103635 February 1, 1996...................................................................56

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ISAAC, SEVERINO, MARIA, TELESFORA, FELISA, SERAPIO, SIMEON and MACARIA all surnamed PANGAN
vs. COURT OF APPEALS and TEODORA GARCIA, G.R. No. L-39299 October 18, 1988................................57
JOVITA YAP ANCOG, and GREGORIO YAP, JR. v. COURT OF APPEALS, ROSARIO DIEZ, and CARIDAD YAP,
G.R. No. 112260, June 30, 1997.................................................................................................................58
BERNARDO DE LOS SANTOS vs. FAUSTINO B. REYES, THE HON. COURT OF APPEALS and SPOUSES
BENJAMIN DIESTRO and AIDA LAGAREJOS, G.R. No. L-45027 January 27, 1992.......................................61
EPIFANIA MAGALLON vs. HON. ROSALINA L. MONTEJO, G.R. No. 73733 December 16, 1986..................62
JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No. 196023 , April 21, 2014................................64
MANUEL L. BAUTISTA, vs MARGARITO L. BAUTISTA, G.R. No. 202088 March 8, 2017.............................67
JOSE FERNANDO, JR. vs. LEON ACUNA, G.R. No. 161030 September 14, 2011.........................................69
ESTRELLA TIONGCO YARED (DECEASED) SUBSTITUTED BY CARMEN M. TIONGCO A.K.A. CARMEN
MATILDE B. TIONGCO, VS. JOSE B. TIONGCO AND ANTONIO G. DORONILA, JR., G.R. No. 161360, October
19, 2011.....................................................................................................................................................72
HEIRS OF TIMOTEO MORENO vs. MACTAN - CEBU INTERNATIONAL AIRPORT AUTHORITY, G. R. No.
156273 - October 15, 2003........................................................................................................................74
SIME DARBY PILIPINAS, INC., Petitioner, v. JESUS B. MENDOZA, Respondent, G.R. NO. 202247, June 19,
2013...........................................................................................................................................................76
TORBELA v. ROSARIO, G.R. No. 140528, December 7, 2011......................................................................78

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Salao v. Salao, G.R. No. L-26699, [March 16, 1976], 162 PHIL 89-120

FACTS: The question of ownership over the Calunuran fishpond, with an area of 47
hectares, located in that part of Lubao which later became a part of Bataan, and
one of the several properties left by the parties predecessors, has given rise to the
present controversy. Plaintiffs' version is that Juan Y. Salao, Jr., his sister Alejandra
and Ambrosia and their nephew Valentin Salao were engaged by joint venture in
the fishpond business; that the funds used by them were earnings of the properties
supposedly inherited from their father, and that these earnings were used in the
acquisition of the Calunuran fishpond. On the other hand, the defendants contend
that the fishpond in question consisted of lands purchased by Juan Y. Salao, Sr.,
and Ambrosia Salao who had secured a Torrens Title for the Calunuran fishpond in
1911 and who exercised dominical rights over it to the exclusion of their nephew
Valentin Salao.

The property was sold a retro and later redeemed. Since then, several of the
parties have died and their estates partitioned and thereafter, interest over the
fishpond has been the bone of contention — whether or not the same was held in
trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao and whether the
property can still be subject to an action for reconveyance.

Plaintiffs filed their original complaint in the CFI of Bataan against defendants,
asking for the annulment of the donation to Juan S. Salao of a share in the fishpond
and for reconveyance to them of the property as Valentin Salao's supposed 1/3
share in the 145 hectares of the fishpond registered in the name of Juan Y. Salao,
Sr. and Ambrosia Salao.

Juan S. Salao, Jr., in his answer with counterclaim, 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. Upon his death, he was substituted
by his widow, children and the administrator of his estate, the now defendants.

The trial court found that there was no community of property among Juan Salao,
Sr., Ambrosia Salao and Valentin Salao when the Calunuran lands were acquired;
that a co-ownership over the real properties of Valentina Ignacio existed among her
heirs 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
3 children and grandson, Valentin Salao. If further held that the donation was
validly executed.

Both parties appealed, the plaintiffs, because their action for reconveyance was
dismissed, and the defendants, because their counterclaim for damages was
likewise dismissed. The Court of Appeals elevated the case to the Supreme Court as
the amount involved exceeded P200,000.00.

ISSUE: WON plaintiffs’ action is "to enforce a trust which defendant" Juan S. Salao,
Jr. allegedly violated.

RULING: 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. A person who establishes a trust is called the trustor; one in
whom confidence is reposed as regards the property for the benefit of the another
person is known as the trustee; and the person for whose benefit the trust has
been created is referred to as the beneficiary. There is a fiduciary relation between
the trustee and the cestui que trust as regards certain property, real, personal,
money or chooses in action.

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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. A person who establishes a trust is called the trustor; one in whom
confidence is reposed as regards the property for the benefit of the another person
is known as the trustee; and the person for whose benefit the trust has been
created is referred to as the beneficiary. There is a fiduciary relation between the
trustee and the cestui que trust as regards certain property, real, personal, money
or chooses in action.

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 (89 C. J. S.725). 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 contradistinguished from a
resulting trust, a constructive trust is "a trust not created by any words, either
expressly or impliedly evincing a direct intention to create a trust, but by the
constructions of equity in order to satisfy the demands of justice." It does not arise
"by agreement or intention, but by operation of law."

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 Art. 1443 of the Civil Code are peremptory and unmistakable;
parol evidence cannot be used to prove an express trust concerning realty. 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.

Article 1457 of the Civil Code 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.

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 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 as being held in trust by the heirs of Juan Y. Salao, Sr. for the
heirs of Valentin Salao.

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 years.
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 bears from the date of registration. The
plaintiffs and their predessor-in-interest, Valentin Salao slept on their rights, if they
had any rigths at all.

Where the Court has reached the conclusion that the plaintiffs are not entitled to
the reconveyance of the Calunuran fishpond, it is no longer necessary to pass upon
the validity of the donation made by Ambrosia Salao to Juan S. Salao, Jr. of her
half-share in the two fishponds. Plaintiffs have no right and personality to assail
that donation.

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De Leon v. Molo-Peckson, G.R. No. L-17809, [December 29, 1962], 116
PHIL 1267-1276

FACTS: 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 parcels 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 donate the properties to plaintiffs for which reason they executed on August 9,
1956 a document revoking said donation which was acknowledged before Notary
Public Leoncio C. Jimenez.

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 of plaintiffs as beneficiaries.

ISSUE: WON a trust was established.

RULING: The document in question, wherein the appellants agreed to sell to the
appellees the lots at a nominal price of P1.00 per lot, represents a recognition of a
pre-existing trust or a declaration of an express trust, based on the provision in the
donor's will to the effect that the titles to the land should be conveyed to appellants
with the duty to hold them in trust for the appellees.

The requirement that to establish a trust the proof must be clear, satisfactory and
convincing, is sufficiently complied with by the document in question, which clearly
and unequivocally declares the existence of the trust even if the same was
executed subsequent to the death of the trustor.

In the absence of any reservation of the power to revoke, a voluntary trust is

irrevocable without the consent of the beneficiary.

An express trust constituted before the effectivity of the new Civil Code shall be
governed by the Civil Code of 1889 and other laws and authorities on the matter,
although the instrument recognizing and declaring such trust was executed after
the effectivity of said Code.

It is the duty of a trustee to deliver the property in trust to the cestui que trust free
from all liens and encumbrances.

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Araneta v. Perez, G.R. No. L-26117, [July 17, 1980], 187 PHIL 382-389)

FACTS: 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 abovestated. 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 23, 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 where ms case was docketed as Civil Case No. 50706
and where he filed an amended complaint against Araneta.

Soon after this Court had remanded the records of the cases above-mentioned to
the court below, or on August 24, 1965, Araneta filed with the court a quo a motion
for execution in Civil Case No. 50707 along with a bill of costs; and the motion for
execution aforesaid was granted by the lower court in an order dated September
21, 1965, notwithstanding the opposition thereto filed by Perez. The latter's motion
for reconsideration of that order was denied in an order issued by the same court
on October 13, 1965. Still later, however, upon certain allegations made by Perez in
a subsequent motion and manifestation, the court below reconsidered the orders

6
above-mentioned and, in an order dated December 6, 1965, it denied, in effect, the
motion for execution it had previously granted.

ISSUE: WON the lower court had acted with grave abuse of discretion.

RULING: There can be no dispute that the judgment of the court a quo, the
execution of which is sought by petitioner Araneta, has become final and executory
after the same was affirmed with modifications by this Court. Ordinarily, petitioner
should be entitled to its execution, as in fact, the court below did so direct in its
order of September 21, 1965. It cannot be denied, however, that upon motion and
manifestation of respondent Perez, the lower court was apprised of the fact that the
guardianship court had authorized Perez - as guardian of his daughter Angela
Tuason who is the beneficiary of a trust estate administered by petitioner Araneta
as trustee - to assign in favor of petitioner the amount of P3,700.00, and of the
additional fact that respondent Perez had likewise deposited with the Clerk of Court
concerned, the amount of P1,472.38 which Perez claims to be the balance of the
obligation then owing to petitioner under the judgment sought to be executed. It
follows, therefore, that the order directing issuance of a writ of execution it had
previously issued was no longer necessary, and, accordingly, it changed the tenor
of the order referred to in its subsequent order of December 6, 1965, and directed
petitioner, instead, to credit to himself the sum of P3,700.00 as ordered by the
guardianship court, plus the P1,479.74 deposited with the Clerk of Court which he
was authorized to withdraw anytime. Accordingly, it is quite clear that the trial
court did nothing more than to make its actuation vis-a-vis the execution prayed for
by petitioner conformable to the facts, law and justice by declaring in the light of
the incontrovertible facts before him that to issue a writ of execution in the manner
prayed for by petitioner was a superfluity, since by merely crediting to himself
(petitioner) the check of P3,441.52 and withdrawing from the Clerk of Court the
P1,472.38 deposited by private respondent, there would be a full satisfaction
already of the judgment sought to be executed.

All other points raised in the petition are too insubstantial in amount and
importance to require any ruling from this Court, taking into account the
relationship between and the respective well known means of the parties. Any small
differences in amounts and the necessity of renewing the check in question should
be duly attended to by them without having to bother the courts any further, as
long as the tenor of the foregoing opinion is substantially observed.

Mindanao Development Authority v. Court of Appeals, G.R. No. L-49087,

[April 5, 1982], 198 PHIL 809-831

FACTS: On February 25, 1939, Ang Bansing, owner of a large tract of land in
Davao City, sold portion thereof to Cruz. Their contract stipulated that Ang Bansing
would work for the titling of the entire area of his land at hit expense, while the
vendee would spend for the titling of the portion sold to him. After the cadastral
survey, where the portion sold to Cruz was designated as Lot 1846-C and the
portion remaining with Ang Bansing was designated as Lots 1846-A, 1846-B, 1846-
D, and 1846-E, Cruz sold Lot 1846-C to the Commonwealth of the Philippines.
Thereafter, pursuant to a decree of registration, Original Certificate of Title No. 26,
covering the entire area, including the lot sold to Cruz, was issued on March 7,
1941 in the names of the original claimants in the cadastral proceedings. This OCT
was however canceled on March 31, 1941 per Deed of Adjudication in favor of Ang
Bansing for which he was issued a transfer certificate of title. Later, on various

7
dates, Ang Bansing also sold Lot 1846-A, portions of Lot 1846-B, and Lot 1846-D to
Cruz and the Transfer Certificate of Title corresponding to the said lots in the name
of Ang Bansing were canceled and new ones issued in the name of Cruz. Transfer
Certificate of Title No. 2601 was issued in the name of Ang Bansing for the
remaining lots, including Lot 1846-C. On February 25, 1965, pursuant to
Presidential Proclamation 459, government ownership of certain parcels of land in
Davao City were transferred to the Mindanao Development Authority (MDA), among
which was Lot 1846-C. MDA accordingly requested Ang Bansing to surrender his
owner's duplicate of TCT 2601 for registration of the government's ownership over
Lot 1846-C, but he refused. MDA thus filed a suit for reconveyance on April 11,
1969, claiming that Ang Bansing acted as trustee for Cruz when he worked for the
titling of the entire tract of land as per their contract. The trial court found the
existence of an express trust and ordered the reconveyance of the subject lot to
MDA. On appeal, however, the Court of Appeals found no express trust and
dismissed the complaint.

ISSUE: WON the 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.

RULING: 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 the property and make himself the trustee of
the property for the benefit of another.

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, 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."

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.

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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.

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 Bansing 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.

Such 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. in the names of Victoriana Ang Bansing, Orfelina
Ang Bansing, and Francisco Ang Bansing. 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.

Roa, Jr. v. Court of Appeals, G.R. No. L-27294, [June 28, 1983], 208 PHIL 2-
16

FACTS: 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

9
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.

ISSUE: WON the compromise agreement, at the least gave rise to an implied trust.

RULING: 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 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.

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 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 1441, 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 P400.00. It seems clear so Us
that the Roas under the compromise agreement did not commit themselves to hold
the lot claimed by Pablo Valdehuesa or Pablo Valdehuesa and in Pablo Valdehuesa's
name.

10
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 Article 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.

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 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. 121. pp. 446-447).

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. 21, Sec. 222, p.
447).

Pablo Valdehuesa and his heirs remained in possession of the property in question
in 1925 when by reason 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 September 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.

11
Perez v. Araneta, G.R. No. L-18414, [July 15, 1968], 133 PHIL 35-43

FACTS: Rebuffed in this attempt to oust as trustee, appellee J. Antonio Araneta,

not the first of its kind either, appellant-guardian Antonio M. Perez of the minors,
his children, Benigno, Angela and Antonio Perez y Tuason, filed this appeal from the
order of the lower court dated October 31, 1960, dismissing his petition to remove
such trustee. The charges and the evidence relied upon to substantiate them were
discussed fully in that order. The lower court took particular pains to inquire into
each alleged grievance. Reference to its appraisal of the matter will thus prove
helpful. It will place things in their proper perspective and explain why the appeal
cannot prosper.

The first charge, according to the appealed order, imputed to the trustee the
withholding of "the allowances due the beneficiaries for October, November and
December, 1956.” According to the lower court the delay in payment is not
attributable to the trustee, and in any case cannot be said to have occurred
because he was withholding the allowances."

Neither was the second charge found meritorious. It attributed to an associate of

the trustee in the practice of the law the statement that if appellant-guardian
"would not withdraw his opposition to the trustee's investment in the Philippine-
American Drug Company shares, the trustee would charge to income of the trust
the amount of P30,120.95 which the trustee had been authorized to collect as
trustee's and attorney's fees." The lower court was not convinced about a remark of
that character having been made, or even if it were, that it was in fact authorized
by the trustee.

The third charge consisted in the trustee again failing to pay the allowances with
the end in view of coercing appellant-guardian to condone "the sale of the Marikina
property which the trustee had consummated and which had been previously
approved in the order of October 15, 1959." Again the lower court was
unimpressed, there being no proof "that the trustee refused to deliver the
allowances though he had enough funds in his possession for that purpose.

Appellant-guardian in the fourth charge contested trustee's investing in shares of

the Philippine-American Drug Co., Ramie Textiles, Inc. and International Textiles
Mills, Inc. alleged to be business enterprises of trustee's family as improper and
unwise as no dividends on said shares were forthcoming. There is merit in this
contention. Delayed payment of dividends alone is not decisive of the unprofitability
of an investment and certainly does not by itself establish the instability of the
enterprise concerned.

Appellant-guardian, in his fifth charge, questioned the trustee's acquisition of

Lepanto shares. Again, the evidence, according to the lower court, proved "that
Lepanto Consolidated Mining Co. is very sound and the trustee's accounts show that
the trusteeship has regularly earned substantial dividends out of said investment."

The sixth charge of non-cooperation against the trustee was dismissed by the lower
court as "palpably baseless because the data the trustee did not furnish him were
either those that the trustee was not bound to furnish him or those that should be
reported in the trustee's quarterly accounts.

After a full-discussion of the evidence, the lower court refused to believe the
seventh charge that the trustee was guilty "of deception and self-dealing on the
allegation that the trustee notified him of the sale of certain lots belonging to the

12
trust in favor of Caltex (Phil.) Inc. but subsequently sold them to the Insular Life
Assurance Co., Ltd. in which the trustee is substantially interested."

In the appealed order, the plea of appellant-guardian for the removal of the trustee
or, in the alternative, "to strip him of his power to sell, mortgage or otherwise
alienate or exercise any power of strict dominion unless with the unanimous
consent of the co-trustee" sought to be appointed in the event that removal is not
effected was denied "and the trustee [was] absolved of all the charges . . .
presented." Hence this appeal.

ISSUE: WON the lower court erred in absolving the trustee from the seven charges
filed.

RULING: The other assigned error to the effect that the failure to remove the
trustee or in the alternative to provide that he could no longer exercise his power to
sell, mortgage, alienate or for that matter any power of strict dominion without the
consent of such co-trustees as might be appointed is likewise untenable. With the
lower court carefully examining the changes preferred and thereafter absolving the
trustee, it logically follows that there is no justification for his removal or for
restricting his authority in the manner suggested. Moreover, what appellant-
guardian would want us to do is to substitute our own discretion on this particular
aspect of the case for that of the lower court. Such power we undoubtedly possess,
but we are not prepared to exercise considering all the attendant circumstances
which reveal the care and circumspection taken by the lower court.

The uppermost consideration should be the welfare of the minor beneficiaries, the
children of appellant guardian, for whom the trust was created. Certainly, as of this
time and after all these litigations, there is no requisite showing of the failure of the
trustee to live up to the exacting responsibility entrusted to him or his
subordination of the well-being of such minors to his own personal interest. The
exercise thereof of appellee should not be disturbed, 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. Such is not the situation obtaining in the
present case.

(Policarpio v. Court of Appeals, G.R. No. 116211, [March 7, 1997], 336

PHIL 329-343)

The facts of the case, as culled from the challenged Decision. are simple.
Petitioner (along with his co-plaintiffs in the antecedent cases, namely, Rodolfo
Gayatin, Jose Villacin and Jocelyn Montinola) 5 and private respondent were
former tenants of the 30-door Barretto Apartments formerly owned by Serapia
Realty, Inc. Sometime in April 1984, private respondent was elected President of
the Barretto Tenants Association (hereafter referred to as the "Association")
which was formed, among others, "to promote, safeguard and protect the general
interest and welfare of its members." 6
In a letter dated July 30, 1984, private respondent as president of the
Association sought the assistance of the then Minister of Human Settlements to
cause the expropriation of the subject property under the Urban Land Reform
Program for subsequent resale to its tenants. The matter was endorsed to the
Human Settlements Regulatory Commission, which in a letter dated November 5,
1984, signed by Commissioner and Chief Executive Officer Ernesto C. Mendiola,
rejected the tenant's request for expropriation. The letter stated in part: 7

13
 "At the moment, the effects of the provisions of PD 1517,
otherwise known as the Urban Land Reform Decree, are limited only to
the proclaimed 245 APD's and/or ULRZ's. Be informed further that,
pursuant to Rule VIII & IX of the Rules and Regulations of the
abovementioned Decree, expropriation will be availed of only as a last
resort as there are various modes of Land Acquisition/Disposition
techniques which the Ministry can avail of to help bonafide (sic)
tenants/residents of a certain area."
Failing to get the assistance of the government, the tenants undertook to
negotiate directly with the owners of the Barretto Apartments. Initially, Private
Respondent Rosito Uy orally expressed to Mrs. Rosita Barretto Ochoa the
tenants' desire to purchase their respective units. Later, in a letter dated May 29,
1985, signed by thirty (30) tenants of the commercial and residential units, the
tenants formally expressed to Mrs. Ochoa their intent to purchase.
On July 27, 1985, Serapia Real Estate, Inc., sent to Rosito Uy, in his
capacity as president of the Association, the following letter: 8
"Sir:
This is in response to your letter regarding your intent to buy our
property together with its improvements located at corners Haig and
Romualdez Streets and along Gen. Kalentong Street, Mandaluyong,
Metro Manila. We would like to inform you that we are offering to sell the
said property at a price of FOUR MILLION FIVE HUNDRED
THOUSAND (P4,500,000.00) PESOS ONLY, under the following Terms
and Conditions:
AREA:  2,237 square meters

Manner of
Payment:  An earnest money of
 P100,000.00 within 30 days.
 Full payment payable
 within 60 days.
This offer is on a 'FIRST COME FIRST SERVED BASIS' and our
price is good only within 60 days or until September 30, 1985 only.
Thank You."
In addition, Serapia Realty, Inc., sent to spouses Gayatin a mimeographed
letter stating: 9
"November 15, 1985
Mr./Mrs. Gayatin
SIR/MADAM:
Please be informed that we are intending to sell the unit you are
now occupying.
We are therefore giving you the first priority to purchase the
same, if you desire.
We are giving you a period of ten (10) days from receipt hereof to
see us(,) otherwise, we will consider your inaction a waiver in (sic) your
part to purchase the same.
Very truly yours,

14
 SERAFIA REALTY INC.
By: S/ Mrs. Rosa B. Ochoa
T/ Mrs. Rosa B. Ochoa
Kalentong Mandaluyong,
Metro Manila
(Authorize (sic) representative)"
On November 20, 1985, Rodolfo Gayatin acknowledged receipt of the said
letter with a request that he be furnished with the following information: 10

"a. Consideration of the sale;

"b. Terms and conditions of the sale; and
"c. Plan indicating the areas and boundaries of each unit."

Letters acknowledging receipt of Mrs. Ochoa's letter of intent to sell the

apartment unit occupied by the tenants were sent by Dionisio Enriquez and
Elena J. Bañares. The tenants designated and appointed private respondent as
their president to negotiate with Serapia Realty, Inc. But the negotiations
apparently did not ripen into a perfected sale.
One and a half years later, on March 12, 1987, petitioner and his co-
plaintiffs were notified that private respondent was the new owner of the
apartment units occupied by them. Believing that they had been betrayed by their
Association president, petitioner sued for "Redemption and Damages with Prayer
For Preliminary Injunction."
Private respondent counter-sued for Damages and Accion Publiciana with
Preliminary Attachment. Joint trial of the two cases ensued. The trial court found
that private respondent had been designated and entrusted by plaintiffs to
negotiate with the Barretto family for the sale of the units. It also found that a
constructive trust was created between the private respondent as "the cestui que
trust [should be trustee] and plaintiffs as beneficiaries [or cestuis que trust] vis-a-
vis the subject units." 11 The dispositive portion of the trial court decision reads: 12
"WHEREFORE, judgment is hereby rendered in the above-
entitled cases in favor of plaintiffs Rodolfo Gayatin, Jose Villacin, Jocelyn
Montinola and Meynardo Policarpio, and against defendant, Rosito
Puechi S. Uy, —
1. Ordering said defendant to execute the corresponding deeds of
conveyance in favor of plaintiffs Meynardo Policarpio, Jocelyn Montinola,
Jose Villacin and Rodolfo Gayatin covering Door 8, Lot 14; Door 3, Lot 9;
Door 2, Lot 9; and Door 1, Lot 9, upon refund by the plaintiffs to the
defendant of the sums of P35,200.00; P35,520.00; P35,600.00 and
P47,200.00 respectively, without any interest.
Should defendant Uy fail to so execute the deeds of conveyance
herein ordered within fifteen (15) days from finality of judgment, the Clerk
of this Court will execute the same and the Register of Deeds will be
ordered to nullify the certificates of title in the name of said defendant
and to issue other certificates of title in favor of the four above-named
plaintiffs, respectively; and to pay to the plaintiffs the following sums:
a) P15,000.00 as attorney's fees;
b) P40,000.00 as moral damages; and

c) P20,000.00 as exemplary damages,

15
 all with interest at 12% per annum from date of this decision;

2. Dismissing the Complaint in Civil Case No. 54444 as far as

defendant Serapia Real Estate Inc. is concerned;
3. Dismissing defendants' counterclaims in Civil Case No. 54444;
and
4. Dismissing Rosito Puechi Uy's complaint in Civil Case No.
55739.
Costs against defendant Uy."
Private respondent appealed the decision to public respondent which as
earlier stated reversed the decision and denied the subsequent motion for
reconsideration. Hence, this petition only by Meynardo Policarpio. His co-plaintiff
in the antecedent case, Jose Villacin, filed a Petition for Intervention 13 on March
28, 1995, which the First Division of this Court in a Resolution dated June 26,
1995, denied for lack of merit, because Villacin's earlier petition docketed as G.R.
No. 116137 Jose Villacin vs. Court of Appeals, et al.) had already been
dismissed for failure to attach an affidavit of service. 14 LibLex

The Issue

The sole issue raised by petitioner in this appeal is: 15

"The respondent Court erred in reversing the finding of the trial
court that a constructive trust existed between the plaintiffs and the
defendant."
Public respondent, in finding that a constructive trust had not been created,
ruled: 16
"The contemporary and subsequent acts of the parties herein fail
to convince Us that a constructive trust exists for the benefit of the
appellees (tenants). A reading of the Articles of Incorporation of Barretto
Apartment Tenants Association, Inc. (Exh. 'J') shows that the purpose for
its formation is couched in general terms without specifically stipulating
the proposed purchase and sale of the apartment units. While it may be
conceded that the sale to the tenants was a general concern that would
have redounded to their benefit, still it cannot be denied that the
transaction could not have been effected unless the tenants and the
owners came to terms regarding the sale. The record reveals that
appellant (herein private respondent) did in fact send several
communications, first to the Ministry of Human Settlements and when
this avenue did not prosper, to the Barretto family in an effort to pursue
their common desire to own their respective unit(s). The letter to the
Minister of Human Settlements is dated July 30, 1984 (Exh. 'J') about a
year before the execution of the Articles of Incorporation on 06 August
1985. Incidentally, no evidence appears on record to show that the
Association filed the requisite documents for incorporation with the
Securities and Exchange Commission.
The Deed of Absolute Sale in favor of appellant over appellees'
unit appear to have been executed on 05 August 1986 (Exhs. 'B' to 'F')
or about two (2) years after appellant was designated President of the
Association and approximately one (1) year after the Articles of
Incorporation were drawn up and signed by the parties. (Exhibit 'S')"

16
 Public respondent contended that plaintiffs were informed of the
negotiations for the purchase and sale of property. Further, public respondent
said:
"it appears incumbent upon the tenants to verify from time to time
on (sic) the progress of the negotiations not only from Mrs. Ochoa but
also from appellant who live (sic) in the same apartment complex. Their
inaction leads to the impression that they lacked interest to pursue their
original plan to purchase the property or they could not agree on the
terms and conditions for the sale." 17
Before us, petitioner argues that public respondent erred in stating that
"there was no common interest on the part of the members of the association to
purchase units they were occupying." 18 He also maintains that it is immaterial
whether the intent to buy the units was specifically stated in the purposes of the
Association. What is important is that the contemporary and subsequent acts of
parties indicated such a purpose." Petitioner insists that the tenants had
authorized and private respondent had agreed to negotiate with the owners
regarding the terms of the sale, precisely to conform to the desire of the owners
to deal with only one person. Petitioner vehemently denies that the co-tenants of
private respondent "had revoked or withdrawn the authority and trust reposed on
the private respondent to act as negotiator in their behalf." 19
Private respondent rebuts by saying that the entire property consisting of
thirty (30) doors was not sold on one particular date. Rather, there were actually
two batches of sale. He asserts that petitioner, in feigning ignorance of the two
batches of sale and suing private respondent, had created an alibi to suspend
payment of rental for years. 20
It should also be considered, states private respondent, that upon denial of
the tenants' request for expropriation by the Ministry of Human Settlements, and
the revelation that Barretto's apartments were heavily encumbered, tenants
"completely abandoned the plan to organize a formal association." Assuming for
the sake of argument, adds private respondent, that the informal Association
created a relationship among the parties, "the same ceased and expired by virtue
of the act of the owners of the apartment who directly deal with the tenants"
under Article 1924 21 of the Civil Code

RULING: CIVIL LAW; TRUSTS; CONSTRUCTIVE TRUST; PRIVATE

RESPONDENT WILLFULLY VIOLATED THE IMPLIED TRUST REPOSED IN
HIM BY HIS CO-TENANTS; THIS WARRANTS THE SANCTION PROVIDED BY
CONSTRUCTIVE TRUST UNDER ARTICLE 1447. — We hold that an implied
trust was created by the agreement between petitioner (and the other tenants) an
private respondent. Implied trusts are those which, without being expressed, are
deducible from the nature of the transaction by operation of law as matters of
equity, independently of the particular intention of the parties. Constructive trusts
are created in order to satisfy the demands of justice and prevent unjust
enrichment. They arise 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. It is not necessary that the intention of the
tenants to purchase their apartment units be categorically stated in the purposes
of their Association. A constructive trust as invoked by petitioner can be implied
from the nature of the transaction as a matter of equity, regardless of the
absence of such intention in the purposes of their Association. During his

17
negotiations with Serapia Realty, Inc., private respondent admitted that he was
not only representing himself but also the other tenants as president of the
Association. This admission recognized the confidence reposed in him by his co-
tenants. The sale of the apartments in favor of private respondent was on August
6, 1986. Yet, it was only on March 27, 1987, that he informed the tenants of such
sale. If he was in good faith, why the delay? Obviously, he hid the perfection of
the sale from them. Why did he not inform the tenants that he was the owner as
soon as the sale was consummated if, according to him, his co-tenants were
unwilling to share the expenses of redemption? His co-tenants could not have
blamed him for acquiring the entire property, after all, they supposedly did not
have the money to contribute. Truly, the actuations of private respondent show
nothing but greed on his part; he purchased the units for himself at bargain prices
so he could resell them at a profit at the expense of the tenants. This violation of
the trust reposed in him warrants the sanction provided by the equitable rule on
which constructive trust is founder. Unfortunately, however, not all the plaintiffs in
the original redemption case will be able to avail of this award because a party
who has not appealed from the decision may not obtain any affirmative relief
from the appellate court other than what he had obtained from the lower court, if
any, whose decision is brought up on appeal. The conclusion we thus reach in
this case finding constructive trust under Article 1447 of the New Civil Code,
rests on the general principles on trust which, by Article 1442, have been
adopted or incorporated into our civil law, to the extent that such principles are
not inconsistent with the Civil Code, other statutes and the Rules of Court.

Heirs of Yap v. Court of Appeals, G.R. No. 133047, [August 17, 1999], 371
PHIL 523-533

FACTS: Sometime in February 1966, private respondent Ramon Yap purchased a

parcel of land situated in Galas, Quezon City. The lot was thereupon registered in
his name. Subsequently, he constructed a two storey 3-door apartment for the use
of the Yap family. He paid one-fifth (1/5) of the cost of the construction, while the
rest was shouldered by his mother. Upon its completion, the improvement was
declared for real estate tax purposes in the name of Lorenzo Yap, brother of private
respondents, in deference to the wishes of their mother. When Lorenzo died, his
heirs, herein petitioners, left their family dwelling in Lucena City to reside
permanently in Manila. Hence, Ramon allowed petitioners to use one unit of the
apartment building. On 18 March 1992, Ramon sold the land and his share of the 3-
door apartment to his brother Benjamin Yap, his herein co-respondent.
Subsequently, petitioners claimed ownership over the property and demanded that
private respondents execute the proper deed necessary to transfer title to them. On
29 July 1992, private respondents filed an action with the Regional Trial Court of
Quezon City for quieting of title. In their answer, petitioners contended that Ramon
was merely used as a dummy by Lorenzo since the latter and his wife were at the
time Chinese citizens. It was agreed that the property will be transferred to Lorenzo
upon his acquisition of Philippine citizenship, but that, should be predecease, the lot
will be transferred to his heirs upon the latter's naturalization. In 1991, petitioners
acquired Philippine citizenship and, forthwith, they requested Ramon to have the
title to the lot transferred to their names but they discovered that he had sold the
lot to his co-respondent. In addition, petitioners claimed that it was Lorenzo who
had caused the construction of the 3-door apartment, merely entrusting the money
therefor to Ramon. Assessing the evidence before it, the trial court rendered a
decision in favor of private respondents. On appeal, the Court of Appeals affirmed

18
with modification the decision of the trial court, finding the evidence submitted by
petitioners to be utterly wanting. Hence, this petition.

ISSUE: WON there exists a trust agreement.

RULING: A trust 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, independently of the particular intention of the parties, as
being superinduced on the transaction by operation of law basically by reason of
equity. These species of implied trust are ordinarily subdivided into resulting and
constructive trusts. A resulting trust is one that arises by implication of law and
presumed always to have been contemplated by the parties, the intention as to
which can be found in the nature of their transaction although not expressed in a
deed or instrument of conveyance. Resulting trusts are based on the equitable
doctrine that it is the more valuable consideration than the legal title that
determines the equitable interest in property. Upon the other hand, a constructive
trust is a trust not created by any word or phrase, either expressly or impliedly,
evincing a direct intention to create a trust, but one that arises in order to satisfy
the demands of justice. It does not come about by agreement or intention but in
main by operation of law construed against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.

One basic distinction between an implied trust and an express trust is that while the
former may be established by parol evidence, the latter cannot. Even then, 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 are proven by an
authentic document. An implied trust, in fine, cannot be established upon vague
and inconclusive proof.

Muller v. Muller, G.R. No. 149615, [August 29, 2006], 531 PHIL 460-470

FACTS: Petitioner Elena Buenaventura Muller and respondent Helmut Muller were
married in Hamburg, Germany on September 22, 1989. The couple resided in
Germany at a house owned by respondent's parents but decided to move and
reside permanently in the Philippines in 1992. By this time, respondent had
inherited the house in Germany from his parents which he sold and used the
proceeds for the purchase of a parcel of land in Antipolo, Rizal at the cost of
P528,000.00 and the construction of a house amounting to P2,300,000.00. The
Antipolo property was registered in the name of petitioner under Transfer
Certificate of Title No. 219438 5 of the Register of Deeds of Marikina, Metro Manila.

Due to incompatibilities and respondent's alleged womanizing, drinking, and

maltreatment, the spouses eventually separated. On September 26, 1994,
respondent filed a petition 6 for separation of properties before the Regional Trial
Court of Quezon City.

On August 12, 1996, the trial court rendered a decision which terminated the
regime of absolute community of property between the petitioner and respondent.
It also decreed the separation of properties between them and ordered the equal
partition of personal properties located within the country, excluding those acquired

19
by gratuitous title during the marriage. With regard to the Antipolo property, the
court held that it was acquired using paraphernal funds of the respondent.
However, it ruled that respondent cannot recover his funds because the property
was purchased in violation of Section 7, Article XII of the Constitution.

Respondent appealed to the Court of Appeals which rendered the assailed decision
modifying the trial court's Decision. It held that respondent merely prayed for
reimbursement for the purchase of the Antipolo property, and not acquisition or
transfer of ownership to him. It also considered petitioner's ownership over the
property in trust for the respondent.

ISSUE: whether respondent is entitled to reimbursement of the funds used for the
acquisition of the Antipolo property.

RULING: Aliens, whether individuals or corporations, are disqualified from

acquiring lands of the public domain. Hence, they are also disqualified from
acquiring private lands. 9 The primary purpose of the constitutional provision is the
conservation of the national patrimony.

Respondent was aware of the constitutional prohibition and expressly admitted his
knowledge thereof to this Court. 11 He declared that he had the Antipolo property
titled in the name of petitioner because of the said prohibition. 12 His attempt at
subsequently asserting or claiming a right on the said property cannot be sustained.

The Court of Appeals erred in holding that an implied trust was created and resulted
by operation of law in view of petitioner's marriage to respondent. Save for the
exception provided in cases of hereditary succession, respondent's disqualification
from owning lands in the Philippines is absolute. Not even an ownership in trust is
allowed. Besides, where the purchase is made in violation of an existing statute and
in evasion of its express provision, no trust can result in favor of the party who is
guilty of the fraud. 13 To hold otherwise would allow circumvention of the
constitutional prohibition.

Heirs of Labanon v. Heirs of Labanon, G.R. No. 160711, [August 14, 2007],
556 PHIL 750-764

FACTS: During the lifetime of Constancio Labanon, prior to the outbreak of WWII,
he settled upon a piece of alienable and disposable public agricultural land situated
at Brgy. Lanao, Kidapawan, Cotabato . . . Constancio cultivated the said lot and
introduced permanent improvements that still exist up to the present. Being of very
limited educational attainment, he found it difficult to file his public land application
over said lot. Constancio then asked his brother, Maximo Labanon who was better
educated to file the corresponding public land application under the express
agreement that they will divide the said lot as soon as it would be feasible for them
to do so. The offer was accepted by Maximo. During the time of the application it
was Constancio who continued to cultivate the said lot in order to comply with the
cultivation requirement set forth under Commonwealth Act 141, as amended, on
Homestead applications. After which, on June 6, 1941, due to industry of
Constancio, Homestead Application No. 244742 (E-128802) of his brother Maximo
was approved with Homestead Patent No. 67512. Eventually, Original Certificate of
Title No. P-14320 was issued by the Register of Deeds of Cotabato over said lot in
favor of Maximo Labanon.

On February 11, 1955, Maximo Labanon executed a document denominated as

"Assignment of Rights and Ownership" and docketed as Doc. No. 20; Page No. 49;
Book No. V; Series of 1955 of the Notarial Register of Atty. Florentino Kintanar. The

20
document was executed to safeguard the ownership and interest of his brother
Constancio Labanon.

After the death of Constancio Labanon, his heirs executed an [e]xtra-judicial

settlement of estate with simultaneous sale over the aforesaid eastern portion of
the lot in favor of Alberto Makilang, the husband of Visitacion Labanon, one of the
children of Constancio. Subsequently, the parcel of land was declared for taxation
purposes in the name of Alberto under TD No. 11593. However, in March 1991, the
defendants heirs of Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon,
Roberto Nieto and Pancho Labanon, caused to be cancelled from the records of the
defendant Provincial Assessor of Cotabato the aforesaid TD No. 11593 and the
latter, without first verifying the legality of the basis for said cancellation, did cancel
the same. Further, after discovering that the defendant-heirs of Maximo Labanon
were taking steps to deprive the heirs of Constancio Labanon of their ownership
over the eastern portion of said lot, the latter, thru Alberto Makilang, demanded the
owner's copy of the certificate of title covering the aforesaid Lot to be surrendered
to the Register of Deeds of Cotabato so that the ownership of the heirs of
Constancio may be fully effected but the defendants refused and still continue to
refuse to honor the trust agreement entered into by the deceased brothers.

Thus, on November 12, 1991, petitioners filed a complaint 5 for Specific

Performance, Recovery of Ownership, Attorney's Fees and Damages with Writ of
Preliminary Injunction and Prayer for Temporary Restraining Order against
respondents

ISSUE: WON the Trust Agreement allegedly made by Constancio Labanon and
Maximo Labanon prescribed.

RULING: The trust agreement between Maximo Labanon and Constancio Labanon
may still be enforced

Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained the
nature and import of a trust:

Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain duties and the
exercise of certain powers by the latter.

This legal relationship can be distinguished from other relationships of a fiduciary

character, such as deposit, guardianship, and agency, in that the trustee has legal
title to the property. In the case at bench, this is exactly the relationship
established between the parties.

Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.

Article 1444 of the New Civil Code on express trust provides that "[n]o particular
words are required for the creation of an express trust, it being sufficient that a
trust is clearly intended."

Civil law expert Tolentino further elucidated on the express trust, thus:

No particular form of words or conduct is necessary for the manifestation of

intention to create a trust. It is possible to create a trust without using the word
"trust" or "trustee". Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship which
to lawyers is known as trust. It is immaterial whether or not he knows that the

21
relationship which he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is called a trust.

Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles

Parsons and Patrick C. Parsons, that:

“An express trust is created by the direct and positive acts of the parties, by
some writing or deed or by words evidencing an intention to create a trust;
the use of the word trust is not required or essential to its constitution, it
being sufficient that a trust is clearly intended.”

In the instant case, such intention to institute an express trust between Maximo
Labanon as trustee and Constancio Labanon as trustor was contained in not just
one but two written documents, the Assignment of Rights and Ownership as well as
Maximo Labanon's April 25, 1962 Sworn Statement. In both documents, Maximo
Labanon recognized Constancio Labanon's ownership and possession over the
eastern portion of the property covered by OCT No. P-14320, even as he
recognized himself as the applicant for the Homestead Patent over the land. Thus,
Maximo Labanon maintained the title over the property while acknowledging the
true ownership of Constancio Labanon over the eastern portion of the land. The
existence of an express trust cannot be doubted nor disputed.

Soledad Cañezo vs. Concepcion Rojas (G.R. No. 148788, November 23,
2007)

FACTS: The subject property is an unregistered land with an area of 4,169 square
meters situated at Naval, Biliran. In a complaint on 1997, petitioner Soledad
Cañezo alleged that she bought such parcel of land in 1939 from Crisogono
Limpiado, although the sale was not reduced into writing. Thereafter, she
immediately took possession of the property. In 1948, she and her husband left for
Mindanao and entrusted the said land to her father, Crispulo Rojas, who took
possession of, and cultivated the property. In 1980, she found out that the
respondent,Concepcion Rojas, her stepmother, was in possession of the property
and was cultivating the same. She also discovered that the tax declaration over the
property was already in the name of his father.

Respondent asserted that it was her husband who bought the property from
Limpiado,which accounts for the tax declaration being in Crispulo’s name.After the
hearing, MTC rendered a decision in favor of the petitioner, making her the real and
lawful owner of the land. Respondent appealed to the RTC of Naval, Biliran, which
reversed the MTC decision on the ground that the action had already prescribed and
acquisitive prescription had set in. However, acting on petitioner’s motion for
reconsideration, the RTC amended its original decision and held that the action had
not yet prescribed considering that the petitioner merely entrusted the property to
her father. The ten-year prescriptive period for the recovery of a property held in
trust would commence to run only from the time the trustee repudiates the trust.
The RTC found no evidence on record showing that Crispulo Rojas ever ousted the
petitioner from the property.

Petitioner filed a petition for review with the CA, which reversed the amended
decision of the RTC. The CA held that, assuming that there was a trust between the
petitioner and her father over the property, her right of action to recover the same
would still be barred by prescription since 49 years had already lapsed since
Crispulo adversely possessed the contested property in 1948.Hence, this petition
for review.

22
ISSUE:Whether or not there is an existence of trust over the property – express or
implied – between the petitioner and her father

RULING: NONE. A trust is the legal relationship between one person having an
equitableownership of property and another person owning the legal title to such
property, the equitableownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter. Trusts are either
express or implied. Express trusts are those whichare created by the direct and
positive acts of the parties, by some writing or deed, or will, or bywords evincing an
intention to create a trust. Implied trusts are those which, without beingexpressed,
are deducible from the nature of the transaction as matters of intent or,
independently,of the particular intention of the parties, as being superinduced on
the transaction by operation of law basically by reason of equity.

As a rule, the burden of proving the existence of a trust is on the party asserting its
existence, and such proof must be clear and satisfactorily show the existence of the
trust and its elements. The presence of the following elements must be proved: (1)
a trustor or settlor who executes the instrument creating the trust; (2) a trustee,
who is the person expressly designated tocarry out the trust; (3) the trust res,
consisting of duly identified and definite real properties; and(4) the cestui que trust,
or beneficiaries whose identity must be clear.

Accordingly, it was incumbent upon petitioner to prove the existence of the trust
relationship. And petitioner sadly failed to discharge that burden.The existence of
express trusts concerning real property may not be established by parol evidence.
It must be proven by some writing or deed. In this case, the only evidence to
support the claim that an express trust existed between the petitioner and her
father was the self-serving testimony of the petitioner.Although no particular words
are required for the creation of an express trust, a clear intention to create a trust
must be shown; and the proof of fiduciary relationship must be clear and
convincing. The creation of an express trust must be manifested with reasonable
certainty and cannot be inferred from loose and vague declarations or from
ambiguous circumstances susceptible of other interpretations.In the case at bench,
an intention to create a trust cannot be inferred from the petitioner’s testimony and
the attendant facts and circumstances.

The petitioner testified only to the effect that her agreement with her father was
that she will be given a share in the produce of the property. This allegation,
standing alone as it does, is inadequate to establish the existence of a trust
because profit-sharing per se, does not necessarily translate to a trust relation.In
light of the disquisitions, we hold that there was no express trust or resulting trust
established between the petitioner and her father. Thus, in the absence of a trust
relation, we can only conclude that Crispulo’s uninterrupted possession of the
subject property for 49 years,coupled with the performance of acts of ownership,
such as payment of real estate taxes, ripened into ownership.Petition denied.
Decision of the CA affirmed

Estate of Grimm v. Estate of Parsons, G.R. No. 159810, [October 9, 2006],

535 PHIL 68-95

FACTS: Parsons and Edward Miller Grimm (Grimm), together with Conrado Y.
Simon (Simon), formed in 1952 a partnership for the stated purpose of engaging in

23
the import/export and real estate business. Per SEC Certificate #3305, the
partnership was registered under the name G-P and Company.

Before September 1964, Parsons and Grimm each owned proprietary membership
share in MGCC, as evidenced by MC No. 374 for 100 units in the name of Parsons,
and MC No. 590, also for 100 units, in the name of Grimm. Per records, the Club
issued MC No. 590 to Grimm on May 25, 1960.

After Grimm's demise on November 27, 1977, Parsons and Simon continued with
the partnership under the same name, G-P and Company, as reflected in Articles of
Partnership dated December 14, 1977. The articles of the partnership would later
undergo another amendment to admit Parsons' son, Patrick, in the partnership.
After Parsons died on May 12, 1988, Amended Articles of Partnership of G-P and
Company was executed on September 23, 1988 by and among Parsons' heirs,
namely, Patrick, Michael, Peter and Jose, all surnamed Parsons, albeit the
amendment appeared to have been registered with the SEC only on March 18,
1993.

The herein legal dispute started when brothers Patrick and Jose, both surnamed
Parsons, responding to a letter from the Estate of Grimm, rejected the existence of
a trust arrangement between their father and Grimm involving MC No. 1088. Thus
spurned, the Estate of Grimm filed on August 31, 1992 before the RTC of Makati
City, a suit for recovery of MC No. 1088 with damages against the Estate of
Parsons, Patrick Parsons and MGCC.

Patrick Parsons averred that his father was, with respect to MC No. 1088, a mere
trustee of the true owner thereof, G-P & Co., and alleged, by way of affirmative
defense, that the claim set forth in the complaint is unenforceable, barred inter alia
by the dead man's statute, prescription or had been waived or abandoned.

In gist, the trial court predicated its ruling on the postulate that the temporary
transfer of Grimm's original share in MGCC — covered by MC No. 590 whence MC
No. 1088 descended — to Parsons, created a trust relationship between the two.

ISSUE: whether or not the transfer to Parsons of MC No. 590, as replaced by MC

No. 1088, partook of the nature of a trust transaction.

RULING: Judging from their documented acts immediately before and subsequent
to the actual transfer on September 7, 1964 of MC No. 590, Parsons, as transferee,
and Grimm, as transferor, indubitably contemplated a trust arrangement. Consider:

There can be no quibbling, owing to the letter exchanges between the Club, in
particular its Honorary Secretary E.C. Von Kauffman, and Parsons, that the reason
Grimm transferred his MC No. 590 to Parsons was because of the latter's wish to
accommodate one Daikichi Yoshida. Earlier, Parsons recommended to Club
management the approval of Mr. Yoshida's "Application For Waiting List Eligible To
[Club] Proprietary Membership." In a letter of August 10, 1964 to the MGCC's Board
of Directors, Parsons endorsed the application of Yoshida as Club member. While
the Club's response does not appear in its files, it is quite apparent that Parsons
addressed a letter to Kauffman requesting that Yoshida be taken in as a Company
assignee.

The conclusion easily deductible from the foregoing exchanges is that, given
existing Club restrictions, the simplest way to accommodate and qualify Yoshida for
Club membership was for Grimm to transfer his 100-unit share to Parsons who will
then assign the playing rights of that share to Yoshida.

It is not difficult to characterize, as did the trial court, the certificate transfer from
Grimm to Parsons, as temporary, there being no evidence whatsoever that the

24
transfer was for value. Such transfer was doubtless meant only to accommodate
Yoshida whose stay in the country was obviously temporary. As it were, Yoshida's
application for Club membership juxtaposed with the August 10, 1964
endorsement-letter of Parsons, yield.

documented events immediately before and after the February 28, 1968 share
certificate conveyance in question veritably confirm the trust arrangement Parsons
had or intended to have with Grimm and vice versa, vis-à-vis MC No. 1088. If, as
herein respondent G-P & Co. posits at every turn, Parsons was its trustee, then the
latter's act of endorsing MC No. 1088 in blank and then delivering the same to the
Club for safekeeping instead of directly to the G-P & Co. was without sense.

documented events immediately before and after the February 28, 1968 share
certificate conveyance in question veritably confirm the trust arrangement Parsons
had or intended to have with Grimm and vice versa, vis-à-vis MC No. 1088. If, as
herein respondent G-P & Co. posits at every turn, Parsons was its trustee, then the
latter's act of endorsing MC No. 1088 in blank and then delivering the same to the
Club for safekeeping instead of directly to the G-P & Co. was without sense.

Goyanko, Jr. v. United Coconut Planters Bank, G.R. No. 179096, [February
6, 2013], 703 PHIL 76-90

FACTS: In 1995, the late Joseph Goyanko, Sr., (Goyanko) invested Two Million
Pesos (P2,000,000.00) with Philippine Asia Lending Investors, Inc. family,
represented by the petitioner, and his illegitimate family presented conflicting
claims to PALII for the release of the investment. Pending the investigation of the
conflicting claims, PALII deposited the proceeds of the investment with UCPB on
October 29, 1996 5 under the name "Phil Asia: ITF (In Trust For) The Heirs of
Joseph Goyanko, Sr." (ACCOUNT). On September 27, 1997, the deposit under the
ACCOUNT was P1,509,318.76.

On December 11, 1997, UCPB allowed PALII to withdraw One Million Five Hundred
Thousand Pesos (P1,500,000.00) from the Account, leaving a balance of only
P9,318.76. When UCPB refused the demand to restore the amount withdrawn plus
legal interest from December 11, 1997, the petitioner filed a complaint before the
RTC. In its answer to the complaint, UCPB admitted, among others, the opening of
the ACCOUNT under the name "ITF (In Trust For) The Heirs of Joseph Goyanko,
Sr.," (ITF HEIRS) and the withdrawal on December 11, 1997.

ISSUE: whether UCPB should be held liable for the amount withdrawn because a
trust agreement existed between PALII and UCPB, in favor of the HEIRS, when
PALII opened the ACCOUNT with UCPB.

RULING: No express trust exists; UCPB exercised the required diligence in

handling the ACCOUNT; petitioner has no cause of action against UCPB.

A trust, either express or implied, is the fiduciary relationship ". . . between one
person having an equitable ownership of property and another person owning the
legal title to such property, the equitable ownership of the former entitling him to
the performance of certain duties and the exercise of certain powers by the latter."
Express or direct trusts are created by the direct and positive acts of the trustor or
of the parties. No written words are required to create an express trust. This is
clear from Article 1444 of the Civil Code, but, the creation of an express trust must

25
be firmly shown; it cannot be assumed from loose and vague declarations or
circumstances capable of other interpretations.

Under these standards, we hold that no express trust was created. First, while an
ascertainable trust res and sufficiently certain beneficiaries may exist, a competent
trustor and trustee do not. Second, UCPB, as trustee of the ACCOUNT, was never
under any equitable duty to deal with or given any power of administration over it.
On the contrary, it was PALII that undertook the duty to hold the title to the
ACCOUNT for the benefit of the HEIRS. Third, PALII, as the trustor, did not have the
right to the beneficial enjoyment of the ACCOUNT. Finally, the terms by which UCPB
is to administer the ACCOUNT was not shown with reasonable certainty. While we
agree with the petitioner that a trust's beneficiaries need not be particularly
identified for a trust to exist, the intention to create an express trust must first be
firmly established, along with the other elements laid above; absent these, no
express trust exists.

Contrary to the petitioner's contention, PALII's letters and UCPB's records

established UCPB's participation as a mere depositary of the proceeds of the
investment. In the March 28, 1996 letter, PALII manifested its intention to pursue
an active role in and up to the turnover of those proceeds to their rightful owners,
32 while in the November 15, 1996 letter, PALII begged the petitioner to trust it
with the safekeeping of the investment proceeds and documents. 33 Had it been
PALII's intention to create 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. As matters
stand, PALII never did. cTESIa

UCPB's records and the testimony of UCPB's witness 34 likewise lead us to the
same conclusion. While the words "ITF HEIRS" may have created the impression
that a trust account was created, a closer scrutiny reveals that it is an ordinary
savings account. 35 We give credence to UCPB's explanation that the word "ITF"
was merely used to distinguish the ACCOUNT from PALII's other accounts with
UCPB. 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. 36 If at all, these words showed a trustee-beneficiary relationship between
PALII and the HEIRS.

Contrary to the petitioner's position, UCPB did not become a trustee by the mere
opening of the ACCOUNT. While this may seem to be the case, by reason of the
fiduciary nature of the bank's relationship with its depositors, 37 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." 38 It simply
means that the bank is obliged to observe "high standards of integrity and
performance" in complying with its obligations under the contract of simple loan. 39
Per Article 1980 of the Civil Code, 40 a creditor-debtor relationship exists between
the bank and its depositor. 41 The savings deposit agreement is between the bank
and the depositor; 42 by receiving the deposit, the bank impliedly agrees to pay
upon demand and only upon the depositor's order. 43

Since the records and the petitioner's own admission showed that the ACCOUNT
was opened by PALII, UCPB's receipt of the deposit signified that it agreed to pay
PALII upon its demand and only upon its order. Thus, when UCPB allowed PALII to
withdraw from the ACCOUNT, it was merely performing its contractual obligation
under their savings deposit agreement. No negligence or bad faith 44 can be
imputed to UCPB for this action. As far as UCPB was concerned, PALII is the
account holder and not the HEIRS. As we held in Fulton Iron Works Co. v. China
Banking Corporation, 45 the bank's duty is to its creditor-depositor and not to third
persons. Third persons, like the HEIRS here, who may have a right to the money
deposited, cannot hold the bank responsible unless there is a court order or

26
garnishment. 46 The petitioner's recourse is to go before a court of competent
jurisdiction to prove his valid right over the money deposited. EAaHTI

In these lights, we find the third assignment of error mooted. A cause of action
requires that there be a right existing in favor of the plaintiff, the defendant's
obligation to respect that right, and an act or omission of the defendant in breach of
that right. 47 We reiterate that UCPB's obligation was towards PALII as its creditor-
depositor. While the HEIRS may have a valid claim over the proceeds of the
investment, the obligation to turn-over those proceeds lies with PALII. Since no
trust exists, the petitioner's complaint was correctly dismissed and the CA did not
commit any reversible error in affirming the RTC decision. One final note, the
burden to prove the existence of an express trust lies with the petitioner. 48 For his
failure to discharge this burden, the petition must fail.

Morales vs. Court of Appeals, GR No. 117228, June 19, 1997

FACTS: The following are the facts adduced by the court from both the parties, to
wit:

1. The identity of the premises in question which is a parcel of land together with
the two residential building standing thereon, located at corner Umbria St. (on the
West) and Rosales Blvd. (on the North), Brgy. Central, Calbayog City, with an area
of 318 sq. meters, presently covered by Tax Declaration No. 47606 in the name of
the female Plaintiff and also bounded on the East by lot 03-002 (1946) and on the
South by lot 03-006 (1950);

2. The Deeds of Conveyance of the questioned premises — the Escritura de Venta

(Exh. "B") from the Mendiolas to Celso Avelino and the Deed of Sale (Exh. "C")
from Celso Avelino to the Plaintiffs are both public instruments;

3. The couple, Rosendo and Juana Avelino as well as their daughter, Aurea, resided
and even died in the disputed premises;

4. The defendant, Rodolfo Morales, constructed the beauty parlor in the said
premises and later occupied the two-storey residential house;

5. Not one of the children or grandchildren of Rosendo Avelino ever contested the
ownership of Celso Avelino of the disputed premises;

6. There has no extra-judicial partition effected on the subject property since the
death of Rosendo Avelino although two of the Intervenor's children are full-pledged
lawyers;

7. Since the premises in question had been acquired by Celso Avelino, it has been
declared in his name for taxation purposes and the receipts of the realty taxes
thereon were kept by him, some were either delivered to him by Aurea or by
defendant; and

8. Ever since the Plaintiffs acquired the disputed premises, its tax declaration is now
in the name of the female Plaintiff with the current realty taxes thereon paid by her.

27
9. Trial on the merits ensued and the lower decided in favor of the plaintiffs.
Dissatisfied with the trial court's decision, defendants heirs of Rodolfo Morales and
intervenor Priscila Morales, petitioners herein, appealed to the Court of Appeals.

10. In its decision of 20 April 1994 10 the Court of Appeals affirmed the decision of
the trial court. Their motion to reconsider the decision having been denied in the
resolution 11 of 14 September 1994 for lack of merit.

ISSUE: WON the property acquired by Celso Avelino a trust property.

RULING: A trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter. The characteristics of a trust
are: 1. It is a relationship; 2. It is a relationship of fiduciary character; 3. It is a
relationship with respect to property, not one involving merely personal duties; 4. It
involves the existence of equitable duties imposed upon the holder of the title to
the property to deal with it for the benefit of another; and 5. It arises as a result of
a manifestation of intention to create the relationship.

Trusts are either express or implied. Express trusts are created by the intention of
the trustor or of the parties, while 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.

In turn, implied are either resulting or constructive trusts. Resulting trusts are
based on the equitable doctrine that valuable consideration and not legal title
determines 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 because 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 defendants of justice and prevent
unjust enrichment. They arise contrary to intention against one who, by fraud,
duress or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold.

The trust created under the first sentence of Article 1448 is sometimes referred to
as a purchase money resulting trust. The trust is created in order to effectuate what
the law presumes to have been the intention of the parties recovery in the
circumstances that the person to whom the land was conveyed holds it as trustee
for the person who supplied the purchase money. To give rise to a purchase money
resulting trust, it is essential that there be: 1. an actual payment of money,
property or services, or an equivalent, constituting valuable consideration; 2. and
such consideration must be furnished by the alleged beneficiary of a resulting trust.
There are recognized exceptions to the establishment of an implied resulting trust.
The first is stated in the last part of Article 1448 itself. Thus, where A pays the
purchase money and title is conveyed by absolute deed to A's child or to a person
to whom A stands in loco parentis and who makes no express promise, a trust does
not result, the presumption being that a gift was intended. Another exception is, of
course, that in which an actual contrary intention is proved. Also where the
purchase is made in violation of an existing statute and in evasion of its express
provision, no trust can result in favor of the party who is guilty of the fraud.

28
Cuaycong v. Cuaycong, G.R. No. L-21616, [December 11, 1967], 129 PHIL
439-445

FACTS: 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 — Nos. 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 Cuaycong for conveyance of
inheritance and accounting, before the Court of First Instance of Negros Occidental.

On December 16, 1961, the Court of First Instance ruled that the trust alleged, in
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.

ISSUE: WON there was an implied trust.

RULING: 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 (Art. 1141). 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, independently of the particular intention of
the parties. 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 the provisions of paragraph 8 of the complaint herein, it is clear that 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. Under
Article 1443 of the Civil Code, such an express trust over an immovable may not be
proved by parole evidence. Since the complaint did not mention the written

29
instrument of the alleged trust and since the complaint was not amended as per
instruction of the Judge below, then the complaint was properly dismissed.

Article 1453, one of the cases of implied trust, 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.

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 defendants in their demands
over the land, and the complaint was filed only in 1961 - more than the 10 - year
period of such prescription for the enforcement of such rights under the trust. It is
settled that the right to enforce an implied trust in one's favor prescribes in 10
years. And even under the Code of Civil Procedure, action to recover real property
such as lands prescribes in ten years (Sec. 40, Act 190).

Sinaon vs. Sorongon, 136 SCRA 407

FACTS: 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.

ISSUE: 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.

RULING: 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

30
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).

O'Laco v. Chit, G.R. No. 58010, [March 31, 1993

FACTS: 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.

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.

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.

31
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.

ISSUE: WON there exists a resulting trust.

RULING: 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

32
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.

Special Services Corporation vs. Centro La Paz, 121 SCRA 748

FACTS: 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

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 as evidenced by "Acknowledgments" executed by them
on October 20, 1961 and October 2, 1971.

On July 21, 1973, CENTRO submitted a third party claim to the Sheriff of Manila
likewise averring exclusive ownership of the properties in question

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

33
thereof had publicly acknowledged their possession of said... properties in the
concept of trustees.

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.

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
conditioned upon CENTRO's posting a bond of P30,000.00.

the Court a quo 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 lower Court held that by a preponderance of evidence CENTRO had established
that it was "really the true and lawful owner of the property in dispute, and that the
persons registered therein as its owners are merely trustees of the plaintiff"

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.

ISSUE: 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.

RULING: We affirm the judgment appealed from.

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.

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 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.

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

34
knowledge was equivalent to registration of the several "Acknowledgments" in the
Registry of Deeds.

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.

Chiao Liong Tan vs. Court of Appeals, 46 SCAD 435, 228 SCRA 75

FACTS: Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle,
particularly described as Isuzu Elf van,1976 Model that he purchased in March
1987. As owner thereof, petitioner says he has been in possession,enjoyment and
utilization of the said motor vehicle until his older brother, Tan Ban Yong, the
private respondent, tookit from him.Petitioner relies principally on the fact that the
van is registered in his name under Certificate of Registration. Heclaims in his
testimony before the trial court that the said motor 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 fro payment wasplaced in his name
because it was his money that was used to pay for the vehicle; that he allowed his
brother to usethe van because the latter was working for his company, the CLT
Industries; and that his brother later refused toreturn 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 Stated and petitioner remaining Filipino in the familyresiding
in the Philippines. When the family business needed a vehicle in 1987 for use in the
deliver of machinery toits customers, he asked petitioner to look for a vehicle and
gave him the amount of P5,000.00 to be deposited asdown payment for the van,
which would be available in about a month. After a month, he himself paid the
whole priceout of a loan of P140, 000.00 from his friend Tan Pit Sin. Nevertheless,
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 thevehicle including the original registration papers thereof,
but allowing petitioner from time to time to use the van for deliveries of machinery.
After hearing, the trial court found for the private respondent. Finding no merit in
the appeal, the Court of Appealsaffirmed the decision of the trail court.

ISSUE: Whether or not the petitioner-appellant established proof of ownership over

the subject motor vehicle.

RULING: No. Petitioner did not have in his possession the Certificate of
Registration of the motor vehicle and theofficial 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 hasbeen issued is virtually the
owner thereof unless proved otherwise. In other words, such presumption is
rebuttable bycompetent proof.The New Civil Code recognizes cases of implied trusts
other than those enumerated therein. Thus, although nospecific provision could be
cited to apply to the parties herein, it is undeniable that an implied trust was
created whenthe 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

35
in hisname cannot repudiate the trust 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 losethat
character simply because of what appears in a legal document.WHEREFORE, the
instant petition for review is hereby DENIED for lack of merit.

Homena v. Casa, G.R. No. L-32749, [January 22, 1988], 241 PHIL 240-242

FACTS: 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 annul 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 cannot 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

ISSUE: WON there exists an implied trust.

RULING: 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 cannot lend itself to its enforcement.

36
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.

Heirs of Candelaria v. Romero, G.R. No. L-12149, [September 30, 1960],

109 PHIL 500-504

FACTS: 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.

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.

ISSUE: WON there is an implied trust.

RULING: 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

37
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 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 to another on certain conditions, a
trust results for the benefit of such other or his heirs, which equity will enforce
according to the agreement. (189 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 that 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 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.

Philippine National Bank v. Court of Appeals, G.R. No. 97995, [January

21, 1993], 291 PHIL 356-369

FACTS: 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

38
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. cdll

On the basis of the cable message dated February 24, 1975, Cashier's Check No.
269522 in the amount of US$1,400 (P9,772.96) 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. Cdpr

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 rules 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

ISSUE: WON 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.

RULING: 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. Implied trusts are those which, without being expressed, are
deducible from the nature of the transaction as matters of the intent or which are
superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties.

39
Implied trusts are subdivided into resulting and constructive trusts. 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. Examples
of resulting trusts are found in Articles 1448 to 1455 of the Civil Code.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.

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense
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.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. 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.

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. 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. While prescription is concerned
with the fact of delay, laches deals with the effect of unreasonable delay. 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.

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. 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

40
environment, consent is presume 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." 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.

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. 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. 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. 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," it is
safe to state that their roots are firmly grounded on such Civil Law principles as
expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari potest,"
particularly the concept of constructive trust.

Iglesia Filipina Independiente vs. Heirs of Bernardino Taeza ,G.R. No.

179597, February 03, 2014

FACTS: Iglesia Filipina Independiente (IFI), a religious corporation owned a parcel

of land which was transferred by Rev. Macario Ga in his capacity as the Supreme
Bishop of IFI to Bernardino Taeza under a deed of sale with mortgage on February
5, 1976. The officers of the Laymen’s Committee of the Parish Council filed a
complaint for annulment of said deed of sale but the complaint was dismissed by
the trial court.

Rev. Ga’s term as Supreme Bishop of the IFI terminated on May 8, 1981.
Meanwhile Bernardino Taeza registered the subject parcels of land and Transfer
Certificate of Sale was issued to him.

On January 1990, a complaint for annulment of sale was again filed by IFI through
the newly-appointed Supreme Bishop. The trial court rendered a decision in favor of
petitioner declaring that the deed of sale was null and void. On appeal, the
appellate court reversed the RTC’s decision ruling that IFI, being a corporation sole

41
validly transferred ownership over the land through it Supreme Bishop who was the
administrator of all properties and the official representative of the church.

ISSUE: A constructive trust having been constituted by law between respondents

as trustees and petitioner as beneficiary of the subject property, may respondents
acquire ownership over the said property.

RULING: The Court held in the same case of Aznar, that unlike in express trusts
and resulting implied trusts where a trustee cannot acquire by prescription any
property entrusted to him unless he repudiates the trust, in constructive implied
trusts, the trustee may acquire the property through prescription even if he does
not repudiate the relationship. It is then incumbent upon the beneficiary to bring an
action for reconveyance before prescription bars the same.

In Aznar, the Court explained the basis for the prescriptive period, to wit:
x x x under the present Civil Code, we find that just as an implied or constructive
trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding
obligation to reconvey the property and the title thereto in favor of the true owner.
In this context, and vis-á-vis prescription, Article 1144 of the Civil Code is
applicable.

Article 1144. The following actions must be brought within ten years from the time
the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx

An action for reconveyance based on an implied or constructive trust must perforce

prescribe in ten years and not otherwise. A long line of decisions of this Court, and
of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-
settled that an action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over the property.

It has also been ruled that the ten-year prescriptive period begins to run from the
date of registration of the deed or the date of the issuance of the certificate of title
over the property, x x x.

Tong vs. Go Tiat Kun 722 SCRA 623

FACTS: Sometime in 1957, Juan Tong had a meeting with all his children to inform
them of his intention to purchase Lot 998 to be used for the family’s lumber
business called "Juan Tong Lumber". However, since he was a Chinese citizen and
was disqualified from acquiring the said lot, the title to the property will be
registered in the name of his eldest son, Luis, Sr., who at that time was already of
age and was the only Filipino citizen among his children. On May 11, 1957, Juan
Tong bought Lot 998 from the heirs of Jose Ascencio. Accordingly, on May 16,
1957, TCT No. 10346 was issued by the Register of Deeds in the name of Luis, Sr.
On December 8, 1978, the single proprietorship of Juan Tong Lumber was
incorporated into a corporation known as the Juan Tong Lumber, Inc.4 However, Sy
Un and Juan Tong both died intestate on October 31, 1984, and November 13,
1990, respectively.

Meanwhile, on May 30, 1981, Luis, Sr. died and the respondents, being his
surviving heirs, claimed ownership over Lot 998 by succession, alleging that no
trust agreement exists and it was Luis, Sr. who bought Lot 998. On July 2, 1982,
the respondents executed a Deed of Extra-Judicial Settlement of Estate of Luis, Sr.,

42
adjudicating unto themselves Lot 998 and claiming that the said lot is the conjugal
property of Luis, Sr., and his wife, which the Juvenile and Domestic Relations Court
of Iloilo City approved on June 28, 1982. On July 19, 1982, the said deed was
registered causing the cancellation of TCT No. 10346 and the issuance of TCT No.
T-60231 in the name of the respondents.

Subsequently, the respondents agreed to subdivide Lot 998, thus, on October 12,
1992, two new titles were issued: (1) TCT No. 97068 over Lot 998-A in the name of
Go Tiat Kun and her children; and (2) TCT No. T-96216 over Lot 998-B in the name
of Luis, Jr.

After Lot 998 was subdivided, Luis, Jr. sold Lot 998-B to Fine Rock Development
Corporation (FRDC), which in turn sold the same to Visayas Goodwill Credit
Corporation (VGCC). It was only after the petitioners received a letter from VGCC,
on August 31, 1995, that they discovered about the breach of the trust agreement
committed by the respondents.

To protect their rights, the petitioners filed an action for Annulment of Sales, Titles,
Reconveyance and Damages of Lot 998-B docketed as Civil Case No. 22730 against
Luis, Jr., FRDC and VGCC. On March 6, 1997, the trial court ruled5 in favor of the
petitioners which were later affirmed by the CA6 and this Court7 on appeal.
Consequently, Lot 998-B was reconveyed to the petitioners and TCT No. T-14839
was issued under their names including the late Luis, Sr.

Then, on February 24, 2001, Go Tiat Kun executed a Deed of Sale of Undivided
Interest over Lot 998-A in favor of her children, Leon, Mary, Lilia, Tomas, and the
late Jaime, resulting in the issuance of TCT No. T-134082 over Lot 998-A.

After trial, the court a quo rendered its judgment in favor of the petitioners, ruling
that there was an implied resulting trust between Juan Tong, Luis, Sr., the
petitioners and the respondents, over Lot 998. The trial court found that Luis Sr.
was a mere trustee, and not the owner of Lot 998, and the beneficial interest over
said property remained in Juan Tong and subsequently in the Juan Tong Lumber,
Inc. The trust is further established by the fact that Luis Sr., during his lifetime: (1)
did not build a house or any structure thereon or make use of the property in any
manner; (2) resided with his family together with his parents, brothers and sisters
in Juan Tong building in front of the said lot; (3) have acquired a residential
property at Ledesco Village, La Paz, Iloilo City and other places, where his heirs
now reside; and (4) did not exercised any other act of ownership over the said lot.

The trial court further claimed that any right that the respondents may have over
Lot 998-A would have been merely derived from that of their predecessor-in-
interest, Luis Sr. Since the respondents were not the owners of Lot 998-A, they
could not appropriate the property unto themselves, much less convey the same
unto third persons. Thus, any document executed by them adjudicating unto
themselves or conveying in favor of each other Lot 998-A, as well as the titles
issued in their favor as a consequence of those documents, are invalid. Since the
petitioners were deprived of Lot 998-A through the surreptitious and fraudulent acts
of the respondents, the petitioners are entitled to the reconveyance of the
properties, and the validity of TCT No. T-134082 which covers Lot 998-A as well as
the previous titles and documents of conveyance covering the said lot were null and
void.

ISSUE: WON there was an implied resulting trust constituted over Lot 998 when
Juan Tong purchased the property and registered it in the name of Luis.

RULING: The appellate court’s conclusion that an express trust was created
because there was a direct and positive act by Juan Tong to create a trust must
inevitably yield to the clear and positive evidence on record which showed that

43
what was truly created was an implied resulting trust. As what has been fully
established, in view of the mutual trust and confidence existing between said
parties who are family members, the only reason why Lot 998 was registered in the
name of Luis, Sr. was to facilitate the purchase of the said property to be used in
the family’s lumber business since Luis, Sr. is the only Filipino Citizen in the Juan
Tong family at that time. As the registered owner of Lot 998, it is only natural that
tax declarations and the corresponding tax payment receipts be in the name of
Luis, Sr. so as to effect payment thereof.

The principle of a resulting trust is 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, a constructive trust,
unlike an express trust, does not emanate from, or generate a fiduciary relation.
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.

Guided by the foregoing definitions, the Court is in conformity with the finding of
the trial court that an implied resulting trust was created as provided under the first
sentence of Article 144815 which is sometimes referred to as a purchase money
resulting trust, the elements of which are: (a) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration; and (b)
such consideration must be furnished by the alleged beneficiary of a resulting
trust.16 Here, the petitioners have shown that the two elements are present in the
instant case. Luis, Sr. was merely a trustee of Juan Tong and the petitioners in
relation to the subject property, and it was Juan Tong who provided the money for
the purchase of Lot 998 but the corresponding transfer certificate of title was placed
in the name of Luis, Sr.

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 families, does not lose that character simply
because of what appears in a legal document.

DOLORES CAMPOS v. DOMINADOR ORTEGA, SR. and JAMES SILOS. G.R.

No. 171286; June 2, 2014)

FACTS: Petitioner Dolores Campos, through her attorney-in-fact, Salvador

Pagunsan (Pagunsan), filed a case for specific performance with damages against
respondents. The Petition stated among others that Plaintiff and her husband
Ernesto Campos, along with their family occupied the entire second level as well as
the front portion of the ground level of a residential structure located at No. 208 F
Blumentritt Street, Mandaluyong City. The lot on which the structure itself is owned
by Dominga Boloy from whom plaintiff leased the same beginning in 1966.

In 1977, under and pursuant to the Zonal Improvement Program (ZIP) of the then
Metro Manila Commission, in coordination with the Local Government of
Mandaluyong City, a census of the Hulo estate, where plaintiffs dwelling is located,
was conducted wherein plaintiff was among those censused and qualified as bona

44
fide occupant. As a consequence of having qualified, plaintiff assigned an identifying
house tag number of 77-000070-08 on August 20, 1977.

In 1979, after the death of the owner DomingaBoloy, her daughter-in-law, Clarita
Boloy managed the leased premises. In 1987, Walter Boloy stepped into the
situation through counsel demanded from the plaintiff and the family immediate
vacation of the subject premises. an ejectment suit was eventually filed against
plaintiff but it was dismissed by the Metropolitan Trial Court.

After receiving the said decision, and after having verified her husbands status as a
bona fide occupant, plaintiff forthwith authorized her nephew Salvador Pagunsan to
follow up with the NHA. Pursuant thereto, after learning that all bona fide occupants
may be allowed to buy the structure if the owner had already died. Plaintiff was
given one month to exercise the option of buying the property denominated as Lot
17, Block 7, Phase III. Plaintiff acceded since the property they are occupying was
Lot 18, Block 7.

When inquired with the NHA, plaintiff questioned the award of the lots to
defendants who are disqualified for not having been duly censused either as renters
or sharers, and also the matter regarding the alteration the lot number actually
being occupied by plaintiff.

As a result of the bypassing of plaintiffs right, she as dislocated, has suffered

sleepless nights, mental anguish, wounded feelings and undue embarrassment,
among others, the assessment of which in pecuniary terms is left to the sound
discretion of the Court.

Respondents countered that the complaint stated no cause of action, and that, if
any, such cause of action is already barred by prior judgment. They noted
petitioners admission in the Verification that an action for recovery of possession
was commenced against her by respondents before the RTC of Pasig, involving the
same property and that it was resolved in respondents favour; and that such
decision was affirmed by the CA and became final and executory.

The RTC ruled in favor of petitioner and declared the acquisition of respondents of
the Lot 18, Block 7 of the Hulo estate void for being violative of the right of the
plaintiff. Further, NHA is ordered to recognize plaintiffs right to purchase the
structure and give her reasonable time within which to exercise said right.

Upon appeal, the CA reversed the trial courts decision. It ruled that petitioner has
no vested right over the subject parcel of land and the residential structure
standing thereon.

ISSUE: WON the petitioner vested right over the subject parcel of land.

RULING: Under the principle of constructive trust, registration of property by one

person in his name, whether by mistake or fraud, the real owner being another
person, impresses upon the title so acquired the character of a constructive trust
for the real owner, which would justify an action for reconveyance. In the action for
reconveyance, the decree of registration is respected as incontrovertible but what is
sought instead is the transfer of the property wrongfully or erroneously registered
in another's name to its rightful owner or to one with a better right. If the
registration of the land is fraudulent, the person in whose name the land is
registered holds it as a mere trustee, and the real owner is entitled to file an action
for reconveyance of the property.21cralawred

An action for reconveyance resulting from fraud prescribes four years from the
discovery of the fraud, which is deemed to have taken place upon the issuance of
the certificate of title over the property, and if based on an implied or a constructive

45
trust it prescribes ten (10) years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property.22 However, an action for
reconveyance based on implied or constructive trust is imprescriptible if the plaintiff
or the person enforcing the trust is in possession of the property.23 In effect, the
action for reconveyance is an action to quiet title to the property, which does not
prescribe.24 We said in Yared v. Tiongco:25cralawred

The Court agrees with the CA’s disquisition that an action for reconveyance can
indeed be barred by prescription. In a long line of cases decided by this Court, we
ruled that an action for reconveyance based on implied or constructive trust must
perforce prescribe in ten (10) years from the issuance of the Torrens title over the
property.

However, there is an exception to this rule. In the case of Heirs of Pomposa

Saludares v. Court of Appeals, the Court, reiterating the ruling in Millena v. Court of
Appeals, held that there is but one instance when prescription cannot be invoked in
an action for reconveyance, that is, when the plaintiff is in possession of the land to
be reconveyed. In Heirs of Pomposa Saludares, this Court explained that the Court,
in a series of cases, has permitted the filing of an action for reconveyance despite
the lapse of more than ten (10) years from the issuance of title to the land and
declared that said action, when based on fraud, is imprescriptible as long as the
land has not passed to an innocent buyer for value. But in all those cases, the
common factual backdrop was that the registered owners were never in possession
of the disputed property. The exception was based on the theory that registration
proceedings could not be used as a shield for fraud or for enriching a person at the
expense of another.

In Alfredo v. Borras, the Court ruled that prescription does not run against the
plaintiff in actual possession of the disputed land because such plaintiff has a right
to wait until his possession is disturbed or his title is questioned before initiating an
action to vindicate his right. His undisturbed possession gives him the continuing
right to seek the aid of a court of equity to determine the nature of the adverse
claim of a third party and its effect on his title. The Court held that where the
plaintiff in an action for reconveyance remains in possession of the subject land, the
action for reconveyance becomes in effect an action to quiet title to property, which
is not subject to prescription.

The Court reiterated such rule in the case of Vda. de Cabrera v. Court of Appeals,
wherein we ruled that the imprescriptibility of an action for reconveyance based on
implied or constructive trust applies only when the plaintiff or the person enforcing
the trust is not in possession of the property. In effect, the action for reconveyance
is an action to quiet the property title, which does not prescribe.

Similarly, in the case of David v. Malay, the Court held that there was no doubt
about the fact that an action for reconveyance based on an implied trust ordinarily
prescribes in ten (10) years. This rule assumes, however, that there is an actual
need to initiate that action, for when the right of the true and real owner is
recognized, expressly or implicitly such as when he remains undisturbed in his
possession, the statute of limitation would yet be irrelevant. An action for
reconveyance, if nonetheless brought, would be in the nature of a suit for quieting
of title, or its equivalent, an action that is imprescriptible. In that case, the Court
reiterated the ruling in Faja v. Court of Appeals which we quote:

x x x There is settled jurisprudence that one who is in actual possession of a piece

of land claiming to be owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid
of a court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one

46
who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose mother, Felipa Faja,
was in possession of the litigated property for no less than 30 years and was
suddenly confronted with a claim that the land she had been occupying and
cultivating all these years, was titled in the name of a third person. We hold that in
such a situation the right to quiet title to the property, to seek its reconveyance and
annul any certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that
the statutory period of prescription commences to run against such possessor.

G.R. No. 182908 August 6, 2014 HEIRS OF FRANCISCO I. NARVASA, SR vs.

IMBORNAL

FACTS: Basilia owned a parcel of land situated at Sabangan, Pangasinan which she
conveyed to her three (3) daughters Balbina, Alejandra, and Catalina (Imbornal
sisters) sometime in 1920. Meanwhile, Catalina’s husband, Ciriaco Abrio (Ciriaco),
applied for and was granted a homestead patent over a 31,367-sq. m. riparian land
(Motherland) adjacent to the Cayanga River in San Fabian, Pangasinan.14 He was
eventually awarded Homestead Patent No. 2499115 therefor, and, on December 5,
1933, OCT No. 1462 was issued in his name. Later, or on May 10, 1973, OCT No.
1462 was cancelled, and Transfer Certificate of Title (TCT) No. 10149516 was
issued in the name of Ciriaco’s heirs, namely: Margarita Mejia; Rodrigo Abrio,
marriedto Rosita Corpuz; Antonio Abrio, married to Crisenta Corpuz; Remedios
Abrio, married to Leopoldo Corpuz; Pepito Abrio; Dominador Abrio; Francisca Abrio;
Violeta Abrio; and Perla Abrio (Heirs of Ciriaco). Ciriaco and his heirs had since
occupied the northern portion of the Motherland, while respondents occupied the
southern portion.

Sometime in 1949, the First Accretion, approximately 59,772 sq. m. in area,

adjoined the southern portion of the Motherland. On August 15, 1952, OCT No. P-
318 was issued in the name of respondent Victoriano, married to Esperanza
Narvarte, covering the First Accretion. Decades later, or in 1971, the Second
Accretion, which had an area of 32,307 sq. m., more or less, abutted the First
Accretion on its southern portion.

On November 10, 1978, OCT No. 21481 was issued in the names of all the
respondents covering the Second Accretion. Claiming rights over the entire
Motherland, Francisco, et al., as the children of Alejandra and Balbina, filed on
February 27,1984 an Amended Complaint or reconveyance, partition, and/or
damages against respondents, docketed as Civil Case No. D-6978. They anchored
their claim on the allegation that Ciriaco, with the help of his wife Catalina, urged
Balbina and Alejandra to sell the Sabangan property. Likewise, Francisco, et al.
alleged that through deceit, fraud, falsehood, and misrepresentation, respondent
Victoriano, with respect to the First Accretion, and the respondents collectively, with
regard to the Second Accretion, had illegally registered the said accretions in their
names, notwithstanding the fact that they were not the riparian owners (as they did
not own the Motherland to which the accretions merely formed adjacent to). In this
relation, Francisco, et al. explained that they did not assert their inheritance claims
over the Motherland and the two (2) accretions because they respected
respondents’ rights, until they discovered in 1983 that respondents have repudiated
their (Francisco, et al.’s) shares thereon. Thus, bewailing that respondents have
refused them their rights not only with respect to the Motherland, but also to the
subsequent accretions, Francisco, et al. prayed for the reconveyance of said
properties, or, in the alternative, the payment of their value, as well as the award
of moral damages in the amount of P100,000.00, actual damages in the amount of
P150,000.00, including attorney’s fees and other costs.

47
On August 20, 1996, the RTC rendered a Decision26 in favor of Francisco, et al. and
thereby directed respondents to: (a) reconvey to Francisco, et al. their respective
portions in the Motherland and in the accretions thereon, or their pecuniary
equivalent; and (b) pay actual damages in the amount of P100,000.00, moral
damages in the amount ofP100,000.00, and attorney’s fees in the sum of
P10,000.00, as well as costs of suit. On November 28, 2006, the CA rendered a
Decision29 reversing and setting aside the RTC Decision and entering a new one
declaring: (a) the descendants of Ciriaco as the exclusive owners of the
Motherland; (b) the descendants of respondent Victoriano asthe exclusive owners of
the First Accretion; and (c) the descendants of Pablo (i.e., respondents collectively)
as the exclusive owners of the Second Accretion.

At odds with the CA’s disposition, Francisco et al. filed a motion for reconsideration
which was, however denied by the CA in a Resolution dated May 7, 2008, hence,
this petition taken by the latter’s heirs as their successors-in-interest.

ISSUE: WON there exists an implied trust.

RULING: The main thrust of Francisco, et al.’s Amended Complaint is that an

implied trust had arisen between the Imbornal sisters, on the one hand, and
Ciriaco, on the other, with respect to the Motherland.

A homestead patent award requires proof that the applicant meets the stringent
conditions48 set forth under Commonwealth Act No. 141, as amended, which
includes actual possession, cultivation, and improvement of the homestead. It must
be presumed, therefore, that Ciriaco underwent the rigid process and duly satisfied
the strict conditions necessary for the grant of his homestead patent application. As
such, it is highly implausible that the Motherland had been acquired and registered
by mistake or through fraud as would create an implied trust between the Imbornal
sisters and Ciriaco.

Hence, when OCT No. 1462 covering the Motherland was issued in his name
pursuant to Homestead Patent No. 24991 on December 15, 1933, Ciriaco’s title to
the Motherland had become indefeasible. It bears to stress that the proceedings for
land registration that led to the issuance of Homestead Patent No. 24991 and
eventually, OCT No. 1462 in Ciriaco’s name are presumptively regular and
proper,which presumption has not been overcome by the evidence presented by
Francisco, et al.

Consequently, as Francisco, et al. failed to prove their ownership rights over the
Motherland, their cause of action with respect to the First Accretion and,
necessarily, the Second Accretion, must likewise fail. A further exposition is
apropos.

As regards the third issue, being the owner of the land adjoining the foreshore
area, respondent is the riparian or littoral owner who has preferential right to lease
the foreshore area. Accordingly, therefore, alluvial deposits along the banks of a
creek or a river do not form part of the public domain as the alluvial property
automatically belongs to the owner of the estate to which it may have been added.
The only restriction provided for by law is that the owner of the adjoining property
must register the same under the Torrens system; otherwise, the alluvial property
may be subject to acquisition through prescription by third persons.

In this case, Francisco, et al. and, now, their heirs, i.e., herein petitioners are not
the riparian owners of the Motherland to which the First Accretion had attached,
hence, they cannot assert ownership over the First Accretion. Consequently, as the
Second Accretion had merely attached to the First Accretion, they also have no
right over the Second Accretion. Neither were they able to show that they acquired

48
these properties through prescription as it was ·not established that they were in
possession of any of them. Therefore, whether through accretion or, independently,
through prescription, the discernible conclusion is that Francisco et al. and/or
petitioners' claim of title over the First and Second Accretions had not been
substantiated, and, as a result, said properties cannot be reconveyed in their favor.
This is especially so since on the other end of the fray lie respondents armed with a
certificate of title in their names covering the First and Second Accretions coupled
with their possession thereof, both of which give rise to the superior credibility of
their own claim. Hence, petitioners' action for reconveyance with respect to both
accretions must altogether fail. WHEREFORE, the petition is DENIED.

Chu, Jr. vs. Caparas, 696 SCRA 324

FACTS: At the root of the case is a parcel of land located at Maguyam, Silang,
Cavite, originally owned and registered in the name of Miguela Reyes. The
petitioners filed a complaint to recover possession of the subject property against
the respondents, with a prayer to annul the sale of the such property executed
between the respondents. In the complaint, the petitioners alleged that they are
the successors-in-interest of Miguela over the subject property, which Carapas held
in trust for Miguela. The petitioners also averred that the property was erroneously
included in the sale of land between the respondents.

The petitioners’ evidence showed that the subject property was previously part of
the 51,151-square meter tract of land owned by Miguela at Maguyam, Silang,
Cavite. On July 5, 1975, Miguela sold to Caparas 25,000 square meters of the
eastern portion of the 51,151-square meter tract of land. Miguela retained for
herself the balance (or 26, 151 square meters) of the subject property, located at
the western portion of the original 51,151-square meter property. Further, the deed
of conveyance executed between Miguela and Caparas, entitled "Kasulatan ng
Tuluyang Bilihan ng Lupa," described the boundaries of the parcel of land purchased
by Caparas as: "sa ibaba ay Faustino Amparo, sa silangan ay Silang at Carmona
boundary, sa ilaya ay Aquilino Ligaya, at sa kanluran ay ang natitirang lupa ni
Miguela Reyes."

The petitioners asserted that more than fourteen (14) years later, Caparas caused
the preparation of a consolidated survey plan8 (Caparas survey plan) under her
name for several parcels of land (consolidated parcels of land) located at Silang-
Carmona, Cavite, with a total land area of 40,697 square meters. Under the
Caparas survey plan, the parcel of land supposedly retained by Miguela was
erroneously transferred to the eastern portion of the original 51,151-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 by Miguela
in the consolidated parcels of land through Caparas’ "Sinumpaang Salaysay ng
Pagpapatotoo"9 dated August 27, 1990.

The petitioners also alleged that on November 8, 1991, Caparas sold to the spouses
Perez the consolidated parcels of land in a deed entitled "Kasulatan ng Bilihang
Tuluyan." The petitioners claimed that included in the aforesaid sale was a parcel of
land with boundary description similar to the 25,000-square meter parcel of land
sold by Miguela to Caparas.

fter an ex parte hearing, the RTC ruled in the petitioners’ favor. The RTC, however,
refused to approve, for lack of authority, the new survey plan for the subject
property13 that the petitioners submitted.

49
The spouses Perez filed a petition for relief from judgment on the ground of
excusable negligence. The spouses Perez averred that the parcel of land sold to the
petitioners was not the subject property whose title had been confirmed in their
(spouses Perez’s) names. In the alternative, the spouses Perez claimed that they
bought the subject property in good faith and for value and had been in open,
continuous, public and adverse possession of it since 1991.

RTC dismissed the petitioners claim. CA confirmed.

ISSUES: WON there exists a trust relation between parties.

RULLING: In light of the above, the petitioners’ action against Caparas and the
spouses Perez for reconveyance, based on trust, must fail for lack of basis. An
action for reconveyance is a legal and equitable remedy that seeks to transfer or
reconvey property, wrongfully registered in another person’s name, to its rightful
owner.34 To warrant reconveyance of the land, the plaintiff must allege and prove,
among others,35 ownership of the land in dispute and the defendant’s erroneous,
fraudulent or wrongful registration of the property.36

In the present petition, the petitioners failed to prove that the parcel of land they
owned was the subject property. Logically, there is nothing to reconvey as what the
spouses Perez registered in their names did not include the parcel of land which the
petitioners, by their evidence, own.

We also see no trust, express or implied, created between the petitioners and the
spouses Perez over the subject property. A trust by operation of law is the right to
the beneficial enjoyment of a property whose legal title is vested in another.37 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.

SIME DARBY PILIPINAS, INC., v. JESUS B. MENDOZA, G.R. NO. 202247, June
19, 2013

FACTS: Petitioner Sime Darby Pilipinas, Inc. (Sime Darby) employed Jesus B.
Mendoza (Mendoza) as sales manager to handle sales, marketing, and distribution
of the company's tires and rubber products. On 3 July 1987, Sime Darby bought a
Class “A” club share4 in Alabang Country Club (ACC) from Margarita de Araneta as
evidenced by a Deed of Absolute Sale.5 The share, however, was placed under the
name of Mendoza in trust for Sime Darby since the By-Laws6 of ACC state that only
natural persons may own a club share.7 As part of the arrangement, Mendoza
endorsed the Club Share Certificate8 in blank and executed a Deed of Assignment,9
also in blank, and handed over the documents to Sime Darby. From the time of
purchase in 1987, Sime Darby paid for the monthly dues and other assessments on
the club share.

When Mendoza retired in April 1995, Sime Darby fully paid Mendoza his separation
pay amounting to more than P3,000,000. Nine years later, or sometime in July
2004, Sime Darby found an interested buyer of the club share for P1,101,363.64.
Before the sale could push through, the broker required Sime Darby to secure an

50
authorization to sell from Mendoza since the club share was still registered in
Mendoza’s name. However, Mendoza refused to sign the required authority to sell
or special power of attorney unless Sime Darby paid him the amount of P300,000,
claiming that this represented his unpaid separation benefits. As a result, the sale
did not push through and Sime Darby was compelled to return the payment to the
prospective buyer.

On 13 September 2005, Sime Darby filed a complaint10 for damages with writ of
preliminary injunction against Mendoza with the Regional Trial Court (RTC) of
Makati City, Branch 132. Sime Darby claimed that it was the practice of the
company to extend to its senior managers and executives the privilege of using and
enjoying the facilities of various club memberships, i.e. Manila Golf and Country
Club, Quezon City Sports Club, Makati Sports Club, Wack Wack Golf Club, and
Baguio Golf and Country Club. Sime Darby added that during Mendoza’s
employment with the company until his retirement in April 1995, Sime Darby
regularly paid for the monthly dues and other assessments on the ACC Class “A”
club share. Further, Sime Darby alleged that Mendoza sent a letter11 dated 9
August 2004 to ACC and requested all billings effective September 2004 be sent to
his personal address. Despite having retired from Sime Darby for less than 10 years
and long after the employment contract of Mendoza with the company has been
severed, Mendoza resumed using the facilities and privileges of ACC, to the damage
and prejudice of Sime Darby. Thus, Sime Darby prayed that a restraining order be
issued, pending the hearing on the issuance of a writ of preliminary injunction,
enjoining Mendoza from availing of the club’s facilities and privileges as if he is the
owner of the club share.

On 15 November 2005, Mendoza filed an Answer alleging ownership of the club

share. Mendoza stated that Sime Darby purchased the Class “A” club share and
placed it under his name as part of his employee benefits and bonus for past
exemplary service. Mendoza admitted endorsing in blank the stock certificate
covering the club share and signing a blank assignment of rights only for the
purpose of securing Sime Darby’s right of first refusal in case he decides to sell the
club share. Mendoza also alleged that when he retired in 1995, Sime Darby failed to
give some of his retirement benefits amounting to P300,000. Mendoza filed a
separate Opposition to Sime Darby’s application for restraining order and
preliminary injunction stating that there was no showing of grave and irreparable
injury warranting the relief demanded.

(RTC favored Sime Darby, CA favored Mendozoa)

ISSUE: WON Mendoza is the owner of the club share.

RULLING: Petitioner Sime Darby has sufficiently established its right over the
subject club share. Sime Darby presented evidence that it acquired the Class “A”
club share of ACC in 1987 through a Deed of Sale. Being a corporation which is
expressly disallowed by ACC’s By-Laws to acquire and register the club share under
its name, Sime Darby had the share registered under the name of respondent
Mendoza, Sime Darby’s former sales manager, under a trust arrangement. Such
fact was clearly proved when in the application form17 dated 17 July 1987 of the
ACC for the purchase of the club share, Sime Darby placed its name in full as the
owner of the share and Mendoza as the assignee of the club share. Also, in
connection with the application for membership, Sime Darby sent a letter18 dated
17 September 1987 addressed to ACC confirming that “Mendoza, as Sime Darby’s
Sales Manager, is entitled to club membership benefit of the Company.”

Even during the trial, at Mendoza’s cross-examination, Mendoza identified his

signature over the printed words “name of assignee” as his own and when
confronted with his Reply-Affidavit, he did not refute Sime Darby’s ownership of the
club share as well as Sime Darby’s payment of the monthly billings from the time

51
the share was purchased.19 Further, Mendoza admitted signing the club share
certificate and the assignment of rights, both in blank, and turning it over to Sime
Darby. Clearly, these circumstances show that there existed a trust relationship
between the parties.

While the share was bought by Sime Darby and placed under the name of Mendoza,
his title is only limited to the usufruct, or the use and enjoyment of the club’s
facilities and privileges while employed with the company. In Thomson v. Court of
Appeals,20 we held that a trust arises in favor of one who pays the purchase price
of a property in the name of another, because of the presumption that he who pays
for a thing intends a beneficial interest for himself. While Sime Darby paid for the
purchase price of the club share, Mendoza was given the legal title. Thus, a
resulting trust is presumed as a matter of law. The burden then shifts to the
transferee to show otherwise.

SPOUSES CELSO DICO, SR. AND ANGELES DICO, vs. VIZCAYA

MANAGEMENT CORPORATION, G.R. No. 161211, July 17, 2013

FACTS: Celso Dico was the registered owner of Lot No. 486 of the Cadiz Cadastre,
comprising an area of 67,300 square meters and covered by Transfer Certificate of
Title (TCT) No. 22922 of the land records of Negros Occidental. Lot No. 486 was
adjacent to Lot No. 29-B and Lot No. 1412 (formerly Lot No. 1118-B), both also of
the Cadiz Cadastre. Celso and his wife Angeles resided on Lot No. 486 since 1958.
On May 30, 1964, Angeles filed in the District Office of the Bureau of Lands in
Bacolod City, her free patent application covering a portion of Lot No. 29-B. On his
part, Celso also filed in the same office an application for free patent covering Lot
No. 1412. It does not appear, however, that the Bureau of Lands acted on their
applications.

Respondent Vizcaya Management Corporation (VMC) was the registered owner

under TCT No. T-41835 of Lot No. 29-B, also of the Cadiz Cadastre, comprising an
area of 369,606 square meters, more or less.3 VMC derived its title to Lot No. 29-B
from Eduardo and Cesar, both surnamed Lopez, the registered owners under TCT
No. T-14827, which emanated from TCT No. RT-9933 (16739) in the names of
Victoria, Eduardo and Cesar, all surnamed Lopez. TCT No. RT-9933 (16739) was a
transfer from TCT No. T-14281, which had been transferred from Original
Certificate of Title (OCT) No. 21331 in the name of Negros Philippines Lumber
Company. OCT No. 21331 was issued pursuant to Decree No. 190483 of G.L.R.O.
Cadastral Record No. 196.

VMC likewise claimed to be the owner of Lot No. 1412, formerly known as Lot No.
1118-B, also of the Cadiz Cadastre, containing an area of 85,239 square meters,
more or less, and registered in its name under TCT No. T-41834.4

Lot Nos. 1426-B, with an area of 6,635 square meters covered by TCT No. T-24135,
and 1426-C, with an area of 6,107 square meters covered by TCT No. T-24136,
appear to be registered in the names of Eduardo Lopez and Cesar Lopez, who had
earlier formed VMC.

In 1967, VMC, then newly formed, caused the consolidation and subdivision of Lot
No. 29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C. The consolidation-
subdivision plan was prepared by Engr. Ricardo Quilop and filed in the Land
Registration Commission (LRC), renamed National Land Titles and Deeds
Registration Administration, but presently known as the Land Registration
Authority. The consolidation-subdivision plan was assigned the number (LRC) PCS-
6611. On July 26, 1967, LRC Commissioner Antonio L. Noblejas approved the

52
consolidation-subdivision plan, resulting in Lot No. 29-B, Lot No. 1412, Lot No.
1426-B, and Lot No. 1426-C being consolidated and subdivided as follows: Lot No.
1 with an area of 238,518 square meters under TCT No. T-47854; Lot No. 2 with an
area of 216,176 square meters under TCT No. T-47855; Lot No. 3 with an area of
11,496 square meters under TCT No. T-47856; and Lot No. 4 with an area of
15,392 square meters under TCT No. T-47857.5 In all, the total landholding of VMC
after the consolidation was 481,583 square meters.

VMC proceeded to develop the Don Eusebio Subdivision project using Lot No. 1 of
the consolidation-subdivision plan under (LRC) PCS-6611. The subdivision plan
under PSD-102560 subdivided Lot No. 1 into 547 small lots. Subsequently, VMC
also developed the Cristina Village Subdivision project using Lots Nos. 2, 3, and 4
under (LRC) PCS-6611. Under PSD-12746 of the subdivision plan for Cristina Village
Subdivision, consolidated Lots Nos. 2, 3, and 4 were subdivided into 348 small lots.
Starting 1971, VMC sold lots in its Don Eusebio Subdivision and Cristina Village
Subdivision.

In 1981, VMC filed against the Dicos a complaint for unlawful detainer in the City
Court of Cadiz (Civil Case No. 649). On April 24, 1981, the City Court of Cadiz
rendered its decision in favor of VMC, ordering the Dicos to demolish the concrete
water gate or sluice gate (locally known as trampahan) located inside Lot No. 1,
Block 3 of the Cristina Village Subdivision. Inasmuch as the Dicos did not appeal,
the decision attained finality. On July 3, 1981, the City Court of Cadiz issued a writ
of execution. On November 11, 1985, a second alias writ of execution was issued.

On May 12, 1986, the Dicos commenced an action for the annulment and
cancellation of the titles of VMC (Civil Case No. 180-C), impleading VMC, the
National Land Titles and Deeds Registration Administration, and the Director of the
Bureau of Lands. On March 12, 1987, the Dicos amended the complaint. They
averred, among others, that they were the registered owners of Lot No. 486 and
the possessors-by-succession of Lot No. 1412 (formerly Lot No. 1118) and Lot No.
489; that VMC had land-grabbed a portion of their Lot No. 486 totaling 111,966
square meters allegedly brought about by the expansion of Cristina Village
Subdivision; and that on May 30, 1964 they had filed free patent applications in the
Bureau of Lands for Lot No. 1412 and Lot No. 489.6 They prayed that the
possession of Lot No. 486, Lot No. 1412, and Lot No. 489 be restored to them; and
that the judgment in Civil Case No. 649 be annulled.

ISSUE: WON prescription already barred petitioners’ cause of action.

RULLING: The CA correctly pointed out that under Article 1456 of the Civil Code,
the person obtaining property through mistake or fraud is considered by force of
law a trustee of an implied trust for the benefit of the person from whom the
property comes. Under Article 1144, Civil Code, an action upon an obligation
created by law must be brought within 10 years from the time the right of action
accrues. Consequently, an action for reconveyance based on implied or constructive
trust prescribes in 10 years.

Here, the CA observed that even granting that fraud intervened in the issuance of
the transfer certificates of title, and even assuming that the Dicos had the
personality to demand the reconveyance of the affected property on the basis of
implied or constructive trust, the filing of their complaint for that purpose only on
May 12, 1986 proved too late for them.

That observation was correct and in accord with law and jurisprudence. Verily, the
reckoning point for purposes of the Dicos’ demand of reconveyance based on fraud
was their discovery of the fraud. Such discovery was properly pegged on the date
of the registration of the transfer certificates of title in the adverse parties’ names,

53
because registration was a constructive notice to the whole world.19 The long
period of 29 years that had meanwhile lapsed from the issuance of the pertinent
transfer certificate of title on September 30, 1934 (the date of recording of TCT No.
RT-9933 (16739) in the name of the Lopezes) or on November 10, 1956 (the date
of recording of TCT No. T-41835 in VMC’s name) was way beyond the prescriptive
period of 10 years.

SPOUSES JOSE BEJOC and JOVITA CAPUTOL BEJOC vs. PRIMA CALDERON
CABREROS and COURT OF APPEALS, G.R. No. 145849. July 22, 2005

FACTS: The original owner of the disputed parcels of land was Maura Caputol, the
mother-in-law of respondent. On November 7, 1975, Maura Caputol executed a
deed of donation inter vivos in favor of her son, Domingo Cabreros. The latter
accepted the donation in the same instrument.

Domingo and his wife, respondent Prima Cabreros, took physical possession of the
lots. In 1976, they had the tax declarations in the name of Maura Caputol cancelled
and transferred to them.

When the new owners and Maura Caputol migrated to Hawaii, they left the charge
and administration of the land to petitioner spouses. Aside from being the uncle and
aunt of Domingo, they were chosen as caretakers because they had been the
overseers of the properties even before the donation to Domingo.

When Domingo died in Hawaii in 1979, his forced heirs, respondent Prima and a
minor daughter, succeeded to his estate.

Sometime in October 1989, respondent Prima made a visit to the Philippines and
went to Danao City, Cebu. She heard rumors that petitioner spouses were
exercising acts of ownership over the disputed land. With her mother-in law Maura
Caputol, she confronted petitioners about the rumors but the latter initially denied
the accusations. Later on, however, they claimed that Maura Caputol gave the
properties to them, an allegation disclaimed by Maura who said it was no longer
possible for her to give the properties to her younger sister, petitioner Jovita,
because she had already donated them to her son Domingo in 1975.

Respondent further found that the petitioner spouses applied for a free patent on
the properties. On October 17, 1984, Original Certificate of Title (OCT) No. 26947
was issued to petitioner Jose Bejoc by virtue of free patent no. (VII-5)17844 which
he was able to obtain.

Earnest efforts to have the controversy settled out of court were unsuccessful as
petitioners even dared respondent to sue them in court. Consequently, the
respondent filed an action for reconveyance against the petitioner spouses on
February 1, 1990 before Branch 17, Regional Trial Court (RTC) of Cebu.

In their answer, petitioners alleged that they had been in possession of the parcels
of land as administrators since 1974 and as absolute owners since 1978. They
claimed that Maura Caputol never donated the parcels of land to her son Domingo.

On December 24, 1978, Maura Caputol allegedly sold the subject properties to
petitioners for ₱5,000 in a deed of sale. This sale was later on confirmed in another
document dated May 18, 1984. From then on, they exercised their rights as owners
of the land and paid the taxes due beginning 1979. They also successfully applied

54
for a free patent on the properties. In 1984, they were issued an original certificate
of title.

Lastly, they contended that, even assuming the truth of respondent’s allegations,
the action for reconveyance was already barred by prescription.

ISSUE: whether or not respondent’s action for reconveyance has prescribed.

RULING: A resulting trust is 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 itself.14 It is based on the equitable doctrine that valuable
consideration, not legal title, determines the equitable title or interest.15

A constructive trust is created, not by any word evincing a direct intention to create
a trust, but by operation of law in order to satisfy the demands of justice and to
prevent unjust enrichment. It arises contrary to an agreement or 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.16 A
constructive trust is illustrated in Article 1456 of the Civil Code:

ARTICLE 1456. If the 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.

The right to seek reconveyance based on an implied or constructive trust is not

absolute. It is subject to extinctive prescription. On this point, petitioners insist that
the action prescribed in 4 years as held in the case of Millena v. Court of Appeals.
Petitioners’ insistence is, however, misplaced. The 4-year prescriptive period is not
applicable in the present case because the action was not based exclusively on
fraud but on implied trust. Significantly, petitioners overlooked the well-settled rule,
reiterated in the same case, that an action for reconveyance based on implied or
constructive trust prescribes in 10 years.

This period is reckoned from the date of the issuance of the original certificate of
title or transfer certificate of title. Since such issuance operates as a constructive
notice to the whole world, the discovery of the fraud is deemed to have taken place
at that time. Here, the title was issued on October 17, 1984. The action for
reconveyance was, on the other hand, filed 6 years later, on February 1, 1990.
Clearly, prescription had not yet attached. The suit was brought well within the 10-
year prescriptive period for implied trusts.

Heirs of TranquilinoLabiste, et.al. v. Heirs of Jose Labiste, et.al., G.R. No.

162033; May 8, 2009

FACTS: On 29 September 1919, the late Epifanio Labiste (Epifanio), on his own and
on behalf of his brothers and sisters who were the heirs of Jose Labiste (Jose),
purchased from the Bureau of Lands Lot No. 1054 of the Banilad Friar Lands Estate,
with an area of 13,308 square meters, located at Guadalupe, Cebu City for
₱36.00.4 Subsequently, on 9 June 1924, then Bureau of Lands Director Jorge B.
Vargas executed Deed of Conveyance No. 12536 selling and ceding Lot No. 1054 to
Epifanio and his brothers and sisters who were the heirs of Jose.5

After full payment of the purchase price but prior to the issuance of the deed of
conveyance, Epifanio executed an Affidavit6 (Affidavit of Epifanio) in Spanish on 10
July 1923 affirming that he, as one of the heirs of Jose, and his uncle and

55
petitioners’ predecessor-in-interest, Tranquilino Labiste (Tranquilino), then co-
owned Lot No. 1054 because the money that was paid to the government came
from the two of them. Tranquilino and the heirs of Jose continued to hold the
property jointly.

Sometime in 1928, the Register of Deeds of Cebu City issued Original Certificate of
Title No. 3878 for Lot No. 1054. On 2 May 1928, Engineer Espiritu Bunagan (Engr.
Bunagan), Deputy Public Land Surveyor, subdivided Lot No. 1054 into two lots: Lot
No. 1054-A with an area of 6,664 square meters for Tranquilino and Lot No. 1054-B
with an area of 6,664 square meters for Epifanio. The subdivision plan prepared by
Engr. Bunagan was approved by Jose P. Dans, Acting Director of Lands on 28
October 1928.7

Subsequently, on 18 October 1939, the heirs of Tranquilino8 purchased the one-

half (1/2) interest of the heirs of Jose9 over Lot No. 1054 for ₱300.00, as evidenced
by the Calig-onan sa Panagpalit executed by the parties in the Visayan dialect. The
heirs of Tranquilino immediately took possession of the entire lot.

When World War II broke out, the heirs of Tranquilino fled Cebu City and when they
came back they found their homes and possessions destroyed. The records in the
Office of the Register of Deeds, Office of the City Assessor and other government
offices were also destroyed during the war. Squatters have practically overrun the
entire property, such that neither petitioners nor respondents possess it.

In October 1993, petitioners learned that one of the respondents, Asuncion Labiste,
had filed on 17 September 1993 a petition for reconstitution of title over Lot No.
1054. Petitioners opposed the petition at first but by a compromise agreement
between the parties dated 25 March 1994, petitioners withdrew their opposition to
expedite the reconstitution process. Under the compromise agreement, petitioners
were to be given time to file a complaint so that the issues could be litigated in an
ordinary action and the reconstituted title was to be deposited with the Clerk of
Court for a period of sixty (60) days to allow petitioners to file an action for
reconveyance and to annotate a notice of lis pendens. The Register of Deeds of
Cebu City issued the reconstituted title, TCT No. RT-7853, in the name of "Epifanio
Labiste, married to Tomasa Mabitad, his brothers and sisters, heirs of Jose Labiste"
on 14 December 1994. However, respondents did not honor the compromise
agreement.

Petitioners filed a complaint for annulment of title seeking the reconveyance of

property and damages on 13 January 1995, docketed as Civil Case No. CEB-16943,
with the RTC of Cebu City. Respondents claimed that the Affidavit of Epifanio and
the Calig-onan sa Panagpalit were forgeries and that petitioners’ action had long
prescribed or barred by laches.

ISSUE: Whether or not petitioners’ cause of action has prescribed.

RULLING: NO.

The Court of Appeals erred in applying the rules on prescription and the principle of
laches because what is involved in the present case is an express trust.

Trust is the right to the beneficial enjoyment of property, the legal title to which is
vested in another. It is a fiduciary relationship that obliges the trustee to deal with
the property for the benefit of the beneficiary. Trust relations between parties may
either be express or implied. An express trust is created by the intention of the
trustor or of the parties. An implied trust comes into being by operation of law.

Express trusts 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

56
intention to create a trust.Under Article 1444 of the Civil Code, "[n]o particular
words are required for the creation of an express trust, it being sufficient that a
trust is clearly intended." The Affidavit of Epifanio is in the nature of a trust
agreement. Epifanio affirmed that the lot brought in his name was co-owned by
him, as one of the heirs of Jose, and his uncle Tranquilino. And by agreement, each
of them has been in possession of half of the property. Their arrangement was
corroborated by the subdivision plan prepared by Engr. Bunagan and approved by
Jose P. Dans, Acting Director of Lands.

As such, prescription and laches will run only from the time the express trust is
repudiated. The Court has held that for acquisitive prescription to bar the action of
the beneficiary against the trustee in an express trust for the recovery of the
property held in trust it must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b)
such positive acts of repudiation have been made known to the cestui que trust,
and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on
the fact that the Torrens title was issued in the name of Epifanio and the other heirs
of Jose. It has been held that a trustee who obtains a Torrens title over property
held in trust by him for another cannot repudiate the trust by relying on the
registration. The rule requires a clear repudiation of the trust duly communicated to
the beneficiary. The only act that can be construed as repudiation was when
respondents filed the petition for reconstitution in October 1993. And since
petitioners filed their complaint in January 1995, their cause of action has not yet
prescribed, laches cannot be attributed to them.

LOPEZ v. CA G.R. No. 157784 December 16, 2008December 16, 2008

FACTS: The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their
union did not bear any children. Juliana was the owner of several properties, among
them, the properties subject of this dispute. The disputed properties totaling more
than 1,500 hectares consist of six parcels of land, which are all located in Batangas.
They were the exclusive paraphernal properties of Juliana together with a parcel of
land situated in Mindoro known as Abra de Ilog and a fractional interest in a
residential land on Antorcha St., Balayan, Batangas.

On 23 March 1968, Juliana executed a notarial will,4 whereby she expressed that
she wished to constitute a trust fund for her paraphernal properties, denominated
as Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to be administered by her
husband. If her husband were to die or renounce the obligation, her nephew,
Enrique Lopez, was to become administrator and executor of the Fideicomiso. Two-
thirds (2/3) of the income from rentals over these properties were to answer for the
education of deserving but needy honor students, while one-third 1/3 was to
shoulder the expenses and fees of the administrator. As to her conjugal properties,
Juliana bequeathed the portion that she could legally dispose to her husband, and
after his death, said properties were to pass to her biznietos or great grandchildren.

Juliana initiated the probate of her will five (5) days after its execution, but she died
on 12 August 1968, before the petition for probate could be heard. The petition was
pursued instead in Special Proceedings (S.P.) No. 706 by her husband, Jose, who
was the designated executor in the will.

On 25 August 1969, the probate court issued an order approving the project of
partition. As to the properties to be constituted into the Fideicomiso, the probate
court ordered that the certificates of title thereto be cancelled, and, in lieu thereof,
new certificates be issued in favor of Jose as trustee of the Fideicomiso covering
one-half (1/2) of the properties listed under paragraph 14 of the project of
partition; and regarding the other half, to be registered in the name of Jose as heir

57
of Juliana. The properties which Jose had alleged as registered in his and Juliana's
names, including the disputed lots, were adjudicated to Jose as heir, subject to the
condition that Jose would settle the obligations charged on these properties. The
probate court, thus, directed that new certificates of title be issued in favor of Jose
as the registered owner thereof in its Order dated 15 September 1969. On even
date, the certificates of title of the disputed properties were issued in the name of
Jose.

Jose died on 22 July 1980, leaving a holographic will disposing of the disputed
properties to respondents. The will was allowed probate on 20 December 1983 in
S.P. No. 2675 before the RTC of Pasay City. Pursuant to Jose's will, the RTC ordered
on 20 December 1983 the transfer of the disputed properties to the respondents as
the heirs of Jose. Consequently, the certificates of title of the disputed properties
were cancelled and new ones issued in the names of respondents.
Petitioner's father, Enrique Lopez, also assumed the trusteeship of Juliana's estate.
On 30 August 1984, the RTC of Batangas, Branch 9 appointed petitioner as trustee
of Juliana's estate in S.P. No. 706. On 11 December 1984, petitioner instituted an
action for reconveyance of parcels of land with sum of money before the RTC of
Balayan, Batangas against respondents. The complaint5 essentially alleged that
Jose was able to register in his name the disputed properties, which were the
paraphernal properties of Juliana, either during their conjugal union or in the course
of the performance of his duties as executor of the testate estate of Juliana and
that upon the death of Jose, the disputed properties were included in the inventory
as if they formed part of Jose's estate when in fact Jose was holding them only in
trust for the trust estate of Juliana.

ISSUE: WON an implied trust was constituted over the disputed

properties when Jose, the trustee, registered them in his name.

RULING: The disputed properties were excluded from the Fideicomiso at the
outset. Jose registered the disputed properties in his name partly as his conjugal
share and partly as his inheritance from his wife Juliana, which is the
complete reverse of the claim of the petitioner, as the new trustee, that the
properties are intended for the beneficiaries of the Fideicomiso. Furthermore,
the exclusion of the disputed properties from the Fideicomiso was approved by
the probate court and, subsequently, by the trial court having jurisdiction over the
Fideicomiso. The registration of the disputed properties in the name of Jose was
actually pursuant to a court order. The apparent mistake in the adjudication of
the disputed properties to Jose created a mere implied trust of the
constructive variety in favor of the beneficiaries of the Fideicomiso.

An action for reconveyance based on implied or constructive trust prescribes in 10

years. This period is reckoned from the date of the issuance of the original
certificate of title or transfer certificate of title. Since such issuance operates as a
constructive notice to the whole world, the discovery of the fraud is deemed to have
taken place at that time.

In the instant case, the ten-year prescriptive period to recover the disputed
property must be counted from its registration in the name of Jose on 15
September 1969, when petitioner was charged with constructive notice that Jose
adjudicated the disputed properties to himself as the sole heir of Juana and not as
trustee of the Fideicomiso.

58
VDA. DE ESCONDE vs. CA, G.R. No. 103635 February 1, 1996

FACTS: Petitioners Constancia, Benjamin and Elenita, and private respondent

Pedro, are the children of the late Eulogio Esconde and petitioner Catalina Buan.
Eulogio Esconde was one of thechildren and heirs of Andres Esconde. Andres is the
brother of Estanislao Esconde, the originalowner of the disputed lot who died
without issue on April 1942. Survived by his only brother, Andres, Estanislao left an
estate consisting of four (4) parcels of land in Samal, Bataan. Eulogiodied in April,
1944 survived by petitioners and private respondent. At that time, Lazara
andCiriaca, Eulogio's sisters, had already died without having partitioned the estate
of the lateEstanislao Esconde. On December 5, 1946, the heirs of Lazara, Ciriaca
and Eulogio executed adeed of extrajudicial partition. Since the children of Eulogio,
with the exception of Constancia,were then all minors, they were represented by
their mother and judicial guardian, petitioner Catalina Buan vda. de Esconde who
renounced and waived her usufructuary rights over theparcels of land in favor of
her children in the same deed.Sometime in December of 1982, Benjamin
discovered that Lot No. 1700 was registered in thename of his brother, private
respondent. Believing that the lot was co-owned by all the childrenof Eulogio
Esconde, Benjamin demanded his share of the lot from private respondent.
However,private respondent asserted exclusive ownership thereof pursuant to the
deed of extrajudicialpartition. Hence, on June 29, 1987, petitioners herein filed a
complaint before the RTC of Bataan against private respondent for the annulment
of TCT No. 394. In its decision of July 31,1989, the lower court ruled that the action
had been barred by both prescription and laches.Hence, petitioners elevated the
case to the CA which affirmed the lower court's decision.

ISSUE: WON Court of Appeals was right on denying their appeal by reason of
prescription.

RULING: Trust is the legal relationship between one person having an equitable
ownership inproperty and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter. In the case at bench,
petitioner Catalina Buan vda. de Esconde, as mother and legal guardian of her
children, appears to have favored her elder son, private respondent, in allowing
that he be given Lot No. 1700 in its entirety in the extrajudicial partition of the
Esconde estate to the prejudice of her other children. After the TCT No. 394 was
handed to him by his mother, private respondent exercised exclusive rights of
ownership therein to the extent of even mortgaging the lot when he needed money.
If, as petitioners insist, a mistake was committed in allotting Lot No. 1700 to
private respondent, then a trust relationship was created between them and private
respondent. However, private respondent never considered himself a trustee. If he
allowed his brother Benjamin to construct or make improvements thereon, it
appears to have been out of tolerance to a brother. Consequently, if indeed, by
mistake, private respondent was given the entirety of Lot No. 1700, the trust
relationship between him and petitioners was a constructive, not resulting, implied
trust. Petitioners, therefore, correctly questioned private respondent’s exercise of
absolute ownership over the property. Unfortunately, however, petitioners assailed
it long after their right to do so have prescribed. The rule that a trustee cannot
acquire by prescription ownership over property entrusted to him until and unless
he repudiates the trust, applies to express trusts and resulting implied trusts.
However, in constructive implied trusts, prescription may supervene even if the
trustee does not repudiate the relationship. Necessarily, repudiation of the said
trust is not a condition precedent to the running of the prescriptive period. Since
the action for the annulment of private respondent’s title to Lot No. 1700 accrued
during the effectivity of Act No. 190, Section 40 of Chapter III thereof applies.
Thus, in Heirs of Jose Olviga v. Court of Appeals, the Court ruled that the ten-year

59
prescriptive period for an action for reconveyance of real property based on implied
or constructive trust which is counted from the date of registration of the property,
applies when the plaintiff is not in possession of the contested property. In this
case, private respondent, not petitioners who instituted the action, is in actual
possession of Lot No. 1700.Having filed their action only on June 29, 1987,
petitioners’ action has been barred by prescription. Not only that. Laches has also
circumscribed the action for, whether the implied trust is constructive or resulting,
this doctrine applies. It is tragic that a land dispute has once again driven a wedge
between brothers. However, credit must be given to petitioner Benjamin Esconde
for resorting to all means possible in arriving at a settlement between him and his
brother. Unfortunately, his efforts proved fruitless. Even the action he brought
before the court was filed too late. On the other hand, private respondent should
not be unjustly enriched by the improvements introduced by his brother on Lot No.
1700 which he himself had tolerated. He is obliged by law to indemnify his brother,
petitioner Benjamin Esconde, for whatever expenses the latter had incurred.

ISAAC, SEVERINO, MARIA, TELESFORA, FELISA, SERAPIO, SIMEON and

MACARIA all surnamed PANGAN vs. COURT OF APPEALS and TEODORA
GARCIA, G.R. No. L-39299 October 18, 1988

FACTS: In 1964, the petitioners filed an application for the registration of the land
in their names by virtue of their continuous and exclusive possession thereof since
1895, by themselves and their father and grandfather before them. After proper
notices by publication and posting as required, the trial court issued an order of
general default, there being no opposition to the application, and proceeded to hear
the evidence of the applicants ex-parte. On the basis thereof, the application was
approved on March 31, 1966.

On June 8, 1966, the herein private respondent filed a petition to set aside the said
decision, which the trial Court granted, 3 admitting at the same time her opposition
to the application and setting the case for reception of her evidence. This evidence
sought to show that the land was inherited by Leon Hilario's three children, but the
son, Felicisimo, waived his right thereto and thereby made his two sisters, Silvestra
and Catalina, its exclusive co-owners. As Catalina's daughter, she was entitled to
one-half of the property, the other half going to Silvestra's heirs, the petitioners
herein and the latter's
grandchildren.

On September 13, 1968, the trial judge issued an order dismissing the opposition
and reinstating his original order of March 31,1966. 5 His reason was that whatever
rights Teodora might have had over the property had been forfeited by extinctive
prescription because she had left the land in 1942 and had not since then asserted
any claim thereto until 1966.

On appeal to the respondent court, this decision was reversed on the ground that
the appellees had not clearly proved that they had acquired the property by
prescription. Hence, the appellant was entitled to one-half of the property as heir,
conformably to her opposition in the court a quo. Their motion for reconsideration
having been denied, they have now come to this Court in a petition for review by
certiorari under Rule 45 of the Rules of Court.

ISSUE: WON respondent court erred in holding that the private respondent was
entitled to one-half of the land, which she had not lost by extinctive prescription
because it was held by them in trust for her.

60
RULING: It is a settled rule that possession by one co-owner will not be regarded
as adverse to the other co-owners but in fact as beneficial to all of them. 9 Hence,
as long as his co-ownership is recognized, an action to compel partition will not
prescribe and may be filed at any time against the actual possessor by any of the
other co-owners. 10 However, if the co-owner actually holding the property asserts
exclusive dominion over it against the other co-owners, the corollary of the rule is
that he can acquire sole title to it after the lapse of the prescribed prescriptive
period. From that moment, the question involved will be one of ownership and no
longer mere partition.

the petitioners have acted in bad faith in denying their aunt and co-heir her legal
share to the property they had all inherited from Leon Hilario through their
respective parents. This is regrettable as Teodora Garcia is their father's first cousin
who apparently trusted him and, indeed, relied on his promise that her share would
be protected. Tomas Pangan presumably was sincere in this assurance, but it was
unfortunately not honored by his children upon his death for they soon dismissed
out of hand Teodora Garcia's claim to the subject property.

In cases where there is a clear showing of imposition and improper motives, the
courts must be vigilant in the protection of the rights of the exploited. 21 So said
the respondent court, and we agree, We note that the private respondent "is a poor
and ignorant 62-year old widow" * whose misplaced trust in her nephews and
nieces is being used now precisely to defeat her claim to the share that she believes
is rightfully hers. It is a sorry spectacle, indeed, to see her own close kin longing up
on her, so to speak, to deprive her of her small heritage, and in her old age at that.

With all this in mind, we affirm the finding of the respondent court that there was
no adequate notice by the petitioners to the private respondent of the rejection of
her claim to her share in the subject property. Noticeably absent here is a
categorical assertion by the petitioners of their exclusive right to the entire property
that barred her own claim of ownership of one-half thereof nor is there any
explanation as to why they said she had no right to a share. If this trusting woman
did not immediately take legal action to protect her rights, it was simply because of
forbearance toward her nephews and nieces, let alone the fact that there was really
no cases belli as yet that required her to act decisively. That legal provocation arose
only when the petitioners commenced the registration proceedings in 1965, and it
was from that time she was required to act, as she did, to protect her interests.

In an earlier case 22 we stressed that this Court is not only a court of law but also
of justice. Faced with a choice between a decision that will serve justice and
another that will deny it because of a too strict interpretation of the law, we must
resolve in favor of the former, for the ultimate end of the law is justice. Bonus
judex secundum aequum at bonum judicat stricto juri praefert. This is a wise
maxim we will follow here in ruling for the deprived and ignorant old widow.

JOVITA YAP ANCOG, and GREGORIO YAP, JR. v. COURT OF APPEALS,

ROSARIO DIEZ, and CARIDAD YAP, G.R. No. 112260, June 30, 1997

FACTS: The land, with improvements thereon, was formerly the conjugal property
of the spouses Gregorio Yap and Rosario Diez. In 1946, Gregorio Yap died, leaving
his wife, private respondent Rosario Diez, and children, petitioners Jovita Yap Ancog
and Gregorio Yap, Jr., and private respondent Caridad Yap as his heirs.
In 1954 and again 1958, Rosario Diez obtained loans from the Bank of Calape,
secured by a mortgage on the disputed land, which was annotated on its OCT.
When Rosario Diez applied again for a loan to the bank, offering the land in
question as security, the banks lawyer, Atty. Narciso de la Serna, suggested that

61
she submit an extrajudicial settlement covering the disputed land as a means of
facilitating the approval of her application. The suggestion was accepted and on
April 4, 1961, Atty. de la Serna prepared an extrajudicial settlement, which the
heirs, with the exception of petitioner Gregorio Yap, Jr., then only 15 years old,
signed. The document was notarized by Atty. de la Serna on April 12, 1961. As a
result, OCT No. 622 was cancelled and Transfer Certificate of Title No. 3447 (T-
2411) was issued on April 13, 1961. On April 14, 1961, upon the execution of a real
estate mortgage on the land, the loan was approved by the bank.

Rosario Diez exercised rights of ownership over the land. In 1985, she brought an
ejectment suit against petitioner Jovita Yap Ancogs husband and son to evict them
from the ground floor of the house built on the land for failure to pay rent. Shortly
thereafter, petitioner Jovita Ancog learned that private respondent Rosario Diez had
offered the land for sale.

Petitioner Ancog immediately informed her younger brother, petitioner Gregorio

Yap, Jr., who was living in Davao, of their mother;s plan to sell the land. On June 6,
1985, they filed this action for partition in the RTC of Bohol. As private respondent
Caridad Yap was unwilling to join in the action against their mother, Caridad was
impleaded as a defendant.

Petitioners alleged that the extrajudicial instrument was simulated and therefore
void. They claimed that in signing the instrument they did not really intend to
convey their interests in the property to their mother, but only to enable her to
obtain a loan on the security of the land to cover expenses for Caridads school fees
and for household repairs.

The trial court rendered judgment dismissing petitioners’ action.

It dismissed petitioners claim that the extrajudicial settlement was simulated and
held it was voluntarily signed by the parties. Observing that even without the need
of having title in her name Rosario Diez was able to obtain a loan using the land in
question as collateral, the court held that the extrajudicial settlement could not
have been simulated for the purpose of enabling her to obtain another loan.
Petitioners failed to overcome the presumptive validity of the extrajudicial
settlement as a public instrument.

The court instead found that petitioner Ancog had waived her right to the land, as
shown by the fact that on February 28, 1975, petitioners’ husband, Ildefonso
Ancog, leased the property from private respondent Diez. Furthermore, when the
spouses Ancog applied for a loan to the Development Bank of the Philippines using
the land in question as collateral, they accepted an appointment from Rosario Diez
as the latters attorney-in-fact.

The court also found that the action for partition had already prescribed. The
registration of the land under private respondent Rosario Diezs name amounted to
a repudiation of the co-ownership. Therefore, petitioners had ten (10) years from
April 13, 1961 within which to bring an action to recover their share in the property.
While it is true that petitioner Gregorio Yap, Jr. was a minor at the time the
extrajudicial settlement was executed, his claim, according to the court, was barred
by laches.

CA: upheld the validity of the extrajudicial settlement and sustained the trial courts
dismissal of the case. The appellate court emphasized that the extrajudicial
settlement could not have been simulated in order to obtain a loan, as the new loan
was merely in addition to a previous one which private respondent Diez had been
able to obtain even without an extrajudicial settlement. Neither did petitioners
adduce evidence to prove that an extrajudicial settlement was indeed required in
order to obtain the additional loan.

62
ISSUES:
(1) WHETHER OR NOT THE CONTESTED EXTRAJUDICIAL SETTLEMENT IS A
SIMULATED ONE; AND
(2) PETITIONER GREGORIO YAP, JR., ONE OF THE CO-OWNERS OF THE LITIGATED
PROPERTY, HAD LOST HIS RIGHTS TO THE PROPERTY THROUGH PRESCRIPTION
OR LACHES

RULING:
(1) Both the trial court and the Court of Appeals correctly acted in upholding the
extrajudicial settlement but erred in ruling that petitioner Gregorio Yap, Jr. was
barred by laches from recovering his share in the property in question. The heirs
(Jovita Yap Ancog and Caridad Yap) meant the extrajudicial settlement to be fully
effective is shown by the fact that Rosario Diez performed acts of dominion over the
entire land, beginning with its registration, without any objection from them.
Instead, petitioner Jovita Ancog agreed to lease the land from her mother, private
respondent Rosario Diez, and accepted from her a special power of attorney to use
the land in question as collateral for a loan she was applying from the DBP. Indeed,
it was private respondent Diez who paid the loan of the Ancogs in order to secure
the release of the property from mortgage.

(2) the Court of Appeals erred in ruling that the claim of petitioner Gregorio Yap, Jr.
was barred by laches. In accordance with Rule 74 of the Rules of Court, as he did
not take part in the partition, he is not bound by the settlement. It is
uncontroverted that, at the time the extrajudicial settlement was executed,
Gregorio Yap, Jr. was a minor. For this reason, he was not included or even
informed of the partition.

Instead, the registration of the land in Rosario Diezs name created an implied trust
in his favor by analogy to Art. 1451 of the Civil Code, which provides:
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.

A cestui que trust may make a claim under a resulting trust within 10 years from
the time the trust is repudiated.15 Although the registration of the land in private
respondent Diezs name operated as a constructive notice of her claim of ownership,
it cannot be taken as an act of repudiation adverse to petitioner Gregorio Yap, Jr.s
claim, whose share in the property was precisely not included by the parties in the
partition. Indeed, it has not been shown whether he had been informed of her
exclusive claim over the entire property before 1985 when he was notified by
petitioner Jovita Yap Ancog of their mother’s plan to sell the property.

This Court has ruled that for prescription to run in favor of the trustee, the trust
must be repudiated by unequivocal acts made known to the cestui que trust and
proved by clear and conclusive evidence. Furthermore, the rule that the prescriptive
period should be counted from the date of issuance of the Torrens certificate of title
applies only to the remedy of reconveyance under the Property Registration Decree.
Since the action brought by petitioner Yap to claim his share was brought shortly
after he was informed by Jovita Ancog of their mothers effort to sell the property,
Gregorio Yap, Jr.s claim cannot be considered barred either by prescription or by
laches.

63
BERNARDO DE LOS SANTOS vs. FAUSTINO B. REYES, THE HON. COURT OF
APPEALS and SPOUSES BENJAMIN DIESTRO and AIDA LAGAREJOS, G.R.
No. L-45027 January 27, 1992

FACTS: Petitioner attempted to persuade the CA that the trial court erred in in
admitting and considering the oral testimony of defendant Faustino B. Reyes in
establishing express trust over the parcel of land in question over and above the
objection of the plaintiff.

Respondent Court was not persuaded. It held: The appellant failed to contradict the
testimony of appellee Reyes to the effect that he placed the land in question in the
name of his daughter, Virginia, only to conform with the requirement of the
hacienda-owner that no one person can buy more than two lots at a time, and that
since the sale, the property had been taken into his possession up to the time it
was sold, the products thereof having been received by appellee Reyes even after
her daughter's marriage to appellant. Further, the allegation that the baby of
Virginia T. Reyes died after the mother died of coronary embolism on the same date
she gave delivery to the baby girl was not substantiated. None of his documentary
relates to how the baby was born — alive or dead. This point is precisely the most
decisive factor in determining the merit of his claim to have inherited the property
in question from the child, because the latter inherited it from its mother. It was
incumbent upon him to prove that the child was born alive and died after the
mother has died earlier. He failed to discharge the duty imposed upon him for
having alleged the death of his wife prior to that of his child, and failed to contradict
the positive and categorical testimony of appellee Reyes that the child was born
dead. Hence, on the opposing claims as to who would inherit the property in
question, that of appellee must be sustained as the lower court ruled correctly.

Moreover, the lower court's finding that the land was actually owned by Faustino B.
Reyes, notwithstanding that the title was in the name of Virginia T. Reyes, pursuant
to the deed of sale where the latter was made to appear as the buyer, finds
convincing support from the record. It was clearly explained why both the deed of
sale and the certificate of title mentioned Virginia T. Reyes as the owner, which was
supported by the agreement duly notarized showing that Faustino Reyes was the
buyer of 3 lots for P14,000.00. Virginia, then only 18 years of age, could not have
paid the price of the lot in question. By no stretch of the imagination can it be
asserted that she bought the land herself as the deed of sale purports to show. The
extrajudicial adjudication affidavit of appellee Reyes cannot, under the
circumstances just noted, be read as an admission of Reyes that her daughter,
Virginia, was the owner of the land, as appellant contends. It is evident that the
execution of this document was resorted to only as the most practical and
expeditious way to transfer the land from the name of Virginia T. Reyes to that of
appellee Reyes. It cannot have a greater probative value than the deed of sale and
the certification of title relied upon by appellant, which have already been shown to
be of no avail against the clear and convincing evidence of appellee.

There is no question of trust involved under the proven facts of the case, as
appellant raises in his third assignment of error. The court a quo made no finding as
to the existence or non-existence of one. As cited by appellant himself, Article
1448, New Civil Code, provides: There is an implied trust when property is sold,
and the legal estate is granted to one party but the practice 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.

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The disputable presumption of a gift as created in the aforequoted provision has
been amply overcome by the evidence of appellee Reyes, as already demonstrated.
If it was a gift, the land should have been taken possession of by appellant at least
after he married his wife as the supposed beneficiary. They then should have
enjoyed also the fruits, and also paid for the tax. No evidence, however, of such
payment was presented. To all appearances, appellant knew as a fact that his wife
never was the owner of the land, not even as a gift under the legal provision he
cited. Otherwise, it should not have taken him almost seven long years to assert
ownership with the filing of the present action.

ISSUE: Whether or not there was an express trust.

RULING: Petitioner miserably failed to demonstrate that respondent court

committed any error which warrants reversal. Petitioner assumes that an express
trust over an immovable was created when it was made to appear that the land in
question was sold to and registered in the name of Faustino Reyes' daughter,
Virginia — wife of petitioner — to conform with the limitation imposed by the
vendor that no vendee could purchase from the former more than two lots.
Consequently, pursuant to Article 1444 of the Civil Code, such a trust cannot be
proved by parol evidence. If his assumption is correct, Article 1444 is applicable
and both the trial court and the respondent Court then erred in admitting the oral
testimony of Faustino Reyes concerning the facts surrounding the "sale" of the lot
in favor of Virginia. Unfortunately, the assumption is wrong. There is neither an
express nor implied trust in this case. The applicable provision of the Civil Code, as
correctly pointed out by respondent Court, is Article 1448 which provides as
follows:

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.
Accordingly, testimonial evidence, such as that offered by Faustino Reyes, that the
land was not given as a gift to Virginia, was properly allowed to rebut the
disputable presumption established in the foregoing article.

EPIFANIA MAGALLON vs. HON. ROSALINA L. MONTEJO, G.R. No. 73733

December 16, 1986

FACTS: Civil Case No. 727 was instituted by plaintiffs against Martin Lacerna to
compel partition of a parcel of land in Magsaysay, Davao del Sur, to which said
defendant had perfected a claim by homestead. The plaintiffs, claiming to be the
common children of Lacerna and his wife, Eustaquia Pichan, asserted a right to one-
half of the land as Eustaquia’s share in her conjugal partnership. The Trial Court
gave Lacerna’s denial of not having contracted marriage with Estaquia and
fathering two of the plaintiffs no credence. The Trial Court further found that
Lacerna had begun working the homestead, and his right to a patent to the land
accrued, during his coverture with Eustaquia. The plaintiffs were declared entitled
to the half of the land claimed by them. Martin Lacerna appealed to the
Intermediate Appellate Court which affirmed the trial court’s decision.
At the time the case was brought, while it was in the Trial Court, no certificate of
title to the land had yet been issued to Lacerna, but he had already complied with
all the conditions necessary to a grant thereof. OCT No. P-11 568 was issued only
on November 22, 1978, while Lacerna's appeal was pending in the IAC. It was the
same land homesteaded by Lacerna during his coverture with Eustaquia, for

65
reasons to which the record before the Court offers no clear clue, it states on its
face that it is issued in the name of " ... MARTIN LACERNA, Filipino, of legal age,
married to Epifania Magallon ... ," the latter being the present petitioner.

On November 1985, after the confirmative Decision of the IAC had become final
and executory, the respondent Judge issued an alias writ of execution commanding
the Provincial Sheriff to order the defendant Lacerna to divide and partition the
property, ½ of which is the share of Eustaquia in the conjugal property, and
plaintiffs being Pichan's children are also entitled thereto.

Apparently, said writ was served on both Lacerna and petitioner. The latter then
filed with the Trial Court a "Motion for Intervention and to Stay Execution" alleging
that the land subject of the writ was conjugal property of herself and Martin
Lacerna under OCT No. P-11568 issued in 1978 without legal impediments, and ...
now incontestable," as well as ... valid, binding and legal unless declared otherwise
in an independent proceedings, ... and praying that ... the property of herein
intervenor be excluded from the enforcement of the writ of execution." Said motion
was denied, as also was a motion for reconsideration of the order of denial. Hence,
the present petition.

ISSUE: Whether or not the plaintiffs are entitled to Estequia’s share in the subject
property.

RULING: The pertinent allegations of the petition leave no doubt that the land in
question, which rightfully pertained to the conjugal partnership of Martin Lacerna
and Eustaquia Pichan, the plaintiff's mother, and should have been titled in the
names of said spouses, was, through fraud or mistaken, registered in the names of
Lacerna and petitioner Magallon In such a situation, the property should be
regarded as impressed with an implied, or a constructive, trust for the party
rightfully entitled thereto. The Civil Code provides that: 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.

The provision restates one of the principles upon which the general law of trust is
founded, expressed in equity jurisprudence thus: A constructive trust is a creature
of equity, defined as a remedial device by which the holder of legal title is held to
be a trustee for the benefit of another who in good conscience is entitled to the
beneficial interest. So the doctrine of constructive trust is an instrument of equity
for the maintenance of justice, good faith, and good conscience, resting on a sound
public policy requiring that the law should not become the instrument of designing
persons to be used for the purpose of fraud. In this respect constructive trusts have
been said to arise through the application of the doctrine of equitable estoppel or
under the broad doctrine that equity regards and treats as done what in good
conscience ought to be done.

Where, through a mistake of fact, title to, and apparent ownership of, property
rightfully belonging to one person is obtained by another, a constructive trust
ordinarily arises in favor of the rightful owner of such property.

It is a general principle that one who acquires land or other property by fraud,
misrepresentation, imposition, or concealment, or under any such other
circumstances as to render it inequitable for him to retain the property, is in equity
to be regarded as a trustee ex maleficio thereof for a person who suffers by reason
of the fraud or other wrong, and is equitably entitled to the property, even though
such beneficiary may never have any legal estate therein. It is to be observed,
however, that in the absence of equitable considerations or a fiduciary relationship,
fraud alone, either actual or constructive, will not give rise to a trust, since, as has

66
been pointed out, if it were otherwise all persons claiming property under defective
titles would be trustee for the 'true' owners.

Under proper circumstances, mistake, although unconnected with fraud, will

warrant relief under the Code providing that one who gains a thing by fraud,
accident, mistake, undue influence, the violation of a trust, or other wrongful act is,
unless he has come better title thereto, an involuntary trustee of the thing gained
for the benefit of the person who would otherwise have had it. As stated by Justice
Cardozo, a constructive trust is the formula through which the conscience of equity
finds expression and when property has been acquired in such circumstances that
the holder of the legal title may not in good conscience retain the beneficial
interest; equity converts him into a trustee.

In Bueno vs. Reyes, where property belonging to an ancestor of whom plaintiffs'

parents were the intestate heirs was, though mistake or in bad faith, registered in
cadastral proceedings in the name of other parties who had no right thereto, this
Court reaffirmed the principles already cited, holding that:

If any trust can be deduced at all from the foregoing facts it was an implied one,
arising by operation of law not from any presumed intention of the parties but to
satisfy the demands of justice and equity and as a protection against unfair dealing
or downright fraud. Indeed, in this kind of implied trust, commonly denominated
constructive, as distinguished from resulting, trust, there exists a certain
antagonism between the cestui que trust and the trustee. Thus, for instance, under
Article 1456 of the Civil Code, '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.' Registration of property
by one person in his name, whether by mistake or fraud, the real owner being
another per- son, impresses upon the title so acquired the character of a
constructive trust for the real owner, which would justify an action for
reconveyance.

Clearly, therefore, the petitioner herein, as the trustee of a constructive trust, has
an obligation to convey to the private respondents that part of the land in question
to which she now claims an ostensible title, said portion rightfully pertaining to the
respondents' deceased mother as her share in the conjugal partnership with Martin
Lacerna.

JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No. 196023 , April
21, 2014

FACTS: Sometime in 1957, Juan Tong informed his children of his intention to
purchase Lot 998 to be used for the family’s lumber business called "Juan Tong
Lumber". However, since he was a Chinese citizen and was disqualified from
acquiring the said lot, the title to the property will be registered in the name of his
eldest son, Luis, Sr., who at that time was already of age and was the only Filipino
citizen among his children. Juan Tong bought Lot 998 and. TCT No. 10346 was
issued in the name of Luis, Sr.

Spouses Juan Tong and Sy Un both died. On May 1981, Luis, Sr. died and the
respondents, being his surviving heirs, claimed ownership over Lot 998 by
succession, alleging that no trust agreement exists and it was Luis, Sr. who bought
Lot 998. The respondents executed a Deed of Extra-Judicial Settlement of Estate of
Luis, Sr., adjudicating unto themselves Lot 998 and claiming that the said lot is the
conjugal property of Luis, Sr., and his wife, which was approved. The said deed was

67
registered causing the cancellation of TCT No. 10346 and the issuance of TCT No.
T-60231 in the name of the respondents.

The respondents then agreed to subdivide Lot 998, thus two new titles were issued:
(1) TCT No. 97068 over Lot 998-A in the name of Go Tiat Kun and her children; and
(2) TCT No. T-96216 over Lot 998-B in the name of Luis, Jr. Luis, Jr. sold Lot 998-B
to FRDC, which in turn sold the same to VGCC. It was only after the petitioners
received a letter from VGCC that they discovered about the breach of the trust
agreement committed by the respondents. To protect their rights, the petitioners
filed an action for Annulment of Sales, Titles, Reconveyance and Damages of Lot
998-B against Luis, Jr., FRDC and VGCC. The trial court ruled in favor of the
petitioners which were later affirmed by the CA and this Court on appeal.
Consequently, Lot 998-B was reconveyed to the petitioners and TCT No. T-14839
was issued under their names including the late Luis, Sr.

On February 24, 2001, Go Tiat Kun executed a Deed of Sale of Undivided Interest
over Lot 998-A in favor of her children, resulting in the issuance of TCT No. T-
134082 over Lot 998-A. Hence, on August 2, 2005, the petitioners filed the instant
case for Nullification of Titles, and Deeds of Extra-judicial Settlement and Sale and
Damages claiming as owners of Lot 998-A.

Trial Court: rendered judgment in favor of the petitioners, ruling that there was an
implied resulting trust between Juan Tong, Luis, Sr., the petitioners and the
respondents, over Lot 998. The trial court found that Luis Sr. was a mere trustee,
and not the owner of Lot 998, and the beneficial interest over said property
remained in Juan Tong and subsequently in the Juan Tong Lumber, Inc. The trust is
further established by the fact that Luis Sr., during his lifetime did not exercised
any other act of ownership over the said lot.

The trial court further claimed that any right that the respondents may have over
Lot 998-A would have been merely derived from that of their predecessor-in-
interest, Luis Sr. Since the respondents were not the owners of Lot 998-A, they
could not appropriate the property unto themselves, much less convey the same
unto third persons. Since the petitioners were deprived of Lot 998-A through the
surreptitious and fraudulent acts of the respondents, the petitioners are entitled to
the reconveyance of the properties, and the validity of TCT No. T-134082 which
covers Lot 998-A as well as the previous titles and documents of conveyance
covering the said lot were null and void.

CA: reversed and set aside the trial court’s decision, and dismissed the complaint
for lack of merit. The appellate court, more particularly ruled that an express trust
was created because there was a direct and positive act from Juan Tong to create a
trust. And when an express trust concerns an immovable property or any interest
therein, it may not be proved by parol or oral evidence, but must be proven by
some writing or deed. The CA also ruled that even granting that an implied
resulting trust was created; the petitioners are still barred by prescription because
the said resulting trust was terminated upon the death of Luis, Sr. and was then
converted into a constructive trust. Since in an action for reconveyance based on a
constructive trust prescribes in ten years from the issuance of the Torrens title over
the property, counting from the death of Luis, Sr. in 1981, the action has already
prescribed. The CA went on to rule that there is a presumption of donation in this
case pursuant to Article 1448 of the Civil Code that 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. The CA also held that the petitioners were already barred by
estoppel and laches.

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ISSUE: Was there an implied resulting trust constituted over Lot 998 when Juan
Tong purchased the property and registered it in the name of Luis, Sr.?

RULING: A review of the records shows an intention to create a trust between the
parties. Although Lot 998 was titled in the name of Luis, Sr., the circumstances
surrounding the acquisition of the subject property eloquently speak of the intent
that the equitable or beneficial ownership of the property should belong to the Juan
Tong family.

First, Juan Tong had the financial means to purchase the property for ₱55,000.00.
On the other hand, respondents failed to present a single witness to corroborate
their claim that Luis, Sr. bought the property with his own money since at that
time, Luis Sr., was merely working for his father where he received a monthly
salary of ₱200.00 with free board and lodging.

Second, the possession of Lot 998 had always been with the petitioners. The
property was physically possessed by Juan Tong and was used as stockyard for
their lumber business before it was acquired, and even after it was acquired. In
fact, the lot remains to be the stockyard of the family lumber business until this
very day.

Third, from the time it was registered in the name of Luis, Sr. in 1957, Lot 998
remained undivided and untouched by the respondents. It was only after the death
of Luis, Sr. that the respondents claimed ownership over Lot 998 and subdivided it
into two lots, Lot 998-A and Lot 998-B.

Fourth, respondent Leon admitted that up to the time of his father’s death, (1) Lot
998 is in the possession of the petitioners, (2) they resided in the tenement in the
front part of Juan Tong’s compound, (3) Luis Sr. never sent any letter or
communication to the petitioners claiming ownership of Lot 998, and (4) he and his
mother have a residence at Ledesco Village, La Paz, Iloilo City while his brother and
sisters also have their own residences.

Fifth, the real property taxes on Lot 998 were paid not by Luis Sr. but by his father
Juan Tong and the Juan Tong Lumber, Inc., from 1966 up to early 2008 as
evidenced by the following: a) the letter of assessment sent by the City Treasurer
of Iloilo, naming Juan Tong as the owner of Lot 998; and b) the receipts of real
property taxes paid by Juan Tong Lumber, and later by Juan Tong Lumber, Inc.,
from 1997 to 2008. While some of the tax receipts were in the name of Luis Sr., the
fact that the petitioners were in possession of the originals thereof established that
the petitioners, the Juan Tong Lumber, Inc., or the late Juan Tong paid for the
taxes. The respondents did not try to explain the petitioners’ possession of the
realty property tax receipts in the name of Luis Sr.

The appellate court’s conclusion that an express trust was created because there
was a direct and positive act by Juan Tong to create a trust must inevitably yield to
the clear and positive evidence on record which showed that what was truly created
was an implied resulting trust. As what has been fully established, in view of the
mutual trust and confidence existing between said parties who are family members,
the only reason why Lot 998 was registered in the name of Luis, Sr. was to
facilitate the purchase of the said property to be used in the family’s lumber
business since Luis, Sr. is the only Filipino Citizen in the Juan Tong family at that
time. As the registered owner of Lot 998, it is only natural that tax declarations and
the corresponding tax payment receipts be in the name of Luis, Sr. so as to effect
payment thereof.

The principle of a resulting trust is 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

69
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, a constructive trust,
unlike an express trust, does not emanate from, or generate a fiduciary relation.
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.

Guided by the foregoing definitions, the Court is in conformity with the finding of
the trial court that an implied resulting trust was created as provided under the first
sentence of Article 1448 which is sometimes referred to as a purchase money
resulting trust, the elements of which are: (a) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration; and (b)
such consideration must be furnished by the alleged beneficiary of a resulting trust.
Here, the petitioners have shown that the two elements are present in the instant
case. Luis, Sr. was merely a trustee of Juan Tong and the petitioners in relation to
the subject property, and it was Juan Tong who provided the money for the
purchase of Lot 998 but the corresponding transfer certificate of title was placed in
the name of Luis, Sr.

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 families, does not lose that character simply
because of what appears in a legal document.

Contrary to the claim of the respondents, it is not error for the trial court to rely on
parol evidence, i.e., the oral testimonies of witnesses Simeon Juan Tong and Jose
Juan Tong, to arrive at the conclusion that an implied resulting trust exists. What is
crucial is the intention to create a trust.

Lastly, the respondents’ assertion that the petitioners’ action is barred by

prescription, laches and estoppel is erroneous. As a rule, implied resulting trusts do
not prescribe except when the trustee repudiates the trust. Further, the action to
reconvey does not prescribe so long as the property stands in the name of the
trustee. To allow prescription would be tantamount to allowing a trustee to acquire
title against his principal and true owner. It should be noted that the title of Lot 998
was still registered in the name of Luis Sr. even when he predeceased Juan Tong.
Considering that the implied trust has been repudiated through such death, Lot 998
cannot be included in his estate except only insofar as his undivided share thereof
is concerned.

MANUEL L. BAUTISTA, vs MARGARITO L. BAUTISTA, G.R. No. 202088

March 8, 2017

FACTS: The Bautista siblings - Margarito, Manuel, Carmelita, Aniano, Florencia, and
Ester - established a lending business through a common fund from the proceeds of
the sale of a parcel of coconut land they inherited from their mother Consorcia.
Margarito, Florencia, and Ester managed the business with Reginald Sahagun,
Carmelita's son, as credit investigator. Senen Cabrera, Ester's husband, prepared
the documents for mortgage and reported the status of the lending business to the
Bautista siblings. Through the said business, the siblings acquired several real
properties in San Pablo City.

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On March 2, 1998, Amelia Mendoza obtained a loan of P690,000.00 from Florencia,
and secured it with a real estate mortgage of her Sta. Monica property (TCT No. T-
2371). They extended the mortgage, for an additional loan of ₱l15,000.00, renewed
the same for ₱l,085,000.00 and cancelled the previous loan of ₱690,000.00.
Subsequently, Amelia and Florencia executed another Kasulatan ng Pagdaragdag ng
Sanla in the amount of ₱57,500.00. Florencia received the owner's duplicate copy of
TCT No. T-2371, which she, in turn, entrusted to Carmelita when she went
overseas.

On November 28, 2002, Amelia allegedly sold the subject property to Margarito
through a Kasulatan ng Bilihang Tuluyan for ₱500,000.00 and, likewise, cancelled
the ₱l,085,000.00 loan through another "Cancellation and Discharge of Mortgage."
On the same date, Florencia filed a Petition for the Issuance of a Second Owner's
Duplicate of TCT No. T-2371 before the RTC of San Pablo City and alleged that she
was the mortgagee of the subject property, and that she could not locate, despite
diligent search, the owner's duplicate title in her possession, which she misplaced
sometime in September 2002. Florencia also executed a Special Power of Attorney
in favor of Margarito to represent her in the proceedings. The RTC granted the
petition and TCT No. T-59882 was later issued in the name of Margarito. On
January 12, 2004, petitioners registered an Adverse Claim over the Sta. Monica
property, which was annotated on TCT No. T-59882.

Failing to settle their differences, petitioners instituted a Complaint for Partition and
Accounting with Prayer for TRO and/or Writ of Preliminary Injunction over several
properties against herein respondent Margarito, the Spouses Marconi de Villa and
Florencia Bautista, and the Spouses Senen Cabrera and Ester Bautista. Petitioners
averred that Margarito and the others refused to heed their oral and written
demands for the partition of the properties they co-owned, which included the Sta.
Monica property.

Since no settlement was reached as regards the Sta. Monica property, petitioners
presented copies of their bank transactions with Far East Bank to support their
claim of co-ownership over the same. They also presented an undated, unnotarized,
and without the name of the vendee Kasulatan ng Bilihang Tuluyan, which Amelia
purportedly executed and signed disposing the subject property in favor of the
Bautista siblings. Petitioner Carmelita also alleged that the duplicate copy of TCT
No. T-2371 in the name of Amelia was in her possession and was never lost. For his
part, Margarito asseverated that he exclusively owns the property in controversy
since he used his personal funds in purchasing the land. Margarito presented TCT
No. T-59882 covering the Sta. Monica property, and the Tax Declaration and
Receipts thereof.

The RTC ruled in favor of the petitioners and declared, among other things, that the
Sta. Monica property was commonly owned by the siblings. The CA reversed and
set aside the decision of the RTC.

ISSUE: Whether or not the petitioners have a right over the Sta. Monica Property.

RULING: In the case at bar, petitioners aver that although the Sta. Monica
property was registered solely in Margarito's name, they are co-owners of the
property because it was acquired through the siblings' lending business, as such,
they are entitled to partition and the conveyance to them of their respective shares.
Petitioners presented several mortgage contracts evidencing the transactions
between Amelia and Florencia, computer printouts of their bank transactions, and
the blank Kasulatan. In Carmelita's testimony, she illustrated how they acquired
properties through their lending business and how ownership of the properties was
transferred under Even the compromise agreement they entered into, which was
approved by the RTC, reflected their claim and admission that they co-owned the
properties although titled to only one of their siblings. It was, thus, logical for the

71
RTC to conclude that it was through this practice that they also acquired the Sta.
Monica property.

It appears that Margarito's evidence of exclusive ownership are the certificate of

title, the tax declarations pertaining thereto, his bank deposits, and other mortgage
contracts involving different mortgagors. Despite all these, Margarito failed to prove
that Amelia conveyed the Sta. Monica property exclusively in his name. It is also
quite intriguing why he did not even bother to present the testimony of Amelia or of
Florencia, who could have enlightened the court about their transactions. In
addition, We find it incredible that a property, which secured a loan roughly over a
million pesos, would be sold for considerably less than that amount or for only
₱550,000.00.

As for the TCT No. T-59882 in the name of Margarito, like in the case at bar,
although a certificate of title is the best proof of ownership of a piece of land, the
mere issuance of the same in the name of any person does not foreclose the
possibility that the real property may be under co-ownership with persons not
named in the certificate or that the registrant may only be a trustee or that other
parties may have acquired interest subsequent to the issuance of the certificate of
title. 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.

There is an implied trust when a 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. This is sometimes referred to as a purchase money
resulting trust, the elements of which are: (a) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration; and (b)
such consideration must be furnished by the alleged beneficiary of a resulting trust.
A trust, which derives its strength from the confidence one reposes on another
especially between families, does not lose that character simply because of what
appears in a legal document. From the foregoing, this Court finds that an implied
resulting trust existed among the parties. The pieces of evidence presented
demonstrate their intention to acquire the Sta. Monica property in the course of
their business, just like the other properties that were also the subjects of the
partition case and the compromise agreement they entered into. Although the Sta.
Monica property was titled under the name of Margarito, the surrounding
circumstances as to its acquisition speak of the intent that the equitable or
beneficial ownership of the property should belong to the Bautista siblings.

JOSE FERNANDO, JR. vs. LEON ACUNA, G.R. No. 161030 September 14,
2011

FACTS: At the heart of this controversy is a parcel of land covered by OCT No. RO-
487 (997) registered in the names of Jose A. Fernando, married to Lucila Tinio, and
Antonia A. Fernando, married to Felipe Galvez, and located in Bulacan. When they
died intestate, the property remained undivided. Petitioners herein are the heirs
and successors-in-interest of the deceased registered owners. However, petitioners
failed to agree on the division of the subject property amongst themselves.

Thus, petitioners, except for the heirs of Germogena Fernando, filed a Complaint for
partition against the heirs of Germogena Fernando. In the Complaint, plaintiffs
claimed that their predecessors-in-interest died intestate and without instructions
as to the disposition of the property left by them. There being no settlement, the
heirs prayed that the subject property be partitioned into eight equal parts,
corresponding to the hereditary interest of each group of heirs.

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In his Complaint in Intervention, respondent Leon Acuna averred that in the
Decision of the Cadastral Court of Baliuag, Bulacan dated November 1929 various
owners and the petitioners’ predecessor-in-interest. He likewise claimed that in a
1930 Decision of the Cadastral Court, the portion identified as Lot 1302 was also
already adjudicated to other people as well. Respondent Acuna further alleged that
Salud Wisco sold her lawful share denominated as Lot 1303-D to Simeon P.
Cunanan, who in turn sold the same piece of land to him as evidenced by a Deed of
Sale. He also belied petitioners’ assertion that the subject property has not been
settled by the parties after the death of the original owners in view of the Decision
of the CFI of Bulacan, in LRC Case No. 80-389 which ordered the Register of Deeds
of Bulacan to issue the corresponding certificates of title to the claimants of the
portion of the subject property designated as Lot 1302. Norma Fernando, one of the
petitioners in the instant case, even testified in LRC Case No. 80-389. According to
respondent Acuna, this circumstance betrayed bad faith on the part of petitioners in
filing the present case for partition. He added that he was in possession of the
original copy of OCT No. RO-487 (997) and that he had not commenced the
issuance of new titles to the subdivided lots because he was waiting for the owners
of the other portions of the subject property to bear their respective shares in the
cost of titling.

A Motion for Intervention was filed by respondent Hermogenes, for himself and on
behalf of the heirs of the late spouses, Antonio and Felisa. According to him, in the
July 1980 Decision of the CFI of Bulacan, their predecessors-in-interest had already
been adjudged owners of Lots 1302-A, 1302-F, 1302-G, 1302-H and 1302-J of OCT
No. RO-487 (997) and any adverse distribution of the properties would cause
respondents damage and prejudice.

Petitioner Elizabeth Alarcon testified that they are not claiming the entire property
covered by OCT No. RO-487 (997) but only the area referred to as Lot 1303 and
Sapang Bayan. She also admitted that Lot 1302 had already been divided into ten
(10) sublots and allocated to various owners pursuant to the July 30, 1980 Decision
of the CFI of Bulacan and these owners already have their own titles. She likewise
claimed that the entire area consisting of Lot 1303 and Sapang Bayan is based on
the subdivision plan of Lot 1303. She admitted that plaintiffs’ predecessor-in-
interest was only allocated a portion of Lot 1303 based on the said plan. However,
she claimed that the November 29, 1929 Decision subdividing Lot 1303 was never
implemented nor executed by the parties.

With respect to Lot 1303, the trial court found that the November 1929 Decision of
the Cadastral Court, adjudicating said lot to different persons and limiting Jose
Fernando’s share to Lot 1303-C, was never implemented nor executed despite the
lapse of more than thirty years. Thus, the said decision has already prescribed and
can no longer be executed. The trial court ordered the reversion of Lot 1303 to the
ownership of spouses Jose A. Fernando and Lucila Tinio and spouses Antonia A.
Fernando and Felipe Galvez under OCT No. RO-487 (997) and allowed the partition
of Lot 1303 among petitioners as successors-in-interest of said registered owners.
Excluded from the partition, however, were the portions of the property which
petitioners admitted had been sold or transferred to Ruperta Sto. Domingo
Villasenor and respondent Acuna. The trial court concluded that none of the parties
had clearly and sufficiently established their claims over Sapang Bayan.

ISSUE: Whether or not petitioners' ascendants held the property erroneously titled
in their names under an implied trust for the benefit of the true owners.

RULING: As the records show, in the November 29, 1929 Decision of the Cadastral
Court of Baliuag, Bulacan, Lot 1303 had already been divided and adjudicated one
of which to spouses Ignacio de la Cruz and Salud Wisco from whom respondent
Acuna derived his title. Still, the November 29, 1929 Decision was never fully

73
implemented in the sense that the persons named therein merely proceeded to
occupy the lots assigned to them without having complied with the other directives
of the cadastral court which would have led to the titling of the properties in their
names. Petitioners claim that respondents’ purported failure to execute the 1929
Decision over Lot 1303 meant that the entire Lot 1303 being still registered in the
name of their ascendants rightfully belongs to them. This is on the theory that
respondents’ right to have the said property titled in their names have long
prescribed.

In Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan, the Court had

recognized the jurisprudential thread regarding the exception to the foregoing
doctrine that while it is true that a Torrens title is indefeasible and imprescriptible,
the registered landowner may lose his right to recover possession of his registered
property by reason of laches. In view of respondents’ decades long possession
and/or ownership of their respective lots by virtue of a court judgment and the
erstwhile registered owners’ inaction and neglect for an unreasonable and
unexplained length of time in pursuing the recovery of the land, assuming they
retained any right to recover the same, it is clear that respondents’ possession may
no longer be disturbed. The right of the registered owners as well as their
successors-in-interest to recover possession of the property is already a stale
demand and, thus, is barred by laches.

In the same vein, we uphold the finding of the Court of Appeals that the title of
petitioners’ ascendants wrongfully included lots belonging to third persons. Indeed,
petitioners’ ascendants appeared to have acknowledged this fact as they were even
the ones that prayed for the cadastral court to subdivide Lot 1303 as evident in the
1929 Decision. We concur with the Court of Appeals that petitioners’ ascendants
held the property erroneously titled in their names under an implied trust for the
benefit of the true owners. Article 1456 of the Civil Code provides:

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.

The party thus aggrieved has the right to recover his or their title over the property
by way of reconveyance while the same has not yet passed to an innocent
purchaser for value. As held in Medizabel v. Apao, the essence of an action for
reconveyance is that the certificate of title is respected as incontrovertible. What is
sought is the transfer of the property, in this case its title, which has been
wrongfully or erroneously registered in another person's name, to its rightful owner
or to one with a better right. It is settled in jurisprudence that mere issuance of the
certificate of title in the name of any person does not foreclose the possibility that
the real property may be under co-ownership with persons not named in the
certificate or that the registrant may only be a trustee or that other parties may
have acquired interest subsequent to the issuance of the certificate of title.

We cannot subscribe to petitioners’ argument that whatever rights or claims

respondents may have under the 1929 Decision has prescribed for their purported
failure to fully execute the same. An action for reconveyance of registered land
based on implied trust prescribes in ten (10) years, the point of reference being the
date of registration of the deed or the date of the issuance of the certificate of title
over the property. However, this Court has ruled that the ten-year prescriptive
period applies only when the person enforcing the trust is not in possession of the
property. If a person claiming to be its owner is in actual possession of the
property, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason is that the one who is in actual possession
of the land claiming to be its owner may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right.

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ESTRELLA TIONGCO YARED (DECEASED) SUBSTITUTED BY CARMEN M.
TIONGCO A.K.A. CARMEN MATILDE B. TIONGCO, VS. JOSE B. TIONGCO
AND ANTONIO G. DORONILA, JR., G.R. No. 161360, October 19, 2011

FACTS: The Heirs of Maria Luis de Tiongco are Matilde, Jose, Vicente, and Felipe.
The present dispute involves 3 parcels of land namely, Lots 3244, 3246 and 1404.
Lots 3244 and 1404 used to be covered by OCT Nos. 484 and 1482, in the names
of Matilde, Jose, Vicente, and Felipe, each in ¼ undivided share, while Lot 3246
used to be covered by OCT No. 368 in the name of "Heirs of Maria Luis de Tiongco."
The Heirs of Maria Luis de Tiongco were survived by their children and descendants.
Among the legitimate children of Jose were petitioner and Carmelo Tiongco, the
father of respondent Jose B. Tiongco.

Sometime in 1965, petitioner built her house on Lot 1404 and sustained herself by
collecting rentals from the tenants of Lots 3244 and 3246. In 1968, petitioner, filed
an adverse claim affecting all the rights, interest and participation of her deceased
father on the disputed lots, but the adverse claim was annotated only on OCT No.
484 and OCT No. 1482, covering Lots 3244 and 1404. In 1983, respondent Jose
prohibited petitioner from collecting rentals from the tenants of Lots 3244 and
3246. In December 1983, respondent Jose filed a suit for recovery of possession
with preliminary injunction against several tenants of Lots 3244 and 3246 wherein
he obtained a judgment in his favor. He also filed a case for unlawful detainer with
damages against petitioner as she was staying on Lot 1404. While the RTC ruled in
respondent Jose's favor, the CA reversed the RTC's decision and ruled in favor of
petitioner. As such, respondent Jose never took possession of the properties.

When petitioner inquired at the Office of the Register of Deeds of Iloilo City, she
discovered that respondent Jose had already executed an Affidavit of Adjudication,
declaring that he is the only surviving heir of the registered owners and
adjudicating unto himself Lots 3244, 3246 and 1404. Consequently, the OCTs of the
aforementioned lots were cancelled, and in place thereof, TCT No. T-37195 for Lot
3244, TCT No. T-4665 for Lot 3246, and TCT No. T-37193 for Lot 1404, all in the
name of respondent Jose. The same day the TCTs were issued, respondent Jose
sold the said lots to Catalino Torre. TCT Nos. T-37195 and T-37193 were thus
cancelled and new were issued in the name of Catalino Torre. Lot 3246 was likewise
disposed of by respondent Jose. Catalino Torre also sold Lots 3244 and 1404 on the
same date to Doronila who was issued corresponding new TCTs. However, just a
few days later, Doronila sold Lot 1404 back to respondent Jose. Lots 3244 and
3246 were also sold back to respondent on January 17, 1980.

On October 2, 1990, petitioner filed a complaint before the court a quo against
respondents. Petitioner argued that respondent Jose knowingly and wilfully made
untruthful statements in the Affidavit of Adjudication because he knew that there
were still other living heirs entitled to the said properties. Moreover, the petitioner
averred that since respondent Jose executed said documents through fraud, bad
faith, illegal manipulation and misrepresentation, Lots 3244 and 1404 should be
reconveyed to its original registered owners and Lot 3246 to the heirs of Maria Luis
de Tiongco subject to subsequent partition among the heirs. Petitioner also posited
that granting for the sake of argument that the affidavit of adjudication was simply
voidable, respondent Jose became a trustee by constructive trust of the property
for the benefit of the petitioner.

Respondent Jose claimed that he was the only legitimate son and that while it was
true that he has two other siblings, he refused to acknowledge them because they
are illegitimate. Respondent Jose denied that the series of sales of the properties
was fraudulent. Respondent Jose averred that he has been paying real property
taxes on the said properties for more than 10 years and that petitioner collected
rentals from Lots 3244 and 3246 only because he allowed her.

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The RTC ruled in favor of respondent Jose. The CA agreed with the trial court that
an action for reconveyance can indeed be barred by prescription. On the other
hand, an action for reconveyance based on an implied or constructive trust
prescribes in 10 years from the date of issuance of the original certificate of title or
transfer certificate of title. For the rule is that the registration of an instrument in
the Office of the Register of Deeds constitutes constructive notice to the whole
world and therefore the discovery of fraud is deemed to have taken place at the
time of registration.

ISSUE: Who has a better right over the properties.

RULING: An action for reconveyance based on implied or constructive trust must

perforce prescribe in ten (10) years from the issuance of the Torrens title over the
property. However, there is an exception to this rule. In the case of Heirs of
Pomposa Saludares v. Court of Appeals, the Court reiterating the ruling in Millena v.
Court of Appeals, held that there is but one instance when prescription cannot be
invoked in an action for reconveyance, that is, when the plaintiff is in possession of
the land to be reconveyed. In Heirs of Pomposa Saludares, this Court explained
that the Court in a series of cases, has permitted the filing of an action for
reconveyance despite the lapse of more than ten years from the issuance of title to
the land and declared that said action, when based on fraud, is imprescriptible as
long as the land has not passed to an innocent buyer for value. But in all those
cases, the common factual backdrop was that the registered owners were never in
possession of the disputed property. The exception was based on the theory that
registration proceedings could not be used as a shield for fraud or for enriching a
person at the expense of another.

In Alfredo v. Borras, the Court ruled that prescription does not run against the
plaintiff in actual possession of the disputed land because such plaintiff has a right
to wait until his possession is disturbed or his title is questioned before initiating an
action to vindicate his right. His undisturbed possession gives him the continuing
right to seek the aid of a court of equity to determine the nature of the adverse
claim of a third party and its effect on his title. The Court held that where the
plaintiff in an action for reconveyance remains in possession of the subject land, the
action for reconveyance becomes in effect an action to quiet title to property, which
is not subject to prescription.

The Court reiterated such rule in the case of Vda. de Cabrera v. Court of Appeals,
wherein we ruled that the imprescriptibility of an action for reconveyance based on
implied or constructive trust applies only when the plaintiff or the person enforcing
the trust is not in possession of the property. In effect, the action for reconveyance
is an action to quiet the property title, which does not prescribe.

x x x There is settled jurisprudence that one who is in actual possession of a piece

of land claiming to be owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid
of a court of equity to ascertain and determine the nature of the adverse claim of a
third party and its effect on his own title, which right can be claimed only by one
who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose mother, Felipa Faja,
was in possession of the litigated property for no less than 30 years and was
suddenly confronted with a claim that the land she had been occupying and
cultivating all these years, was titled in the name of a third person. We hold that in
such a situation the right to quiet title to the property, to seek its reconveyance and
annul any certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that
the statutory period of prescription commences to run against such possessor.

76
In this case, petitioner's possession was disturbed in 1983 when respondent Jose
filed a case for recovery of possession. The RTC of Iloilo City ruled in respondent
Jose's favor but the CA on November 28, 1991, during the pendency of the present
controversy with the court a quo, ruled in favor of petitioner. Petitioner never lost
possession of the said properties, and as such, she is in a position to file the
complaint with the court a quo to protect her rights and clear whatever doubts has
been cast on her title by the issuance of TCTs in respondent Jose's name.

The Court further observes that the circuitous sale transactions of these properties
from respondent Jose to Catalino Torre, then to Antonio Doronila, Jr., and back
again to respondent Jose were quite unusual. However, this successive transfers of
title from one hand to another could not cleanse the illegality of respondent Jose's
act of adjudicating to himself all of the disputed properties so as to entitle him to
the protection of the law as a buyer in good faith. Respondent Jose himself
admitted that there exists other heirs of the registered owners in the OCTs.

HEIRS OF TIMOTEO MORENO vs. MACTAN - CEBU INTERNATIONAL

AIRPORT AUTHORITY, G. R. No. 156273 - October 15, 2003

FACTS: THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA, petitioners herein,
are the successors-in-interest of the former registered owners of 2 parcels of land,
designated as Lot No. 916 under TCT No. RT-7543 (106) T-13694, and Lot No. 920
under TCT No. RT-7544 (107) T-13695.

In 1949 the National Airport Corporation as the predecessor agency of respondent

MCIAA wanted to acquire Lots Nos. 916 and 920 for the proposed expansion of
Lahug Airport. The government assured them that they could repurchase their
lands once Lahug Airport was closed or its operations transferred to Mactan Airport.
The owners of Lots Nos. 916 and 920, refused the offer. On April 1952, the Civil
Aeronautics Administration as the successor agency of the NAC filed a complaint
with the CFI of Cebu, for the expropriation of Lots Nos. 916 and 920. On December
1961 the trial court promulgated its Decision in Civil Case No. R-1881 condemning
Lots Nos. 916 and 920 for public use upon payment of just compensation.
Thereafter, the certificates of title for these parcels of land were issued in the name
of the Republic of the Philippines under TCT No. 58691 for Lot No. 916 and TCT No.
58692 for Lot No. 920, which under RA 6958 (1990) were subsequently transferred
in favor of respondent MCIAA.

Soon after the transfer of Lots Nos. 916 and 920 to MCIAA, Lahug Airport ceased
operations as the Mactan Airport was opened for incoming and outgoing flights.
Lots Nos. 916 and 920 which had been expropriated for the extension of Lahug
Airport were not utilized. In fact, no expansion of Lahug Airport was undertaken.
Hence, petitioners wrote then President Ramos and the airport manager begging
them for the exercise of their alleged right to repurchase Lots Nos. 916 and 920.
Their pleas were not heeded.

On 11 March 1997 petitioners filed a complaint for reconveyance and damages with
RTC against respondent MCIAA to compel the repurchase of Lots Nos. 916 and 920.
Petitioners averred that they had been convinced by the officers of the predecessor
agency of respondent not to oppose the expropriation proceedings since they could
repurchase the properties if the airport expansion would not push through. MCIAA
did not object to petitioners evidence establishing these allegations.
While pending, one Richard E. Enchuan filed a Motion for Transfer of Interest
alleging that he acquired through deeds of assignment the rights of some of herein
petitioners over Lots Nos. 916 and 920. The DPWH also sought to intervene in the

77
civil case claiming that it leased in good faith Lot No. 920 from the predecessor
agencies of respondent MCIAA and that it built thereon its Regional 7 Office.

Trial Court: granted the petitioners the right to repurchase the properties but
subject to the alleged property rights of Richard E. Enchuan and the leasehold of
DPWH. The trial court opined that the expropriation became illegal or functus officio
when the purpose for which it was intended was no longer there.

CA: reversed the assailed Decision on the ground that the judgment of
condemnation in Civil Case No. R-1881 was unconditional so that the rights gained
therefrom by respondent MCIAA were indicative of ownership in fee simple. The
appellate court cited Fery v. Municpality of Cabanatuan which held that mere
deviation from the public purpose for which the power of eminent domain was
exercised does not justify the reversion of the property to its former owners.

ISSUE: Whether or not petitioners have the right to demand reconveyance of the
properties from the respondent government.

RULING: No doubt, the return or repurchase of the condemned properties of

petitioners could be readily justified as the manifest legal effect or consequence of
the trial courts underlying presumption that "Lahug Airport will continue to be in
operation" when it granted the complaint for eminent domain and the airport
discontinued its activities.

The predicament of petitioners involves a constructive trust, one that is akin to the
implied trust referred to in Art. 1454 of the Civil Code, "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." In the case at bar, petitioners conveyed
Lots Nos. 916 and 920 to the government with the latter obliging itself to use the
realties for the expansion of Lahug Airport; failing to keep its bargain, the
government can be compelled by petitioners to reconvey the parcels of land to
them, otherwise, petitioners would be denied the use of their properties upon a
state of affairs that was not conceived nor contemplated when the expropriation
was authorized.

Although the symmetry between the instant case and the situation contemplated by
Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as explained
by an expert on the law of trusts: "The only problem of great importance in the
field of constructive trusts is to decide whether in the numerous and varying fact
situations presented to the courts there is a wrongful holding of property and hence
a threatened unjust enrichment of the defendant.” Constructive trusts are fictions
of equity which are bound by no unyielding formula when they are used by courts
as devices to remedy any situation in which the holder of the legal title may not in
good conscience retain the beneficial interest.

In constructive trusts, the arrangement is temporary and passive in which the

trustees sole duty is to transfer the title and possession over the property to the
plaintiff-beneficiary. Of course, the "wronged party seeking the aid of a court of
equity in establishing a constructive trust must himself do equity." Accordingly, the
court will exercise its discretion in deciding what acts are required of the plaintiff-
beneficiary as conditions precedent to obtaining such decree and has the obligation
to reimburse the trustee the consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good
judgment of the court, the trustee may also be paid the necessary expenses he
may have incurred in sustaining the property, his fixed costs for improvements
thereon, and the monetary value of his services in managing the property to the
extent that plaintiff-beneficiary will secure a benefit from his acts.

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The rights and obligations between the constructive trustee and the beneficiary, in
this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are
echoed in Art. 1190 of the Civil Code, "When the conditions have for their purpose
the extinguishment of an obligation to give, the parties, upon the fulfillment of said
conditions, shall return to each other what they have received x x x x In case of the
loss, deterioration or improvement of the thing, the provisions which, with respect
to the debtor, are laid down in the preceding article shall be applied to the party
who is bound to return x x x x"

Hence, respondent MCIAA as representative of the State is obliged to reconvey Lots

Nos. 916 and 920 to petitioners who shall hold the same subject to existing liens
thereon, i.e., leasehold right of DPWH. In return, petitioners as if they were
plaintiff-beneficiaries of a constructive trust must restore to respondent MCIAA
what they received as just compensation for the expropriation of Lots Nos. 916 and
920 in Civil Case No. R-1881. Petitioners must likewise pay respondent MCIAA the
necessary expenses it may have incurred in sustaining the properties and the
monetary value of its services in managing them to the extent that petitioners will
be benefited thereby.

SIME DARBY PILIPINAS, INC., Petitioner, v. JESUS B. MENDOZA,

Respondent, G.R. NO. 202247, June 19, 2013

FACTS: Petitioner Sime Darby employed Mendoza as sales manager of the

company's tires and rubber products. On 3 July 1987, Sime Darby bought a Class
“A” club share in Alabang Country Club (ACC) but the share, however, was placed
under the name of Mendoza in trust for Sime Darby since the By-Laws of ACC state
that only natural persons may own a club share. As part of the arrangement,
Mendoza endorsed the Club Share Certificate in blank and executed a Deed of
Assignment, also in blank, and handed over the documents to Sime Darby. From
the time of purchase in 1987, Sime Darby paid for the monthly dues and other
assessments on the club share.

When Mendoza retired in April 1995, Sime Darby fully paid Mendoza his separation
pay. 9 years later, Sime Darby found an interested buyer of the club share. Before
the sale could push through, the broker required Sime Darby to secure an
authorization to sell from Mendoza since the club share was still registered in
Mendoza’s name. However, Mendoza refused to sign the required authority to sell
or special power of attorney unless Sime Darby paid him P300,000, claiming that
this represented his unpaid separation benefits. As a result, the sale did not push
through and Sime Darby was compelled to return the payment to the prospective
buyer.

On 13 September 2005, Sime Darby filed a complaint against Mendoza with RTC of
Makati. Sime Darby claimed that it was the practice of the company to extend to
its senior managers and executives the privilege of using and enjoying the facilities
of various club memberships. Sime Darby added that during Mendoza’s
employment with the company until his retirement, Sime Darby regularly paid for
the monthly dues and other assessments on the ACC Class “A” club share. Further,
that Mendoza sent a letter to ACC and requested all billings effective September
2004 be sent to his personal address. Despite having retired from Sime Darby for
less than 10 years and long after the employment contract of Mendoza with the
company has been severed, Mendoza resumed using the facilities and privileges of
ACC, to the damage and prejudice of Sime Darby. Thus, Sime Darby prayed that a
restraining order be issued, pending the hearing on the issuance of a writ of

79
preliminary injunction, enjoining Mendoza from availing of the club’s facilities and
privileges as if he is the owner of the club share.

Mendoza filed an Answer alleging ownership of the club share. Mendoza stated that
Sime Darby purchased the Class “A” club share and placed it under his name as
part of his employee benefits and bonus for past exemplary service. Mendoza
admitted endorsing in blank the stock certificate covering the club share and
signing a blank assignment of rights only for the purpose of securing Sime Darby’s
right of first refusal in case he decides to sell the club share.
The trial Court rendered a Decision in favor of Sime Darby. The appellate court
reversed the ruling of the trial court. The appellate court ruled that Sime Darby
failed to prove that it has a clear and unmistakable right over the club share of
ACC.

ISSUE: Whether the appellate court erred in declaring that Mendoza is the owner of
the club share.

RULING: In the present case, petitioner Sime Darby has sufficiently established its
right over the subject club share. Sime Darby presented evidence that it acquired
the Class “A” club share of ACC in 1987 through a Deed of Sale. Being a corporation
which is expressly disallowed by ACC’s By-Laws to acquire and register the club
share under its name, Sime Darby had the share registered under the name of
respondent Mendoza, Sime Darby’s former sales manager, under a trust
arrangement. Such fact was clearly proved when in the application form dated 17
July 1987 of the ACC for the purchase of the club share, Sime Darby placed its
name in full as the owner of the share and Mendoza as the assignee of the club
share. Also, in connection with the application for membership, Sime Darby sent a
letter dated 17 September 1987 addressed to ACC confirming that “Mendoza, as
Sime Darby’s Sales Manager, is entitled to club membership benefit of the
Company.”

While the share was bought by Sime Darby and placed under the name of Mendoza,
his title is only limited to the usufruct, or the use and enjoyment of the club’s
facilities and privileges while employed with the company. In Thomson v. Court of
Appeals, we held that a trust arises in favor of one who pays the purchase price of
a property in the name of another, because of the presumption that he who pays
for a thing intends a beneficial interest for himself. While Sime Darby paid for the
purchase price of the club share, Mendoza was given the legal title. Thus, a
resulting trust is presumed as a matter of law. The burden then shifts to the
transferee to show otherwise.

Mendoza’s contention of the right of first refusal is a self-serving statement. He did

not present any document to show that there was such an agreement between him
and the company, not even an acknowledgment from Sime Darby that it actually
intended the club share to be given to him as a reward for his performance and
past service. In fact, the circumstances which occurred after the purchase of the
club share point to the opposite. It can be gathered then that Sime Darby did not
intend to give up its beneficial interest and right over the share. The company
merely wanted Mendoza to hold the share in trust since Sime Darby, as a
corporation, cannot register a club share in its own name under the rules of the
ACC. At the same time, Mendoza, as a senior manager of the company, was
extended the privilege of availing a club membership, as generously practiced by
Sime Darby.

However, Mendoza violated Sime Darby’s beneficial interest and right over the club
share after he was informed of Sime Darby’s plan to sell the share. Mendoza
refused to give an authorization to sell the club share unless he was paid allegedly
his unpaid retirement benefit. Mendoza tried to appropriate the club share and
demanded from ACC that he be recognized as the true owner of the share as the

80
named member in the stock certificate as well as in the annual report issued by
ACC. Despite being informed by Sime Darby to stop using the facilities and
privileges of the club share, Mendoza continued to do so. Thus, in order to prevent
further damage and prejudice to itself, Sime Darby properly sought injunction in
this case.

TORBELA v. ROSARIO, G.R. No. 140528, December 7, 2011

FACTS: The controversy began with a parcel of land, located in Urdaneta City (Lot
No. 356-A) and was part of a larger parcel of land (Lot No. 356 covered by OCT No.
16676) in the name of Valeriano Semilla. Valeriano gave Lot No. 356-A to his sister
Marta Semilla, married to Eugenio Torbela. Upon the deaths of the spouses Torbela,
Lot No. 356-A was adjudicated in equal shares among the Torbela siblings. On
December 12, 1964, the Torbela siblings executed a Deed of Absolute Quitclaim
over Lot No. 356-A in favor of Dr. Rosario. 4 days later, on December 16, 1964,
OCT No. 16676 in Valeriano’s name was partially cancelled as to Lot No. 356-A and
TCT No. 52751 was issued in Dr. Rosario’s name covering the said property.
Another Deed of Absolute Quitclaim was subsequently executed on December 28,
1964, this time by Dr. Rosario, acknowledging that he only borrowed Lot No. 356-A
from the Torbela siblings and was already returning the same to the latter for
₱1.00. The Deed was notarized, but was not immediately annotated on TCT No.
52751. Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan from
DBP, secured by a mortgage constituted on Lot No. 356-A. The mortgage was
annotated on TCT No. 52751 Dr. Rosario used the proceeds of the loan for the
construction of improvements on Lot No. 356-A. On May 16, 1967, Cornelio T.
Tosino executed an Affidavit of Adverse Claim, on behalf of the Torbela siblings.
The Torbela siblings had Cornelio’s Affidavit of Adverse Claim and Dr. Rosario’s
Deed of Absolute Quitclaim dated annotated on TCT No. 52751.

The construction of a 4-storey building on Lot No. 356-A was eventually completed.
Dr. Rosario paid his loan from DBP and the mortgage appearing in TCT No. 52571
was cancelled on March 1981. Dr. Rosario then acquired another loan from PNB
sometime in 1979-1981. The loan was secured by mortgages constituted on several
properties, including Lot No. 356-A, ( TCT No. 52751 in Dr. Rosario’s name). The
same was annotated on TCT No. 52751. Another annotation was made canceling
the adverse claim on Lot No. 356-A on the basis of the Cancellation and Discharge
of Mortgage on March 5, 1981.

On December 8, 1981, the spouses Rosario acquired a third loan from Banco
Filipino. To secure said loan, the spouses Rosario constituted mortgages including
Lot No. 356-A. On February 13, 1986, the Torbela siblings filed before the RTC a
Complaint for recovery of ownership and possession of Lot No. 356-A, plus
damages, against the spouses Rosario.

The spouses Rosario failed to pay their loan from Banco Filipino. Banco Filipino
extrajudicially foreclosed the mortgages and during the public auction, Banco
Filipino was the lone bidder for the foreclosed properties. The Certificate of Sale was
annotated on TCT No. 52751.

On December 9, 1987, the Torbela siblings filed before the RTC their Amended
Complaint, impleading Banco Filipino as additional defendant in Civil Case No. U-
4359 and praying that the spouses Rosario be ordered to redeem Lot No. 356-A
from Banco Filipino. The Torbela siblings tried to redeem Lot No. 356-A from Banco
Filipino, but their efforts were unsuccessful. Upon the expiration of the one-year
redemption period in April 1988, the Certificate of Final Sale and Affidavit of
Consolidation the foreclosed properties were executed.

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On June 7, 1988, new certificates of title were issued in the name of Banco Filipino,
particularly TCT No. 165813 for Lot No. 356-A . The Torbela siblings thereafter
filed before the RTC a Complaint for annulment of the Certificate of Final Sale,
judicial cancelation of TCT No. 165813, and damages, against Banco Filipino, the Ex
Officio Provincial Sheriff, and the Register of Deeds of Pangasinan, which was
docketed as Civil Case No. U-4733. On June 1991, Banco Filipino filed before the
RTC a Petition for the issuance of a writ of possession (Case No. U-822), and the
spouses Rosario and other persons presently in possession of said properties be
directed to abide by said writ.

ISSUE: What was the relation between Dr. Rosario and the Torbela siblings.

RULING: There was an express trust between the Torbela siblings and Dr. Rosario.
There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from
their parents, the Torbela spouses, who, in turn, acquired the same from the first
registered owner of Lot No. 356-A, Valeriano.

Indeed, the Torbela siblings executed a Deed of Absolute Quitclaim in which they
transferred and conveyed Lot No. 356-A to Dr. Rosario for the consideration of
₱9.00. However, the Torbela siblings explained that they only executed the Deed as
an accommodation so that Dr. Rosario could have Lot No. 356-A registered in his
name and use said property to secure a loan from DBP, the proceeds of which
would be used for building a hospital on Lot No. 356-A – a claim supported by
testimonial and documentary evidence, and borne out by the sequence of events
immediately following the execution by the Torbela siblings of said Deed. Among
the notable evidence presented by the Torbela siblings is the testimony of
Alcantara, while still a boarder at the house of Dr. Rosario’s mother, was consulted
by the Torbela siblings as regards the extrajudicial partition of Lot No. 356-A. She
also witnessed the execution of the two Deeds of Absolute Quitclaim by the Torbela
siblings and Dr. Rosario.

In contrast, Dr. Rosario presented TCT No. 52751, issued in his name, to prove his
purported title to Lot No. 356-A. Registration does not vest title; it is merely the
evidence of such title. Land registration laws do not give the holder any better title
than what he actually has. Consequently, Dr. Rosario must still prove herein his
acquisition of title to Lot No. 356-A, apart from his submission of TCT No. 52751 in
his name. Even if the Court considers Dr. Rosario’s testimony on his alleged verbal
agreement with the Torbela siblings, the Court finds the same unsatisfactory. It can
also be said that Dr. Rosario is estopped from claiming or asserting ownership over
Lot No. 356-A based on his Deed of Absolute Quitclaim. Dr. Rosario's admission in
the said Deed that he merely borrowed Lot No. 356-A is deemed conclusive upon
him. That admission cannot now be denied by Dr. Rosario as against the Torbela
siblings, the latter having relied upon his representation.

The Court agrees with the RTC and the Court of Appeals that Dr. Rosario only holds
Lot No. 356-A in trust for the Torbela siblings.

Trust is the right to the beneficial enjoyment of property, the legal title to which is
vested in another. It is a fiduciary relationship that obliges the trustee to deal with
the property for the benefit of the beneficiary. Trust relations between parties may
either be express or implied. An express trust is created by the intention of the
trustor or of the parties, while an implied trust comes into being by operation of
law.

Express trusts are created by direct and positive acts of the parties, by some
writing or deed, or will, or by words either expressly or impliedly evincing an
intention to create a trust. Under Article 1444 of the Civil Code, "[n]o particular
words are required for the creation of an express trust, it being sufficient that a
trust is clearly intended." It is possible to create a trust without using the word

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"trust" or "trustee." Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of relationship which
to lawyers is known as trust. It is immaterial whether or not he knows that the
relationship which he intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which is called a trust.
In Tamayo v. Callejo, the Court recognized that a trust may have a constructive or
implied nature in the beginning, but the registered owner’s subsequent express
acknowledgement in a public document of a previous sale of the property to
another party, had the effect of imparting to the aforementioned trust the nature of
an express trust. The same situation exists in this case. When Dr. Rosario was able
to register Lot No. 356-A in his name under TCT No. 52751, an implied trust was
initially established between him and the Torbela siblings under Article 1451 of the

Civil Code, which provides:

ART. 1451. When land passes by succession to any person and he causes the legal
title to be put in the name of another, a trust is established by implication of law for
the benefit of the true owner.

Dr. Rosario’s execution of the Deed of Absolute Quitclaim containing his express
admission that he only borrowed Lot No. 356-A from the Torbela siblings,
eventually transformed the nature of the trust to an express one. The express trust
continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim that he was
already returning Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained
registered in Dr. Rosario’s name under TCT No. 52751 and Dr. Rosario kept
possession of said property, together with the improvements thereon.

The right of the Torbela siblings to recover Lot No. 356-A has not yet prescribed.
The Court extensively discussed the prescriptive period for express trusts in the
Heirs of Maximo Labanon v. Heirs of Constancio Labanon, to wit: On the issue of
prescription, we had the opportunity to rule in Bueno v. Reyes that unrepudiated
written express trusts are imprescriptible: "While there are some decisions which
hold that an action upon a trust is imprescriptible, without distinguishing between
express and implied trusts, the better rule, as laid down by this Court in other
decisions, is that prescription does supervene where the trust is merely an implied
one. The reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co.,
Inc. vs. Magdangal, 4 SCRA 84, 88, as follows:

Under Section 40 of the old Code of Civil Procedure, all actions for recovery of real
property prescribed in 10 years, excepting only actions based on continuing or
subsisting trusts that were considered by section 38 as imprescriptible. As held in
the case of Diaz v. Gorricho, L-11229, March 29, 1958, however, the continuing or
subsisting trusts contemplated in section 38 of the Code of Civil Procedure referred
only to express unrepudiated trusts, and did not include constructive trusts (that
are imposed by law) where no fiduciary relation exists and the trustee does not
recognize the trust at all."

In the more recent case of Secuya v. De Selma, we again ruled that the
prescriptive period for the enforcement of an express trust of ten (10) years starts
upon the repudiation of the trust by the trustee.

To apply the 10-year prescriptive period, which would bar a beneficiary’s action to
recover in an express trust, the repudiation of the trust must be proven by clear
and convincing evidence and made known to the beneficiary. The express trust
disables the trustee from acquiring for his own benefit the property committed to
his management or custody, at least while he does not openly repudiate the trust,
and makes such repudiation known to the beneficiary or cestui que trust. For this
reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse
possession do not apply to "continuing and subsisting" (i.e., unrepudiated) trusts.

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In an express trust, the delay of the beneficiary is directly attributable to the
trustee who undertakes to hold the property for the former, or who is linked to the
beneficiary by confidential or fiduciary relations. The trustee's possession is,
therefore, not adverse to the beneficiary, until and unless the latter is made aware
that the trust has been repudiated.

Dr. Rosario argues that he is deemed to have repudiated the trust when he
registered Lot No. 356-A in his name under TCT No. 52751, so when the Torbela
siblings instituted before the RTC Civil Case No. U-4359, for the recovery of
ownership and possession of Lot No. 356-A from the spouses Rosario, over 21
years had passed. Civil Case No. U-4359 was already barred by prescription, as well
as laches. The Court already rejected a similar argument in Ringor v. Ringor for the
following reasons:

A trustee who obtains a Torrens title over a property held in trust for him by
another cannot repudiate the trust by relying on the registration. A Torrens
Certificate of Title in Jose’s name did not vest ownership of the land upon him. The
Torrens system does not create or vest title. It only confirms and records title
already existing and vested. It does not protect a usurper from the true owner. The
Torrens system was not intended to foment betrayal in the performance of a trust.
It does not permit one to enrich himself at the expense of another. Where one does
not have a rightful claim to the property, the Torrens system of registration can
confirm or record nothing. Petitioners cannot rely on the registration of the lands in
Jose’s name nor in the name of the Heirs of Jose M. Ringor, Inc., for the wrong
result they seek. For Jose could not repudiate a trust by relying on a Torrens title
he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust,
notwithstanding the irrevocability of the Torrens title. The intended trust must be
sustained.

In the more recent case of Heirs o Tranquilino Labiste v. Heirs of Jose Labiste, the
Court refused to apply prescription and laches and reiterated that:
[P]rescription and laches will run only from the time the express trust is repudiated.
The Court has held that for acquisitive prescription to bar the action of the
beneficiary against the trustee in an express trust for the recovery of the property
held in trust it must be shown that: (a) the trustee has performed unequivocal acts
of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts
of repudiation have been made known to the cestui que trust, and (c) the evidence
thereon is clear and conclusive. Respondents cannot rely on the fact that the
Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has
been held that a trustee who obtains a Torrens title over property held in trust by
him for another cannot repudiate the trust by relying on the registration. The rule
requires a clear repudiation of the trust duly communicated to the beneficiary. The
only act that can be construed as repudiation was when respondents filed the
petition for reconstitution in October 1993. And since petitioners filed their
complaint in January 1995, their cause of action has not yet prescribed, laches
cannot be attributed to them.

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