SPOUSES RAYOS VS.

REYES ET AL
G.R. NO. 150913
FEBRUARY 20, 2003

FACTS:
3 parcels of unregistered land in Pangasinan were formerly owned by
the spouses Tazal who on 1 September 1957 sold them to respondents
predecessor-in-interest, Reyes, with right to repurchase within two 2 years
from date thereof by paying to the vendee the purchase price and all
expenses incident to their reconveyance. After the sale the vendee a
retro took physical possession of the properties and paid the taxes thereon.
The otherwise inconsequential sale became controversial when 2 of the 3
parcels were again sold by Tazal in favor of petitioners predecessor-in-
interest Rayos without first availing of his right to repurchase the properties.
In the meantime, the conventional right of redemption in favor of spouses
Tazal expired without the right being exercised by either the Tazal spouses or
the vendee Rayos.
After the expiration of the redemption period, Tazal attempted to
repurchase the properties from Reyes by asserting that the 1 September
1957 deed of sale with right of repurchase was actually an equitable
mortgage and offering the amount of P724.00 to pay for the alleged debt.
But Reyes refused the tender of payment and vigorously claimed that their
agreement was not an equitable mortgage.3
On 9 May 1960 Francisco Tazal filed a complaint with the CFI Reyes for the
declaration of the 1 September 1957 transaction as a contract of equitable
mortgage. He also prayed for an order requiring defendant Mamerto Reyes to
accept the amount of P724.00 which he had deposited with the trial court as
full payment for his debt, and canceling the supposed mortgage on the three
(3) parcels of land with the execution of the corresponding documents of
reconveyance in his favor.
ISSUE:
Whether or not the consignation is valid
HELD:
In order that consignation may be effective the debtor must show that:
(a) there was a debt due;
(b) the consignation of the obligation had been made because the creditor to
whom a valid tender of payment was made refused to accept it;
(c) previous notice of the consignation had been given to the person
interested in the performance of the obligation;
(d) the amount due was placed at the disposal of the court; and, (e) after the
consignation had been made the person interested was notified thereof.
In the instant case, petitioners failed. First, to offer a valid and unconditional
tender of payment; Second, to notify respondents of the intention to deposit
the amount with the court; and third, to show the acceptance by the creditor
of the amount deposited as full settlement of the obligation, or in the
alternative, a declaration by the court of the validity of the consignation. The
failure of petitioners to comply with any of these requirements rendered the
consignation ineffective. Consignation and tender of payment must not be
encumbered by conditions if they are to produce the intended result of
fulfilling the obligation. In the instant case, the tender of payment of P724.00
was conditional and void as it was predicated upon the argument of Tazal
that he was paying a debt which he could do at any time allegedly because
the 1 September 1957 transaction was a contract of equitable mortgage and
not a deed of sale with right to repurchase. The ostensible purposes of
offering the amount in connection with a purported outstanding debt were
to evade the stipulated redemption period in the deed of sale which had
already expired when the tender of payment was made and the Civil Case
was instituted, and as a corollary, to avail of the thirty (30)-day grace period
under Art. 1606 of the Civil Code within which to exercise the right to
repurchase. Reyes was therefore within his right to refuse the tender of
payment offered by petitioners because it was conditional upon his waiver of
the two (2)-year redemption period stipulated in the deed of sale with right
to repurchase.
Moreover, petitioners failed to prove in the Civil Cases that any form of
notice regarding their intention to deposit the amount of P724.00 with the
CFI had been served upon respondents. This requirement is not fulfilled by
the notice which could have ensued from the filing of the complaint in the
civil case or the stipulation made between Tazal and Reyes regarding the
consignation of P724.00. The latter constitutes the second notice required by
law as it already concerns the actual deposit or consignation of the amount
and is different from the first notice that makes known the debtors intention
to deposit the amount, a requirement missing in the instant case. Without
any announcement of the intention to resort to consignation first being made
to the persons interested in the fulfillment of the obligation, the consignation
as a means of payment is void.
It is also futile to argue that the deposit of P724.00 with the Court of First
Instance could have perfected the redemption of the three (3) parcels of land
because it was not approved by the trial court, much less accepted by
Mamerto Reyes or his heirs, herein respondents. expenses that petitioners
had to reimburse to respondents predecessor-in-interest aside from
the P724.00 earlier deposited by Tazal.
In the instant case, since there is no clear and preponderant evidence that
the consignation of P724.00 satisfied all the requirements for validity and
enforceability, and since Mamerto Reyes vehemently contested the propriety
of the consignation, petitioners cannot rely upon sheer speculation and
unfounded inference to construe the Decision of the Court of First Instance as
one impliedly approving the consignation of P724.00 and perfecting the
redemption of the three (3) parcels of land.
It should be recalled that one of the requisites of consignation is the filing of
the complaint by the debtor against the creditor. Hence it is the judgment on
the complaint where the court declares that the consignation has been
properly made that will release the debtor from liability. Should the
consignation be disapproved by the court and the case dismissed, there is no
payment and the debtor is in mora and he shall be liable for the expenses
and bear the risk of loss of the thing.

ROMAN CATHOLIC OF MALOLOS V IAC

GR 72110
NOVEMBER 16, 1990

FACTS:
On July 7, 1971, the subject contract over the land in question was executed
between the petitioner as vendor and the private respondent through its
then president, Mr. Carlos F. Robes, as vendee, stipulating for a
downpayment of P23,930.00 and the balance of P100,000.00 plus 12%
interest per annum to be paid within four years from execution of the
contract. The contract likewise provides for cancellation, forfeiture of
previous payments, and reconveyance of the land in question in case the
private respondent would fail to complete payment within the said period.
After the expiration of the stipulated period for payment, Atty. Adalia
Francisco (president of the company who bought land) wrote the petitioner a
formal request that her company be allowed to pay the principal amount of
P100,000.00 in three equal installments of six months each with the first
installment and the accrued interest of P24,000.00 to be paid immediately
upon approval of the said request. The petitioner formally denied the said
request of the private respondent, but granted the latter a grace period of
five days from the receipt of the denial to pay the total balance of
P124,000.00. The private respondent wrote the petitioner requesting an
extension of 30 days from said date to fully settle its account but this was
still denied. Consequently, Atty. Francisco wrote a letter directly addressed to
the petitioner, protesting the alleged refusal of the latter to accept tender of
payment made by the former on the last day of the grace period. But the
private respondent demanded the execution of a deed of absolute sale over
the land in question. Atty. Fernandez, wrote a reply to the private respondent
stating the refusal of his client to execute the deed of absolute sale so the
petitioner cancelled the contract and considered all previous payments
forfeited and the land as ipso facto reconvened.

ISSUE:
Whether or not the finding of the IAC that Atty. Francisco had sufficient
available funds did tender payment for the said obligation.

HELD:
No. Tender of payment involves a positive and unconditional act by the obligor of
offering legal tender currency as payment to the obligee for the formers obligation
and demanding that the latter accept the same. Thus, tender of payment cannot be
presumed by a mere inference from surrounding circumstances. At most, sufficiency
of available funds is only affirmative of thecapacity or ability of the obligor to fulfill
his part of the bargain. The respondent court was therefore in error.

FIRST UNITED CONSTRUCTORS CORPORATION AND BLUE STAR

CONSTRUCTION CORPORATION v BAYANIHAN AUTOMOTIVE
CORPORATION
G.R. NO. 164985
JANUARY 15, 2014

FACTS:

Petitioner First United Constructors Corporation (FUCC) and petitioner Blue

Star Construction Corporation (Blue Star) were associate construction firms
sharing financial resources, equipment and technical personnel on a case-to-
case basis. From May 27, 1992 to July 8, 1992, they ordered six units of
dump trucks from the respondent, a domestic corporation engaged in the
business of importing and reconditioning used Japan-made trucks, and of
selling the trucks to interested buyers who were mostly engaged in the
construction business. On September 19, 1992, FUCC ordered from the
respondent one unit of Hino Prime Mover that the respondent delivered on
the same date. On September 29, 1992, FUCC again ordered from the
respondent one unit of Isuzu Transit Mixer that was also delivered to the
petitioners. For the two purchases, FUCC partially paid in cash, and the
balance through post-dated checks. Upon presentment of the checks for
payment, the respondent learned that FUCC had ordered the payment
stopped. The respondent immediately demanded the full settlement of their
obligation from the petitioners, but to no avail. Instead, the petitioners
informed the respondent that they were withholding payment of the checks
due to the breakdown of one of the dump trucks they had earlier purchased
from respondent, specifically the second dump truck delivered on May 27,
1992. Due to the refusal to pay, the respondent commenced this action for
collection on April 29, 1993, seeking payment of the unpaid balance in the
amount of P735,000.00 represented by the two checks.

ISSUE:
Whether or not the petitioners validly exercised the right of recoupment
through the withholding of payment of the unpaid balance of the purchase
price of the two purchases

HELD:
Article 1599. Where there is a breach of warranty by the seller, the buyer
may, at his election: (1) Accept or keep the goods and set up against the
seller, the breach of warranty by way of recoupment in diminution or
extinction of the price; (2) Accept or keep the goods and maintain an action
against the seller for damages for the breach of warranty; (3) Refuse to
accept the goods, and maintain an action against the seller for damages for
the breach of warranty; (4) Rescind the contract of sale and refuse to receive
the goods or if the goods have already been received, return them or offer to
return them to the seller and recover the price or any part thereof which has
been paid. When the buyer has claimed and been granted a remedy in
anyone of these ways, no other remedy can thereafter be granted, without
prejudice to the provisions of the second paragraph of article 1191.
Recoupment is the act of rebating or recouping a part of a claim upon which
one is sued by means of a legal or equitable right resulting from a
counterclaim arising out of the same transaction.7It is the setting up of a
demand arising from the same transaction as the plaintiff claim, to abate or
reduce that claim.

BPI V. CA
G.R. NO. 136202
JANUARY 25, 2007

FACTS:
Salazar had in her possession three crossed checks with an aggregate
amount of P267,692.50. These checks were payable to the order of JRT
Construction and Trading which was the name of Templonuevos business.
Despite lack of knowledge and endorsement of Templonuevo, Salazar was able to
deposit the checks in her personal savings account with BPI and encash the
same. The three checks were deposited in three different occasions over the
span of eight months. A year after the last encashment, Templonuevo
protested the purportedly unauthorized encashments and demanded from
BPI the aggregate amount of the checks. BPI complied with Templonuevos
demand. Since the money could no longer be debited from the account of Salazar
where she deposited the checks, they froze her other account with them.
Later on, BPI issued a cashiers check in favor of Templonuevo for the
aggregate amount and debited P267, 707.70 from Salazars account representing
the aggregate amount and the bank charges for the cashiers check. Salazar
filed a complaint against BPI.

ISSUE:
Whether or not Did BPI have the authority to unilaterally withdraw
from Salazars account the amount it has previously paid upon certain
unendorsed order instrument

HELD:
Records show that no prior arrangement existed between Salazar and
Templonuevo regarding the transfer of ownership of the checks. This fact is
crucial as Salazars entitlement to the value of the instruments is based on
the assumption that she is a transferee within the contemplation of Section
49 of the NIL. Section 49 of the NIL contemplates a situation where the
payee or endorsee delivers a negotiable instrument for value without
endorsing it. The underlying premise of this provision, however, is that a
valid transfer of ownership of the negotiable instrument in question has
taken place. Transferees in this situation do not enjoy the presumption of
ownership in favor of holders since they are neither payees nor endorsees of
such instruments. Mere possession of a negotiable instrument does not in
itself conclusively establish either the right of the possessor to receive
payment, or of the right of one who has made payment to be discharged
from liability. Something more than mere possession is necessary to
authorize payment to such possessor

BOGNOT VS. RRI LENDING

GR NO. 180144
SEPTEMBER 24, 2014

FACTS:
In September 1996, Leonardo Bognot and his younger brother, Rolando
Bognot applied for and obtained a loan of P500,000.00 from RRI Lending,
payable on November 30, 1996. The loan was evidenced by a promissory
note and was secured by a post-dated check dated November 30, 1996.
Evidence on record shows that Leonardo renewed the loan several times on a
monthly basis. He paid a renewal fee of P54,600.00 for each renewal, issued
a new post-dated check as security, and executed and/or renewed the
promissory note previously issued. RRI Lending on the other hand, cancelled
and returned to Leonardo the post-dated checks issued prior to their
renewal. Leonardo purportedly paid the renewal fees and issued a post-dated
check dated June 30, 1997 as security. As had been done in the past, RRI
Lending superimposed the date "June 30, 1997" on the promissory note to
make it appear that it would mature on the said date. Several days before
the loans maturity, Rolandos wife, Julieta, went to the respondents office
and applied for another renewal of the loan. She issued in favor of RRI
Lending a promissory note and a check dated July 30, 1997, in the amount
of P54,600.00 as renewal fee. On the excuse that she needs to bring home
the loan documents for the Bognot siblings signatures and replacement,
Julieta asked the RRI Lending clerk to release to her the promissory note, the
disclosure statement, and the check dated July 30, 1997. Julieta, however,
never returned these documents nor issued a new post-dated check.
Consequently, RRI Lending sent Leonardo follow-up letters demanding
payment of the loan, plus interest and penalty charges. These demands went
unheeded.

ISSUE:
Whether or not the parties obligation was extinguished by payment

HELD:
Jurisprudence tells us that one who pleads payment has the burden of
proving it; the burden rests on the defendant to prove payment, rather than
on the plaintiff to prove non-payment. Indeed, once the existence of an
indebtedness is duly established by evidence, the burden of showing with
legal certainty that the obligation has been discharged by payment rests on
the debtor. In the present case, Leonardo failed to satisfactorily prove that
his obligation had already been extinguished by payment. As the CA
correctly noted, the petitioner failed to present any evidence that RRI
Lending had in fact encashed his check and applied the proceeds to the
payment of the loan. Neither did he present official receipts evidencing
payment, nor any proof that the check had been dishonored.

NARCISO DEGAOS V PEOPLE BERSAMIN

G.R. NO. 162826
OCTOBER 14, 2013

FACTS:
Narciso and Aida Luz are brother and sister. Lydia knew them because they
are the relatives of her husband. The usual business practice of Sps. Atty
Bordador with the accused was for Narciso to receive the jewelry and gold
items for and in behalf of Aida and for Narciso to sign the "Kasunduan at
Katibayan" receipts while Aida will pay for the price later on. The subject
items were usually given to Narciso only upon instruction from Aida through
telephone calls or letters. Said business arrangement went on for quite some
time since Narciso and Aida Luz had been paying religiously. When the
accused defaulted in their payment, they sent demand letters Aida sent a
letter to Lydia Bordador requesting for an accounting of her indebtedness.
Lydia made an accounting which contained the amount of P122,673.00 as
principal and P21,483.00 as interest. Thereafter, she paid the principal
amount through checks. She did not pay the interest because the same was
allegedly excessive. Atty. Jose Bordador brought a ledger to her and asked
her to sign the same. The said ledger contains a list of her supposed
indebtedness to the private complainants. She refused to sign the same
because the contents thereof are not her indebtedness but that of his
brother, Narciso. She even asked the private complainants why they gave so
many pieces of jewelry and gold bars to Narciso without her permission, and
told them that she has no participation in the transactions covered by the
subject "Kasunduan at Katibayan" receipts. Co-accused Narciso categorically
admitted that he is the only one who was indebted to the private
complainants and out of his indebtedness, he already made partial payments
in the amount of P53,307.00. Included in the said partial payments is the
amount of P20,000.00 which was contributed by his brothers and sisters who
helped him and which amount was delivered by Aida to the private
complainants. RTC found Narciso GUILTY beyond reasonable doubt of the
crime of estafa but acquitted Luz for insufficiency of evidence, imposing on
Narciso twenty years of reclusion temporal. On appeal, Degaos assailed his
conviction

ISSUES:
Whether or not RTC erred in not finding that the agreement between the
private complainant and accused was one of sale on credit.

HELD:
Transaction was an agency, not a sale on credit. Narciso contends that his
agreement with the complainants relative to the items of jewelry and gold
was a sale on credit, not a consignment to sell on commission basis. The
contention of Degaos is devoid of factual and legal bases. Based on the
express terms and tenor of the Kasunduan at Katibayan, Narciso received
and accepted the items under the obligation to sell them in behalf of the
complainants and he would be compensated with the overprice as his
commission. Plainly, the transaction was a consignment under the obligation
to account for the proceeds of sale, or to return the unsold items. As such, he
was the agent of the complainants in the sale to others of the items. In
contrast, according the first paragraph of Article 1458 of the Civil Code one
of the contracting parties in a contract of sale obligates himself to transfer
the ownership of and to deliver a determinate thing, while the other party
obligates himself to pay therefor a price certain in money or its equivalent.
Contrary to the contention of Narciso, there was no sale on credit to him
because the ownership of the items did not pass to him. Novation did not
transpire as to prevent the incipient criminal liability from arising Degaos
claims that his partial payments to the complainants novated his contract
with them from agency to loan, thereby converting his liability from criminal
to civil. He insists that his failure to complete his payments prior to the filing
of the complaint-affidavit by the complainants notwithstanding, the fact that
the complainants later required him to make a formal proposal before the
barangay authorities on the payment of the balance of his outstanding
obligations confirmed that novation had occurred. The CA rejected the claim
of Degaos, opining that his argument that novation took place when the
private complainants accepted his partial payments before the criminal
information was filed in court and therefore, his criminal liability was
extinguished is untenable Novation is not one of the grounds prescribed by
the RPC for the extinguishment of criminal liability.

HEIRS OF LABANON V. HEIRS OF LABANON

GR 160711
AUGUST 14, 2004

FACTS:

During the lifetime of Constancio Labanon, prior to the outbreak of

WWII, he settled upon a piece of alienable and disposable public
agricultural land situated at Brgy. Lanao, Kidapawan, Cotabato.
Constancio cultivated the said lot and introduced permanent
improvements that still exist up to the present. Being of very limited
educational attainment, he found it difficult to file his public land
application over said lot. Constancio then asked his brother, Maximo
Labanon who was better educated to file the corresponding public
land application under the express agreement that they will divide
the said lot as soon as it would be feasible for them to do so. The
offer was accepted by Maximo. During the time of the application it
was Constancio who continued to cultivate the said lot in order to
comply with the cultivation requirement set forth under
Commonwealth Act 141, as amended, on Homestead applications.
After which, on June 6, 1941, due to industry of Constancio,
Homestead Application No. 244742 (E-128802) of his brother
Maximo was approved with Homestead Patent No. 67512.
Eventually, Original Certificate of Title No. P-14320 was issued by the
Register of Deeds of Cotabato over said lot in favor of Maximo
Labanon. On February 11, 1955, Maximo Labanon executed a
document denominated as Assignment of Rights and Ownership. The
document was executed to safeguard the ownership and interest of
his brother Constancio Labanon. After the death of Constancio
Labanon, his heirs executed an extra-judicial settlement of estate
with simultaneous sale over the aforesaid eastern portion of the lot
in favor of Alberto Makilang, the husband of Visitacion Labanon, one
of the children of Constancio. Subsequently, the parcel of land was
declared for taxation purposes in the name of Alberto under TD No.
11593. However, in March 1991, the defendant heirs of Maximo
Labanon namely, Alicia L. Caniedo, Leopoldo Labanon, Roberto Nieto
and Pancho Labanon, caused to be cancelled from the records of the
defendant Provincial Assessor of Cotabato the aforesaid TD No.
11593 and the latter, without first verifying the legality of the basis
for said cancellation, did cancel the same. Further, after discovering
that the defendant-heirs of Maximo Labanon were taking steps to
deprive the heirs of Constancio Labanon of their ownership over the
eastern portion of said lot, the latter, thru Alberto Makilang,
demanded the owners copy of the certificate of title covering the
aforesaid Lot to be surrendered to the Register of Deeds of Cotabato
so that the ownership of the heirs of Constancio may be fully
effected but the defendants refused and still continue to refuse to
honor the trust agreement entered into by the deceased brothers.
Thus, on November 12, 1991, petitioners filed a complaint[5] for
Specific Performance, Recovery of Ownership, Attorneys Fees and
Damages with Writ of Preliminary Injunction and Prayer for
Temporary Restraining Order against respondents

ISSUE:
Whether or not Whether or not the Trust Agreement allegedly made
by Constancio Labanon and Maximo Labanon prescribed

HELD:
In the case at bar, Maximo Labanon never repudiated the express trust
instituted between him and Constancio Labanon. And after Maximo Labanons
death, the trust could no longer be renounced; thus, respondents right to enforce the
trust agreement can no longer be restricted nor prejudiced by prescription.

It must be noted that the Assignment of Rights and Ownership and Maximo
Labanons Sworn Statement were executed after the Homestead Patent was applied
for and eventually granted with the issuance of Homestead Patent No. 67512
on June 6, 1942. Evidently, it was the intent of Maximo Labanon to hold the title
over the land in his name while recognizing Constancio Labanons equitable
ownership and actual possession of the eastern portion of the land covered by OCT
No. P-14320.

In addition, petitioners can no longer question the validity of the positive

declaration of Maximo Labanon in the Assignment of Rights and Ownership in
favor of the late Constancio Labanon, as the agreement was not impugned during
the formers lifetime and the recognition of his brothers rights over the eastern
portion of the lot was further affirmed and confirmed in the subsequent April 25,
1962 Sworn Statement.

Section 31, Rule 130 of the Rules of Court is the repository of the settled precept
that [w]here one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence
against the former. Thus, petitioners have accepted the declaration made by their
predecessor-in-interest, Maximo Labanon, that the eastern portion of the land
covered by OCT No. P-14320 is owned and possessed by and rightfully belongs to
Constancio Labanon and the latters heirs. Petitioners cannot now feign ignorance
of such acknowledgment by their father, Maximo.

Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied
in the Assignment of Rights and Ownership pursuant to Article 1371 of the Civil
Code that contracts take effect between the parties, assigns, and heirs.

Petitioners as heirs of Maximo cannot disarrow the commitment made by

their father with respect to the subject property since they were merely subrogated
to the rights and obligations of their predecessor-in-interest. They simply stepped
into the shoes of their predecessor and must therefore recognize the rights of the
heirs of Constancio over the eastern portion of the lot. As the old adage goes, the
spring cannot rise higher than its source.

WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision

and October 13, 2003 Resolution in CA-G.R. CV No. 65617 are AFFIRMED with
the modifications that the Kidapawan City, Cotabato RTC, Branch 17 is directed to
have OCT No. P-14320 segregated and subdivided by the Land Management
Bureau into two (2) lots based on the terms of the February 11, 1955 Assignment
of Rights and Ownership executed by Maximo Labanon and Constancio Labanon;
and after approval of the subdivision plan, to order the Register of Deeds of
Kidapawan City, Cotabato to cancel OCT No. P-14320 and issue one title each to
petitioners and respondents based on the said subdivision plan.

Costs against petitioners.

Tamayo v Callejo
FACTS:
Before 1912, the Tamayos sold a piece of land to Fernando Domantay, who
took possession of the land. When Vicente died after the sale and his widow
waived her rights to the remaining portion of the property to their children
Mariano and Marcos, the two brothers applied to register the land in their
name, saying they inherited it from their father, including the part that was
sold to Domantay. In 1918 Domantay sold the land to Callejo. In 1940
Mariano Tamayo sold the land to Estacio, whose surveyor went to the land in
1952 to segregate it; that same year Callejo registered his adverse claim to
the land. Tamayo pleaded the statute of limitations as defense, but the court
found that in 1918, when they had the land registered in their name, Mariano
Tamayo, on his behalf and that of his brother, executed a public document
acknowledging that his deceased parents had sold a parcel of the land to
Domantay.
Though there was no clear evidence to create a trust, ruling out an express
trust, the admission of the sale in a public document turned the implied trust
into an express one. An express trust, the court held, was a continuing and
subsisting trust until repudiated, in which case the period of prescription
begins to run only from the time of repudiation.

ISSUE:
Whether or not in not holding that the respondent Aurelio Callejo's cause of action, if any, had
already prescribed

HELD:
It should be noted, however, that although the trust created by the application for registration filed by
Mariano and Marcos Tamayo, on or about September 29, 1913, and the inclusion in OCT No. 2612,
issued in their names, on November 15, 1915, of the tract of land previously sold by their parents to
Fernando Domantay and later conveyed by him to Aurelio Callejo may have had a constructive
or implied nature, its status was substantially affected on June 28, 1918, by the following facts,
namely: On the date last mentioned, Fernando Domantay and petitioner Mariano Tamayo the
latter acting in his own behalf and on that of his brother Marcos Tamayo executed the public
instrument Exhibit I whereby Mariano Tamayo explicitly acknowledged that his deceased parents,
Vicente Tamayo and Cirila Velasco, had sold to Fernando Domantay, for the sum of P200, the parcel
of land of about 22,125-1/3 square meters, then held by the latter, and stipulating, inter alia, that
Fernando Domantay is the absolute owner of said land, free from any lien or encumbrance thereon,
and that, in view of the sale thus made by his parents, he (Mariano Tamayo) "quedo responsible al
susodicho Don Fernando Domantay, sus herederos y causa habientes por la propiedad, cuyo titulo
me comprometo a defender contra las reclamaciones ... de quienes las presentare." 1

This express recognition by Mariano Tamayo on his behalf and that of his brother Marcos Tamayo
of the previous sale, made by their parents, to Fernando Domantay had the effect of imparting to
the aforementioned trust the nature of an express trust it having been created by the will of the
parties, "no particular words" being "required for the creation of an express trust, it being sufficient
that a trust is clearly intended" 2 which express trust is a "continuing and subsisting" trust, not subject
to the statute of limitations, at least, until repudiated, in which event the period of prescription begins to
run only from the time of the repudiation. 3 The latter did not take place, in the case at bar, until early in
June, 1952, when Mariano Tamayo rejected Aurelio Callejo's demand that the now disputed portion be
excluded from TCT No. 5486 in the former's name. But, then, the case at bar was filed weeks later, or on
June 25, 1952, when the period of prescription had barely begun to run.

It is thus apparent that the Court of Appeals did not err in overruling the plea of prescription.

O Laco vs Co Cho Chit

Facts:
Emila is the half-sister of O Lay Kia who is, as is her husband Co Cho Chit, a
Chinese national and cannot own property in the Philippines. O lay
kia bought a piece of land and had it named under her sister, Emilia. Emilia
on the other hand sold the property to the Church without the knowledge of
her sister. When O Lay Kia found out, they immediately filed a case for
breach of contract.
Issue:
Whether or not there was a trust relationship between the sisters
Held:
Yes.Trust relations between parties may either be express or implied. Express
trusts are those which are created by the direct and positive acts of
the parties, by some writing or deed, or will, or by words evidencing an
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 which are super induced
on the transaction by operation of law as matters of equity, independently of
the particular intention of the parties. Implied trusts may either be resulting
or constructive trusts, both coming into being by operation of law. Resulting
trusts are based on the equitable doctrine that valuable consideration and
not legal title determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise from the nature
or circumstances of the consideration involved in a transaction whereby one
person thereby becomes invested with legal title but is obligated in equity to
hold his legal title for the benefit of another. On the other hand, constructive
trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise contrary to
intention against one who, by fraud, duress or abuse of confidence, obtains
or holds the legal right to property which he ought not, in equity and good
conscience, to hold. In this case, the court cited five instances that prove a
trust relationship. First, sps O Lay Kia were in possession of all the pertinent
documents of the sale from the beginning until the end of the transaction.
Second, there is a previous case of similar facts involving O lay kia and her
brother on a different parcel of land decided in her favor. Third, the
circumstances leading to Emilia acquiring a title to the land was dubious.
Fourth, until the sale to the church, Emilia actually recognized the trust

Vda. de RIGONAN vs. DERECHO

G.R. No. 159571
July 15, 2005

FACTS:

The instant controversy revolves around a parcel of land located at

Tuburan Sur, Danao City, originally owned by Hilarion Derecho. When Hilarion
died long before World War II, his eight children -- Leonardo, Apolinar,
Andres, Honorata, Dolores, Gerardo, Agaton, and Oliva -- became pro
indiviso co-owners of the subject property by intestate succession.
Subsequently, Tax Declaration No. 00267[5] was issued under the name Heirs
of Hilarion.
 On July 16, 1921, five of the co-owners -- Leonardo, Apolinar, Andres,
Honorata, and Dolores -- sold the inherited property to Francisco Lacambra,
subject to a five-year redemption clause.[6] Notably, the three other Derecho
heirs -- Gerardo, Agaton, and Oliva -- were not parties to the pacto de
retro sale.

Sometime in 1928, two years after the period for redemption expired,
Dolores -- together with her husband, Leandro Rigonan -- purchased [7] the
land from Lacambra and immediately occupied it.[8]

More than five decades passed without any controversy. On April 24,
1980, Leandro Rigonan executed the assailed Affidavit of Adjudication in
favor of his son, Teodoro Rigonan (the deceased husband of Petitioner
Delfina vda. de Rigonan).[9] Under this instrument, Leandro declared himself
to be the sole heir of Hilarion, [10] while Teodoro obtained the cancellation of
Tax Declaration No. 00267,[11] and acquired Tax Declaration No. 00667 in his
own name.[12]

During the same year, Teodoro mortgaged the subject property to the
Rural Bank of Compostela of Cebu. Dreading foreclosure, he settled his
obligations with the bank[13] by securing the aid of Spouses Valerio and
Visminda Laude. On April 5, 1984, Teodoro executed the assailed Deed of
Absolute Sale of Unregistered Land in favor of Valerio Laude, [14] who then
obtained Tax Declaration No. 00726 under the latters name on May 10, 1984.
[15]

On November 10, 1993, respondents -- as the alleged heirs of Hilarion

and pro indiviso owners of the subject realty -- brought an action before the
Regional Trial Court (RTC) of Danao City (Branch 25), first, to recover the
property; and, second, to annul the Deed of Sale in favor of Laude[16] and the
Affidavit of Adjudication, whose validity and authenticity they assailed on the
ground of fraud. They likewise maintained that the subject property had not
been partitioned among the heirs; thus, it was still co-owned at the time it
was conveyed to Petitioner Laude.[17]

Petitioners did not deny the imputed fraud in the execution of the
Affidavit of Adjudication. They, however, averred that the document had no
bearing on their claim of ownership, which had long pertained to the Rigonan
spouses following the 1928 conveyance from the absolute owner, Lacambra.
[18]
They theorized that the co-ownership over the property ended when the
period for redemption lapsed without any action on the part of the co-
owners.[19] Therefore, the Rigonan spouses bought the property as legitimate
vendees for value and in good faith, not in the capacity of redeeming co-
owners.[20]

Petitioners likewise argued that they and their predecessors-in-interest

had continuously owned and possessed the subject property for 72 years.
Accordingly, acquisitive prescription had allegedly set in, in their favor, when
the case was filed in 1993.[21]

Lastly, petitioners maintained that they were entitled to the equitable

defense of laches. Respondents and their forebears were rebuked for not
asserting their rights over the property for the past 72 years. They
supposedly did so only after finding that the land had been developed, and
that it had appreciated in value.[22]

Issue:
Whether or not respondent erred in holding that the land subject matter
hereof is property held in common by the Heirs of Hilarion Derecho and an
implied trust was created by the act of repurchase.

Held:

Petitioners contend that the appellate court erred in holding that an

implied trust had arisen from the 1928 repurchase by the Rigonan spouses.
They argue that the sale was a conveyance of the absolute ownership of
Lacambra over the land, which he had acquired by virtue of a failure to
redeem. Therefore, when he sold it, the spouses likewise acquired absolute
ownership.

An implied trust arises, not from any presumed intention of the parties, but
by operation of law in order to satisfy the demands of justice and equity and
to protect against unfair dealing or downright fraud. [46] Under Article 1456 of
the new Civil Code, if property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an implied
trust for the benefit of the person from whom the property comes. Although
this provision is not retroactive in character, and thus inapplicable to the
1928 purchase, it merely expresses a rule already recognized by our courts
prior to the effectivity of the Code.[47]

In the present case, the implied trust arose in 1921, when five of the
eight co-owners assumed ownership of the whole inherited property and sold
it in its entirety to Lacambra. The sale clearly defrauded the three other co-
heirs who were not parties to the transaction -- Gerardo, Agaton, and Oliva --
and unlawfully deprived them of their undivided shares in the inheritance.
Thus, to the extent of their participation, the property is deemed to have
been acquired through fraud; and the person who acquired it, a trustee for
the benefit of the person from whom it was acquired.[48]

In the present case, Lacambra was the trustee who held the property
partly for the benefit of the three mentioned heirs (cestuis que trustent).

The CA, however, erred in finding that the implied trust had arisen in
1928, when the Rigonan spouses repurchased the property from Lacambra.
[49]
By then, Petitioners Rigonan were merely stepping into the shoes of
Lacambra as trustee.