G.R. No. 108121 May 10, 1994 HERMINIA L.
to the effect that within one year from said
RAMOS and HEIRS OF HERMINIO RAMOS,
Petitioners, v. HON. COURT OF APPEALS,
SPOUSES HILARIO CELESTINO and LYDIA
CELESTINO, Respondents.
DAVIDE, JR., J.:
FACTS: Lydia Celestino, married to Hilario
Celestino, was employed in the economic research
department of the Central Bank of the Philippines
from 1949 to 1983, while the late Herminio Ramos
- the deceased spouse of respondent Herminia L.
Ramos, was employed during his lifetime in the
same department of the Central Bank until his
retirement sometime in 1972, the now defunct
People's Homesite & Housing Corporation (PHHC)
awarded the rights to buy certain parcels of land to
employees of the Central Bank. Herminio was
awarded the rights to buy the parcel of land
designated as Lot 25, Block 86, with an area of
some 400 square meters, and situated in Sikatuna
Village in Diliman, Quezon City, Herminio then sold
and transferred to Lydia his said rights to buy said
property, and Lydia paid the price in several
installments, the last installment being paid on May
21, 1962. Having acquired the rights to buy the
property, Lydia assumed the obligation of paying to
the PHHC the purchase price thereof. When she
paid the last monthly amortization, thereby
effecting the full payment of the purchase of the
subject land, Lydia's friend, Cynthia Camacho, who
was then residing at the back of the subject
property, acted as the property's caretaker for
Lydia, even as Lydia also had the land fenced.
A TCT was issued in the name of Herminio Ramos
and the copy since then had been in Lydia’s
possession. Then, Hermnio and Herminia executed
in Lydia's favor an irrevocable special power of
attorney, empowering Lydia to sell, mortgage, or
lease the subject property and to dispose of the
proceeds thereof in any manner she wants. It
serves as a practical means of giving assurance to
Lydia that Herminio, together with his spouse
Herminia, was in good faith and recognized the
existing implied trust relationship between them
over the subject land, particularly in view of the
restriction annotated on the title certificate in sum
certificate's issuance no transfer or alienation of the
property shall be made without the PHHC's written
consent. In 1985, upon Herminia’s petition, the
RTC of Quezon City declared Lydia’s copy to be
null and void due to Herminia’s claim that such
copy has been lost. Lydia filed her petition herein
praying that said Order to be declared null and void
that the new owner's duplicate copy issued and
delivered to Herminia be cancelled, on the ground
that Herminia secured such new owner's duplicate
copy thru fraud and misrepresentation because she
well knew that the supposedly "lost" owner's
duplicate copy was in Lydia's possession and
custody.
Sometimes later, after having verified that Herminio
had passed away in the early part of 1985 and that
Herminia and his successors-in interest were
disputing the ownership of the subject property and
building thereon, Lydia together with her spouse
Hilario Celestino filed the complaint herein,
engaging the services of counsel for the
prosecution thereof. RTC: An implied or resulting
trust was created by operation of law when the
subject property was sold by the PHHC, with the
legal title being vested in Herminio as the
corresponding TCT was issued in his name, but
with the beneficial title, however, being vested in
Lydia as she was the one who paid the purchase
price of the property out of her funds after Herminio
had earlier sold and transferred to her his rights to
buy the property and she had fully paid him the
purchase price for said rights; accordingly, it
appearing that instead of recognizing and abiding
by said trust, Herminia and the other respondents
have repudiated the trust by claiming the property
for themselves soon after Herminio's death in 1985,
Lydia and her spouse Hilario were fully warranted
in bringing their said compliant. CA: affirmed the
RTC’s decision. The cause of action for
reconveyance had not yet prescribed for "the trust
was a continuing and subsisting one" which the
special power of attorney recognized; the rule of
prescription of implied or resulting trust does not
apply where a fiduciary relation exists and the
trustee recognizes the trust; and if at all, there was
a repudiation of the trust, it "came about only after
the death of Herminio when defendants tried to
claim the property for themselves in 1985."
Hence, this petition.
ISSUE: Whether a trust was established because
there is a restriction expressly imposed by the
PHHC in the sale of the land to Herminio Ramos,
to wit: Within a period of one year from the
issuance of TCT by virtue of this deed no transfer
or alienation whatsoever of the property subject
thereof whether in whole or in part shall be made or
registered w/out the written consent of the vendor
and such transfer or alienation may be made only
in favor of person qualified to acquire land under
the laws of the Philippines.
RULING: Lydia Celestino, knowing of her
disqualification (she already owns a lot in Quezon
City) to acquire a lot from the PHHC at the
subdivision reserved for qualified Central Bank
employees, tried to get one through the backdoor.
Otherwise stated, she wanted to get indirectly that
which she could not do so directly. Having acted
with evident bad faith, she did not come to court
with clean hands when she asked for the
reconveyance of the property on the basis of a
resulting trust under Article 1448 of the Civil Code.
A resulting trust is an "intent-enforcing" trust, based
on a finding by the court that in view of the
relationship of the parties their acts express an
intent to have a trust, even though they did not use
language to that effect. The trust is said to result in
law from the acts of the parties. However, if the
purpose of the payor of the consideration in having
title placed in the name of another was to evade
some rule of the common or statute law, the courts
will not assist the payor in achieving his improper
purpose by enforcing a resulting trust for him in
accordance with the "clean hands" doctrine. The
court generally refuses to give aid to claims from
rights arising out of an illegal transaction, such as
where the payor could not lawfully take title to land
in his own name and he used the grantee as a
mere dummy to hold for him and enable him to
evade the land laws, e.g., an alien who is ineligible
to hold title to land, who pays for it and has the title
put in the name of a citizen.
As an exception to the law on trusts, "[a] trust or a
provision in the terms of a trust is invalid if the
enforcement of the trust or provision would be
against public policy, even though its performance
does not involve the commission of a criminal or
tortious act by the trustee." The parties must
necessarily be subject to the same limitations on
allowable stipulations in ordinary contracts, i.e.,
their stipulations must not be contrary to law,
morals, good customs, public order, or public
policy. What the parties then cannot expressly
provide in their contracts for being contrary to law
and public policy, they cannot impliedly or implicitly
do so in the guise of a resulting trust.
Although the contract should be voided for being
contrary to public policy, we deem it equitable to
allow the private respondents to recover what they
had paid for the land with legal interest thereon
commencing from the date of the filing of the
complaint.
G.R. No. 144516 February 11, 2004
DEVELOPMENT BANK OF THE PHILIPPINES
vs. COMMISSION ON AUDIT
These principles are best exemplified in
Development Bank of the Philippines v. COA, 422
SCRA 465 (2004), where the DBP contributed
funds into a retirement plan for its officers and
employees, and constituted a board of trustees
vesting it with the control and administration of the
fund. Augmentation to the retirement fund were
made through loans extended to the qualified
officers and employees, which were invested in
shares of stocks and other marketable securities,
and the earnings from which were directed to be
distributed to the beneficiaries even before they
have retired.
The COA objected to the distribution of the
earnings from the investments made through the
retirement fund on the ground that is was contrary
to an express provision of law which prohibits the
distribution of retirement benefits to government
employees prior to their actual retirement. COA
also directed that the earnings from the investment
be included in DBP’s books of account as part of its
own earnings, since the retirement and its income
were actually owned by DBP having made the
contributions thereto.
DBP objected to the COA resolution on the ground
“the express trust created for the benefit of
qualified DBP employees under the Trust
Agreement gave the Fund a separate legal
personality and therefore the earnings pertained to
the employees and should be credited as income
of DBP.
While DBP v. COA characterized an “employees’
trust” as “a trust maintained by an employer to
provide retirement, pension or other benefits to its
employees is a separate taxable entity established
for the exclusive benefit of the employees,” still the
Court did not consider the such employees’ trust as
a separate juridical person. The Court ruled that
“The principal and income of the Fund [of
employees’ trust] would be separate and distinct
from the funds of DBP, on the ground that DBP as
trustor already conveyed legal title thereto to the
Board of Trustees of the employees’ trust, and with
DBP officers and employees having beneficial title
thereto,” thus:
In a trust, one person has an equitable ownership
in the property while another person owns the legal
title to such property, the equitable ownership of
the former entitling him to the performance of
certain duties and the exercise of certain powers by
the latter.
In the present case, DBP, as the trustor, vested in
the trustees of the Fund legal title over the Fund as
well as control over the investment of the money
and assets of the Fund. The powers and duties
granted to the trustees of the Fund under the
Agreement were plainly more than just
administrative [but included the power of control,
the right to hold legal title, and the power to invest
and reinvest] xxx.
Clearly, the trustees received and collected any
income and profit derived from the Fund, and they
maintained separate books of account for this
purpose. The principal and income of the Fund will
not revert to DBP even if the trust is subsequently
modified or terminated. The Agreement states that
the principal and income must be used to satisfy all
of the liabilities to the beneficiary officials and
employees under the Gratuity Plan .
On the issue that the DBP officials and employees
had no right to the fund nor to the income earned
until they actually retire, which therefore did not
qualify them to be considered cestui que trust or
beneficiary, and therefore the same should still
accrue to DBP, the Court ruled –
The beneficiaries or cestui que trust of the Fund
are the DBP officials and employees who will retire
xxx.
As COA correctly observed, the right of the
employees to claim their gratuities from the Fund is
still inchoate. [The law], does not allow employees
to receive their gratuities until they retire. However,
this does not invalidate the trust created by DBP or
the concomitant transfer of legal title to the
trustees. As far back as in Government v. Abadilla,
the Court held that “it is not always necessary that
the cestui que trust should be named, or even be in
esse at the time the trust is created in his favor.” It
is enough that the beneficiaries are sufficiently
certain or identifiable.
The Court resolved in DBP v. COA, that “The
Agreement indisputably transferred legal title over
the income and properties of the Fund to the
Fund’s trustees. Thus, COA’s directive to record
the income of the Fund in DBP’s books of account
as the miscellaneous income of DBP constitutes
grave abuse of discretion. The income of the Fund
does not form part of the revenues or profits of
DBP, and DBP may not use such income for its
own benefit. The principal and income of the Fund
together constitute the res or subject matter of the
trust. The Agreement established the Fund
precisely so that it would eventually be sufficient to
pay for the retirement benefits of DBP employees
under [the law] without additional outlay from DBP.
COA itself acknowledged the authority of DBP to
set up the Fund. However, COA’s subsequent
directive would divest the Fund of income, and
defeat the purpose for the Fund’s creation.
G.R. No. 161237 January 14, 2009 PERFECTO
MACABABBAD, Jr.,* deceased, substituted by
his heirs Sophia Macababbad, Glenn M.
Macababbad, Perfecto Vener M. Macababbad III
and Mary Grace Macababbad, and SPS. CHUA
SENG LIN AND SAY UN AY, petitioners, vs.
FERNANDO G. MASIRAG, FAUSTINA G.
MASIRAG, CORAZON G. MASIRAG, LEONOR G.
MASIRAG, and LEONCIO M. GOYAGOY,
respondent FRANCISCA MASIRAG BACCAY,
PURA MASIRAG FERRER-MELAD, AND
SANTIAGO MASIRAG, Intervenors
Respondents.
BRION, J.:
FACTS: On April 28, 1999, respondents Fernando
Masirag (Fernando), Faustina Masirag (Faustina),
Corazon Masirag (Corazon), Leonor Masirag
(Leonor) and Leoncio Masirag Goyagoy (Leoncio),
filed with the RTC a complaint against
Macababbad, Chua and Say. 6 On May 10, 1999,
they amended their complaint to allege new
matters. The respondents alleged that their
complaint is an action for quieting of title, nullity of
titles, reconveyance, damages and attorney’s fees.
The deceased spouses Pedro Masirag (Pedro) and
Pantaleona Tulauan (Pantaleona) were the original
registered owners of Lot No. 4144 of the Cadastral
Survey of Tuguegarao, as evidenced by OCT No.
1946.11 Lot No. 4144 contained an area of 6,423
square meters.
Pedro and Pantaleona had 8 children, namely,
Valeriano, Domingo, Pablo, Victoria, Vicenta,
Inicio, Maxima and Maria. Respondents Fernando,
Faustina, Corazon and Leonor Masirag are the
children of Valeriano and Alfora Goyagoy, while
Leoncio is the son of Vicenta and Braulio Goyagoy.
The respondents allegedly did not know of the
demise of their respective parents; they only
learned of the inheritance due from their parents in
the first week of March 1999 when their relative,
Pilar Quinto, informed respondent Fernando and
his wife Barbara Balisi about it. They immediately
hired a lawyer to investigate the matter.
The investigation disclosed that the petitioners
falsified a document entitled “Extra-judicial
Settlement with Simultaneous Sale of Portion of
Registered Land (Lot 4144) dated December 3,
1967”12 so that the respondents were deprived of
their shares in Lot No. 4144. The document
purportedly bore the respondents’ signatures,
making them appear to have participated in the
execution of the document when they did not; they
did not even know the petitioners. The document
ostensibly conveyed the subject property to
Macababbad for the sum of P1,800.00.13
Subsequently, OCT No. 1946 was cancelled and
Lot No. 4144 was registered in the names of its
new owners under TCT No. 13408,14 presumably
after the death of Pedro and Pantaleona. However,
despite the supposed sale to Macababbad, his
name did not appear on the face of TCT No.
13408.15 Despite his exclusion from TCT, his
“Petition for another owner’s duplicate copy of TCT
No. 13408,” filed in the CFI of Cagayan, was
granted on July 27, 1982.
Subsequently, Macababbad registered portions of
Lot No. 4144 in his name and sold other portions to
third parties. On May 18, 1972, Chua filed a
petition for the cancellation of TCT No. T-13408
and the issuance of a title evidencing his ownership
over a subdivided portion of Lot No. 4144 covering
803.50 square meters. On May 23, 1972, TCT No.
T-18403 was issued in his name.
Based on these allegations, the respondents
asked: (1) that the extrajudicial settlement of estate
and sale be declared null and void ab initio and
without force and effect, and that Chua be ordered
and directed to execute the necessary deed of
reconveyance of the land; if they refuse, that the
Clerk of Court be required to do so; (2) the
issuance of a new TCT in respondents’ name and
the cancellation of Macababbad’s and Chua’s
certificates of title; and (3) that the petitioners be
ordered to pay damages and attorney’s fees.
Macababbad filed a motion to dismiss the
amended complaint on July 14, 1999, while Chua
and Say filed an “Appearance with Motion to
Dismiss” on September 28, 1999.
On December 14, 1999, the RTC granted the
motion of Francisca Masirag Baccay, Pura Masirag
Ferrer-Melad, and Santiago Masirag for leave to
intervene and to admit their complaint-
inintervention. The motion alleged that they have
common inheritance rights with the respondents
over the disputed property. The RTC, after initially
denying the motion to dismiss, reconsidered its
ruling and dismissed the complaint in its Order19
dated May 29, 2000 on the grounds that: 1) the
action, which was filed 32 years after the property
was partitioned and after a portion was sold to
Macababbad, had already prescribed; and 2) there
was failure to implead indispensable parties,
namely, the other heirs of Pedro and Pantaleona
and the persons who have already acquired title to
portions of the subject property in good faith. The
CA ignored23 the jurisdictional issue raised by the
petitioners in their motion to dismiss, took
cognizance of the appeal, and focused on the
following issues: 1) whether the complaint stated a
cause of action; and 2) whether the cause of action
had been waived, abandoned or extinguished.
The appellate court reversed and set aside the
RTC’s dismissal of the complaint. The CA, among
others, applied the Civil Code provision on implied
trust, i.e., that a person who acquires a piece of
property through fraud is considered a trustee of an
implied trust for the benefit of the person from
whom the property came. Reconciling this legal
provision with Article 1409 (which defines void
contracts) and Article 1410 (which provides that an
action to declare a contract null and void is
imprescriptible), the CA ruled that the respondents’
cause of action had not prescribed, because “in
assailing the extrajudicial partition as void, the
[respondents] have the right to bring the action
unfettered by a prescriptive period.
ISSUES: Whether there was an implied trust,
hence, the prescriptive period for the action is 10
years.
HELD: YES. As the nullity of the extrajudicial
settlement of estate and sale has been raised and
is the primary issue, the action to secure this result
will not prescribe pursuant to Article 1410 of the
Civil Code.
Article 1458 of the New Civil Code provides: "By
the contract of sale one of the contracting parties
obligates himself of transfer the ownership of and
to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent."
It is essential that the vendors be the owners of the
property sold otherwise they cannot dispose that
which does not belong to them. As the Romans put
it: "Nemo dat quod non habet." No one can give
more than what he has. The sale of the realty to
respondents is null and void insofar as it prejudiced
petitioners' interests and participation therein. At
best, only the ownership of the shares of Luisa,
Maria and Guillerma in the disputed property could
have been transferred to respondents.
Consequently, respondents could not have
acquired ownership over the land to the extent of
the shares of petitioners. The issuance of a
certificate of title in their favor could not vest upon
them ownership of the entire property; neither
could it validate the purchase thereof which is null
and void. Registration does not vest title; it is
merely the evidence of such title. Our land
registration laws do not give the holder any better
title than what he actually has. Being null and void,
the sale to respondents of the petitioners' shares
produced no legal effects whatsoever.
Stated otherwise, to form a valid and legal
agreement it is necessary that there be a party
capable of contracting and party capable of being
contracted with. Hence, if any one party to a
supposed contract was already dead at the time of
its execution, such contract is undoubtedly
simulated and false and therefore null and void by
reason of its having been made after the death of
the party who appears as one of the contracting
parties therein. The death of a person terminates
contractual capacity.
In actions for reconveyance of the property
predicated on the fact that the conveyance
complained of was null and void ab initio, a claim of
prescription of action would be unavailing. "The
action or defense for the declaration of the
inexistence of a contract does not prescribe."
Neither could laches be invoked in the case at bar.
Laches is a doctrine in equity and our courts are
basically courts of law and not courts of equity.
Equity, which has been aptly described as "justice
outside legality," should be applied only in the
absence of, and never against, statutory law.
Aequetas nunguam contravenit legis. The positive
mandate of Art. 1410 of the New Civil; Code
conferring imprescriptibility to actions for
declaration of the inexistence of a contract should
preempt and prevail over all abstract arguments
based only on equity. Certainly, laches cannot be
set up to resist the enforcement of an
imprescriptible legal right, and petitioners can
validly vindicate their inheritance despite the lapse
of time.
The respondents’ action is therefore imprescriptible
and the CA committed no reversible error in so
ruling. The petition was denied for lack of merit.
G.R. No. 178645 January 30, 2009 LINA
PEÑALBER vs.QUIRINO RAMOS, LETICIA
PEÑALBER, and BARTEX INC.,
CHICO-NAZARIO, J.:
FACTS: Petitioner Lina is the mother of respondent
Leticia and the mother-in-law of respondent
Quirino, husband of Leticia claimed that she
operated a hardware store in a building she owned
along Bonifacio St., Tuguegarao, Cagayan.
However, the commercial lot (Bonifacio property)
upon which the building stood is owned by and
registered in the name of Maria Mendoza, from
whom Lina rented the same. She allowed spouses
Ramos to manage the hardware store. Mendoza
put the Bonifacio property up for sale. As Lina did
not have available cash to buy the property, she
allegedly entered into a verbal agreement with
spouses Ramos wherein the lot would be bought
by spouses for and in behalf of Lina using the
earnings of the store. It was also agreed that the
spouses’ name shall appear in the Deed of Sale
and in the title to secure a loan with which to build
a bigger building and expand the business. Upon
purchasing the property and the issuance of the
title in the spouses’ name, Lina demanded the
reconveyance of said title to her but the former
refused.
Lina insisted that the spouses were trustees and
thus they were under a moral and legal obligation
to reconvey the title to her. Spouses averred that
they were entrusted with not only the management
but full ownership of the store, on the condition that
the stocks and merchandise of the store will be
inventoried, and out of the proceeds of the sales
thereof, they shall pay Lina’s outstanding
obligations and liabilities. Also, the express trust,
from the alleged verbal agreement of the parties,
cannot be proven by parole evidence.
ISSUE: WON there exists an express trust.
HELD: NO. Express trusts are those which are
created by the direct and positive acts of the
parties, by some writing or deed, or will, or by
words either expressly or impliedly evincing an
intention to create a trust. No particular words are
required for the creation of an express trust, it
being sufficient that a trust is clearly intended.
However, in accordance with Article 1443 of the
Civil Code, when an express trust concerns an
immovable property or any interest therein, the
same may not be proved by parol or oral evidence.
But the spouses were deemed to have waived their
objection to the parol evidence as they failed to
timely object when petitioner testified on the said
verbal agreement. The requirement in Article 1443
that the express trust concerning an immovable or
an interest therein be in writing is merely for
purposes of proof, not for the validity of the trust
agreement. Therefore, the said article is in the
nature of a statute of frauds.
Nevertheless, while admissibility of evidence is an
affair of logic and law, determined as it is by its
relevance and competence, the weight to be given
to such evidence, once admitted, still depends on
judicial evaluation. Thus, despite the admissibility
of the said testimonies, the Court holds that the
same carried little weight in proving the alleged
verbal trust agreement between petitioner and
respondent spouses.
Salao v. Salao 70 SCRA
Aquino, J.
Facts: Spouses Manuel Salao and Valentina
Ignacio begot four children named Patricio,
Alejandra, Juan and Ambrosia. Manuel Salao died
in 1885 while his son Patricio died in 1886 survived
by his only child, Valentin Salao. When Manuel
Salao died there was no documentary evidence as
to what properties formed part of his estate.
Valentina died and her estate was administered by
Ambrosia. The lands left by Valentina are the
following:
1.) 2 1⁄2 interest in a fishpond; 2.) 4 fishponds; 3.)
fishpond with bodega for salt; 4.) 3 riceland. The
estate of Valentina was partitioned extrajudicially
and signed by her four legal heirs (her grandson
and three children). To each of the legal heirs of
Valentina was adjudicated a distributive share
valued at 8,135.25 pesos.
The documentary evidence also shows that prior
to the death of Valentina, Juan and Ambrosia
secured a Torrens title in their names for a 47
hectare fishpond (Calunuran fishpond). Thereafter,
Ambrosia sold under pacto de retro for 800.00
pesos the Calunuran fishpond to Vicente Villongco
with a right to redeem for a period of one year.
After the fishpond was redeemed from Villongco,
Ambrosia and Juan sold it under pacto de retro to
Eligio Naval. The fishpond was later redeemed and
reconveyed by Juan and Ambrosia. Ambrosia
bought a parcel of swampland planted to bakawan
and nipa with an area of 96 hectares
(Pinañganacan or Lewa fishpond). Juan Salao died
in 1931 while Valentin Salao died in 1933 (there
was a contention here whether he died at 60 or 63
years old). Before Ambrosia died, she donated to
her grandniece (Benita) three lots and to her
nepnew (Juani) 1⁄2 proindiviso share of the
fishpond. After the death of Ambrosia, Benita and
Victorina (children of Valentin) while partitioning
their father’s estate, filed an action for the
reconveyance of the Calunuran fishpond which
was allegedly held in trust and had become the
sole property of Juani. Juani categorically stated
that Valentin did not have any interest in the two
fishponds and that the sole owners thereof were
his father Juan and his aunt Ambrosia
The Trial Court dismissed the complaint. It found
that there was no community of property among
Juan, Ambrosia and Valenti when the Calunuran
and Pinañganacan were acquired.
Both parties appealed to the CA.
The CA elevated the case to the SC because the
amount in controversy exceed 200.00.
ISSUE: Whether the Calunuran fishpond was held
in trust for Valentin by Juan and Ambrosia
HELD: The Court held that there was no trust in
the instant case because there never was any
intention on the part of Juan, Ambrosia and
Valentin to create any trust. Trusts are either
express or implied. Express trusts are created by
the intention of the trustor or of the parties. No
express trusts concerning an immovable or any
interest therein may be proven by parol evidence
(Art. 1443). The plaintiffs did not present a scintilla
of documentary evidence to prove that there was
an express trust over the Calunuran fishpond in
favor of Valentin. Purely parole evidence was
offered by them, which are not legally indefensible
because of the terms of Article 1443. In the same
way, plaintiffs’ evidence cannot be relied upon to
prove the existence of an implied trust. Implied
trust come into being by operation of law and is
ordinarily subdivided into resulting and constructive
trusts. There was no constructive trust because the
registration of the 2 fishponds in the names of Juan
and Ambrosia was not vitiated by fraud or mistake.
There was no resulting trust because it was never
the intention of Juan, Ambrosia and Valentin to
create any trust. Moreover, even assuming that
there was an implied trust, plaintiffs’ action is
barred by prescription or laches. Under Act No.
190, longest period of extinctive prescription was
only 10 years. The Calunuran fishpond was
registered in 1911 and the action was only filed in
1952 or after the lapse of more than 40 years from
the date of registration
[G.R. No. 97995. January 21, 1993.] PHILIPPINE
NATIONAL BANK, petitioner, vs. COURT OF
APPEALS AND B.P. MATA AND CO., INC.,
respondents.
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). action had already prescribed under Article 1145,
Mata sends monthly billings to its foreign principal paragraph 2 of the Civil Code.
Star Kist, which in turn reimburses Mata by sending
Hence, the petition for certiorari.
a telegraphic transfer through banks for credit to
the latter's account. ISSUE: Whether PNB has the right to recover from
Mata based on a constructive trust in Art. 1456
Security Pacific National Bank (SEPAC) of Los
Angeles which had an agency arrangement with HELD: NO. A deeper analysis of Article 1456
Philippine National Bank (PNB), transmitted a reveals that it is not a trust in the technical sense
cable message to PNB to pay the amount of for in a typical trust, confidence is reposed in one
US$14,000 to Mata by crediting the latter's account person who is named a trustee for the benefit of
with the Insular Bank of Asia and America (IBAA), another who is called the cestui que trust,
per order of Star Kist. Upon receipt of this cabled respecting property which is held by the trustee for
message, PNB noticed an error and sent a service the benefit of the cestui que trust. A constructive
message to SEPAC Bank. The latter replied with trust, unlike an express trust, does not emanate
instructions that the amount of US$14,000 should from, or generate a fiduciary relation. While in an
only be for US$1,400. express trust, a beneficiary and a trustee are linked
by confidential or fiduciary relations, in a
On the basis of the cable message, Cashier's Chec
constructive trust, there is neither a promise nor
in the amount of US$1,400 was issued by the Star
any fiduciary relation to speak of and the so-called
Kist for the account of Mata through the Insular
trustee neither accepts any trust nor intends
Bank of Asia and America (IBAA). However,
holding the property for the beneficiary. In the case
fourteen days after, PNB effected another payment
at bar, Mata, in receiving the US$14,000 in its
in the amount of US$14,000 (P97,878.60)
account through IBAA, had no intent of holding the
purporting to be another transmittal of
same for a supposed beneficiary or cestui que
reimbursement from Star Kist, private respondent's
trust, namely PNB. But under Article 1456, the law
foreign principal. Six years later, PNB requested
construes a trust, namely a constructive trust, for
Mata for refund of US$14,000 (P97,878.60) after it
the benefit of the person from whom the property
discovered its error in effecting the second
comes, in this case PNB, for reasons of justice and
payment.
equity.
PNB filed a civil case for collection and refund of
Proceeding now to the issue of whether or not
US$14,000 against Mata arguing that based on a
petitioner may still claim the US$14,000 it
constructive trust under Article 1456 of the Civil
erroneously paid private respondent under a
Code, it has a right to recover the said amount it
constructive trust, we rule in the negative. Although
erroneously credited to respondent Mata. The
we are aware that only seven (7) years lapsed after
Regional Trial Court of Manila rendered judgment
petitioner erroneously credited private respondent
dismissing the complaint ruling that the instant
with the said amount and that under Article 1144,
case falls squarely under Article 2154 on solutio
petitioner is well within the prescriptive period for
indebiti and not under Article 1456 on constructive
the enforcement of a constructive or implied trust,
trust. In affirming the lower court’s decision, the
we rule that petitioner's claim cannot prosper since
appellate court added in its opinion that under Art.
it is already barred by laches. It is a well-settled
2154 on solutio indebiti, the person who makes the
rule now that an action to enforce an implied trust,
payment is the one who commits the mistake vis-à-
whether resulting or constructive, may be barred
vis the recipient who is unaware of such a mistake.
not only by prescription but also by laches. While
Consequently, recipient is duty bound to return the
prescription is concerned with the fact of delay,
amount paid by mistake. But the appellate court
laches deals with the effect of unreasonable delay.
concluded that petitioner's demand for the return of
It is unbelievable for a bank, and a government
US$14,000 cannot prosper because its cause of
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.
G.R. No. L-45645 June 28, 1983 FRANCISCO A.
TONGOY, for himself and as Judicial
Administrator of the Estate of the Late Luis D.
Tongoy and Ma. Rosario Araneta Vda. de
Tongoy, petitioners, vs. THE HONORABLE
COURT OF APPEALS, MERCEDES T. SONORA,
JUAN T. SONORA, JESUS T. SONORA,
TRINIDAD T. SONORA, RICARDO P. TONGOY,
CRESENCIANO P. TONGOY, AMADO P.
TONGOY, and NORBERTO P. TONGOY,
respondents.
MAKASIAR, J.:
FACTS: The case is an action for reconveyance
respecting two (2) parcels of land in Bacolod City.
The first is Lot No. 1397 of the Cadastral Survey of
Bacolod, otherwise known as Hacienda Pulo,
originally registered under Original Certificate of
Title No. 2947 in the names of Francisco Tongoy,
and Jovita Tongoy (and three others, Jose, Ana,
Teresa, who died without issue) in pro-indiviso
equal shares. Said co-owners were all children of
the late Juan Aniceto Tongoy. The second is Lot
No. 1395 of the Cadastral Survey of Bacolod,
briefly referred to as Cuaycong property, containing
formerly covered by Original Certificate of Title No.
2674 in the name of Basilisa Cuaycong.
Francisco Tongoy, who died on September 15,
1926, had six children; Patricio D. Tongoy and Luis
D. Tongoy by the first marriage; Amado P. Tongoy,
Ricardo P. Tongoy; Cresenciano P. Tongoy and
Norberto P. Tongoy by his second wife Antonina
Pabello whom he subsequently married sometime
after the birth of their children. For her part, Jovita
Tongoy (Jovita Tongoy de Sonora), who died on
May 14, 1915, had four children: Mercedes T.
Sonora, Juan T. Sonora, Jesus T. Sonora and
Trinidad T. Sonora.
By the time this case was commenced, the late
Francisco Tongoy's aforesaid two children by his
first marriage, Patricio D. Tongoy and Luis D.
Tongoy, have themselves died. On the other hand,
there is no question that Luis D. Tongoy left behind
a son, Francisco A. Tongoy, and a surviving
spouse, Ma. Rosario Araneta Vda. de Tongoy.
On April 17, 1918, Hacienda Pulo was mortgaged
by its registered co-owners to the Philippine
National Bank (PNB), Bacolod Branch, as security
for a loan of P11,000.00 payable in ten (10) years
at 8% interest per annum. The mortgagors
however were unable to keep up with the yearly
amortizations, as a result of which the PNB
instituted judicial foreclosure proceedings over
Hacienda Pulo on June 18, 1931.
To avoid foreclosure, one of the co-owners and
mortgagors, Jose Tongoy, proposed to the PNB an
amortization plan that would enable them to
liquidate their account. But, on December 23, 1932,
the PNB Branch Manager in Bacolod advised Jose
Tongoy by letter that the latter's proposal was
rejected and that the foreclosure suit had to
continue. As a matter of fact, the suit was pursued
to finality up to the Supreme Court which affirmed
on July 31, 1935 the decision of the CFI giving the
PNB the right to foreclose the mortgage on
Hacienda Pulo.
In the meantime, Patricio D. Tongoy and Luis
Tongoy executed on April 29, 1933 a Declaration of
Inheritance wherein they declared themselves as
the only heirs of the late Francisco Tongoy and
thereby entitled to the latter's share in Hacienda
Pulo. On March 13, 1934, Ana Tongoy, Teresa
Tongoy, Mercedes Sonora, Trinidad Sonora, Juan
Sonora and Patricio Tongoy executed an "Escritura
de Venta", which by its terms transferred for
consideration their rights and interests over
Hacienda Pulo in favor of Luis D. Tongoy.
Thereafter, on October 23, 1935 and November 5,
1935, respectively, Jesus Sonora and Jose Tongoy
followed suit by each executing a similar "Escritura
de Venta" pertaining to their corresponding rights
and interests over Hacienda Pulo in favor also of
Luis D. Tongoy. In the case of Jose Tongoy, the
execution of the "Escritura de Venta" was preceded
by the execution on October 14, 1935 of an
Assignment of Rights in favor of Luis D. Tongoy by
the Pacific Commercial Company as judgment lien-
holder (subordinate to the PNB mortgage) of Jose
Tongoy's share in Hacienda Pulo.
On the basis of the foregoing documents, Hacienda
Pulo was placed on November 8, 1935 in the name
of Luis D. Tongoy, married to Maria Rosario
Araneta, under Transfer Certificate of "Title No.
20154. In the following year, the title of the
adjacent Cuaycong property also came under the
name of Luis D. Tongoy, married to Maria Rosario
Araneta, per Transfer Certificate of Title No. 21522,
by virtue of an "Escritura de Venta" executed in his
favor by the owner Basilisa Cuaycong on June 22,
1936 purportedly for P4,000.00.
On June 26, 1936, Luis D. Tongoy executed a real
estate mortgage over the Cuaycong property in
favor of the PNB, Bacolod Branch, as security for
loan of P4,500.00. Three days thereafter, on June
29, 1936, he also executed a real estate mortgage
over Hacienda Pulo in favor of the same bank to
secure an indebtedness of P21,000.00, payable for
a period of fifteen (15) years at 8% per annum.
After two decades, on April 17, 1956, Luis D.
Tongoy paid off all his obligations with the PNB,
amounting to a balance of P34,410.00, including
the mortgage obligations on the Cuaycong property
and Hacienda Pulo. However, it was only on April
22, 1958 that a release of real estate mortgage
was executed by the bank in favor of Luis D.
Tongoy.
On February 5, 1966, Luis D. Tongoy died, leaving
as heirs his wife Maria Rosario Araneta and his son
Francisco A. Tongoy. Just before his death,
however, Luis D. Tongoy received a letter from
Jesus T. Sonora, dated January 26, 1966,
demanding the return of the shares in the
properties to the co-owners
Not long after the death of Luis D. Tongoy, the
case was instituted in the court below on complaint
filed on June 2, 1966 by Mercedes T. Sonora, Juan
T. Sonora, Jesus T. Sonora, Trinidad T. Sonora,
Ricardo P. Tongoy and Cresenciano P. Tongoy.
Named principally as defendants were Francisco A.
Tongoy, for himself and as judicial administrator of
the estate of the late Luis D. Tongoy, and Maria
Rosario Araneta Vda. de Tongoy. Alleging in sum
that plaintiffs and/or their predecessors transferred
their interests on the two lots in question to Luis D.
Tongoy by means of simulated sales, pursuant to a
trust arrangement whereby the latter would return
such interests after the mortgage obligations
thereon had been settled, the complaint prayed
that 'judgment be rendered in favor of the plaintiffs
and against the defendants
(a) Declaring that the HACIENDA PULO and the
former Cuaycong property, as trust estate
belonging to the plaintiffs and the defendants in the
proportion set forth in this complaint;
(b) Ordering the Register of Deeds of Bacolod to
issue new TCTs in the names of the plaintiffs and
defendants in the proportions set forth in Par. 26
thereof, based on the original area of HACIENDA
PULO;
(c) Ordering the defendants Francisco A. Tongoy
and Ma. Rosario Araneta Vda. de Tongoy to render
an accounting to the plaintiffs of the income of the
above two properties from the year 1958 to the
present and to deliver to each plaintiff his
corresponding share with legal interest thereon
from 1958 and until the same shall have been fully
paid;
Defendants Francisco A. Tongoy and Ma. Rosario
Vda. de Tongoy filed separate answers, denying in
effect plaintiffs' causes of action, and maintaining,
among others, that the sale to Luis D. Tongoy of
the two lots in question was genuine and for a
valuable consideration, and that no trust agreement
of whatever nature existed between him and the
plaintiffs. As affirmative defenses, defendants also
raised laches, prescription, estoppel, and the
statute of frauds against plaintiffs
After trial on the merits, the lower court rendered its
decision finding the existence of an implied trust in
favor of plaintiffs, but at the same time holding their
action for reconveyance barred by prescription,
except in the case of Amado P. Tongoy, Ricardo P.
Tongoy, Cresenciano P. Tongoy, and Norberto P.
Tongoy, who were adjudged entitled to
reconveyance of their corresponding shares in the
property left by their father Francisco Tongoy
having been excluded therefrom in the partition had
during their minority, and not having otherwise
signed any deed of transfer over such shares.
**The proportionate legal share of Amado P.
Tongoy, Ricardo P. Tongoy, Cresenciano P.
Tongoy and the heirs of Norberto P. Tongoy, in
Hda. Pulo and Cuaycong property consist of 4/5 of
the whole trust estate, leaving 1/5 of the same to
the heirs of Luis D. Tongoy.
Both parties appealed the decision of the lower
court to respondent appellate court. Respondent
court rendered the questioned decision, modifying
the judgment and Orders appealed from by
ordering, among others, Maria Rosario Araneta
Vda. de Tongoy and Francisco A. Tongoy.
1) To reconvey to Mercedes T. Sonora, Juan T.
Sonora (as substituted and represented by his
heirs), Jesus T. Sonora and Trinidad T. Sonora
each a 7/60th portion of both Hacienda Pulo and
the Cuaycong property, based on their original
shares;
2) To reconvey to Ricardo P. Tongoy, Cresenciano
P. Tongoy, Amado P. Tongoy and Norberto P.
Tongoy as substituted and represented by his heirs
each a 14/135th portion of both Hacienda Pulo and
the Cuaycong property, also based on their original
shares; provided that the 12 hectares already
reconveyed to them by virtue of the Order for
execution pending appeal of the judgment shall be
duly deducted;
3) To render an accounting to the parties named in
pars. 1 and 2 above with respect to the income of
Hacienda Pulo and the Cuaycong property from
May 5, 1958 up to the time the reconveyances as
herein directed are made; and to deliver or pay to
each of said parties their proportionate shares of
the income, if any, with legal interest thereon from
the date of filing of the complaint in this case,
January 26, 1966, until the same is paid.
**SC: The Court of Appeals found enough
convincing evidence not barred by the aforecited
survivorship rule to the effect that the transfers
made by the co- owners in favor of Luis D. Tongoy
were simulated. The deeds of transfer executed in
favor of Luis Tongoy were from the very beginning
absolutely simulated or fictitious, since the same
were made merely for the purpose of restructuring
the mortgage over the subject properties and thus
preventing the foreclosure by the PNB.
ISSUES: 1) Whether or not the rights of herein
respondents over subject properties, which were
the subjects of simulated or fictitious transactions,
have already prescribed
2) Whether, assuming arguendo that such an
implied trust exists between Luis Tongoy as trustee
and the private respondents as cestui que trust, the
rights of private respondents to claim
reconveyance is barred by prescription or laches
(from what time should such period be counted?
HELD:
I. No. Under Article 1409, contracts which are
absolutely simulated or fictitious are inexistent and
void from the beginning. These contracts cannot be
ratified. Neither can the right to set up the defense
of illegality be waived. Under Article 1410, the
action or defense for the declaration of the
inexistence of a contract does not prescribe.
Considering the law and jurisprudence on
simulated or fictitious contracts as aforestated, the
within action for reconveyanceinstituted by herein
respondents which is anchored on the said
simulated deeds of transfer cannot and should not
be barred by prescription. No amount of time could
accord validity or efficacy to such fictitious
transactions, the defect of which is permanent.
There is no implied trust that was generated by the
simulated transfers; because being fictitious or
simulated, the transfers were null and void ab initio-
from the very beginning and thus vested no rights
whatsoever in favor of Luis Tongoy or his heirs.
That which is inexistent cannot give life to anything
at all.
II. No. Even assuming arguendo that such an
implied trust exists between Luis Tongoy as trustee
and the private respondents as cestui que trust, still
the rights of private respondents to claim prescriptive period for bringing the action to enforce
reconveyance is not barred by prescription or the trust or for reconveyance of plaintiffs-
laches. appellants’ shares should be toned from the
registration of the release of the mortgage
Petitioners maintain that, even conceding that
obligation, since only by that time could
respondents have adequately proven an implied
plaintiffsappellants be charged with constructive
trust in their favor, their rights have already
knowledge of the liquidation of the mortgage
prescribed, since actions to enforce an implied trust
obligations, when it became incumbent upon them
created under the old Civil Code prescribes in ten
to expect and demand the return of their shares,
years. On the other hand, private respondents
there being no proof that plaintiffs-appellants
contend that prescription cannot operate against
otherwise learned of the payment of the obligation
the cestui que trust in favor of the trustee, and that
earlier. More precisely then the prescriptive period
actions against a trustee to recover trust property
should be reckoned from May 5, 1958 when the
held by him are imprescriptible.
release of the mortgage was recorded in the
The facts of the case at bar reveal that the title to Registry of Deeds, which is to say that the present
Hacienda Pulo was registered in the name of Luis complaint was still filed within the period on June 4,
D. Tongoy with the issuance of TCT No. 20154 on 1966.
November 8, 1935; that the title to the adjacent
Consequently, petitioner Francisco A. Tongoy as
Cuaycong property was transferred to Luis D.
successor-ininterest and/or administrator of the
Tongoy with the issuance of TCT No. 21522 on
estate of the late Luis D. Tongoy, is under
June 22, 1936. The properties were mortgaged in
obligation to return the shares of his co-heirs and
the year 1936 by said Luis D. Tongoy for
co-owners in the subject properties and, until it is
P4,500.00 and P21,000.00, respectively, for a
done, to render an accounting of the fruits thereof
period of fifteen years; that the mortgage
from the time that the obligation to make a return
obligations to the PNB were fully paid on April 17,
arose, which in this case should be May 5, 1958,
1956; that the release of mortgage was recorded in
the date of registration of the document of release
the Registry of Deeds on May 5, 1958; and that the
of mortgage.
case for reconveyance was filed in the trial court on
June 2, 1966. CARAGAY-LAYNO VS. COURT OF APPEALS
G.R. No. L-52064
Considering that the implied trust resulted from the
simulated sales which were made for the purpose Melencio-Herrera, J
of enabling the transferee, Luis D. Tongoy, to save
FACTS: As Administratrix, DE VERA’s widow filed
the properties from foreclosure for the benefit of the
in Special Proceedings of the Court of First
co-owners, it would not do to apply the theory of
Instance of Pangasinan, an Inventory of all
constructive notice resulting from the registration in
properties of the deceased, which included a parcel
the trustee's name. Hence, the ten-year
of land in the poblacion of Calasiao, Pangasinan,
prescriptive period should not be counted from the
containing an area of 5,417 square meters, more or
date of registration in the name of the trustee.
less, and covered by Tax Declaration No. 12664.
Rather, it should be counted from the date of
Because of the discrepancy in area mentioned in
recording of the release of mortgage in the Registry
the Inventory as 5,147 square metersand that in
of Deeds, on which date May 5, 1958 — the cestui
the title as 8,752 square meters, respondent
que trust were charged with the knowledge of the
ESTRADA repaired to the Disputed Property and
settlement of the mortgage obligation, the
found that the northwestern portion, subsequently
attainment of the purpose for which the trust was
surveyed to be 3,732 square meters, was occupied
constituted.
by petitioner-spouses Juliana Caragay Layno and
Indeed, as respondent Court of Appeals had Benito Layno. ESTRADA demanded that they
correctly held: as already indicated, the ten-year vacate the Disputed Portion since it was titled in
the name of the deceased DE VERA, but
petitioners refused claiming that the land belonged
to them and, before them, to JULIANA’S father
Juan Caragay. ESTRADA then instituted suit
against JULIANA for the recovery of the Disputed
Portion which she resisted, mainly on the ground
that the Disputed Portion had been fraudulently or
mistakenly included in OCT No. 63, so that an
implied or constructive trust existed in her favor.
She then counterclaimed for reconveyance of
property in the sense that title be issued in her
favor.
After hearing, the Trial Court rendered judgment
ordering JULIANA to vacate the Disputed Portion.
On appeal, respondent Appellate Court affirmed
the Decision in toto.
ISSUE Whether or not petitioner’s claim for
reconveyance based on implied or constructive
trust has prescribed after 10 years.
HELD: No. The evidence discloses that the
Disputed Portion was originally possessed openly,
continuously and uninterruptedly in the concept of
an owner by Juan Caragay, the deceased father of
JULIANA, and had been declared in his name
under Tax Declaration No. 28694 beginning with
the year 1921. Prescription cannot be invoked
against JULIANA for the reason that as lawful
possessor and owner of the Disputed Portion, her
cause of action for reconveyance which, in effect,
seeks to quiet title to the property, falls within
settled jurisprudence that an action to quiet title to
property in one’s possession is imprescriptible. Her
undisturbed possession over a period of fifty two
(52) years gave her a continuing right to seek the
aid of a Court of equity to determine the nature of
the adverse claim of a third party and the effect on
her own title. Besides, under the circumstances,
JULIANA’S right to quiet title, to seek
reconveyance, and to annul OCT. No. 63 accrued
only in 1966 when she was made aware of a claim
adverse to her own. It was only then that the
statutory period of prescription may be said to have
commenced to run against her.
G.R. No. L-44546 January 29, 1988 RUSTICO
ADILLE, petitioner, vs. THE HONORABLE
COURT OF APPEALS, EMETERIA ASEJO,
TEODORICA ASEJO, DOMINGO ASEJO,
JOSEFA ASEJO and SANTIAGO ASEJO,
respondents.
SARMIENTO, J.
FACTS: The land in question originally belonged to
Felisa Alzul, who married twice in her lifetime. In
her first marriage, she had as an only child
petitioner Rustico Adille; and in her second
marriage, her children were private respondents.
Felisa sold the property in pacto de retro to certain
third persons, with a period of repurchase for 3
years. She died without being able to redeem the
property. After her death but during the period of
redemption, petitioner repurchased the property.
Petitioner executed a deed of extrajudicial partition,
representing himself to be the only heir and child of
his mother, with the consequence that he was able
to secure title in his name alone. Hence, private
respondents filed an action for partition against
petitioner.
ISSUE: Whether the petitioner is a trustee of the
property on behalf of the private respondents.
HELD: YES. Art. 1456 of 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 Supreme Court agree with the
respondent Court of Appeals that fraud attended
the registration of the property. The petitioner's
pretension that he was the sole heir to the land in
the affidavit of extrajudicial settlement he executed
preliminary to the registration thereof betrays a
clear effort on his part to defraud his brothers and
sisters and to exercise sole dominion over the
property. The aforequoted provision therefore
applies
It is the view of the respondent Court that the
petitioner, in taking over the property, did so either
on behalf of his co-heirs, in which event, he had
constituted himself a negotiorum gestor under
Article 2144 of the Civil Code, or for his exclusive
benefit, in which case, he is guilty of fraud, and
must act as trustee, the private respondents being
the beneficiaries, under the Article 1456. The
evidence, of course, points to the second
alternative the petitioner having asserted claims of
exclusive ownership over the property and having
acted in fraud of his co-heirs. He cannot therefore
be said to have assume the mere management of
the property abandoned by his co-heirs, the
situation Article 2144 of the Code contemplates. In
any case, as the respondent Court itself affirms,
the result would be the same whether it is one or
the other. The petitioner would remain liable to the
Private respondents, his co-heirs.