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CASE DIGESTS TRUSTS

4.

LOPEZ v CA ...............................................................................................................23

5.

SALAO v SALAO......................................................................................................24

NATURE AND CLASSIFICATION ............................................................................2

6.

MUNICIPALITY OF VICTORIAS v CA............................................................25

1.

MORALES v CA...........................................................................................................2

7.

PNB v CA ....................................................................................................................26

2.

PENALBER v CA ........................................................................................................3

8.

PARUNGIT v BAJIT ...............................................................................................27

EXPRESS TRUSTS ..........................................................................................................4

9.

HEIRS OF EMILIO v ROMERO .........................................................................28

Contents
I.

II.
1.

TORBELA v ROSARIO .............................................................................................4

10.

ADAZA v CA .........................................................................................................29

2.

JULIO v DALANDAN ................................................................................................5

11.

SING JUCO AND SING BENGCO v SUNYANTONG .............................30

3.

CANEZO v ROJAS.......................................................................................................6

12.

LEOVERAS v VALDEZ .....................................................................................31

4.

PNB v AZNAR..............................................................................................................7

13.

PASINO v MONTERROYO .............................................................................32

5.

HEIRS OF TRANQUILINO LABISTE v HEIRS OF JOSE LABISTE........9

14.

GAYONDATO v TREASURER.......................................................................33

6.

CANEZO v ROJAS....................................................................................................10

15.

ESCOBAR v LOCSIN .........................................................................................33

7.

PACHECO v ARRO .................................................................................................11

16.

ESTATE OF MARGARITA v LAIGO ...........................................................34

8.

GAMBOA.....................................................................................................................12

17.

CAVILE v LITANIA-HONG ............................................................................36

9.

TY v TY ........................................................................................................................13

18.

TIONGCO YARED v TIONGCO.....................................................................37

10.

TAN SENGUAN v PHILTRUST ....................................................................14

19.

PNB v JUMANOY ...............................................................................................38

11.

GOVERNMENT v ABADILLA .......................................................................15

20.

BRITO v DIANALA............................................................................................39

12.

CRISTOBAL v GOMEZ .....................................................................................16

21.

HEIRS OF DOMINGO v RAMA.....................................................................40

13.

DBP v COA ............................................................................................................17

III.

IMPLIED TRUSTS...................................................................................................18

1.

RAMOS v RAMOS ...................................................................................................18

2.

DIAZ v GORRICHO AND AGUADO .................................................................21

3.

VDA DE OUANO v REPUBLIC ..........................................................................22

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I.

NATURE AND CLASSIFICATION


1. MORALES v CA

Morales v CA
G.R. No. 117228
June 19, 1997
RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES,
petitioners,
vs.
COURT OF APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and
ERLINDA ORTIZ, respondents.
Celso Avelino - Seller
Ranulfo & Erlinda Ortiz Spouses-Buyers
Rodolfo Morales Nephew-Builder
Priscila Morales Sellers Other Sister / Mother of Builder
FACTS
Seller owns two adjoining parcels of land on which he constructed a
house where he let his parents and sister lived while he worked as City Fiscal of
Calbayog, then Immigration Officer, and, later on, as Judge of CFI Cebu.
While in Cebu, without the Sellers knowledge, his Nephew built a
beauty shop on his property. When he was offering to sell the property to
prospective buyer Spouses, the latter did an ocular inspection and was able to
talk with the Nephew, who encouraged them to buy the property and assured
them that he will vacate the premises if notified by the seller to do so. The sale
was consummated and the Spouses paid the purchase price. Unfortunately,
despite due notice from the Seller, the Nephew refused to vacate or demolish
the beauty shop unless he is reimbursed for P35k. The Spouses also
subsequently found out that the Nephew also then occupied the dilapidated
residential building, which the former had sought to repair. The Spouses then
filed a case to recover the property against the Nephew (later substituted by his
heirs).
According to the Nephews mother, sister of the Seller, (aside from the
one who live in the house constructed) who also intervened in the case, the
property was inherited by her together with their other siblings, except for the

Seller who was away for 30 years because of his job. The Seller, being the only
son, was allowed by their father to acquire the property with money coming
from the father. She further alleged that the constructed house was built by
their parents and that the built beauty shop was with the knowledge and
consent of the Seller. She intervened arguing that the sale was fraudulent for
including her share and the beauty shop of her son.
The Trial Court ruled in favor of the Spouses and ordered the Nephew
to vacate and remove the beauty shop. The court noted that the sellers siblings
and their descendants had not disputed the Sellers ownership of the property
nor the extra judicial-partition effected on the property, even though two of the
Sister-Intervenors children were lawyers. It further noted that the claim of
ownership by the buyer Spouses were based on documentary evidence (Deed of
Conveyance, tax declarations transferred to the wife-buyer, etc.), as against the
evidence presented by the Sellers Sister and Nephew which were only
testimonial. Furthermore, the other sisters did not join them and intervened in
the case. The court further ruled that their claim of implied trust is untenable,
because in order for implied trust to exist there must be evidence of an
equitable obligation of the trustee to convey, which was absent in this case. The
CA affirmed the decision of the trial court.
ISSUE
WON the Seller was a mere trustee for his parents and siblings
RATIO
NO. 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. While implied trusts may be
proved by oral evidence, the evidence must be trustworthy and received
by the courts with extreme caution, and should not be made to rest on
loose, equivocal or indefinite declarations.
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: (a) it is a relationship; (b) it is
a relationship of fiduciary character; (c) It is a relationship with respect to

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property, not one involving merely personal duties; (d) 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 (e) it arises as a
result of a manifestation of intention to create the relationship.
A resulting trust, also sometimes referred to as a PURCHASE MONEY
RESULTING TRUST, is exemplified by Article 1448 of the Civil Code, which
reads: Art. 1448. There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of
having the beneficial interest of the property. The former is the trustee, while the
latter is the beneficiary. However, if the person to whom the title is conveyed is
a child, legitimate or illegitimate, of the one paying the price of the sale, no
trust is implied by law, it being disputably presumed that there is a gift in
favor of the child. 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.
The Court agreed with the lower courts that the current situation falls
within the exception under the third sentence of Article 1448.
Also fatal to the case of the Sister and the Nephew is the declaration of
their other sister, Concepcion, who disclaimed any interest on the property and
executed a Confirmation that their brother bought the property using his own
funds. If indeed the property was merely held in trust by Celso for his parents,
Concepcion would have been entitled to a proportionate part thereof as co-heir.
However, by her Confirmation, Concepcion made a solemn declaration against
interest. Furthermore, the Sellers sisters did not do anything to have their
respective shares in the property conveyed to them after the death of their
father. Neither is there any evidence that during his lifetime, their father
demanded from the Seller that the latter convey the land, which was mute and
eloquent proof of the fathers recognition that the Seller was the to be the
absolute owner of the property.

2. PENALBER v CA
FACTS:

Lina Penalber is the mother of Leticia and the mother-in-law of Quirino


Ramos, husband of Leticia. The mother claimed that for many years, she
operated a hardware store in a building she owned. However, the lot upon
which the building stood is owned by Maria Mendoza.

The mother allowed the spouses to manage the hardware store. When
Mendoza put the property up for sale, the mother did not have cash to buy the
property. She allegedly entered into a verbal agreement with the spouses
wherein the lot would be bought by the spouses for and in behalf of the mother,
and since the spouses have the better credit standing, they would be made to
appear as the buyers so that the title to be issued in their names could be used
by the spouses to secure a loan with which to build a bigger building and
expand the business of the mother.
Pursuant to agreement, the spouses Ramos allegedly entered into a
contract of sale with Mendoza. Later, the spouses returned the management of
the hardware. On the bases of receipts and disbursements, the mother asserted
that the land was fully paid out of the funds of the store and if the spouses had
given any amount for the purchase price of the said land, they had already
sufficiently reimbursed themselves from the funds of the store. The mother
demanded from the spouses the reconveyance of the title to the land but the
spouses refused.
The Mothers Arguments:
The spouses were, in reality, mere trustees of the land, thus, they were
under a moral and legal obligation to reconvey title over the said property to
her.
She calls attention to the fact that the spouses could not account for the
P116,946.15 difference in the beginning inventory and the second inventory of
the stocks of the hardware store. As the spouses never denied the existence of
the said amount, the mother contends that they have the burden of proving
where this amount had gone, and their failure to discharge such burden, the
only conclusion would be that they did use the amount to purchase the property
making such property held merely in trust by the spouses for the mother.
The mother also alleges that based on the verbal agreement between
her and the spouses, a valid and enforceable trust agreement was created, and
such was clearly intended by the parties.
The SpousesArguments
The spouses contended that they were given not only the management,
but also the full ownership of the hardware store by the the mother, on the
condition that the stocks and merchandise of the store will be inventoried, and
out of the proceeds of the sales, the spouses shall pay the mothers outstanding
liabilities. According to the spouses, they bought the property from Mendoza
out of their own funds.
The spouses also said that given that the alleged trust concerns an
immovable property, it is unenforceable since the agreement was made verbally

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and no parol evidence may be admitted to prove the existence of an express
trust concerning an immovable property or any interest therein.
ISSUE:
(1) whether the existence of a trust agreement between her and respondent
spouses Ramos was clearly established.
(2) whether such trust agreement was valid and enforceable.
HELD:
(1)
No.
(2)
No.
RATIO:

mother), by itself, is not conclusive proof that the said amount was used to pay
the purchase price of the property, such as would make it the property of the
mother held merely in trust by respondent spouses Ramos. The fact that the
spouses never denied the P116,946.15 difference, or that they failed to present
proof that they indeed used the said amount to pay the other obligations of the
mother is not sufficient to discharge the mothers burden to prove the existence
of the alleged express trust agreement.

II.

EXPRESS TRUSTS
1. TORBELA v ROSARIO

A trust is defined as the right, enforceable solely in equity, to the


beneficial enjoyment of property, the legal title to which is vested in another,
but the word "trust" is frequently employed to indicate duties, relations, and
responsibilities which are not strictly technical trusts. A person who establishes
a trust is called the trustor; one in whom confidence is reposed 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
beneficiary (cestui que trust) as regards certain property, real, personal, money
or choses in action.
Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties. Implied trusts come into being by
operation of law. 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.
From the allegations of the the mother, the alleged verbal trust
agreement is in the nature of an express trust as the mother explicitly agreed to
allow the spouses to acquire title to the property in their names, but to hold the
same property for the mothers benefit. The mothers allegations as to the
existence of an express trust agreement with the spouses, supported only by her
testimonies, do not hold water.
The resulting difference of P116,946.15 in the beginning inventory of
the stocks of the hardware store (before management was transferred to the
spouses) and the second inventory (after management was returned to the

FACTS
The controversy began with a parcel of land (Lot No. 356-A) in
Pangasinan which was originally a part of a larger piece of land in the name of
Valeriano Semilla, married to Potenciano Acosta. Lot No. 356-A was given by
Valeriano to his sister Marta, married to Eugenio Torbela. Upon the death of the
Spouses Torbela, Lot No. 356-A was adjudicated in equal shares among their
children, the Torbela siblings, by virtue of a Deed of Extrajudicial Partition.
Then the Torbela siblings executed a Deed of Absolute Quitclaim over
Lot No. 356-A in favor of Dr. Rosario. Another Deed of Absolute Quitclaim was
subsequently executed, this time by Dr. Rosario, acknowledging that he only
borrowed Lot No. 356-A from the Torbela siblings and was already returning
the same.
Following the issuance of TCT No. 52751, Dr. Rosario obtained a loan
from DBP secured by a mortgage constituted on Lot No. 356-A. Dr. Rosario used
the proceeds of the loan for the construction of improvements on Lot No. 356-A.
Dr. Rosario was able to fully pay his loan from DBP. Dr. Rosario
acquired another loan from the Philippine National Bank (PNB) sometime in
1979-1981.
On December 8, 1981, Dr. Rosario and his wife, Duque-Rosario
(spouses Rosario), acquired a third loan in the amount of P1,200,000.00 from
Banco Filipino. To secure said loan, the spouses Rosario again constituted
mortgages on Lot No. 356-A, Lot No. 4489, and Lot No. 5-F-8-C-2-B-2-A.
Because Banco Filipino paid the balance of Dr. Rosarios loan from PNB,
the mortgage on Lot No. 356-A in favor of PNB was cancelled per Entry No.
533478.

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A Complaint was then filed for the recovery of ownership and
possession of said land. Also since the spouses failed to pay their loan (3rd) with
Banco Filipino, the property was foreclosed.
ISSUE(S):
Whether or not a trust existed between the parties.
Whether or not the trust was validly repudiated by Dr. Rosario.
RATIO:

There is no dispute that the Torbela sibling inherited the title to Lot No.
356-A from their parents. Indeed, the Torbela siblings executed a Deed of
Absolute Quitclaim on December 12, 1964 in which they transferred and
conveyed Lot No. 356-A to Dr. Rosario for the consideration of P9.00. 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-Aa 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.
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.61Express 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 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.

When Dr. Rosario was able to register Lot No. 356-A in his name under
TCT No. 52751 on December 16, 1964, an implied trust was initially established
between him and the Torbela siblings.
Dr. Rosarios execution of the Deed of Absolute Quitclaim on December
28, 1964, 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. Rosarios name
under TCT No. 52751 and Dr. Rosario kept possession of said property, together
with the improvements thereon.
Dr. Rosario argues that he is deemed to have repudiated the trust on
December 16, 1964, when he registered Lot No. 356-A in his name under TCT
No. 5275, so he claims that the action for the recovery has already prescribed.
The court rejected this argument and said that 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. (Ringor v. Ringor).
However, the Supreme Court agreed with the Court of Appeals when it
held that Dr. Rosario repudiated the express trust when he acquired another
loan from PNB and constituted a second mortgage on Lot No. 356-A sometime
in 1979, which, unlike the first mortgage to DBP in 1965, was without the
knowledge and/or consent of the Torbela siblings. But the Torbela siblings were
able to institute Civil Case No. U-4359 well before the lapse of the 10-year
prescriptive period for the enforcement of their express trust with Dr. Rosario.

2. JULIO v DALANDAN
FACTS
An affidavit was subscribed and sworn to by Clemente Dalandan. By the
terms of this writing, Clemente Dalandan, deceased father of defendants
Emiliano and Maria Dalandan, acknowledged that a four-hectare piece of
riceland in Las Pias, Rizal belonging to Victoriana Dalandan, whose only child
and heir is plaintiff Victoria Julio, was posted as security for an obligation which
he, Clemente Dalandan, assumed but, however, failed to fulfill. The result was
that Victoriana's said land was foreclosed.
The key provisions of said document are:
3. That this riceland owned by VICTORIANA DALANDAN whose sole
heir is VICTORIA JULIO was posted as security for an obligation assumed by me

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even before the outbreak of the last war and because I failed to fulfill the
obligation secured by her said farm the same was foreclosed;
4. That because of this, and as agreed upon between us, I accordingly
held myself liable to Victoria Julio for the foreclosure of her said land, and I
promised her that I would replace her aforesaid land which was foreclosed
because of my obligation with another farm of more than four; (4) hectares, that
is, one planted to four cavanes of seedlings, more or less;]
5. That my children (EMILIANO AND MARIA DALANDAN) may not be
forced to give up the harvest of the farm herein above mentioned;
6.That neither may the land which was exchanged for the farm with
four cavanes of seedlings be demanded immediately;
After the death of Clemente Dalandan, plaintiff requested from
defendants to deliver the land to her, but they refused.
ISSUE
W/N Emiliano and Maria Dalandan are trustees of Victoria Julio.
HELD / RATIO
YES. Emiliano and Maria Dalandan are usufructuaries for an
undetermined length of time. For so long as that period has not been fixed and
has not elapsed, they hold the property. Theirs is to enjoy the fruits of the land
and to hold the same as trustees of Victoria Julio. And this because, by the deed,
Clemente Dalandan divested himself of the ownership qualified solely by
withholding enjoyment of the fruits and physical possession. In consequence,
Clemente Dalandan cannot transmit to his heirs, the present defendants, such
ownership. Nemo dat quod non habet. And then, the document is a declaration
by Clemente Dalandan, now deceased, against his own proprietary interests.
Such document is binding upon his heirs.
While it is true that said deed did not in definitive words institute
defendants as trustees, a duty is therein imposed upon them when the
proper time comes to turn over both the fruits and the possession of the
property to Victoria Julio. Not that this view is without statutory support. Article
1444 of the Civil Code states that: "No particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended." In
reality, the development of the trust as a method of disposition of property, so
jurisprudence teaches, "seems in large part due to its freedom from formal
requirements." This principle perhaps accounts for the provisions in Article
1444 just quoted. For, "technical or particular forms of words or phrases are not
essential to the manifestation of intention to create a trust or to the
establishment thereof." Nor would the use of some such words as "trust" or

"trustee" essential to the constitution of a trust. Conversely, the mere fact that
the word "trust" or "trustee" was employed would not necessarily prove an
intention to create a trust. What is important is whether the trustor manifested
an intention to create the kind of relationship which in law is known as a trust.
It is unimportant that the trustor should know 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."7 Here, that trust is
effective as against defendants and in favor of the beneficiary thereof, plaintiff
Victoria Julio, who accepted it in the document itself.

3. CANEZO v ROJAS
SOLEDAD CAEZO, substituted by WILLIAM CAEZO and VICTORIANO CAEZO
Petitioners, vs
CONCEPCION ROJAS, Respondent.
GR No. 148788

November 23, 2007

FACTS:
Soledad Caezo (Caezo) claims that she bought a parcel of land in
1939 from Crisogono Limpiado (Limpiado) but the transaction was not reduced
into writing. She immediately took possession of the property.
When she and her husband left for Mindanao in 1948, she entrusted the
land to her father, Cripulo Rojas (Crispulo), who took possession of and
cultivated the land. However, in 1980, she discovered that her stepmother,
Concepcion Rojas (Rojas), took possession of the land and that the tax
declaration was already transferred in Crispulos name.
Thus, Caezo filed a complaint for the recovery of the land plus
damages against Rojas.
Rojas, on the other hand, claims that it Crispulo who bought the
property from Limpiado in 1948. From then on until his death in 1978, Crispulo
was on possession of the land
ISSUE:

WON a trust, express or implied, was constituted between Caezo and


Crispulo
RULING:
There was no trust, express or implied, between Caezo and Crispulo.

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RATIO:

A trust is the legal 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.
As a rule, however, 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 to carry 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 Caezo to prove the existence of
the trust relationship, but she 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. Bare allegations do not constitute evidence adequate to support a
conclusion. They are not equivalent to proof under the Rules of Court.
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 Caezos testimony and the attendant facts and circumstances.
Neither can it be deduced from the circumstances of the case that a
resulting trust was created. A resulting trust is a species of implied trust that is
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. A resulting trust is based on the equitable
doctrine that it is the more valuable consideration than the legal title that
determines the equitable interest in property.

Assuming that such a relation existed, it terminated upon Crispulos


death in 1978. A trust terminates upon the death of the trustee where the trust
is personal to the trustee in the sense that the trustor intended no other person
to administer it. Hence, after Crispulos death, Rojas had no right to retain
possession of the property. At such point, a constructive trust would be created
over the property by operation of law. Where one mistakenly retains property
which rightfully belongs to another, a constructive trust is the proper remedial
device to correct the situation.
A constructive trust is one created not by any word or phrase, either
expressly or impliedly, evincing a direct intention to create a trust, but one
which arises in order to satisfy the demands of justice. It does not come about
by agreement or intention but in the 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.
As previously stated, the rule that a trustee cannot, by prescription,
acquire 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. 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. The relation of trustee and cestui que trust does not in fact exist,
and the holding of a constructive trust is for the trustee himself, and therefore,
at all times adverse.

4. PNB v AZNAR
G.R. No. 171805, May 30, 2011
PHILIPPINE NATIONAL BANK, PETITIONER
MERELO B. AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (DECEASED),
REPRESENTED BY HIS HEIRS; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA;
JOSE B. ENAD (DECEASED), REPRESENTED BY HIS HEIRS; AND RICARDO
GABUYA (DECEASED), REPRESENTED BY HIS HEIRS, RESPONDENTS.

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G.R. NO. 172021
MERELO B. AZNAR AND MATIAS B. AZNAR III, PETITIONERS,
PHILIPPINE NATIONAL BANK, RESPONDENT
FACTS:
In 1958, RISCO ceased operation due to business reverses. In plaintiffs'
desire to rehabilitate RISCO, they contributed P212,720.00 which was used in
the purchase of the 3 parcels of land
After the purchase of the lots, titles were issued in the name of RISCO.
The amount contributed by plaintiffs constituted as liens and encumbrances on
the aforementioned properties as annotated in the titles of said lots. Such
annotation was made pursuant to the Minutes of the Special Meeting of the
Board of Directors of RISCO, pertinent portion of which states:
xxxx
3. That in a special meeting of the stockholders called for the purpose of
putting up certain amount for the rehabilitation of the Company, the following
stockholders contributed the amounts indicated opposite their names: Melero
Aznar, Matias Aznar, Jose Aznar, Ramon Barcenilla, Rosario Barcenilla, Jose
Enad, and Ricardo Gabuya.
The respective contributions above-mentioned shall constitute as their
lien or interest on the property, if and when said property are titled in the
name of RISCO., subject to registration as their adverse claim in pursuance of
the Provisions of Land Registration Act, until such time their respective
contributions are refunded to them completely.
xxxx
Thereafter, various subsequent annotations were made on the titles,
including the Notice of Attachment and Writ of Execution.
As a result, a Certificate of Sale was issued in favor of PNB, being the
lone and highest bidder of the 3 parcels. Thereafter, a Final Deed of Sale in favor
of the Philippine National Bank was also issued and a new TCT was issued in the
name of PNB on August 26, 1991.
Plaintiffs filed a complaint seeking the quieting of their supposed title,
cancellation of TCT and reconveyance with TRO and PI. Plaintiffs alleged that
the annotations on the titles are subject to the prior annotation of their liens
and encumbrances. Plaintiffs further contended that the subsequent writs and
processes annotated are all null and void for want of valid service upon RISCO
and on them, as stockholders. They argued that the Final Deed of Sale and TCT
are null and void as these were issued only after 28 years.
The trial court ruled against PNB on the basis that there was an express
trust created over the subject properties whereby RISCO was the trustee and

the stockholders, Aznar, et al., were the beneficiaries or the cestui que trust.
The CA set aside the judgment of the trial court. Although the Court of Appeals
agreed with the trial court that a judgment on the pleadings was proper, the
appellate court opined that the monetary contributions made by Aznar, et al., to
RISCO can only be characterized as a loan secured by a lien on the subject lots,
rather than an express trust. Thus, it directed PNB to pay Aznar, et al., the
amount of their contributions plus legal interest from the time of acquisition of
the property until finality of judgment.
ISSUE:
The relevant one: Were the contributions of the stockholders AN
EXPRESS TRUST?
HELD:
No they are not an express trust.
RATIO:
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.[21]
Express trusts, sometimes referred to as direct trusts, are intentionally
created by the direct and positive acts of the settlor or the trustor - by some
writing, deed, or will or oral declaration. It is created not necessarily by some
written words, but by the direct and positive acts of the parties.[22] This is in
consonance with Article 1444 of the Civil Code, which states that "[n]o
particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended."
In other words, 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.[23]
No such reasonable certitude in the creation of an express trust obtains
in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of
the terms used in the Minutes does not offer any indication that the parties
thereto intended that Aznar,et al., become beneficiaries under an express trust
and that RISCO serve as trustor.

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WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED
for lack of merit. The petition of PNB in G.R. No. 171805 is GRANTED. The
Complaint, docketed as Civil Case No. CEB-21511, filed by Aznar, et al., is hereby
DISMISSED. No costs.

587 SCRA 417 (2009)

October 1993 they opposed the said petition but later on withdrew the same on
the basis of a compromise agreement they entered with the heirs of Jose to
expedite the reconstitution of title. So on December 14, 1994, the Register of
Deed issued the reconstituted Title in the names of the heirs of Jose.
The heirs of Jose however did not honor the compromise agreement. So
on January 13, 1995, the heirs of Lino filed a complaint for annulment of title,
re-conveyance of property with damages. Joses heirs however said that the
action of Linos heirs had long prescribed or barred by laches.

DOCTRINE
If a trust relationship has been created between the parties whether expressly or
impliedly, prescription does not run until the said trust is repudiated.

ISSUE
a) WON Linos heirs had long prescribed or barred by laches.
b) How Express Trusts are created.

FACTS

HELD / RATIO
a)No. The rules on prescription and the principle of laches cannot be
applied here because of the existence of a trust relationship.

5. HEIRS OF TRANQUILINO LABISTE v HEIRS OF JOSE LABISTE

The case involved a parcel of Friar Land with an area of 13,308 square
meters known at Cebu City which was purchased from the Bureau of Lands way
back on 1919 by Emilio in his own behalf and on behalf of his brothers and
sisters who were the heirs of Jose. (Collectively known as Heirs of Jose)
The money that was used to purchase the land came from both Emilio
and their Uncle Lino so after full payment of the purchase price but prior to the
issuance of the deed of conveyance by the Bureau of Lands, Emilio executed an
Affidavit in Spanish dated on 1923 affirming that he, as one of the heirs of Jose
and his Uncle Lino then co-owned the lot. Thereafter or on 1924 the Bureau of
Lands executed the Deed of Conveyance in favor of Emilio and his siblings, or
the heirs of Jose by virtue of which a TCT was issued by the Register of Deeds.
On 1928, the lot was subdivided by Deputy Land Surveyor, Engineer
Bunag into two (2) equal parts with an area of 6,664 square meters for Lino and
an area of 6,664 square meters for Emilio and the other heirs of Jose. This was
approved by the Director of Lands on 1928.
On 1939, the heirs of Lino purchased the share of the lot of the heirs of
Jose as evidenced by the Calig-onan sa Panagpalit executed by the parties in
Visayan dialect. So the heirs of Lino immediately took possession of the entire
13,308 sqm lot.
When World War II broke out however, Linos heirs fled the city. When
they came back after the war, they found their homes and possessions and the
records in the government offices burned and destroyed with squatters
occupying their entire property.
Linos heirs subsequently learned that one of the heirs of Jose filed a
petition for reconstitution of title over the Lot on September 17, 1993. So in

b) Trust is the right to the beneficial enjoyment of property, the legal


title to which is vested in another. It may either be express or implied. An
express trust is created by direct and positive acts of the parties, by some
writing or deed or will. No particular words are required for the creation of an
express trust it being sufficient that a trust is clearly intended (Article 144, Civil
Code). An implied trust comes into being by operation of law.
The Affidavit of Emilio which is genuine and authentic beyond cavil is
in the nature of an express trust. In said affidavit, Emilio confirmed that Lot
1054 bought in his name was co-owned by him as one of the heirs of Jose, and
his uncle Lino. And by agreement, each of them has been in possession of half of
the property as corroborated by the subdivision plan prepared by Engineer
Bunag and approved by the Bureau of Lands. As such prescription and laches
will run only if it is shown that: (a) the trustee has performed unequivocal acts
of repudiation amounting to an ouster of the beneficiary; (b) such positive acts
of repudiation have been made known to the beneficiary, and (c) the evidence
thereon is clear and conclusive.
Joses heirs cannot rely on the fact that the Torrens title was issued in
their names. Trustees who obtain a Torrens title over a property held in trust by
them for another cannot repudiate the trust by relying on the registration. The
only act that can be construed as repudiation was when one of Joses heirs filed
the petition for reconstitution in October 1993. And since Linos heirs filed their
complaint in January 1995 their cause of action has not yet prescribed.

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Neither can laches be attributed to them. Laches cannot be used to
defeat justice or perpetuate fraud and injustice. Neither should it be applied to
prevent rightful owners of a property from recovering what has been
fraudulently registered in the name of another.
However with respect to the other half covered by the private Caligonan sa Pagpapalit, the heirs of Lino should have filed an action to compel Joses
heirs to execute a public deed of sale. Since this document was executed on
October 18, 1939, such action has already prescribed because actions upon
written contract must be filed within 10 years only. So only one-half can be
recovered by Linos heirs or 6,664 sqm shall be retained by Joses heirs.

6. CANEZO v ROJAS
FACTS
Soledad Canezo filed a complaint for the recovery of real property plus
damages against Conception Rojas (2nd wife of her father). Canezo alleged that
she bought the said land from Crisogono Limpiado although the transaction was
not in writing. Then she entrusted it to her father when she and her husband
had to go mindanao. The father took possession of the said land and then one
day canezo found out that Rojas was in possession of the said land and the tax
declarations were under his fathers name.
Rojas contends that her husband (father of canezo) bought the land
from the same seller. The father took possession and cultivated it. Canezo has
knowledge of it because it was included in the estate of the father (father died)
and canezo did not protest meaning she abandoned her right assuming canezos
contentions were true. Canezo is barred by laches and estoppel.
MTC was in favor of canezo. Rojas appealed to RTC, decision was
reversed because action has not yet prescribed because it is a trust. Canezo filed
a motion for reconsideration, RTC reversed again the decision (in favor of
canezo). Rojas filed a motion to reconsider the decision but denied by RTC.
Rojas then filed a petition for review with CA reversed the decision of RTC
(ground is laches and prescription). Hence, this petition.
ISSUE
W/N there was a trust
HELD
No trust!

RATIO

Procedural issue: Canezo contends that the court should not have
granted the motion for extension of time to file. The court said, the grant or
denial of a motion fro extension of time is addressed to the sound discretion of
the court and there was a reasonable basis for the said extension.
Second issue: W/N there was a trust. Trust is a legal 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 exercise of certain
powers by the latter. Trusts are either express or implied.
Express trust are those which are created by the direct and positive
acts of the parties by some writing or deed, or will, or by words evidencing and
intention to create a trust.
Implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or, independently, of the
particular intention of the parties, as being superinduced ont eh transaction by
operation of law basically by reason of equity. It can be either resulting trust or
constructive trust.
Resulting trust is presumed always to have been contemplated. The
intention as to which can be found in the nature of their transaction altough not
expressed in a deed or instrument. Based on the equitable doctrine that it is the
more valuable consideration than the legal title that determines the equitable
interest in property. Trustworthy evidence is required in here.
Express trust and resulting trust trustee cannot acquire by
prescription a property entrusted to him unless he repudiates a trust. This is
because, in an express trust, the possession of a trustee is not adverse,
therefore, he does not acquire by prescription the property. The burden of
proving the existence of trust is on the party asserting it.
In this case, canezo failed to provide clear and satisfactorily proof of its
existence. Elements: (1) trustor who executes the instrument creating the trust;
(2) a trustee who is the person expressly designated to carry out the trust; (3)
the trust res consisting of duly identified and definite real property; and (4)
beneficiaries whose identity must be clear.
Canezos only evidence was her self-serving testimony of the
petitioner. Express trust may not be established by parol evidence. One
exception when there was a clear intention of such. However, it cannot be
inferred from canezos testimoney and the attendant facts and circumstances.
What they agreed is to give canezo a share of the copra in land.

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What distinguishes a trust from other relations is the separation of
legal title and equitable ownership of the property. Legal title is vested in the
fiduciary and equitable ownership to cestui que trust and this is not true in the
case.
In addition, the fathers uninterrupted possession for 49 years coupled
with the acts of ownership, such payment of real estate taxes, ripened
ownership. Tax declarations are not conclusive evidence but if coupled with
actual possession, then it will have great weight.
On the other hand, Constructive trust is one created not by any word,
either expressly or impliedly, evincing a direct intention to create trust, but one
which arises in order to satisfy the demands of justice. There is neither a
promise nor any fiduciary relation to speak of, no one accepts any trust nor
tends holding the property for a beneficiary. In here, after the death of the
father, rojas has no right to retain possession of the property. At such point, a
constructive trust would be created over the property by operation of law.
Constructive trust may be supervened by prescription if the trustee does
not repudiate the relationship.
In addition, canezo is estopped because of her failure to protest its
inclusion in the estate of the father. She was also barred by laches because
when she discovered it, it took her 17 years to file an action about it. Finally, the
complaint must be dismissed because the indispensable parties (other heirs)
were not included. It is to recover ownership thus it was in the nature of an
action for reconveyance, therefore, owners of property over which
reconveyance is asserted are indispensable parties.

7. PACHECO v ARRO
G.R. No. L-48090 February 16, 1950
PETITIONERS: Dolores Pacheco, in her capacity as guardian of the minors
Concepcion, Alicia, and Herminia Yulo (SUCCESSORS-IN-INTEREST)
RESPONDENTS: Santiago Arro et al. (CLAIMANTS)
***Jose Yulo y Regalado (PREDECESSOR IN INTEREST)
FACTS
The CLAIMANTS filed answers in a cadastral case, claiming lots as their
property and began to present evidence before a referee. Dr. Mariano Yulo, who
represented the late PREDECESSOR-IN-INTEREST in the cadastral case, assured
and promised that after the change of the street names from Zamora and

Quennon streets to T. Yulo and G. Regalado streets, the PREDECESSOR-ININTEREST would convey and assign the lots to the claimants.
Because of this, the CLAIMANTS withdrew their claims and the
cadastral court confirmed the title to the lost and decreed their registration in
the name of the PREDECESSOR-IN-INTEREST.
The representative of the PREDECESSOR-IN-INTEREST complied with
the promise by executing deeds of donation or assignment to some of the
claimants.
***2/3 of this case is in Spanish; Im guessing that the part where the
CLAIMANTS filed a complaint was explained there.
CFI ordered the PREDECESSOR-IN-INTEREST to execute deeds of
assigned in favour of the CLAIMANTS for each and every lot claimed by them.
The CA affirmed.
The SUCCESSORS-IN-INTEREST contend that since a trustee does not
have title to the property which is the subject of the trust, because title to such
property is vested in the cestui que trust, if the PREDECESSOR-IN-INTEREST of
the SUCCESSORS-IN-INTEREST was a trustee, he or his successors-in-interest
could not and cannot be compelled in an action for specific performance to
convey or assign the property the subject of the trust because in an action
for specific performance the party to be compelled to perform is the owner of
has title to the property sought to be conveyed or assigned.
ISSUE
Whether or not the SUCCESSORS-IN-INTEREST may be compelled in an
action for specific performance to convey or assign the property.
RULING
YES. Judgment affirmed.
RATIO
The juridical concept of a trust, which in a broad sense involves, arises
from, or is the result of, a fiduciary relation between the trustee and the cestui
que trust as regards certain property real, personal, funds or money, or choses
in action must not be confused with an action for specific performance.
When the claim to the lots in the cadastral case was withdrawn by the
CLAIMANTS relying upon the assurance and promise made in open court by Dr.
Mariano Yulo in behalf of the PREDECESSOR-IN-INTEREST, a trust or a fiduciary
relation between them arose, or resulted therefrom, or was created thereby.
The trustee cannot invoke the statute of limitations to bar the action
and defeat the right of the cestui que trust. If the pretense of counsel for the

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SUCCESSORS-IN-INTEREST that the promise above adverted to cannot prevail
over the final decree of the cadastral court holding the PREDECESSOR-ININTEREST of the SUCCESSORS-IN-INTEREST to be the owner of the lots claimed
by the CLAIMANTS were to be sustained and upheld, then actions to compel a
party to assign or convey the undivided share in a parcel of land registered in
his name to his co-owner or co-heir could no longer be brought and could no
longer succeed and prosper.

8. GAMBOA
G.R. No. L-29556
FACTS:
This action was instituted in the Court of First Instance of the Province
of Pampanga by various plaintiffs of the surname or connection of Gamboa, for
the purpose of enforcing partition of some ten parcels of real property located
in the municipality of Santa Ana, in the province of Pampanga, of which, it is
asserted, the plaintiffs are coowners with the defendants Modesta, Pedro and
Rafael, of the same name. At the same time the plaintiffs seek to obtain an
accounting from Modesta Gamboa of the plaintiffs' shares in the procedure
taken from the land in the past.
To this complaint Modesta Gamboa answered with a general denial,
supplemented by an admission that the single parcel constituting the last item
specified in the complaint and identified as tax No. 6247, is in fact common
property of herself and the plaintiffs who are her coheirs, and asserting, as to
the rest, that she is the owner of the same and has been in adverse possession
thereof for more than ten years. The defendant Rafael and Pedro Gamboa
answered with a formal general denial, but at the trial they admitted the claim
to Modesta Gamboa as owner of the contested properties.
It is not disupted that all of the properties that are the subject of this
action once belonged to Juan Gamboa and Ana Manago, the parents of the first
set of Gamboa plaintiffs of the three defendants of the same name. There is no
controversy over the further fact that on August 27, 1987, Juan Gamboa and
wife sold all of the properties which are the subject of this action, except the
parcel identified by the tax assessment No. 6247, under contract of sale with
pacto de retro for two years to one Felipe Javier, the vendors, however,
remaining in possession in the character of lessees. The period of redemption
having been effected, and the property consolidated in Javier. But Juan Gamboa,
and after his death, his family, continued in possession as tenants under Javier.

On June 18, 1910, Javier then sold the properties to Feliciana and
Modesta Gamboa. The proof shows that ever since the property in question was
conveyed by Javier to the Gamboa sisters in 1910, the same has been
continuously in the possession of Modesta, except for the two years 1912 and
1913 when, by some arrangement or other, one of her brothers had charge as
manager. During this period Modesta exercised all the rights of ownership,
accounting of course to Feliciana for the latter's share of the produce during the
term of their ownership.
For the petitioners, this buying of the land was in effect a repurchase by
Feliciana and Modesta of the land in behalf of their ancestors.
ISSUE:
Whether the purchase of the land by the Gamboa sisters was in fact, in
trust only for the Juan Gamboa and in effect, be only co-owners as co-heirs with
the petitioners?
HELD:
No. This theory of the case, in our opinion, is untenable. The sale of the
property by Javier to the two sisters in 1910 was an unconditional transfer of
title to them, inasmuch as Javier had been undisputed owner of the property for
fully eleven years. Of course if it had really been agreed that the sisters were
purchasing the property in a trust character, that agreement might have been
enforced, but the nature of the title held by the sisters and the inconclusive
character of the proof of trusteeship refute this theory. We attribute little
importance to the form in which the property was assessed for taxation, in view
of the explanation which Modesta gives of the obstructions which she
encountered in straightening that matter out. The situation, as we see it, is that
Modesta Gamboa, during the period in which she has been part owner of the
property and during the later period in which she has held title in her own
name, has been surrounded by kinsfolk who were anxious to insinuate
themselves into a coownership of the property, and this litigation was
undoubtedly promoted chiefly by her brother Serapion Gamboa. But it is
noteworthy that at least two brothers have admitted her title.
The trial judge seems to have entertained the idea that the case must
turn upon the character of the possession exercised by Modesta Gamboa during
the period allowed by law for prescription; and he assumed that it was
necessary for her to show adverse possession during that period. This idea is
not of correct application, because Modesta Gamboa, either cojointly with her
sister Feliciana or exclusively in her own right, has held the legal title since
1910; and the fact that her brother and sisters may have questioned her right

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during the ten years next preceding the institution of this action does not have
the effect of impairing her right.
Clearly, the sisters bought the land as their own and not in trust for
their relatives.

9. TY v TY
ALEJANDRO B. TY, petitioner, vs. SYLVIA S. TY, in her capacity as Administratrix of
the Intestate Estate of Alexander Ty, respondent.
G.R. No. 165696
April 30, 2008
FACTS:

Alexander Ty died and was succeeded by his wife Sylvia and his
daughter Krizia. A few months after his death, a petition for the settlement of his
intestate estate was filed. Sylvia, as administratrix, was ordered by the
California court to distribute his property in the United States. In the
Philippines, Sylvia submitted to the intestate Court in Quezon City an inventory
of the assets of Alexanders estate, consisting of shares of stocks and various
properties (EDSA Property, Meridien, and Wack-Wack). She asked the court to
permit her to sell/mortgage the properties of the estate in order to pay
additional estate tax as assessed by the BIR.
Apparently, this action did not sit well with her father-in-law,
Alejandro, who later filed a complaint for recovery of properties with prayer for
preliminary injunction and/or temporary restraining order. In her opposition,
Sylvia claimed that plaintiff Alejandro had no actual or existing right, which
entitles him to the writ of preliminary injunction, for the reason that no express
trust concerning an immovable maybe proved by parole evidence under the
law. In addition, Sylvia Ty argued that the claim is barred by laches, and more
than that, that irreparable injury will be suffered by the estate of Alexander Ty
should the injunction be issued.
As to the complaint for recovery of properties, it is asserted by
Alejandro that he owns the three properties mentioned above. He said he
bought all three properties at different times, and registered them under his
sons name with the understanding that they will be held in trust for his
brothers and sisters in the event of his sudden demise. Plaintiff further alleged
that at the time the properties were purchased, his son was financially
incapable of purchasing said properties. He presented Alexanders and Sylvias
income tax returns to bolster his claim. Alejandro added that defendant acted in
bad faith in including the subject properties in the inventory of Alexander Tys

estate, for she was well aware that Alexander was simply holding the said
properties in trust for his siblings.
ISSUE:

Whether or not a trust, express or implied, was established by


Alejandro in favor of his late son and name-sake Alexander
RULING/RATIO:
No, there was neither express nor implied trust created concerning the
subject properties. An express trust over real property cannot be constituted
when nothing in writing was presented to prove it. As for implied trust, since
Alejandro has erected his case upon Art. 1448 of the Civil Code, a prime example
of an implied trust, viz.: that it was he who allegedly paid for the purchase price
of some of the realties subject of this case, legal title or estate over which he
allegedly granted or conveyed unto his son, Alexander, for the latter to hold
these realties in trust for his siblings in case of his demise, Alejandro is charged
with the burden of establishing the existence of an implied trust by evidence
described or categorized as "sufficiently strong," "clear and satisfactory," or
"trustworthy." He has miserably failed to discharge that burden.
If only to emphasize and reiterate what the Supreme Court has in the
past declared about implied trusts, these case law rulings are worth mentioning
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. While implied trusts may be proved by
oral evidence, the evidence must be trustworthy and received by the courts
with extreme caution and should not be made to rest on loose, equivocal or
indefinite declarations. Trustworthy evidence is required because oral evidence
can easily be fabricated.
The EDSA Property
Article 1448 of the Civil Code is clear. If the person to whom the title is
conveyed is the child of the one paying the price of the sale, and in this case this
is undisputed, NO TRUST IS IMPLIED BY LAW. The law, instead, disputably
presumes a donation in favor of the child.
On the question of whether or not petitioner intended a donation, the
CA found that petitioner failed to prove the contrary. This is a factual finding
which this Court sees no reason the record to reverse. The net effect of all the
foregoing is that Sylvia is obliged to collate into the mass of the estate of
Alejandro, in the event of his death, the EDSA property as an advance of

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Alexanders share in the estate of his father, to the extent that petitioner
provided a part of its purchase price.
The Meridien Condominium and the Wack-Wack property.
Among the facts cited by the CA are the sources of income of Alexander
Ty who had been working for nine years when he purchased these two
properties, who had a car care business, and was actively engaged in the
business dealings of several family corporations, from which he received
emoluments and other benefits.
There was no implied trust created because there was no showing that
part of the purchase price was paid by petitioner and, on the contrary, the
evidence showed that Alexander Ty had the means to pay for the same.

10. TAN SENGUAN v PHILTRUST


FACTS:
Plaintiff Tan Sen Guan & Co. brought suit in the CFI of Manila for the
sum of P10,000 based on an agreement entered into it with the Philippine Trust
Company which says that Tan Sen Guan & Co., a mercantile partnership secured
a judgment for the sum of P21,426.00 against the Mindoro Sugar Co., of which
the Philippine Trust is the Trustee. That accordingly, Tan Sen Guan & Co.,
assigns, conveys, transfers and sells to said Philippine Trust Company the full
amount of said judgment and in connection for the stipulations that, the
Philippine Trust Company, upon signing the agreement, shall pay to Tan Sen
Guan & Co., the sum of five thousand (P5,000) pesos and should the Mindoro
Sugar Co., be sold, assigned or its ownership transferred in any manner
whatsoever to any person or entity including the Philippine Trust Company,
itself, it shall pay to Tan Sen Guan & Co., an additional sum of ten thousand
(10,000) pesos.
After trial on an agreed statement of facts which had been entered into
by the respective attorneys, the court absolved the defendant on two grounds:
first, that in the contract it was bound only as a trustee and not as an individual
and second, that it had not been proved that all the properties of the Mindoro
Sugar Company had been sold. Defendant claims that the omission of a comma
between the words "Mindoro Sugar Company" and the words "which appear
described" shows that only a portion of the Mindoro Sugar Company's
properties were sold. The stipulation of facts relative to the second point reads:
(9) That, pursuant to the attached copy of notice of sale, Modesto
Manahan, Justice of the peace of the Municipality of San Jose, Province of

Mindoro, sold at public auction to the Roman Catholic Archbishop of Manila, a


corporation sole, all the properties belonging to the Mindoro sugar Company
which appears described in the certificate of sale executed by the said justice of
the peace Modesto Manahan in favor of the said the Roman Catholic Archbishop
of Manila.
ISSUE:

W/N defendant is personally liable for the claim of the plaintiff

HELD:
While the legal title of the properties of the Mindoro Sugar Company
were in the Philippine Trust Company as trustee, Tan Sen Co. secured a
judgment against the Mindoro Sugar Company and sold, transferred, and
assigned that judgment to its trustee by their contract. Whether all the
properties of the Mindoro Sugar Company were sold by the justice of the peace
as recited in paragraph 9 of the stipulation of facts, is not controlled by the
insertion or omission of a comma in the stipulation of facts. An examination of
any of the standard dictionaries will show that the relative pronoun "which" is
descriptive and not restricted. If a restrictive relative pronoun were desired, the
word "that" should have been used.
While in the contract in question the Philippine Trust Company was
usually referred to as trustee, it must be noted that nowhere in the deed of trust
from the Mindoro Sugar Company to the Philippine Trust Company, was any
authority given to enter into a contract such as is here presented. The Philippine
Trust Company held the legal title to the properties of the Mindoro Sugar
Company to protect the bond holders. So far as the Philippine Trust Company
was concerned, it was not authorized to manage the affairs of the Mindoro
Sugar Company or to enter into contracts in its behalf. But even if the contract
had been authorized by the trust indenture, the Philippine Trust Company in its
individual capacity would still be responsible for the contract as there was no
express stipulation that the true estate and not the true trustee should be held
liable on the contract in question.
Not only is there no express stipulation that the trustee should not be
held responsible but in the "Wherefore" clause of the contract, the judgment
was expressly assigned in favor of the Philippine Trust Company, not the
Philippine Trust Company. If therefore follows that appellant had a right to
proceed directly against the Philippine Trust Company on its contract and has
no claim against either the Mindoro Sugar Company or the trust estate.

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11. GOVERNMENT v ABADILLA
G.R. No. L-21334
December 10, 1924
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, petitioner,
vs.
ANASTASIA ABADILLA, ET AL., claimants.
THE MUNICIPALITY OF TAYABAS, ET AL., claimants-appellees,
MARIA PALAD, ET AL., claimants-appellants.
FACTS

A school teacher originally owned three parcels of land, by composicion


gratuita. Before dying, he executed a holographic will party in Spanish and
partly in Tagalog, leaving their possession to his widow. The will contained a
Tagalog clause which translated read: That the coconut land in Colongcolong,
which I have put under cultivation, be used by my wife after my death during her
life or until she marries, but from this cocoanut land shall be taken what is to be
lent to the persons who are to plant cocoanut trees and that which is to be paid to
them as their share of the crop if any should remain; and that she try to earn with
the product of the cocoanut trees of which those bearing fruit are annually
increasing; and if the times aforementioned should arrive, I prepare and
donate it to secondary college to be erected in the capital of Tayabas; so this
will be delivered by my wife and the executors to the Ayuntamiento of this
town, should there be any, and if not, to the civil governor of this province in
order to cause the manager thereof to comply with my wishes for the good
of many and the welfare of the town.
After the school teacher died, the widow remained in possession of the
land and remarried. Subsequently, collateral heirs of the deceased brought an
action against the widow for the partition of the lands arguing that she, by
reason of her second marriage, had lost the right to their exclusive use and
possession. The municipality of Tayabas intervened claiming the land based on
the said clause in the will. During the pendency of the action, an agreement was
arrived at by the parties, where two lots were turned over to the municipality as
its share of the inheritance under the will, and the remaining lot left in the
possession of the widow. Based on the agreement, the action was dismissed
with the concurrence of all the parties, but reserving to the collateral heirs the
right to bring another action. The municipality of Tayabas the widow had
uninterrupted possession of their respective lots. The court also ordered
registration of the three lots in the name of the governor of Tayabas in trust for

the secondary school to be established. The widow and the collateral heirs
appealed.
ISSUE
HELD:

WON the property should be given to the collateral heirs


NO. A trust can be created even when the cestui que trust be in

esse.
RATIO

According to the court, the clause in the will reveals the intent of
testator which must be given effect, which is to create a trust for the benefit of a
secondary school to be established in the town of Tayabas, naming as trustee
the ayuntamiento of the town or if there be no ayuntamiento, then the civil
governor of the Province of Tayabas.
Drawing on American precedents, the court notes that in order that a
trust may become effective there must, of course, be a trustee and a cestui
que trust. On the other hand, the claimants counsel argue that there is neither
in the present case; that there is no ayuntamiento, no Gobernador Civil of the
province, and no secondary school in the town of Tayabas.
An ayuntamiento corresponds to what in English is termed a municipal
corporation. But in the Philippines, provincial governors are the chief
executives of their respective provinces, and as the successor of the civil
governor of the province under the Spanish regime, may act as trustee in the
present case. In regard to private trust, it is not always necessary that
the cestui que trust should be named, or even be in esse (to be) at the
time the trust is created in his favor. Thus a devise to a father in trust for
accumulation for his children lawfully begotten at the time of his death
has been held to be good although the father had no children at the time of
the vesting of the funds in him as trustees. In charitable trust such as the
one here under discussion, the rule is still further relaxed.
While the collateral heirs argue that assuming all this to be true they
would nevertheless be entitled to the income of the land until the cestui que
trust is actually in esse. The court however disagreed. If the trustee holds the
legal title and the devise is valid, the natural heirs of the deceased have no
remaining interest in the land except their right to the reversion in the event the
devise for some reason should fail, an event which has not as yet taken place.
From a reading of the testamentary clause under discussion it seems quite
evident that the intention of the testator was to have income of the property

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accumulate for the benefit of the proposed school until the same should be
established.
For the property in possession of the widow, she was able to acquire
the property through prescription.
CONCURRING & DISSENTING OPINION (MALCOLM, J.)
His view is that the property should not have been awarded to the
widow. The school teacher, in his will, transmitted the usufructuary rights to the
land to his widow "during her life or until she marries," after which the property
was to be delivered to the ayuntamiento or if there should not be any, to the
civil governor of the Province of Tayabas, for the benefit of a secondary college.
The widow having remarried, the property should have been turned over to the
municipality of Tayabas. The alleged agreement between the parties cannot
alter the facts. The possession by the widow has been in contravention of the
terms of the trust and in bad faith.

12. CRISTOBAL v GOMEZ


G.R. No. L-27014
October 5, 1927
PAULINA CRISTOBAL, ET AL., plaintiffs-appellees
defendant-appellant.

vs. MARCELINO GOMEZ,

FACTS:
Epifanio Gomez sold this property with pacto de retro to Yangco,
redeemable in 5 years. The period expired without redemption. Yangco,
however still allowed Epifanio to repurchase. Epifanio borrowed money from
Baas. Baas told Epifanio that he would let Epifanio have the money if
Epifanios siblings Marcelino and Telesfora would make themselves responsible
for the loan.
Marcelino and Telesfora agreed, so all four of them (Epifanio,
Marcelino, Telesfora, and Baas) met and agreed that Baas should advance the
sum of P7,000, upon the personal credit of Marcelino and Telesfora, and that
this money should be used to repurchase the property in the name of Telesfora
and Marcelino. Telesfora and Marcelino would hold and administer the
property until the capital advanced by Baas should be paid off, after which the
property would be returned to Epifanio.
Marcelino and Telesfora entered into a "private partnership in
participation" to redeem the property from Yangco. It was agreed that the
capital of this partnership should consist of P7,000, of which Marcelino was to

supply the amount of P1,500, and Telesfora the sum of P5,550. The important
provisions in this agreement are:
1.
That all the income, rent, and produce of the aforesaid property of
Epifanio shall be applied exclusively to the amortization of the capital
employed by the Marcelino and Telesfora.
2.
As soon as the capital employed, interest and other expenses are
covered, said properties shall be returned to Epifanio Gomez or to his
legitimate children
3.
In order that the property may be returned, it is made essential that
Epifanio shall manifest good behavior in the opinion of Marcelino and
Telesfora.
Epifanio later died, leaving a widow, Paulina Cristobal, and 4children.
Marcelino meanwhile entered into possession of the property, a possession
which he subsequently maintained for 20 yrs. During this period, Marcelino
improved the larger parcel by extending the salt beds constructed upon it.
Later, Telesfora conveyed to Marcelino her interest and share in the
property previously redeemed from Yangco. Marcelino Gomez eventually paid
to Baas the sum of P7,575.92 in full satisfaction of the entire claim and
received from Baas a reconveyance of the property.
Paulina and children filed action to recover property from Marcelino.
They claimed that the capital had been covered by the propertys income, hence,
the same should be returned to them.
ISSUE:
W/N a trust agreement was created. YES.
W/N the property should be returned to Cristobal and her children. YES.
HELD:
The so-called partnership agreement (Exhibit A) between
Marcelino Gomez and his sister created a trust for the express purpose of
rescuing the property of Epifanio Gomez; and now that the purpose has
been accomplished, the property should be returned to his legitimate
children, as provided in paragraph (i) of the agreement.
This bilateral contract was fully binding on both the contracting
parties; and the trial court did not err in declaring that, under the second trial
paragraph of article 1257 of the Civil Code, the successors of Epifanio Gomez are
entitled to demand fulfillment of the trust. In Martinez vs. Grao (42 Phil., 35),
we held that a person who, before consolidation of property in the purchaser
under a contract of sale with pacto de retro, agrees with the vendors to buy the
property and administer it till all debts constituting an encumbrance thereon

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shall be paid, after which the property shall be turned back to the original
owner, is bound by such agreement; and upon buying in the property under
these circumstances such person becomes in effect a trustee and is bound to
administer the property in this character. The same rule is applicable in the case
before us.
It is claimed that the trust agreement was kept secret from Epifanio
Gomez and that, having no knowledge of it, he could not have accepted it before
the stipulation was revoked. This contention is contradicted in act by the
testimony of Bibiano Baas, who says that Epifanio Gomez was present when
the arrangement for the repurchase of the property from Yangco was discussed
and that he assented thereto. Moreover, Baas states that after the agreement
had been executed, he told Epifanio Gomez in the presence of his brother and
sister that he should be well pleased as the object he had in view had been
accomplished, meaning, that the property was recorded. But even supposing
that Epifanio Gomez may never have seen the said agreement, we have no doubt
that he understood the nature of the arrangement and his assent thereto was a
sufficient acceptance.
JOHNS, J., with whom concurs VILLA-REAL, J., dissenting:
The record shows that Marcelino was a thrifty, prudent, business man,
and that under his management and by close personal attention to the business,
he eventually paid for the property, and that a portion of the purchase price was
paid out of his own money. There is no evidence that the defendant acted as
trustee or that he ever recognized a trust, or that during the whole period of
twenty years he ever rendered any accounting or that any one ever requested
him to make an accounting. The evidence is conclusive that at all times he acted,
dealt with and treated the property as his own, upon which he spent his own
time, his own money, and improved the property, so as to give it a commercial
value. Because he did that and the property now has increased in value, it is
taken away from him without any compensation for his services, and he is
denied the fruits of twenty years of his labor in giving it a commercial value.
The very fact that during the whole period of twenty years, Marcelino
was never called upon to make an accounting and that at all times he
considered, dealt with, and treated the property as his own, is conclusive
evidence that he never held the title in trust for any one.

FACTS:
DBP adopted Resolution No. 794 creating the DBP Gratuity Plan and
authorizing the setting up of a retirement fund to cover the benefits due to DBP
retiring officials and employees under Commonwealth Act No. 186, as amended.
A Trust Indenture was entered into by and between the DBP and the Board of
Trustees of the Gratuity Plan Fund, vesting in the latter the control and
administration of the Fund.
The Bank established a Special Loan Program availed thru the facilities
of the DBP Provident Fund and funded by placements from the Gratuity Plan
Fund as part of the benefit program of the Bank to provide financial assistance
to qualified members to enhance and protect the value of their gratuity
benefits.
Under it, a prospective retiree is allowed the option to utilize in the
form of a loan a portion of his outstanding equity in the gratuity fund and to
invest it in a profitable investment or undertaking. The earnings of the
investment shall then be applied to pay for the interest due on the gratuity loan.
The excess or balance of the interest earnings shall then be distributed to the
investor-members.
The payments were disallowed by the Auditor under Audit Observation
Memorandum No. 93-2 on the ground that the distribution of income of the
Gratuity Plan Fund (GPF) to future retirees of DBP is irregular and constituted
the use of public funds for private purposes which is specifically proscribed
under Section 4 of P.D. 1445.
Apart from requiring the recipients to refund their dividends, the
Auditor recommended that the DBP record in its books as miscellaneous
income the income of the Gratuity Plan Fund (Fund). The Auditor reasoned
that the Fund is still owned by the Bank, the Board of Trustees is a mere
administrator of the Fund in the same way that the Trust Services Department
where the fund was invested was a mere investor and neither can the
employees, who have still an inchoate interest [i]n the Fund be considered as
rightful owner of the Fund.
Former DBP Chairman Alfredo C. Antonio requested then COA
Chairman Celso D. Gangan to reconsider AOM No. 93-2. It was denied by the
COA.
Hence, this petition.
ISSUE:

13. DBP v COA

Whether or not the trustees of the Fund


administrators./Whether or not the fund is the subject of a trust.

are

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merely

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HELD:
The DBP counters that the Fund is the subject of a trust, and that the
Agreement transferred legal title over the Fund to the trustees. The income of
the Fund does not accrue to DBP. Thus, such income should not be recorded in
DBPs books of account.
A trust is a fiduciary relationship with respect to property which
involves the existence of equitable duties imposed upon the holder of the title to
the property to deal with it for the benefit of another. A trust is either express
or implied. Express trusts are those which the direct and positive acts of the
parties create, by some writing or deed, or will, or by words evincing an
intention to create a trust.
In the present case, the DBP Board of Governors (now Board of
Directors) Resolution No. 794 and the Agreement executed by former DBP
Chairman Rafael Sison and the trustees of the Plan created an express trust,
specifically, an employees trust. An employees trust is a trust maintained by an
employer to provide retirement, pension or other benefits to its employees. It is
a separate taxable entity.
Employees trusts are also exempted from certain taxes under Section
60 (B) of the National Internal Revenue Code, as amended. established for the
exclusive benefit of the employees.
Resolution No. 794 shows that DBP intended to establish a trust fund to
cover the retirement benefits of certain employees under Republic Act No.
1616. The principal and income of the Fund would be separate and distinct
from the funds of DBP.
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. A person who establishes a trust is the trustor. One
in whom confidence is reposed as regards property for the benefit of another is
the trustee. The person for whose benefit the trust is created is the beneficiary.
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
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.

Also as COA correctly observed, the right of the employees to claim


their gratuities from the Fund is still inchoate. RA 1616, 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.

III.

IMPLIED TRUSTS
1. RAMOS v RAMOS

FACTS:

Spouses Martin Ramos and Candida Tanate died and were survived by
their three legitimate children named Jose, Agustin and Granada. Martin Ramos
was also survived by his seven natural children named Atanacia, Timoteo,
Modesto, Manuel, Emiliano, Maria and Federico.
Martin Ramos left considerable real estate, the most valuable of which
were the Hacienda Calaza and Hacienda Ylaya, both located in Himamaylay,
Negros Occidental. Hacienda Calaza consists of sugar land, palay land and nipa
groves with an area of 400 hectares and with a sugar quota allotment of 10,000
piculs, more or less, and having as its present actual value P500,000 more or
less.
All the children of Martin Ramos, whether legitimate or acknowledged
natural, lived together in Hacienda Ylaya during his lifetime and were under his
care. All said children continued to live in said house of their father for years
even after his death.
Upon their father's death, his properties were left under the
administration of Rafael Ramos, the younger brother of their father and their
uncle, Rafael Ramos continued to administer those properties of their father,
giving plaintiffs money as their shares of the produce of said properties but
plaintiffs not receiving any property or piece of land however, until 1913 when
Rafael Ramos gathered all the heirs, including plaintiffs, in the house of their
father, saying he would return the administration of the properties. He turned
over Hacienda Ylaya to Agustin Ramos and Hacienda Calaza to Jose Ramos.
All said children, defendants and plaintiffs alike, continued to live in the
same house of their father in Hacienda Ylaya, now under the support of Agustin
Ramos. Agustin Ramos supported plaintiffs, getting the money from the produce
of Hacienda Ylaya, the only source of income of Agustin coming from said
hacienda. Plaintiffs asked money from Agustin pertaining to their share in the

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produce of Hacienda Ylaya and received varied amounts, sometimes around
P50 at a time, getting more when needed, and receiving P90 or P100 more or
less a year.
Jose Ramos gave plaintiffs also money as their shares from the products
of Hacienda Calaza.
Upon the death of Jose Ramos his widow Gregoria Ramos, herself, his
first cousin, their father and mother, respectively being brother and sister,
continued to give plaintiffs money pertaining to their shares in the products of
Hacienda Calaza. She however stopped doing so in 1951, telling them that the
lessee Estanislao Lacson was not able to pay the lease rental.
There was never any accounting made to plaintiffs by Jose Ramos,
plaintiffs reposing confidence in their elder brother, nor was any accounting
made by his widow, defendant Gregoria Ramos, upon his death, plaintiff Manuel
Ramos moreover having confidence in her.
Before the survey of these properties by the Cadastral Court, plaintiff
Modesto Ramos was informed by the Surveying Department that they were
going to survey these properties. Plaintiffs then went to see their elder brother
Jose to inform him that there was a card issued to them regarding the survey
and gave him 'a free hand to do something as an administrator'. They therefore
did not intervene in the said cadastral proceedings because they were promised
that they (defendants Jose and Agustin) would 'be the ones responsible to have
it registered in the names of the heirs'. Plaintiffs did not file and cadastral
answer because defendants Jose and Agustin told them 'not to worry about it as
they have to answer for all the heirs'. Plaintiffs were 'assured' by defendants
brothers.
Plaintiffs did not know that intestate proceedings were instituted for
the distribution of the estate of their father. Neither did plaintiffs Modesto,
Manuel, Emiliano and Maria know that Timoteo Zayco, their uncle and brotherin-law of defendant widow Gregoria was appointed their guardian. They never
received any sum of money in cash the alleged insignificant sum of P1,785.35
each from said alleged guardian as their supposed share in the estate of their
father under any alleged project of partition.
Neither did Atanacia Ramos nor her husband, Nestor Olmedo, sign any
project of partition or any receipt of share inthe inheritance of Martin Ramos in
cash. Nestor Olmedo did not sign any receipt allegedly containing the signatures
of Atanacia assisted by himself as husband, Timoteo Ramos, and Timoteo Zayco
as guardian ad-litem of the minors Modesto, Manual, Federico, Emiliano and
Maria. As a matter of fact, plaintiffs Modesto and Manuel were in 1913 no longer
minors at the time of the alleged project of partition of the estate being

approved, both being of age at that time. No guardian could in law act on their
behalf.
Plaintiffs only discovered later on that the property administered by
their elder brother Jose had a Torrens Title in the name of his widow, Gregoria,
and daughter, Candida, when plaintiff Modesto's children insisted and inquired
from the Register of Deeds sometime in 1956 or 1957. Plaintiffs did not
intervene in the intestate proceedings for the settlement of the estate of their
brother Jose as they did not know of it.
Plaintiffs were thus constrained to bring the present suit before the
Court of First Instance of Negros Occidental seeking for the reconveyance in
their favor by defendants Gregoria and daughter Candida and husband Jose
Bayot of their corresponding participations in said parcels of land in accordance
with article 840 of the old Civil Code.
ISSUE:
W/N plaintiffs' shares were held in trust by the defendants.
HELD:

NO. The plaintiffs did not prove any express trust in this case. The
expediente of the intestate proceeding, particularly the project of partition, the
decision and the manifestation as to the receipt of negatives the existence of an
express trust. Those public documents prove that the estate of Martin Ramos
was settled in that proceeding and that adjudications were made to his seven
natural children. A trust must be proven by clear, satisfactory, and convincing
evidence. It cannot rest on vague and uncertain evidence or on loose, equivocal
or indefinite declarations (De Leon vs. Peckson, 62 O. G. 994). As already noted,
an express trust cannot be proven by parol evidence(Pascual vs. Meneses, L18838, May 25, 1967, 20 SCRA 219, 228; Cuaycong vs. Cuaycong, L-21616,
December 11, 1967, 21 SCRA 1192).
Neither have the plaintiffs specified the kind of implied trust
contemplated in their action. We have stated that whether it is a resulting or
constructive trust, its enforcement may be barred by laches.
In the cadastral proceedings, which supervened after the closure of the
intestate proceeding, the eight lots involved herein were claimed by the spouses
Jose Ramos and Gregoria T. Ramos to the exclusion of the plaintiffs. After the
death of Jose Ramos, the said lots were adjudicated to his widow and daughter.
In 1932 Gregoria T. Ramos and Candida Ramos leased the said lots to Felix Yulo.
Yulo in 1934 transferred his lease rights over Hacienda Calazato Juan S. Bonin
and Nestor Olmedo, the husband of plaintiff Atanacia Ramos. Bonin and Olmedo
in 1935 sold their lease rights over Hacienda Calaza to Jesus S. Consing.

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Those transactions prove that the heirs of Jose Ramos had repudiated
any trust which was supposedly constituted over Hacienda Calaza in favor of
the plaintiffs.
*DOCTRINES CITED
"In its technical legal sense, a trust is defined as the right, enforceable
solely in equity, to the beneficial enjoyment of property, the legal title to which
is vested in another, but the words 'trust' is frequently employed to indicate
duties, relations, and responsibilities which are not strictly technical trusts." (89
C.J.S. 712).
"A person who establishes a trust is called the trust or; one in whom
confidence is reposed is known as the trustee; and the person for whose benefit
the trust has been created is referred to as the beneficiary" (Art. 1440, Civil
Code). There is a fiduciary relation between the trustee and the cestui que trust
as regards certain property, real, personal, money or choses inaction (Pacheco
vs. Arro, 85 Phil. 505).
"Trusts are either express or implied. Express trusts are created by the
intention of the trust or of the parties. Implied trusts come into being by
operation of law." (Art. 1144, Civil Code). "No express trusts concerning an
immovable or any interest therein may be proven by oral evidence. An implied
trust may be proven by oral evidence" (Ibid, Arts. 1443 and 1457).
"No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended" (Ibid, Art. 1444; Tuason de
Perez vs. Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30, 1967, 21
SCRA 543, 546). "Express trusts are those which are created by the direct and
positive acts of the parties, by some writing or deed, or will, or by words either
expressly or impliedly evincing an intention to create a trust" (89 C.J.S. 722).
"Implied trust are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent, or which are super
induced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties" (89 C.J.S. 724). They are
ordinarily subdivided into resulting and constructive trusts (89 C.J.S. 722).
"A resulting trust is broadly defined as a trust which is raised or
created by the act or construction of law, but in its more restricted sense it is a
trust raised by implication of law and presumed 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). Examples of resulting trusts are found in article
1448 to 1455 of the Civil Code. See Padilla vs. Court of Appeals, L-31569,
September 28, 1973, 53 SCRA 168,179).

On the other hand, a constructive trust is a trust "raised by construction


of law, or arising by operation of law". In a more restricted sense and as contra
distinguished from a resulting trust, a constructive trust is "a trust not created
by any words, either expressly or impliedly evincing a direct intention to create
a trust, but by the construction of equity in order to satisfy the demands of
justice. It does not arise by agreement or intention but by operation of law." (89
C.J.S. 7260727). "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." A constructive trust is not a
trust in the technical sense(Gayondato vs. Treasurer of the P.I., 49 Phil. 244; See
Art. 1456, Civil Code).
There is a rule that a trustee cannot acquire by prescription the
ownership of property entrusted to him (Palma vs. Cristobal, 77 Phil. 712), or
that an action to compel a trustee to convey property registered in his name in
trust for the benefit of the cestui qui trust does not prescribed (Manalang vs.
Canlas, 94 Phil. 776; Cristobal vs. Gomez, 50 Phil. 810), or that the defense of
prescription cannot be set up in an action to recover property held by a person
in trust for the benefit of another(Sevilla vs. De los Angeles, 97 Phil. 875), or that
property held in trust can be recovered by the beneficiary regardless of the
lapse of time (Marabilles vs. Quito, 100 Phil. 64; Bancairen vs. Diones, 98 Phil.
122, 126 Juan vs. Zuniga, 62 O.g. 1351; 4 SCRA 1221; Jacinto, L-17957, May 31,
1962. See Tamayo vs. Callejo, 147 Phil. 31, 37).
That rule applies squarely to express trusts. The basis of the rule is that
the possession of a trustee is not adverse. Not being adverse, he does not
acquire by prescription the property held in trust. Thus, section 38 of Act 190
provides that the law of prescription does not apply "in the case of a continuing
and subsisting trust" (Diaz vs. Gorricho and Aguado, 103 Phil. 261,266; Laguna
vs. Levantino, 71 Phil. 566; Sumira vs. Vistan, 74 Phil. 138; Golfeo vs. Court of
Appeals, 63 O.G. 4895, 12 SCRA 199; Caladiao vs. Santos, 63 O.G. 1956, 10 SCRA
691).
The rule of imprescriptibility of the action to recover property held in
trust may possibly apply to resulting trusts as long as the trustee has not
repudiated the trust (Heirs of Candelaria vs. Romero, 109 Phil. 500, 502-3;
Martinez vs. Grano, 42 Phil. 35; Buencamino vs. Matias, 63 O. G. 11033, 16 SCRA
849).
The rule of imprescriptibility was misapplied to constructive trusts
(Geronimo and Isidoro vs. Nava and Aquino, 105 Phil. 145, 153. Compare with
Cuison vs. Fernandez and Bengzon, 105 Phil. 135, 139; De Pasion vs. De Pasion,
112 Phil. 403, 407).

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Acquisitive prescription may bar the action of the beneficiary against
the trustee in an express trust for the recovery of the property held in trust
where (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 conclusive (Laguna vs. Levantino, supra; Salinas vs. Tuason, 55 Phil. 729.
Compare with the rule regarding co-owners found in the last paragraph of
article 494, Civil Code; Casanas vs. Rosello, 50 Phil. 97; Gerona vs. De Guzman, L19060, May 29, 1964, 11 SCRA 153,157).
With respect to constructive trusts, the rule is different. The
prescriptibility of an action for reconveyance based on constructive trust is now
settled (Alzona vs. Capunitan, L-10228, February 28, 1962, 4 SCRA 450; Gerona
vs. De Guzman, supra; Claridad vs. Henares, 97 Phil. 973; Gonzales vs. Jimenez,
L-19073, January 30, 1965, 13 SCRA 80; Bonaga vs. Soler, 112 Phil. 651; J. M.
Tuason & Co., vs. Magdangal, L-15539, January 30, 1962, 4 SCRA 84).
Prescription may supervene in an implied trust (Bueno vs. Reyes, L-22587,
April 28, 1969, 27 SCRA 1179; Fabian vs. Fabian, L-20449, January 29, 1968;
Jacinto vs. Jacinto, L-17957, May 31, 1962, 5 SCRA 371).
And whether the trust is resulting or constructive, its enforcement may
be barred by laches (90 C.J.S. 887-889; 54 Am Jur. 449-450; Diaz vs. Gorricho
and Aguado, supra. Compare with Mejia vs. Gampona, 100 Phil. 277).

2. DIAZ v GORRICHO AND AGUADO


MANUEL DIAZ, CONSTANCIA DIAZ and SOR PETRA DIAZ, plaintiffs-appellants, vs.
CARMEN GORRICHO and her husband FRANCISCO AGUADO, defendants-appellees.
G.R. No. L-11229 March 29, 1958
FACTS:
Lots No. 1941 and 3073 belonged to the conjugal partnership of
Francisco Diaz (Francisco) and Marial Sevilla (Maria). When Francisco died, he
was survived by Maria and their three children, Manuel, Lolita and Constancia
(petitioners).
Sometime in 1935, Carmen Gorricho (Gorricho) filed an action against
Maria, and as a result, a writ of attachment was issued against the share of
Maria in Lots No. 1941 and 3073. Gorricho, being the highest bidder in the
public auction, acquired the property and a final deed of sale was executed in
her favor after Maria failed to redeem the property after the lapse of one year.

Pursuant to this deed, TCTs were issued in her name and she has been in
possession of the land ever since.
However, the sheriff erroneously conveyed to Gorricho the whole
parcels of Lot Nos. 1941 and 3073, instead of only the half interest of Maria.
Thus, petitioners filed an action against Gorricho to execute a deed of
reconveyance over the half interest of the property (pertaining to the interest of
Francisco), which was illegally conveyed by the sheriff to Gorricho.
Gorricho answered that the action has already prescribed. Petitioners
contend that since Gorricho acquired their fathers half through an error of the
sheriff, the land became subject to an implied trust; therefore, since the trust is
continuing and subsisting, the appellants may compel reconveyance of the
property despite the lapse of time
ISSUE:
WON petitioners are barred by laches
HELD:
Yes. Petitioners are in error in believing that like express trusts, such
constructive trusts may not be barred by lapse of time.
The American law on trusts has always maintained a distinction
between express trusts created by intention of the parties, and the implied or
constructive trusts that are exclusively created by law, the latter not being
trusts in their technical sense.
The express trusts disable 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.
But in constructive trusts, the rule 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.
The reason for the difference in treatment is obvious. In express trusts,
the delay of the beneficiary is directly attributable to the trustee who
undertakes to hold the property for the former, or who 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. But in constructive trusts (that are imposed by law),
there is neither promise nor fiduciary relation; the so-called trustee does not
recognize any trust and has no intent to hold for the beneficiary; therefore, the

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latter is not justified in delaying action to recover his property. It is his fault if
he delays; hence, he may be estopped by his own laches.

3. VDA DE OUANO v REPUBLIC


G.R. No. 168770
ANUNCIACION VDA. DE OUANO, MARIO P. OUANO, LETICIA OUANO ARNAIZ, and
CIELO OUANO MARTINEZ, Petitioners,
THE REPUBLIC OF THEPHILIPPINES, THE MACTAN-CEBU INTERNATIONAL
AIRPORT AUTHORITY, and THE REGISTER OF DEEDS FOR THE CITY OF CEBU,
Respondents.
G.R. No. 168812
MACTAN-CEBUINTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner,
RICARDO L. INOCIAN, in his personal capacity and as Attorney-in-Fact of
OLYMPIA E. ESTEVES, EMILIA E. BACALLA, RESTITUTA E. MONTANA, and RAUL L.
INOCIAN; and ALETHA SUICO MAGAT, in her personal capacity and as Attorneyin-Fact of PHILIP M. SUICO, DORIS S. DELA CRUZ, JAMES M. SUICO, EDWARD M.
SUICO, ROSELYN SUICO-LAWSIN, REX M. SUICO, KHARLA SUICO-GUTIERREZ,
ALBERT CHIONGBIAN, and JOHNNY CHAN, Respondents.
FACTS
G.R. No. 168770 (the relevant case)
In 1949, the National Airport Corporation (NAC), MCIAAs predecessor
agency, pursued a program to expand the Lahug Airport in Cebu. NAC met and
negotiated with the owners of the properties situated around the airport of the
Banilad Estate. As the landowners would later claim, the government
negotiating team, assured them that they could repurchase their respective
lands should the Lahug Airport expansion project not push through or once the
Lahug Airport closes or its operations transferred to Mactan-Cebu Airport.
Some of the landowners accepted the assurance and executed deeds of sale with
a right of repurchase. Others, however, including the owners of the
aforementioned lots, refused to sell because the purchase price offered was
viewed as way below market, forcing the hand of the Republic, represented by
the then Civil Aeronautics Administration (CAA), as successor agency of the
NAC, to file a complaint for the expropriation.
The CFI rendered judgment for the Republic declaring the
expropriation of Lots included in the Lahug Airport, Cebu City, justified in and in

lawful exercise of the right of eminent domain. After the payment of the
foregoing financial obligation to the landowners, directing the latter to deliver
to the plaintiff the corresponding TCT; and upon the presentation of the said
titles, ordering the RoD to cancel the same and to issue new TCTs in the name of
the plaintiff. In view of the adverted buy-back assurance, the owners no longer
appealed the decision of the trial court. Following the finality of the judgment of
condemnation, certificates of title for the covered parcels of land were issued in
the name of the Republic which, were subsequently transferred to MCIAA.
At the end of 1991, or soon after the transfer of the lots, Lahug Airport
completely ceased operations, Mactan Airport having opened to accommodate
incoming and outgoing commercial flights. On the ground, the expropriated lots
were never utilized for the purpose they were taken. This development
prompted the former lot owners to formally demand from the government that
they be allowed to exercise their promised right to repurchase.
G.R. No. 168812 (MCIAA Petition)
Inocian and four others (all children of Isabel Limbaga who originally
owned 6 of the lots expropriated); and Aletha Suico Magat and 7 others,
successors-in-interest of Santiago Suico, the original owner of 2 of the
condemned lots (collectively, the Inocians), filed before the RTC in Cebu City a
complaint for reconveyance of real properties and damages against MCIAA.
Albert Chiongbian (Chiongbian), alleging to be the owner of one of the lots, but
which the Inocians were now claiming, moved and was later allowed to
intervene.
MCIAA admitted that the purpose of the expropriation was for the
expansion of the old Lahug Airport; that the Lahug Airport was not expanded;
that the old Lahug Airport was closed sometime in June 1992;and that some
properties were reconveyed by the MCIAA because the previous owners were
able to secure express waivers or riders wherein the government agreed to
return the properties should the expansion of the Lahug Airport not materialize.
ISSUE

Was the claim of the Ouanos meritorious

HELD
The Republic and MCIAAs petition in G.R. No. 168812 is bereft of merit,
while the Ouano petition in G.R. No. 168770 is meritorious.
RATIO

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Providing added support to the Ouanos and the Inocians right to
repurchase is what in Heirs of Moreno was referred to as constructive trust, one
that is akin to the implied trust expressed in Art. 1454 of the Civil Code,[37] the
purpose of which is to prevent unjust enrichment.[38] In the case at bench, the
Ouanos and the Inocians parted with their respective lots in favor of the MCIAA,
the latter obliging itself to use the realties for the expansion of Lahug Airport;
failing to keep its end of the bargain, MCIAA can be compelled by the former
landowners to reconvey the parcels of land to them, otherwise, they would be
denied the use of their properties upon a state of affairs that was not conceived
nor contemplated when the expropriation was authorized. In effect, the
government merely held the properties condemned in trust until the proposed
public use or purpose for which the lots were condemned was actually
consummated by the government. Since the government failed to perform the
obligation that is the basis of the transfer of the property, then the lot owners
Ouanos and Inocians can demand the reconveyance of their old properties after
the payment of the condemnation price.
Constructive trusts are fictions of equity that courts use as devices to
remedy any situation in which the holder of the legal title, MCIAA in this case,
may not, in good conscience, retain the beneficial interest. We add, however, as
in Heirs of Moreno, that the party seeking the aid of equitythe landowners in
this instance, in establishing the trustmust himself do equity in a manner as
the court may deem just and reasonable.

4. LOPEZ v CA
574 SCRA 26 (2008)
FACTS

The decedent, Juliana, was married to Jose (Jose). Their union did not
bear any children. Juliana was the owner of several properties, which are the
subject of this dispute.
On 1968, Juliana executed a notarial will, 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 Jose. If her husband were to die or renounce the
obligation, her nephew, Enrique Lopez (Petioner's father), was to become
administrator and executor of the Fideicomiso.

Note: Fideicomiso- Arrangement by which the testator left his estate or part of it
to the good faith of someone so that, in certain case and time, transmit it to
another person or invest it in the way that was pointed out by the testator.
Paraphernal properties- Exclusive properties of the wife.
Jose died on 1980, leaving a holographic will disposing of the disputed
properties to respondents. The will was allowed probate on 1983. Pursuant to
Joses will, the RTC ordered 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.
Enrique Lopez, also assumed the trusteeship of Julianas estate. On
1984, the RTC appointed petitioner Richard Lopez as trustee of Julianas estate.
Thereafter, petitioner instituted an action for reconveyance of parcels of land
with sum of money before the RTC against respondents. The complaint
essentially alleged that Jose (the husband) 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
Joses estate when in fact Jose was holding them only in trust for the trust estate
of Juliana.
The RTC rendered a summary judgment, dismissing the action on the
ground of prescription of action. The Court of Appeals rendered the assailed
decision denying the appeals filed by both petitioner and respondents. In
addition, the CA held that the petitioner's action for reconveyance has
prescribed and that the fiduciary relation assumed by the late Jose was an
Implied Trust.
ISSUE

a) WON an implied trust was constituted over the disputed properties


when Jose, the trustee, registered them in his name.
b) WON petitioners action for reconveyance has prescribed.
HELD
The disputed properties were the paraphernal properties of Juliana
which should have been included in the Fideicomiso, their registration in the
name of Jose was erroneous and Joses possession is that of a trustee in an
implied trust.

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Implied trusts are those which, without being expressed, are deducible
from the nature of the transaction as matters of intent or which are
superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties.
The Court differentiated two kinds of implied trusts. Implied trusts are
either resulting or constructive trusts. These two are differentiated from each
other as follows:
DOCTRINE: Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the equitable title or interest
and are presumed always to have been contemplated by the parties. They arise
from the nature of circumstances of the consideration involved in a transaction
whereby one person 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.
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.
However, the right to seek reconveyance based on an implied or
constructive trust is not absolute. It is subject to extinctive prescription. 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.
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. Jose had indicated that the disputed properties were conjugal in
nature and, thus, excluded from Julianas Fideicomiso. This act is clearly
tantamount to repudiating the trust, at which point the period for prescription
is reckoned.
b) The petitioner's action for reconveyance has clearly already
prescribed when he filed said actions on 1984 or fifteen (15) years later.
Petition denied.

5. SALAO v SALAO
FACTS:

Manuel Salao and Valentina Ignacio has four children Patricio,


Alejandra, Juan and Ambrosia. Manuel Salao and Patricio died. No documentary
evidence as to what properties formed part of Manuel Salaos estate. Valentina
also died and her estate was administered by Ambrosia. Patricio died and being
represented by Valentin (his son). Therefore, the estate will be divided to
Valentin, Alejandra, Juan and Ambrosia. Valentina left a lot of properties and
the distributive share of each was P8,135 but Valentin got more than the said
amount so he was forced to pay his coheirs the difference.
Before Valentina died, Juan and Ambrosia secured a torrens title in
their name 47ha of fishpond in Calunaran, Pampanga which is also known as
Lot 540 of Hermosa cadastre and exercised dominical rights over it to the
exclusion of Valentin. It was contended that Juan and Ambrosia used the
commond fund to buy the said fishpond but was denied by the other party. The
said fishpond was sold under pacto de retro sale to two persons but was
redeemed in due time.
Juan and Ambrosia also bought a swampland in Lewa, Pampanga and
registered it under their names, it became cadastral lot no. 544 of Hermosa
Cadastre it adjoins the Calunuran fishpond. Juan and valentin died. Valentin
has two daughters Benita and Victorina. Valentins estate consisted of 2
fishponds inherited from Valentina.
Ambrosia donated to Benita 3 lots and a deed of donation was signed. It
was only after Abrosias death benita filed an action for reconveyance of the
caluran fishpond which was allegedly held in trust and which had become the
sole property of Juani (son of juan).
Before ambrosias death, she donated share of the fishpond to Juani.
Benita and children of victorina contends that they had a 1/3 share in the 2
fishponds that Juani took possession. Juani refused to give Benita and children
their respective shares. Juani then contends that the fishponds were only
owned by Juan and ambrosia - Valentin has no interest on the said fishpond.
Benita and children filed for an annulment of the donation to Juani and
reconveyance to them. But as a defense of juani, he pleaded the indefeasibility of
the Torrens title secured by Juan and ambrosia and prescription and laches.
Juani died and substituted by his wife (pascual) and children. The court ruled

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that there was no co-ownership and the said fishpond was properly donated to
Juani. In addition, the parties involved in the alleged trust were dead.
ISSUE:

W/N the fishfpond was held in trust for Valentin by Juan and Ambrosia
and W/N their action for reconveyance had already prescribed.
HELD:
No! And if ever there was a trust, action has already prescribed.
RATIO:

Trust is the right enforceable solely in equity, to the beneficial


enjoymnet of the property indicate duties, relations, and responsibilities. It
can be either express or implied. No express trust concerning an immovable or
any interest therin may be proven by parol evidence. It is created by writing or
deed or will. Resulting trust is created by the act or construction of law.
Constructive trust arise by operation of law. Trust must be proven by clear,
satisfactory and convincing evidence.
No documentary evidence was presented by benita and children to
prove that there was an express trust over the calunuran fishpond in favor of
valentin. Purely parol evidence was offered. There was also no resulting trust
because there were never was any intention on the part of Juan, ambrosia and
valentin to create any trust. No constructive trust because the consent of juan
and ambrosia wan not vitiated by fraud or mistake.
And assuming there is implied trust, it was already barred by
prescription (10 yrs supposedly but filed after 40 yrs from the date of
registration) and laches. The court said that there was no community of
property during the lifetime of valentina (great grandmother) is substantiated
by benita and childrens documentary evidence.
The fact that Valentin never bothered for 40 years to procure any
documentary evidence to establish his supposed interest in the 2 fishponds is
very suggestive of the absence of such interest. Torrens title is generally a
conclusive evidence of the ownership of the land and in order to maintain an
action for reconveyance, proof as to the fiduciary relation of the parties must be
clear and convincing.
In addition, benita cannot represent valentin because in the collateral
line, representation takes place only in favor of the children of brothers and
sisters whether full or half blood and this excludes grand niece like benita.

6. MUNICIPALITY OF VICTORIAS v CA
G.R. No. L-31189 March 31, 1987
PETITIONER: Municipality of Victorias (MUNICIPALITY)
RESPONDENTS: CA, Norma Leuenberger (GRANDAUGHTER), Francisco Soliva
(HUSBAND)
Simeona J. Vda. de Ditching (WIDOW) / (GRANDMOTHER)
FACTS:
Lot No. 76, which forms part of Cadastral Lot No. 140, is in the name of
the deceased Gonzalo Ditching under a tax declaration for the year 1941. He
was survived by his widow and daughter. The latter died leaving a 6 month-old
daughter, Norma Leuenberger.
The GRANDDAUHTER, married to Soliva, inherited the whole Lot. No.
140 from her GRANDMOTHER. In 1952, she donated a portion of Lot No. 140 to
the municipality for the ground of a certain high school, and had another
portion converted into a subdivision.
In 1963, following a survey of the remaining area, it was discovered
that a parcel of land within her property is used by the MUNICIPALITY as a
cemetery from 1934 (identified as Lot No. 76).
The GRANDDAUGHTER wrote to the Mayor regarding her discovery
and demanded payment of past rentals and requesting delivery of the area
allegedly illegally occupied by the MUNICIPALITY. The Mayor claimed that the
MUNICPALITY bought the land from the GRANDMOTHER in 1934 but failed to
show documents concerning the sale.
In 1964, the GRANDDAUGHTER filed a complaint in the CFI for
recovery of possession of the parcel of land occupied by the municipal
cemetery.
In lieu of a Deed of Sale, the MUNICIPALITY presented certificate issued
by the Archives Division of the Bureau of Records Management which showed
the nature of the instrument, the subject of the sale, the parties of the contract,
the consideration, the name of the witnesses, and the dale of the sale. Several
testimonies and tax declarations corroborated and supported the document.
The CFI ruled in favour of the MUNICIPALITY, declaring the cemetery
side as property of the MUNICIPALITY. The CA set aside the decision of the
lower court.
Hence, this petition.

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In 1972, the GRANDDUAGHTER died so her HUSBAND continued the
appeal on behalf of her estate; the latter having been appointed as special
administrator.
It should be noted that the land is covered by a TCT in the name of the
GRANDAUGTER issued by the Register of Deeds.
ISSUE:

Whether or not the GRANDDAUGHTER and HUSBAND are bound to


execute a deed of reconveyance in favour of the MUNICIPALITY.
RULING:
YES. The CFI decision is reinstated.
HELD:
Despite the failure of the MUNICIPALITY to register the Deed of Sale, it
is still binding upon the GRANDDAUGHTER because the latter admitted to
inheriting the land from her GRANDMOTHER who had already sold the land to
the MUNICIPALITY in 1934. Hence, the GRANDDAUGHTER merely stepped into
the shoes of the GRANDMOTHER and she cannot claim a better right than her
predecessor-in-interest.
Although the land in now covered by a TCT in the name of the
GRANDAUGHTER (which entitles her to protection afforded to a holder of a
Torrens Title), Article 1456 of the NCC provides that if the property is acquired
through mistake or frau, 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 beneficiary shall have the right to enforce the trust,
notwithstanding the irrevocability of the Torrens title and the trustee and his
successor-in-interest are bound to execute the deed of reconveyance.
As the land in dispute is held by the GRANDDAUGHTER and her
HUSBAND in trust for the MUNICIPALITY, it is logical to conclude that the latter
can neither be deprived of its possession nor be made to pay rentals thereof.
The GRANDDAUGHTER and her HUSBAND are bound to reconvey the subject
land to the cestui que trust the MUNICIPALITY. The Torrens system never
calculated to foment betrayal in the performance of a trust.

7. PNB v CA
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 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.
Based n this, PNB issued Check No. 269522 for $1,400(P9,772.95) for
the account of Mata. 14 days after, PNB again issued another Cashier's Check
No. 270271 for $14,000 (P97,878.60).
Six years later, or more specifically, on May 13, 1981, PNB requested
Mata for refund of US$14,000 (P97,878.60) after it discovered its error in
effecting the second payment.
On February 4, 1982, PNB then filed a case for the collection of the
$14,000 on the basis of a constructive trust but the RTC dismissed the case
ruling that it falls under Solution indebiti and not Constructive trust. The CA
affirmed this decision.
Hence, the instant petition for certiorari proceeding seeking to annul
the decision of the appellate court on the basis that Mata's obligation to return
US$14,000 is governed, in the alternative, by either Article 1456 on constructive
trust or Article 2154 of the Civil Code on quasi-contract.
Petitioner naturally opts for an interpretation under constructive trust
as its action filed on February 4, 1982 can still prosper, as it is well within the
prescriptive period of ten 10 years because if it would fall under solution
indebiti, prescription period is only for 6 years and therefore, prescribed.
ISSUE:
Whether the case falls under trust of it falls under quasi-contracts?

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HELD
TRUST. This clearly is a constructive trust but petitioner may no longer
recover because he is barred by laches.
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.
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.
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.
Returning to the instant case, while petitioner may indeed opt to avail
of an action to enforce a constructive trust or the quasi-contract of solutio
indebiti, it has been deprived of a choice, for prescription has effectively blocked
quasi-contract as an alternative, leaving only constructive trust as the feasible
option.
Petitioner argues that the lower and appellate courts cannot indulge in
semantics by holding that in Article 1456 the recipient commits the mistake
while in Article 2154, the recipient commits no mistake. On the other hand,
private respondent, invoking the appellate court's reasoning, would impress
upon us that under Article 1456, there can be no mutual mistake. Consequently,
private respondent contends that the case at bar is one of solutio indebiti and
not a constructive trust.
We agree with petitioner's stand that under Article 1456, the law does
not make any distinction since mutual mistake is a possibility on either side
on the side of either the grantor or the grantee. 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 wellsettled 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.

8. PARUNGIT v BAJIT
SPS. FELIPE and JOSEFA PARINGIT, Petitioner, vs. MARCIANA PARINGIT BAJIT,
ADOLIO PARINGIT and ROSARIO PARINGIT ORDOO, Respondents.
G.R. No. 181844
September 29, 2010
FACTS:
During their lifetime, spouses Paringit leased a lot in Sampaloc, Manila
from Terocel Realty. They built their home there and raised five children. For
having occupied the lot for years, Terocel Realty offered to sell it to Julian but he
did not have enough money at that time to meet the payment deadline. Julian
sought the help of his children so he can buy the property but only his son
Felipe and wife Josefa had the financial resources he needed at that time. To
bring about the purchase, Julian executed a deed of assignment of leasehold
right in favor of Felipe and his wife that would enable them to acquire the lot.
The latter then bought the same from Terocel Realty and a TCT was
subsequently issued in favor of spouses Felipe and Josefa.
Later on, due to issues among Julians children regarding the ownership
of the lot, Julian executed an affidavit clarifying the nature of Felipe and his
wifes purchase of the lot. He claimed that it was bought for the benefit of all his
children.
Despite the title being under their name, the spouses moved to another
house on the same street in 1988. Marciana, et al, on the other hand, continued
to occupy the lot with their families without paying rent. This was the situation
when their father died in 1994. A year later, Felipe and his wife sent a demand
letter to his siblings who occupy the lot, asking them to pay rental arrearages
for occupying the property. They refused to pay or reply to the letter, believing
that they had the right to occupy the house and lot, it being their inheritance
from their parents. Because of this, Felipe and his wife filed an ejectment suit
against them. The suit prospered, resulting in the ejectment of Marciana, et al
and their families from the property.

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To vindicate what they regarded as their right to the lot and the house,
the other children filed the present action against Felipe and his wife for
annulment of title and reconveyance of property.

siblings to reside on the property. This is incompatible with their claim that
they bought the house and lot for themselves back in 1984. Until they filed the
suit, they did nothing to assert their supposed ownership of the house and lot.

ISSUE:
Whether or not Felipe and his wife purchased the subject lot under an
implied trust for the benefit of all the children of Julian;
RULING/RATIO:
Yes, the Court ruled that the case at bar falls under the rubric of the
implied trust provided in Article 1450 of the Civil Code.Implied trust under
Article 1450 presupposes a situation where a person, using his own funds, buys
property on behalf of another, who in the meantime may not have the funds to
purchase it. Title to the property is for the time being placed in the name of the
trustee, the person who pays for it, until he is reimbursed by the beneficiary, the
person for whom the trustee bought the land. It is only after the beneficiary
reimburses the trustee of the purchase price that the former can compel
conveyance of the property from the latter.
The circumstances of this case are actually what implied trust is about.
Although no express agreement covered Felipe and his wifes purchase of the lot
for the siblings and their father, it came about by operation of law and is
protected by it. The nature of the transaction established the implied trust and
this in turn gave rise to the rights and obligations provided by law. Implied trust
is a rule of equity, independent of the particular intention of the parties.
Here, the evidence shows that Felipe and his wife bought the lot for the
benefit of Julian and his children, rather than for themselves. There is no
question that the house originally belonged to Julian and Aurelia who built it.
First, if Julian really intended to sell the entire house and assign the right to
acquire the lot to Felipe and his wife, he would have arranged for Felipes other
siblings to give their conformity as co-owners to such sale. Second, Julian said in
his affidavit that Felipe and his wife bought the lot from Terocel Realty on his
behalf and on behalf of his other children. Felipe and his wife advanced the
payment because Julian and his other children did not then have the money
needed to meet the realty companys deadline for the purchase. Notably, Felipe,
acting through his wife, countersigned Julians affidavit the way his siblings did.
Third, if Felipe and his wife really believed that they were the absolute owners
of the lot, then their moving out of the house in 1988 and letting Marciana, et al
continue to occupy the house did not make sense. Fourth, Felipe and his wife
demanded rent from Marciana, et al only a year following Julians death. This
shows that for over 10 years, Felipe and his wife respected the right of the

9. HEIRS OF EMILIO v ROMERO


FACTS:

Ester Candelaria, in her own behalf and in representation of the other


alleged heirs of Emilio Candelaria, alleges 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 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. 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". 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. Lucas died in August, 1942, survived by the present defendants, who
are his spouse Luisa Romero and several children. Said defendants are still in
possession of the lot, having refused to reconvey it to plaintiff despite repeated
demands.
ISSUE
W/N the trust which has been created is implied
HELD

Yes. 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. 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

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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.
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, the property in
question was acquired by Lucas Candelaria under circumstances which show it
was conveyed to him on the faith of his intention to hold it for, or convey it to
the grantor, the plaintiff's predecessor in interest.

10. ADAZA v CA
G.R. No. 47354
March 21, 1989
HORACIO G. ADAZA and FELICIDAD MARUNDAN, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and VIOLETA G. ADAZA, assisted by her
husband LINO AMOR, respondents.
Victor Adaza Deceased/Father/Donor
Violeta Adaza Donee/Daughter (RESPONDENT)
Horacio Adaza 1st Brother/Fiscal (PETITIONER)
FACTS
Before dying, the Father executed a Deed of Donation covering a parcel
of land to his daughter, then single. (NOTE: a crossed out provision in the
Deed of Donation provided: The donee shall share of the entire
property with one of her brothers or sisters after the death of the donor.
The Father had five other children.) The Deed was notarized and accepted in the
same instrument. However, the property was then still part of the public
domain, but was held and cultivated by the Father. The Daughter, aided by her

Brother, filed a homestead application for the land which eventually lead to the
registration of the property under her name. After the Daughter married, she
and her spouse mortgaged the property to secure a loan with PNB. Meanwhile,
the Brother became a Provincial Fiscal of Davao Oriental and moved to the said
province.
When the said Brother returned for a family gathering, he asked his
sister to sign a Deed of Waiver over the property stating that the property was
co-owned by them, including all the improvements thereon. The Deed also
provided for the waiver, transfer and conveyance of the said share from Sister
to Brother.
A few months later, the Daughter, with her husband, filed a complaint
for annulment of the Deed of Waiver against the Brother, together with the
latters wife, declaring that the Daughter signed the Deed because of the
Brothers fraud, misrepresentation and undue influence. Meanwhile, the
Brother contended that they were co-owners and that the Deed of Waiver was
signed by his sister freely and voluntarily.
The trial court declared the Deed of Waiver as valid and binding and
that the brother and sister was co-owners of the said property. Upon the
Daughters appeal, the CA reversed the trial courts decision, while agreeing that
the Deed of Waiver was signed voluntarily, was without cause or consideration,
because the land had been unconditionally donated to the Daughter alone. CA
further held that the Deed of Waiver could not be regarded as a gratuitous
contract or a donation as it did not comply with the requirements of Articles
749 and 1270 of the Civil Code.
In the brothers petition for review with the SC, he argues that the fact
of co-ownership was sufficient consideration to sustain the validity of the Deed
of Waiver and testified that the intention of the deceased father was to donate
the brother to him and his Sister. He further testified that he himself crossed out
the provision, with the Fathers consent, to facilitate the issuance in his sisters
name.
ISSUE
WON the property was co-owned by the brother and sister.
HELD / RATIO
YES. The execution of the Deed of Donation by the Father created
an implied trust in favor of the brother in respect of half of the property
donated. Art. 1449 There is also an implied trust when a donation is made to a

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person but it appears that although the legal estate is transmitted to the donee, he
nevertheless is either to have no beneficial interest or only a part thereof.
The court notes that the donation was executed by the father while the
land was still public disposable land and that the final issuance of title was still
about 7 years later. It, found that the crossing out of the said paragraph was at
least an ambiguous act and that CA took a too literal view of the matter holding
that the effect of the crossing-out of that paragraph was to make the
unconditional donation, thus not requiring the daughter not obliged to share the
property with her brother. For the SC, if the real intent of the father was to make
the two co-owners of the property, and such intent is sufficiently shown, it must
be respected and implemented.
For the court, the said intent was evidenced: firstly, by the Deed of
Waiver executed where the Daughter acknowledged that she owned the land in
common with her brother although the certificate of title bore only her name.
While the Sister strove to convince that she had signed by reason of fraud,
misrepresentation and undue influence, the trial court and CA both concluded
that the signature was voluntarily made. The Deed of Waiver had been signed in
the presence of their 3 other siblings. Furthermore, the other siblings testified
that the Deed of Donation was executed with the understanding that the same
would be divided between the Brother and the Sister. Also, at the same time the
Deed of Waiver was signed, another Deed of Waiver was signed between
another brother and another sister, who testified. The trial court pointed out
that four parcels of land were left to be divided among the six children.
Evidently, their parents made it a practice, for reasons of their own, to
have lands acquired by them titled in the name of one or another of their
children. Three (3) of the four (4) parcels acquired by the parents were each
placed in the name of one of the children. For the court, the current case was not
one where an older brother is exploiting or cheating his younger sister. On the
contrary, the evidence showed that the Brother took care of the sister and had
been quite relaxed and unworried about the title remaining in the name of his
sister alone until the latter had gotten married and her husband began to show
what Brother thought was undue and indelicate interest in the land.

11. SING JUCO AND SING BENGCO v SUNYANTONG


FACTS:

Sing Juco and Sing Bengco obtained from Maria Gay a written option to
purchase an estate known as "San Antonio Estate". The term of the option
expired, but Sing Juco and Sing Bengco had it extended verbally.
Sunyantong was an employee of Sing Juco and Sing Bengco, and the
evidence shows that they reposed confidence in him and did not mind
disclosing to him their plans of purchasing the San Antonio estate and the status
of their negotiations with Gay.
In one of the meetings held by Sing Juco and Sing Bengco, Sunyantong
was present. At that time, Sunyantong remarked that it would be advisable to let
some days elapse before accepting the terms of the transfer as proposed by
Maria Gay, in order that the Gay might not think that they were desperate for
the said property.
On the day that Sing Juco and Sing Bengcos option to purchase was to
expire, Sunyantong called at the house of Gay and offered to buy the estate on
the terms she proposed, which were not yet accepted by Sing Juco and Sing
Bengco. Sunyantong offered to buy not for the benefit of Sing Juco and Sing
Bengco, but for the benefit of his own wife.
Maria Gay informed the broker of Sing Juco and Sing Bengco that there
was another interested buyer and that she would like to know immediately Sing
Juco and Sing Bengcos decision.
Sing Bengco instructed Sotelo to inform her, "siya ang bahala".
Interpreting the phrase to mean that Sing Juco and Sing Bengco waived their
option to buy, Maria Gay closed the sale of the estate in favor of Sunyantong.
Sing Bengco and Sing Juco then filed a case against Sunyantong. The
lower court ordering the Sunyantong to execute a deed of conveyance to Sing
Bengco and Sing Juco of the San Antonio Estate for the same price and with the
same conditions as those of the purchase thereof from Maria Gay
ISSUE
W/N Sunyantong must be held liable
HELD

Yes. Even supposing that Sing Bengco intended to waive all claims to
the option when he said bahala ka, the action of the Sunyantong in intervening
in the negotiations does not make him innocent of infidelity in view of the fact
that he was an employee of the plaintiffs to whom he owed loyalty and
faithfulnes.
Despite the fact that when Sunyantong closed the contract of sale with
Maria Gay, Sing Juco and Sing Bengco option had expired, it cant be denied that
he was the cause of the option having precipitously come to such an end. His

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disloyalty to his employers was responsible for Maria Gay not accepting the
terms proposed by Sing Juco and Sing Bengco, because of being certain of
another less exigent buyer. Without such intervention on the part of the
Sunyantong it is presumed, taking into account all the circumstances of the case,
that the sale of the estate in question would have been consummated between
Maria Gay and Sing Juco and Sing Bengco, perhaps with such advantages to Sing
Juco and Sing Bengco, as they expected to obtain by prolonging negotiations.
Such an act of infidelity committed by a trusted employee calculated to
redound to his own benefit and to the detriment of his employers cannot pass
without legal sanction. He shall be liable for the damage caused
DISSENTING OPINION BY VILLAMOR, J:
Sunyantong is held civilly liable for having purchased the land in
question in behalf of his wife, Vicenta Llorente, with knowledge of the fact that
Sing Bengco and Sing Juco, by whom he was employed, were negotiating with
the owner of the land for the purchase of the same.
The liability of Sunyantong should consist in the reparation of the
damage caused to the Sing Bengco and Sing Juco. Has any damage been proven
to have arisen from the culpable act of the defendant Sunyantong? I do not think
that it has, and indeed no damage could have been caused to the Sing Bengco.
There is also no proof of Sunyantong having acquired the land in
question in the name or in behalf of Sing Bengco and Sing Juco, or at the request
of the latter, or with funds furnished by them. Said defendants had legal
capacity to buy (art. 1457, Civil Code) and are not within any of the cases
prohibited by article 1459 of the same Code.

12. LEOVERAS v VALDEZ


FACTS:
Maria Sta. Maria and Dominga Manangan were the registered owners
(3/4 and respectively), pro indiviso of a parcel of land.
Maria sold her share to Benigna Llamas. When Benigna died in 1944,
she willed her three-fourths () share equally to her sisters Alejandra Llamas
and Josefa Llamas.
Thus, Alejandra and Josefa each owned one-half () of Benignas threefourths () share. On June 14, 1969, Alejandras heirs sold their predecessors
one-half () share to the respondent.

Josefa sold her own one-half () share (subject property) to the


respondent and the petitioner.
The respondent asked the Register of Deeds of Lingayen, Pangasinan on
the requirements for the transfer of title over the portion allotted to him on the
subject property. To his surprise, the respondent learned that the petitioner had
already obtained in his name two transfer certificates of title (TCTs): one, TCT
No. 195812covering an area of 3,020 square meters; and two, TCT No.
195813covering an area of 1,004 square meters (or a total of 4,024 square
meters).
The respondent filed a complaint for Annulment of Title, Reconveyance
and Damages against the petitioner, seeking the reconveyance of the 1,004square meter portion (disputed property) covered by TCT No. 195813, on the
ground that the petitioner is entitled only to the 3,020 square meters identified
in the parties Agreement.
ISSUE
Whether or not the order for reconveyance was valid.
Whether or not there existed an implied trust between the petitioner and
respondent.
HELD
The CA correctly ordered the reconveyance of the disputed property,
covered by TCT No. 195813, to the respondent
An action for reconveyance is a legal and equitable remedy granted to
the rightful landowner, whose land was wrongfully or erroneously registered in
the name of another, to compel the registered owner to transfer or reconvey the
land to him.
The respondent adequately proved his ownership of the disputed
property by virtue of the (i) Deed of Absolute Sale executed by Josefa in favor of
the parties; (ii) the parties Affidavit of Adverse Claim; and (iii) the parties
Agreement, which cover the subject property.
By fraudulently causing the transfer of the registration of title
over the disputed property in his name, the petitioner holds the title to
this disputed property in trust for the benefit of the respondent as the true
owner; registration does not vest title but merely confirms or records title
already existing and vested.
The Torrens system of registration cannot be used to protect a usurper
from the true owner, nor can it be used as a shield for the commission of fraud,
or to permit one to enrich oneself at the expense of others.

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13. PASINO v MONTERROYO


FACTS:
Lot No. 2139, with an area of 19,979 square meters, located at Panuliran, Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and
cleared by Laureano Pasio. The 24-hectare land formed part of the public
domain which was later declared alienable and disposable.
Laureano filed a homestead application over the entire 24-hectare land.
The Bureau of Forestry wrote Laureano and informed him that the tract of land
covered by his application was not needed for forest purposes. The Director of
Lands issued an Order approving Laureanos homestead application and stating
that Homestead Entry No. 154651 was recorded in his name for the land
applied for by him.
After Laureano died, the Director of Lands issued an Order for the
issuance of a homestead patent in favor of Laureano, married to Graciana
Herbito. Laureanos heirs did not receive the order and consequently, the land
was not registered under Laureanos name or under that of his heirs. The
property was thereafter covered by a tax declaration in the name of Laureano
with Graciana as administrator.
A Cadastral Survey was conducted in Iligan City, and the surveyor
found that a small creek divided the 24-hectare parcel of land into two portions,
identified as Lot No. 2138 and Lot No. 2139.
Petitioners (Rogelio, George, Lolita, Rosalinda and Josephine, all
surnamed Pasio) claimed that Laureanos heirs, headed by his son Jose,
continuously possessed and cultivated both lots. Joses co-heirs executed a Deed
of Quitclaim renouncing their rights and interest over the land in favor of Jose.
Jose secured a title in his name for Lot No. 2138. Later, Jose alienated Lot No.
2139 in favor of his children (petitioners in this case) who simultaneously filed
applications for grant of Free Patent Titles over their respective shares of Lot
No. 2139 before the Land Management Bureau of the Department of
Environment and Natural Resources. The DENR granted petitioners
applications and issued Original Certificate of Titles in favor of them. Petitioners
alleged that their possession of Lot No. 2139 was interrupted when respondents
forcibly took possession of the property.
Respondents (Dr. Teofilo Eduardo F. Monterroyo, later substituted by
his heirs Romualdo, Maria Teresa and Stephen, all surnamed Monterroyo)
alleged that they had been in open, continuous, exclusive and notorious

possession of Lot No. 2139, by themselves and through their predecessors-ininterest. They alleged that Rufo Larumbe sold Lot No. 2139 to Petra Teves. Petra
thereafter executed a deed of sale over Lot No. 2139 in favor of Vicente Teves.
Later, Vicente executed a pacto de retro sale over the land in favor of Arturo
Teves. Arturo then sold Lot No. 2139 in favor of respondents father, Dr.
Monterroyo, by virtue of an oral contract. He Arturo executed a Deed of
Confirmation of Absolute Sale of Unregistered Land in favor of Dr. Monterroyos
heirs.
ISSUE
W/N petitioners are rightful owners and possessors of Lot No. 2139.
HELD

NO. The preponderance of evidence favors respondents as the


possessors of Lot No. 2139 for over 30 years, by themselves and through their
predecessors-in-interest. Respondents were able to present the original Deed
of Absolute Sale executed by Larumbe in favor of Petra. Respondents also
presented the succeeding Deeds of Sale showing the transfer of Lot No. 2139
from Petra to Vicente and from Vicente to Arturo and the Deed of Confirmation
of Absolute Sale of Unregistered Real Property executed by Arturo in favor of
respondents. Respondents also presented a certification executed by P/Sr.
Superintendent Julmunier Akbar Jubail, City Director of Iligan City Police
Command and verified from the Log Book records by Senior Police Officer Betty
Dalongenes Mab-Abo confirming that Andres Quinaquin made a report that
Jose, Rogelio and Luciana Pasio, Lucino Pelarion and Nando Avilo forcibly took
his copra. This belied petitioners allegation that they were in possession of Lot
No. 2139 and respondents forcibly took possession of the property.
Considering that petitioners application for free patent titles was filed
only when Lot No. 2139 had already become private land ipso jure, the Land
Management Bureau had no jurisdiction to entertain petitioners application.
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 anothers 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.

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In the case before us, respondents were able to establish that they have
a better right to Lot No. 2139 since they had long been in possession of the
property in the concept of owners, by themselves and through their
predecessors-in-interest. Hence, despite the irrevocability of the Torrens titles
issued in their names and even if they are already the registered owners under
the Torrens system, petitioners may still be compelled under the law to
reconvey the property to respondents.

14. GAYONDATO v TREASURER


ROSARIO GAYONDATO, plaintiff-appellant,
vs.
THE TREASURER OF THE PHILIPPINE ISLANDS, ET AL., defendants-appellant.
G.R. No. L-24597 August 25, 1926
FACTS:
Three parcels of land (subject lots) were inherited by Domingo
Gayondato from his mother. Domingo then married Adela Gasataya (Adela) and
they had one child, Rosario Gayondato (Gayondato). Domingo died in 1902 and
six years later, Adela married Domingo Cuachon.
The subject lots were included in a cadastral case where Domingo
appeared on behalf of Adela and Rosario, who was then fifteen years old.
Despite Domingos claims that the subject lots were owned by both Adela and
Rosario, Court of First Instance erroneously decreed the registration of the
aforesaid lots in the name of Adela Gasataya alone.
Subsequently Adela, with the consent of her husband, mortgaged the
property to the National Bank and in the year 1920, sold it to the Francisco
Rodriguez (Francisco), the latter assuming the liability for the mortgage and for
certain other debts.
Rosario filed a complaint against Adela, Domingo, Francisco, and
Insular Treasurer to recover damages for the erroneous registration of the
subject lots in the name of Adela.
Trial court ruled in favor of Rosario ordering Adela and Domingo to
solidarily indemnify Rosario, but absolving Insular Treasurer and Francisco.
ISSUE

WON Insular Treasurer should be held secondarily liable

RULING

As the plaintiff-appellant was a minor at the time of the registration of


the land and consequently no negligence can be imputed to her, in the absence
of special circumstances to the contrary, the assurance fund is secondarily liable
for the damages suffered by her through the wrongful registration.
HELD
The Attorney-General in his brief for the Insular Treasurer raises the
point that Domingo and Adela prior to the registration must be considered to
have held the property in trust and for the benefit of Rosario; thus, the relation
of trustee and cestui que trust was created making this case fall under Section
106 of the Land Registration Act, which provides that "the assurance fund shall
not be liable to pay for any loss or damage or deprivation occasioned by a
breach of trust, whether express, implied, or constructive, by any registered
owner who is a trustee, or by the improper exercise of any sale in mortgageforeclosure proceedings."
The use of the word "trust" in this sense is not technically accurate. As
Perry says, such trusts "are not trusts at all in the strict and proper signification
of the word "trust"; but as courts are agreed in administering the same remedy
in a certain class of frauds as are administered in fraudulent breaches of trusts,
and as courts and the profession have concurred in calling such frauds
constructive trusts, there can be no misapprehension in continuing the same
phraseology, while a change might lead to confusion and misunderstanding."
If this is the kind of constructive trust referred to in Section 106, it must
be conceded that Rosario cannot recover damages from the assurance fund. But
that such is not the case, becomes quite apparent upon an examination of
sections 101 and 102, of the same Act, in which the right of recovery from the
assurance fund in cases of registration through fraud or wrongful acts is
expressly recognized, then it clearly shows that the term trust as used in section
106 must be taken in its technical and more restricted sense. Indeed, if it were
to be regarded in its broadest sense, the assurance fund would, under the
conditions here prevailing, be of little or no value.

15. ESCOBAR v LOCSIN


G.R. No. L-48309
January 30, 1943
EUSEBIA ESCOBAR, plaintiff-appellant,
RAMON LOCSIN, in his capacity as special administrator of the intestate estate of
Juana Ringor,defendant-appellee.

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FACTS

The complaint alleges that the plaintiff is the owner of the subject lot;
and that in the course of the cadastral proceedings, plaintiff being illiterate,
asked Sumangil to claim the same for her (plaintiff) but Sumangil committed a
breach of trust by claiming the lot for himself, so it was adjudicated in favor of
Sumangil. The defendant is the special administrator of the estate of Juana
Ringor, to whom the parcel of land in question was assigned by partition in the
intestate estate of Sumangil and Duque.
The CFI found that the plaintiff is the real owner of the lot which she
had acquired in 1914 by donation propter nuptias from Pablo Ringor; that
plaintiff had since that year been in possession of the land; and that the same
had been decreed in the cadastral proceedings in favor of Domingo Sumangil.
The trial court, while recognizing that the plaintiff had the equitable title and
the defendant the legal title, nevertheless dismissed the complaint because the
period of one year provided for in section 38 of the Land Registration Act for the
review of a decree had elapsed, and the plaintiff had not availed herself of this
remedy.
ISSUE

Does the possession of legal title preclude the operation of a trust


agreement?
HELD

contained in this Act shall in any way be construed to relieve registered land or
the owners thereof from any rights incident to the relation of husband and wife, or
from liability to attachment on mesne process or levy on execution, or from
liability to any lien of any description established by law on land and the buildings
thereon, or the interest of the owner in such land or buildings, or to change the
laws of descent, or the rights of partition between coparceners, joint tenants and
other cotenants, or the right to take the same by eminent domain, or to relieve
such land from liability to be appropriated in any lawful manner for the payment
of debts, or to change or affect in any other way any other rights or liabilities
created by law and applicable to unregistered land, except as otherwise expressly
provided in this Act or in the amendments hereof.
A trust such as that which was created between the plaintiff and
Domingo Sumangil is sacred and inviolable. The Courts have therefore
shielded fiduciary relations against every manner of chicanery or detestable
design cloaked by legal technicalities. The Torrens system was never calculated
to foment betrayal in the performance of a trust.
The judgment appealed from is hereby reverse, and the defendant is
ordered to convey that lot in question to the plaintiff within fifteen days from
the entry of final judgment herein; and upon his failure or refusal to do so, this
judgment shall constitute sufficient authorization for the Register of Deeds of
Nueva Ecija, in lieu of a deed of conveyance, to transfer the certificate of title for
said lot No. 692 to the plaintiff Eusebia Escobar. The defendant shall pay the
costs of both instances.

No

16. ESTATE OF MARGARITA v LAIGO

RATIO

The trial court plainly erred. The complaint did not seek the review of
the decree or the reopening of the cadastral case, but the enforcement of a trust.
Hence, section 38 of Act No. 496 does not apply. The estate of Juana Ringor as
the successor in interest of the trustee, Domingo Sumangil, is in equity bound to
execute a deed of conveyance of this lot to the plaintiff-appellant. The remedy
herein prayed for has been upheld by this Court in previous cases, one of which
is Severino vs. Severino (44 Phil., 343, year 1923).
There is no indication there of an intention to cut off, through the issuance of a
decree of registration, equitable rights or remedies such as those here in
question. On the contrary, section 70 of the Act provides:
Registered lands and ownership therein, shall in all respects be subject to
the same burdens and incidents attached by law to unregistered land. Nothing

FACTS:

Margarita Cabacungan owned three parcels of unregistered land


covered by tax declaration all in her name in Bauang, La Union. In 1968,
Margarita's son, Roberto Laigo, Jr., applied for a non-immigrant visa to the
United States, and to support his application, he allegedly asked Margarita to
transfer the tax declarations of the properties in his name.
Margarita, unknown to her other children, executed an Affidavit of
Transfer of Real Property whereby the subject properties were transferred by
donation to Roberto and his visa was issued and able to travel to the U.S. as a
tourist and returned in due time. Roberto adopted respondents Pedro Laigo and
Marilou Laigo and married respondent Estella Balagot.

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Roberto sold one of the property to spouses Mario and Julia Campos,
then he sold the other one to Marilou and to Pedro not known to Margarita and
her other children.
It was only in Roberto's wake, that Margarita came to know of the sales
as told by Pedro himself. In 1996, Margarita, represented by her daughter, Luz,
instituted the complaint for the annulment of said sales and for the recovery of
ownership and possession of the subject properties as well as for the
cancellation of Ricardo's tax declarations. The Spouses Campos, Marilou and
Pedro advanced that they were innocent purchasers for value and in good faith,
the cause of action was nevertheless barred by prescription.
Margarita and the Spouses Campos entered into a settlement whereby
they waived their respective claims against each other. Margarita died two days
later and was forthwith substituted by her estate, the trial court rendered a
decision approving the compromise agreement and dismissing the complaint
against the Spouses Campos.
Forthwith, trial on the merits ensued with respect to Pedro and
Marilou. The trial court dismissed. Appeal was made. The Court of Appeals
dismissed petitioner's claim that Roberto was merely a trustee of the subject
properties as there was no evidence on record supportive of the allegation that
Roberto merely borrowed the properties from Margarita upon his promise to
return the same on his arrival from the United States. Further, it hypothesized
that granting the existence of an implied trust, still Margarita's action
thereunder had already been circumscribed by laches.
ISSUE
a) Whether the complaint is barred by laches and/or prescription.
b) WON Roberto held the property in trust only for Margarita.
HELD
a) NO. Laches, being rooted in equity, is not always to be applied strictly
in a way that would obliterate an otherwise valid claim especially between
blood relatives. The existence of a confidential relationship based upon
consanguinity is an important circumstance for consideration; hence, the
doctrine is not to be applied mechanically as between near relatives. The
relationship between the parties therein, who were a family, was sufficient to
explain and excuse what would otherwise have been a long delay in enforcing
the claim and the delay in such situation should not be as strictly construed as
where the parties are complete strangers to another.
It is clear that an action for reconveyance under a constructive implied
trust in accordance with Article 1456 does not prescribe unless and until the

land is registered or the instrument affecting the same is inscribed in


accordance with law, inasmuch as it is what binds the land and operates
constructive notice to the world. In the present case, however, the lands
involved are concededly unregistered lands; hence, there is no way by which
Margarita, during her lifetime, could be notified of the furtive and fraudulent
sales made in 1992 by Roberto in favor of respondents, except by actual notice
from Pedro himself in August 1995. Hence, it is from that date that prescription
began to toll. The filing of the complaint in February 1996 is well within the
prescriptive period. Finally, such delay of only six (6) months in instituting the
present action hardly suffices to justify a finding of inexcusable delay or to
create an inference that Margarita has allowed her claim to stale by laches.
Prescription and laches, in respect of this resulting trust relation,
hardly can impair petitioner's cause of action. In this case, it was the 1992
sale of the properties to respondents that comprised the act of
repudiation which, however, was made known to Margarita only in 1995
but nevertheless impelled her to institute the action in 1996 - still well
within the prescriptive period. It is settled that an action for reconveyance
based on a constructive implied trust prescribes in 10 years likewise in
accordance with Article 1144 of the Civil Code. Yet not like in the case of a
resulting implied trust and an express trust, prescription supervenes in a
constructive implied trust even if the trustee does not repudiate the
relationship. In other words, repudiation of said trust is not a condition
precedent to the running of the prescriptive period.
b) Petitioners before the trial court, had actually adduced evidence to
prove the intention of Margarita to transfer to Roberto only the legal title to the
properties in question, with attendant expectation that Roberto would return
the same to her on accomplishment of that specific purpose for which the
transaction was entered into. The evidence of course is not documentary,
but rather testimonial. It is deducible from the foregoing that the
inscription of Roberto's name in the Affidavit of Transfer as Margarita's
transferee is not for the purpose of transferring ownership to him but only
to enable him to hold the property in trust for Margarita. The circumstances
from which could be derived the unwritten understanding between Roberto
and Margarita that by their act, no absolute transfer of ownership would be
effected. Besides, it would be highly unlikely for Margarita to institute the
instant complaint if it were indeed her intention to vest in Roberto, by virtue of
the Affidavit of Transfer, absolute ownership over the covered properties.
Finally, petitioner states that whether a buyer is in good or bad faith is
a matter that attains relevance in sales of registered land, as corollary to the
rule that a purchaser of unregistered land uninformed of the seller's defective

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title acquires no better right than such seller. Wherefore, the Petition is granted
and judgment of the Regional Trial Court, is reversed and set aside and a new
one is entered (a) directing the cancellation of the tax declarations covering the
subject properties in the name of Roberto D. Laigo and his transferees; (b)
nullifying the deeds of sale executed by Roberto D. Laigo in favor of respondents
Pedro Roy Laigo and Marilou Laigo; and (c) directing said respondents to
execute reconveyance in favor of petitioner.

17. CAVILE v LITANIA-HONG


FACTS
A deed of partition was entered into by the heirs of spouses Bernardo
Cavile and Tranquilina Galon. Subject of the deed of partition were several
parcels of lant all under the name of Bernardo. Some of the legal heirs sold their
shares to Castor (father of Perfecta petitioner) making him sole owner of the
properties.
Castor and Susana (legal heir, sister of castor) executed a confirmation
of extrajudicial partition, it was recognized and confirmed in the document that
Susana has a just and lawful share on the said properties and she was in actual
possession of the said properties.
14 years after, heirs of susana filed a complaint for reconveyance
and recovery of the said property with damages before RTC against
Perfecta (daughter of castor). Heirs of susana contends that Perfecta
intruded upon and excluded them from the subject lots unlawful
occupancy Perfecta planted and harvested crops on the land. In addition,
the land was registered under the name of Perfecta. (Perfecta was in
possession of the land)
Perfecta then contends that the land sold by castors heir to him and
castor has possession and lots covered by tax declaration. Then castor sold it to
perfecta who took possession and filed with the Bureau of Lands an application
for the issuance of title over her name and it was granted.
Furthermore, the Confirmation of Extrajudicial Partition was a nullity.
The intention of such document was to accommodate susana who thenneeded
security for the loan she was trying to obtain from the Rural bank.
RTC was in favor of Perfecta because her evidence was more worthy of
credence. Heirs of susana appealed before CA and it reversed the decision
alleging that the confirmation of extrajudicial partition was not a simulated

document. It was susana who paid the taxes before. Perfecta then filed a motion
for reconsideration but was denied. Perfecta then filed this petition.
ISSUE
W/N Perfecta has a the better right to the subject lots
HELD

Yes!

RATIO
In civil cases, the party having the burden of proof must establish his
case by a preponderance of evidence. It is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be synonymous
with the term greater weight of the evidence or greater weight of the credible
evidence. It is the probability of truth.
The heirs of susana was only able to provide as evidence the document
of the Confirmation of Extrajudicial Partition and the tax declaration. Tax
declarations are not conclusive evidence of ownership but it can be used to
support such claim. In addition, susana failed to shed light on why or how the
said properties wholly pertained to her when her parents Bernardo and
Tranquilina clearly had other heirs who also had shares in the inheritance. No
information was provided as to how said possession of the lots was actually
excercised or demonstrated by Susana.
On the side of perfecta, the land was registered under her name, a
patent was legally issued by the government in her name. Possession of lots
was established not just by the testimony of Perfecta but was corroborated by
the testimony of Luciana Navarra, whose husband was a tenant working on the
subject lots. Moreover, they planted coconuts, rice, and corn on which the heirs
of susana were unable to refute.
Therefore, the court was convinced that the evidence adduced by
perfecta preponderated over that of the heirs of susanna.
It is important to note that the heirs of susana brought the action for
reconveyance of the subject lots before RTC only more than 12 years after the
torrens titles were issued in favor of perfecta. The remedy then was already
time-barred (implied or constructive trust 10 years from the date of the
issuance of certificate of title over the property provided not transferred to
innocent purchaser for value). And even if it has not been barrred, still perfecta
will win because of the preponderance of evidence.

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In addition, the heirs of susana alleged fraud and breach of trust in the
part of perfecta. But the court said that mere allegation of fraud is not enough.
Intentional acts to decive and deprive another party of his right must be proved.

18. TIONGCO YARED v TIONGCO


G.R. No. 161360 October 19, 2011
PETITIONERS: Estrella Tiongco Yared (Deceased) substituted by Carmen Matilde
B. Tiongco
RESPONDENTS: Jose B. Tiongco (NEPHEW) and Antonio G. Doronila, Jr.
SUBJECT PROPERTY: Lots 3244, 3246, and 1404, all located in Iloilo. Lots 3244
and 1404 are covered by Original Certificated of Title (OCTs) in the names of
Matilde, Jose, Vicente and Felipe; Lot 3246 covered by an OCT in the name of
HEIRS OF MARIA LUIS DE TIONGCO.
FACTS:

Matilde, Jose, Vicente, Felipe are the HEIRS OF MARIA LUIS DE


TIONGCO. Although the HEIRS OF MARIA LUIS DE TIONGCO have all died, there
were survived by their children and descendants. Among them are the
legitimate children of Jose, Estrella Tiongco Yared and Carmelo Tiongco, father
of the respondent Jose.
In 1965, Estrella built a house on Lot 1404 and sustained herself by
collecting rentals from the tenants of Lots 3244 and 3246.
In 1968, Estrella, as one of the heirs of Jose, filed an adverse claim
affecting all the rights, interest and participation of her deceased father on the
disputed lots, but the adverse claim was only annotated on the OCTs covering
Lots 3244 and 1404.
In 1983, the NEPHEW prohibited Estrella from collecting rentals from
the tenants of Lots 3244 and 3246. The NEPHEW filed a suit for recovery of
possession against several tenants of Lots 324 and 3246 wherein he obtained a
judgment in his favour.
The NEPHEW also filed a case for unlawful detainer against Estrella as
she was staying on Lot 1404. The RTC ruled in favour of the NEPHEW. The CA
revered and ruled in favour of Estrella. As such, the NEPHEW never took
possession of the properties.
In 1988, when Estrella inquired at the Office of the RD, she discovered
that, sometime in 1974, the NEPHEW 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. The OCTs
were cancelled and new TCTs were issued in respondent Joses name.
Based on the records of the RD, the NEPHEW sold Lots 3244 and 1404
to Catalino Torre. Lot 3246 was sold to Antonio Doronila. Torre sold the Lots
3244 and 1404 to Doronila. Doronila sold back to Jose Lots 1404, 3244, and
3246.
In 1990, Estrella filed a complaint against the NEPHEW and Doronila.
RTC ruled in favour of Jose for prescription has set since the complaint was filed
in 1990 or some 16 years after the NEPHEW caused to be registered the
affidavit of adjudication. The CA AFFIRMED.
ISSUE
Who has a better right to the properties.
RULING
Estrella Tiongco Yared. The CA decision is reversed and set aside. The
RD is ordered to restore the OCTs under the name/s of the registered original
owners.
HELD

Generally, an action for reconveyance can barred by prescription. An


action for reconveyance based on implied or constructive trust must perforce
prescribe in 10 years from the issuance of the Torrens title over the property.
However, there is an exception to this rule: when the plaintiff is in
possession of the land to be reconveyed, prescription cannot be invoke in an
action for reconveyance. The action is imprescriptible so long as the land has
not passed to an innocent buyer for value. This is based on the theory that
registration proceedings cannot be used as a shield for fraud or enriching a
person at the expense of another.
In this case, Estrellas possession was disturbed in 1983 when the
NEPHEW filed a case for recovery of possession. The RTC ruled in favour of
Estrella. Estrella never lost possession of the properties, as such, she is in a
position to file the complaint to protect her rights and clear whatever doubts
had been cast on her title by the issuance of the TCTs in the NEPHEWs name.
The circuitous sale transaction of the properties from the NEPHEW to
Torre to Doronilla, and back again to the NEPHEW were unusual. However,
these successive transfers of title from one hand to another could not
cleanse the illegality of the NEPHEWs act of adjudicating to himself all the
disputed properties so as to entitle him the protection of the law as a
buyer in good faith. The NEPHEW cannot claim lack of knowledge of the

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defects surrounding the cancellation of the OCTs over the properties and benefit
from his fraudulent actions. The subsequent sales will not cure the nullity of the
certificates of title obtained by the NEPHEW on the basis of the false and
fraudulent Affidavit of Adjudication.

19. PNB v JUMANOY


FACTS:
On December 27, 1989, the RTC, Branch 19, of Digos City, Davao del
Sur, rendered a Decision5 in Civil Case No. 2514 (a case for Reconveyance and
Damages), ordering the exclusion of 2.5002 hectares from Lot 13521. The trial
court found that said 2.5002 hectares which is part of Lot 13521, a 13,752square meter parcel of land covered by Original Certificate of Title (OCT) No. P49526 registered in the name of Antonio Go Pace (Antonio) on July 19, 1971
actually pertains to Sesinando Jumamoy (Sesinando), Ciriacos predecessor-ininterest. The RTC found that said 2.5002-hectare lot was erroneously included
in Antonios free patent application which became the basis for the issuance of
his OCT. It then ordered the heirs of Antonio (the Paces [represented by Rosalia
Pace (Rosalia)]) to reconvey said portion to Ciriaco. In so ruling, the RTC
acknowledged Ciriacos actual and exclusive possession, cultivation, and claim
of ownership over the subject lot which he acquired from his father Sesinando,
who occupied and improved the lot way back in the early 1950s.7
The December 27, 1989 ruling then became final but could not be
annotated since the OCT was already cancelld. Apparently, Antonio and his wife
Rosalia mortgaged Lot 13521 to PNB as security for a series of loans which
Antonio defaulted and PNB foreclosed the mortgage on July 14, 198610 and the
title was transferred to PNB.
Thus, in February 1996, Ciriaco filed the instant complaint against PNB
and the Paces for Declaration of Nullity of Mortgage, Foreclosure Sale,
Reconveyance and Damages,11 docketed as Civil Case No. 3313 and raffled to
Branch 18 of RTC, Digos City, Davao del Sur.
In his complaint, Ciriaco averred that Antonio could not validly
mortgage the entire Lot 13521 to PNB as a portion thereof consisting of 2.5002
hectares belongs to him (Ciriaco), as already held in Civil Case No. 2514. He
claimed that PNB is not an innocent mortgagee/purchaser for value because
prior to the execution and registration of PNBs deed of sale with the Register of
Deeds, the bank had prior notice that the disputed lot is subject of a litigation. It
would appear that during the pendency of Civil Case No. 2514, a notice of lis

pendens was annotated at the back of OCT No. P-4952 as Entry No. 16554712
on November 28, 1988.
The RTC and CA ruled that Ciriaco is correct and that PNB must
reconvey the land to Ciriaco. Thus PNB filed this case to question the ruling of
the RTC and CA.
ISSUE

Whether or not PNB must reconvey the land to Ciriaco?

HELD
Yes. PNB is not an innocent purchaser/ mortgagee for value. PNB In
this case is considered a trustee in a constructive trust holding the land in trust
for Ciriaco. Also, since Ciriaco is in possession of the land, the action based on
constructive trust is imprecriptible.
Undoubtedly, our land registration statute extends its protection to an
innocent purchaser for value, defined as "one who buys the property of another,
without notice that some other person has a right or interest in such property
and pays the full price for the same, at the time of such purchase or before he
has notice of the claims or interest of some other person in the property."25 An
"innocent purchaser for value" includes an innocent lessee, mortgagee, or other
encumbrancer for value .26
Here, we agree with the disposition of the RTC and the CA that PNB is
not an innocent purchaser for value. As we have already declared:
A banking institution is expected to exercise due diligence before
entering into a mortgage contract. The ascertainment of the status or condition
of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.27 (Emphasis ours.)
PNBs contention that Ciriaco failed to allege in his complaint that PNB
failed to take the necessary precautions before accepting the mortgage is of no
moment. It is undisputed that the 2.5002-hectare portion of the mortgaged
property has been adjudged in favor of Ciriacos predecessor-in-interest in Civil
Case No. 2514. Hence, PNB has the burden of evidence that it acted in good faith
from the time the land was offered as collateral. However, PNB miserably failed
to overcome this burden. There was no showing at all that it conducted an
investigation; that it observed due diligence and prudence by checking for flaws
in the title; that it verified the identity of the true owner and possessor of the
land; and, that it visited subject premises to determine its actual condition
before accepting the same as collateral.
Both the CA and the trial court correctly observed that PNB could not
validly raise the defense that it relied on Antonios clean title. The land, when it

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was first mortgaged, was then unregistered under our Torrens system. The first
mortgage was on February 25, 197128 while OCT No. P-4952 was issued on July
19, 1971. Since the Paces offered as collateral an unregistered land, with more
reason PNB should have proven before the RTC that it had verified the status of
the property by conducting an ocular inspection before granting Antonio his
first loan. Good faith which is a question of fact could have been proven in the
proceedings before the RTC, but PNB dispensed with the trial proper and let its
opportunity to dispute factual allegations pass. Had PNB really taken the
necessary precautions, it would have discovered that a large portion of Lot
13521 is occupied by Ciriaco.
Ciriacos action for reconveyance is inprescriptible. If a person claiming
to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in
effect seeks to quiet title to the property, does not prescribe. The reason for this
is that one who is in actual possession of a piece of land claiming to be the
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.34
In Ciriacos case, as it has been judicially established that he is in actual
possession of the property he claims as his and that he has a better right to the
disputed portion, his suit for reconveyance is in effect an action for quieting of
title. Hence, petitioners defense of prescription against Ciriaco does

20. BRITO v DIANALA


Ramon Brito, petitioner, vs. Severino Dianala, Violeta Dianala Sales, Jovita Dianala
Dequinto, Rosita Dianala, Conchita Dianala, and Joel Dequinto, respondents.
G.R. No. 171717 December 15, 2010
FACTS:
Subject of the present petition is a parcel of land in Negros Occidental.
The said tract of land is a portion of Lot No. 1536-B, originally owned by a
certain Esteban Dichimo and his wife, Eufemia Dianala, both of whom are
already deceased.
On September 27, 1976, Margarita Dichimo, assisted by her husband,
Ramon Brito, Sr., et al filed a Complaint for Recovery of Possession and Damages

against a certain Jose Maria Golez. Petitioner's wife, Margarita and the others,
alleged that they are the heirs the descendants of Esteban and Eufemia and that
the subject lot is part of their inheritance.
On July 29, 1983, herein respondents filed an Answer-in-Intervention
claiming that prior to his marriage to Eufemia, Esteban was married to a certain
Francisca; that Esteban and Francisca bore five children, all of whom are
already deceased; that herein respondents are the heirs of Esteban and
Francisca's children; that they are in open, actual, public and uninterrupted
possession of a portion of Lot No. 1536-B for more than 30 years; that their
legal interests over the subject lot prevails over those of petitioner and his coheirs; that, in fact, petitioner and his co-heirs have already disposed of their
shares in the said property a long time ago.
Subsequently, the parties in Civil Case No. 12887 agreed to enter into a
Compromise Agreement wherein Lot No. 1536-B was divided between Jose
Maria Golez, on one hand, and the heirs of Vicente, namely: Margarita,
Bienvenido, and Francisco, on the other. It was stated in the said agreement
that the heirs of Eusebio had sold their share in the said lot to the mother of
Golez. Thus, on September 9, 1998, the RTC trying the case rendered a decision
approving the said Compromise Agreement.
Thereafter, a new TCT was issued by the Register of Deeds in the name
of Margarita, Bienvenido and Francisco.
In 1999, Brito and his co-heirs filed another Complaint for Recovery of
Possession and Damages, this time against herein respondents Dianalas. The
Dianalas, on the other hand, filed with the same court, a Complaint for
Reconveyance and Damages against petitioner and his co-heirs. One of the
defenses raised by Brito was that the Dianalas are a guilty of laches and are
already estopped from questioning the decision of the RTC in Civil Case No.
12887 on the ground that they slept on their rights and allowed the said
decision to become final.
ISSUE
Whether or not the respondents are barred by laches
HELD

No, they are not barred by laches. In the first place, respondents cannot
be faulted for not appealing the decision of the RTC in Civil Case No. 12887
simply because they are no longer parties to the case and, as such, have no
personality to assail the said judgment.
Secondly, respondents' act of filing their action for reconveyance within
the ten-year prescriptive period does not constitute an unreasonable delay in

39 TRUSTS CASE DIGESTS by: Alojado, Atienza, Balderama, Camarao, Carandang, Cruz, Estilles, Garcia, Gonzaga, Hui, Lazaro, Senajon

CASE DIGESTS TRUSTS


asserting their right. The Court has ruled that, unless reasons of inequitable
proportions are adduced, a delay within the prescriptive period is sanctioned by
law and is not considered to be a delay that would bar relief.
Moreover, the prescriptive period applies only if there is an actual need
to reconvey the property as when the plaintiff is not in possession thereof.
Otherwise, if the plaintiff is in possession of the property, prescription does not
commence to run against him. Thus, when an action for reconveyance is
nonetheless filed, it would be in the nature of a suit for quieting of title, an
action that is imprescriptible. The reason for this is that one who is in actual
possession of a piece of land claiming to be the owner thereof may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate
his right, the rationale for the rule being, that his undisturbed possession
provides 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 the one who is in possession.
In the present case, there is no dispute that respondents are in
possession of the subject property as evidenced by the fact that petitioner and
his co-heirs filed a separate action against respondents for recovery of
possession thereof. Thus, owing to respondents' possession of the disputed
property, it follows that their complaint for reconveyance is, in fact,
imprescriptible. As such, with more reason should respondents not be held
guilty of laches as the said doctrine, which is one in equity, cannot be set up to
resist the enforcement of an imprescriptible legal right.

21. HEIRS OF DOMINGO v RAMA

Valientes, had their Affidavit of Adverse Claim duly entered in the Memorandum
of Encumbrances at the back of TCT No. T-5, 427.
Upon the death of the spouses Belen, their surviving heirs Brigida
Sescon Belen and Maria Lina Belen executed an extra-judicial settlement with
partition and sale in favor of private respondent Vilma Valencia-Minor, the
present possessor of the subject property. On 1979, herein private respondent
Minor filed with the courts a "PETITION FOR CANCELLATION OF
MEMORANDUM OF ENCUMBRANCE. Private respondent Minor filed an
Omnibus Motion to Dismiss Civil Case No. 98-021 on the grounds of forum
shopping and litis pendentia.
ISSUE
W/N action for reconveyance based on an implied or constructive trust
is imprescriptible
HELD

No. We have allowed actions for reconveyance based on implied trusts


even beyond such one-year period, for such actions respect the decree of
registration as incontrovertible. The right to seek reconveyance based on an
implied or constructive trust is not absolute nor is it imprescriptible. An action
for reconveyance based on an implied or constructive trust must perforce
prescribe in ten years from the issuance of the Torrens title over the property.
As discussed above, Civil Case No. 98-021 was filed more than 28 years
from the issuance of TCT No. T-5,427. This period is unreasonably long for a
party seeking to enforce its right to file the appropriate case. Thus, petitioners'
claim that they had not slept on their rights is patently unconvincing.

FACTS
Petitioners claim that they are the heirs of Domingo Valientes who,
before his death, was the owner of a parcel of land in Zamboanga del Sur. In
1939, Domingo Valientes mortgaged the subject property to secure his loan to
the spouses Leon Belen and Brigida Sescon (spouses Belen). In the 1950s, the
Valientes family purportedly attempted, but failed, to retrieve the subject
property from the spouses Belen. Through an allegedly forged document
captioned VENTA DEFINITIVA purporting to be a deed of sale of the subject
property between Domingo Valientes and the spouses Belen, the latter obtained
Transfer Certificate of Title (TCT) No. T-5, 427 in their name. On 1970, Maria
Valientes Bucoy and Vicente Valientes, legitimate children of the late Domingo

40 TRUSTS CASE DIGESTS by: Alojado, Atienza, Balderama, Camarao, Carandang, Cruz, Estilles, Garcia, Gonzaga, Hui, Lazaro, Senajon