Title: EMILIA O'LACO and HUCO LUNA vs.

VALENTIN CO CHO CHIT, O LAY KIA and COURT OF APPEALS Topic: Implied Trust Articles 1447 to 1457 Facts: 1. Emilia is the half sister of O Lay 2. Philippine Sugar Estate Development Company, Ltd., sold a parcel of land situated in Sta. Cruz, Manila, with the Deed of Absolute Sale naming Emilia O'Laco as vendee; thereafter, a TCT was issued in her name. 3. Sps Valentin and O Lay learned from the newspapers that Emilia sold the same property to the Roman Catholic Archbishop of Manila for 230K with assumption of the real estate mortgage 4. Sps Valentin and O Lay sued Sps Emilia and Hugo to recover the purchase price of the land alleging a. Emilia knew that they were the real vendees of the Oroquieta property sold in 1943 by Philippine Sugar Estate, and that the legal title thereto was merely placed in her name. b. Emilia breached the trust when she sold the land to the Roman Catholic Archbishop of Manila 5. Sps Emilia and Hugo deny the existence of any form of trust relation arguing: a. Emilia actually bought the property with her own money; b. Emilia left the Deed of Absolute Sale and the corresponding title with them merely for safekeeping; c. when Emilia asked for the return of the documents evidencing her ownership, they told her that these were misplaced or lost; and, d. that in view of the loss, she filed a petition for issuance of a new title, CFI of Manila granted her petition. 6. TC ruling: no trust relationship 7. Both parties appealed 8. CA set aside TC ruling 9. Parties filed MR 10.MR was denied 11.Hence this petition Issue: 1. W/N there exists an implied trust b/w the sisters Held: 1. Yes a. Express vs Implied i. Express trusts 1. created by the direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust. ii. Implied trusts 1. 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.

2. may either be resulting or constructive trusts, both coming into being by operation of law. a. Resulting trusts i. 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. ii. 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. b. Constructive trusts i. created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. ii. 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. b. 5 instances that prove a trust relationship in this case: i. Sps O lay were in the possession of all pertinent docs of the sale from the beginning til the end of the transaction ii. A previous case of similar facts involving Emilia and her older brother Ambrosio on a different parcel of land 1. Ambrisio claimed that Sps Valentin and O lay utilized his name in buying the Kusang-Loob property while that of Emilia was used in the purchase of the Oroquieta property. 2. In effect, there was an implied admission by Ambrosio that his sister Emilia, like him, was merely used as a dummy. 3. However, the Anti-Dummy Board exonerated respondent-spouses since the purchases were made in 1943, or during World War II, when the Anti-Dummy Law was not enforceable. iii. The circumstances leading to Emilia acquiring a title to the land was dubious iv. Until the sale to Roman Catholic, Emilie actually recognized the trust (by promising to take care of the transfer to the actual owners as soon as she is able) 1. A resulting trust is repudiated if the following requisites concur: a. the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui

qui trust b. such positive acts of repudiation have been made known to the cestui qui trust; and, c. the evidence thereon is clear and convincing. v. Emilia had no source of income to show how it was possible for her to purchase the land c. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale, the action therefore has not yet prescribed.